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UPDATE 2018 INSIGHTS | NEWS | SUPPORT
Going eco Thermo-Eco sustainable packaging is here
Cheers to China
Launching direct to Chinese consumer distribution
Wine summit highlights Streamline your wine sales with our API Wine club set up made easy Shipping programme review Spotlighting star winemakers ‘There is no glass ceiling’ In Grant’s Words
We’re very proud to share with you UPDATE 2018 - our Insights, News & Support newsletter. Our aim with this update is to share informative and purposeful content that provides value and support to you and your team. To ensure that you have the very best reading experience we’ve made some exciting changes to the look and feel of our update. We hope you enjoy this new format. I’d also like to take this opportunity to say a BIG thank you to my team, past and present, for their huge efforts since our inception in 2006. We’re only a small team and being split between our support office in Tauranga and our export warehouse in South Auckland means communication can be challenging. Despite the remote and distant operations our team collaborates extremely well, all towards the common goal of delivering the utmost care to the precious wine that we are entrusted with. All signals indicate the summer selling season ahead will be sizable. With new initiatives in place and others ready for launch we’re all set to support you with your Direct to Consumer Export needs.
Grant Rimmer Founder & Managing Director
Contents ISSUE 2018
Introducing Thermo-Eco
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Cheers to China Launching direct to Chinese consumer distribution
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Wine summit highlights Direct to Consumer Sales & Compliance Conference Napa Region 8
Short bits 2018 FDA Registration Renewal 11 Streamline your online wine sales with our API Supporting you with your wine club logistics 12 Team update 12 Snapshot back in time 13 Handy sales tip 13
Shipping programme review Spotlighting star winemakers ‘There is no glass ceiling’ In Grant’s Words 18
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Introducing
We’ve reduced our carbon footprint and the integrity of your wine is improved.
Our sustainable packaging is recyclable, reusable, biodegradable and better protects the integrity of your wine.
We were astonished with the performance of our Thermo-Eco packaging during extensive temperature testing covering a range of -5°C through to 38°C. Testing occurred across both static and real time shipping environments. Results showed that our Thermo-Eco solution achieved at least the same thermal resistance qualities as polystyrene in cool conditions and superior thermal resistance qualities in warmer conditions.
Thermo-Eco We’re thrilled to announce the launch of our new Thermo-Eco packaging solution for the delivery of your precious wine directly to your customers across the globe. Our new environmentally sustainable packaging solution creatively blends recycled sheep’s wool with composite cardboard materials to achieve a packaging solution with optimal thermal resistance properties, relatively high compression and shear strength.
Four years in the making Our social conscience and our genuine desire to closely support our Producer Partners to achieve their own sustainable goals has driven us to develop this new, fully unique design. Delivering over 10,000 cases of wine to the doors of New Zealand wine lovers across the globe, through a vast
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array of different handling and temperature conditions, means we needed the strongest, most lightweight solution that can also provide the best level of temperature stability. Over the past four winters Stephanie and our warehouse team have been evolving ideas from concept to concept. Along the way we’ve considered and tested various existing sustainable packaging solutions already on the market. Nothing has come up to standard that protects bottles from impact damage and delivers temperature stability.
We are proud that at least 99% of our Thermo-Eco packaging is recyclable, reusable and biodegradable. Release date & cost Ideally we would have chosen a quieter time of the year to introduce our eco packaging. As we don’t have that luxury, we’re targeting the slightly slower month of December to help ensure smoothest integration within our warehouse processes. Whilst we are firmly committed to ultimately ceasing the use of polystyrene, we are initially offering a choice of either polystyrene or our Thermo-Eco packaging. Part of the reason for this is that there is a slight price premium of an additional $10 per case for Thermo-Eco. For price sensitive customers you can still offer our lower priced, traditional polystyrene packaging. Or, simply make a unilateral decision to only offer whichever of our two packaging options you prefer.
Looking for further inspiration we even contracted a specialist packaging design engineer. In the end, clever thinking from our warehouse team nailed the ‘ThermoEco’ concept. Following the Thermos Flask theory, where liquid is retained at desired temperature through isolation within an isolated container, we have developed a case-within-case solution. Multiple layering, using highly durable environmentally sustainable materials, has enabled us to substantially reduce the length of time external temperature takes to reach the internal space.
Before launch we will send you fresh sales collateral including rate cards to support you in presenting our Thermo-Eco packaging option to your customer.
As an additional personal touch, each and every single bottle is hand fitted into its own individual thermally lined wine sleeve - crafted from recycled New Zealand sheep’s wool! Natural thermal properties of wool help with temperature stability and cushioning. As a bonus it comes complete with sensory aromas of lanoline, providing a pleasant nod to its homeland. Our sheep’s wool sleeves are biodegradable and can be reused within wine cellars for added thermal protection.
Phasing out - We’re committed to completely eradicating polystyrene from our packaging and whilst Thermo-Eco provides the perfect solution for 750ml bottles we’re still working on a suitable solution for large format bottles and for packaging mixed cases of 750ml bottles alongside different 1.5L & 3L bottles. In time, we’ll have a solution for large formats - our commitment and determination to reduce our environmental impact will see to that! 5
Cheers to China Launching direct to Chinese consumer distribution How many cups of tea does it take to cut a deal in China? Well, Grant’s lost count! The great news though is that the winding roads of opportunity have led to a huge success. We’re delighted to announce we can now offer China as a shipping destination for your fine wine.
Here’s what you need to know to get your wine into China with us: Before commencement, we need to register your wines with China Customs There is a maximum case size purchase of 1 x 8-bottle case per individual customer, per shipment. Our fixed rate is $198.00 per 8-bottle case - consistent with our other destinations this price is FULLY inclusive of taxes & duties, export packaging, insurance, and delivery to your customer’s door.
You may well have followed the journey of our pursuit to ‘crack China’ in our previous communications or enquiries over the years. It has taken so long because of the intricate web of challenges that lay in front of us. China Customs has had no provision for Direct-Consumer imports of alcohol products. Trying to follow the wine import regulations as they relate to wholesale/trade was too complex. Recently however, Customs has now established new import procedures to permit more sensitive products such as wine to be imported direct to consumer. Whilst the process is still considerably complex, we have navigated our way to the simplest, most workable and achievable solution.
If you would like to progress this exciting opportunity, email support@nzwinehome.co.nz with your approval to register your wine list. Once approved we will provide full operational/sales procedures and you’ll be ‘good-to-go’. Don’t worry, we’re here to support you with all of the above. Although we do suggest that you contact us quickly to ensure you’re ready for Chinese New Year on the 5th of February 2019.
Sell your wine direct to your Chinese customers You can now confidently sell your wine in 8-bottle case lots, directly to your Chinese customers. Being able to leverage opportunity off this maturing market needs little explanation and we are pretty excited, as we are sure you will be, with this opportunity.
Additionally, the Government of New Zealand and China are collaborating to make 2019 the ChinaNew Zealand Year of Tourism. Find out more about this at www.cnzyot.govt.nz.
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Wine summit highlights Direct to Consumer Sales & Compliance Conference - Napa Region evidenced in marketing strategies globally, experience is very much the key driver of shopper preferences these days. Several speakers emphasised that experience was not only important when a customer physically visited wineries, but also a key success component within a winery’s online offering. One thought provoking perspective put forward was that as wineries embraced the importance of providing experience they should consider a wider competitive landscape outside of their traditional neighbour and regional colleagues. Globally wineries, like most brands, are fighting for not only the discretionary dollar of their customers, but also the discretionary time of their customers.
Attending this event has been on Grant’s wish list for several years, so the chance for Grant to attend the 2018 ShipCompliant Wine Summit in Napa Valley, California on May 31st was an opportunity too good to miss. Compliance: The Greater Use of Data The summit was broken into two components, Compliance and DTC Sales. Perhaps the most intriguing subject was the increasing use of data by State Licensing Authorities to both monitor State shipping activities. But also to ensure declaration and payment of State taxes and duties. Various compliance specialists including speakers from State Authorities emphasised the notable transition away from attempting to restrict inter-state shipping to more of a revenue collection focus. Whilst there is certainly still some very strict States, many States are now turning their attention to making sure that they can maximise their revenue from the rapidly growing Direct to Consumer Shipping. Experts noted that State Authorities were now investing in specialist data and information software to manage their compliance regulations.
The 'Utilising Data to Grow Your Business' presentation featured Danny Brager from Nielsen. He highlighted the importance of e-commerce on the US retail market, with fast moving goods like groceries and alcohol, being on the leading end of growth in e-commerce. The boom in remote selling, along with greater consolidation in the distributor and retailer tiers, means that DTC must become an even greater part of every winery’s business model.
DTC Sales
In the broader wine market, there were a few points that Danny stressed. Notably certain things we thought may have just been fads - Rosé and wine in cans - are turning into trends. These areas have been trending up so much and so sustainably, that we cannot think they’ll go away.
'Consumer Experience 2020' and 'Utilising Data to Grow Your Business' were my pick of the DTC Sales topics. The Consumer Experience panel discussion drew out the importance of providing a compelling and unique experience for consumers. As 8
Some key data stats you might find interesting: For the first time since the Great Depression, traditional Off Premise sales are decreasing
based on the recent acquisitions of some global winemakers within online tech and direct distribution sectors. This points to a quiet readiness of larger producers to gently move away from their reliance on big box retail. Within nzwinehome we’re not currently monitoring activity by winery size. However, we suspect that if we were we would see our larger NZ wineries growing their DTC sales at a higher rate than medium and smaller producers. With impressive and well thought out commitment to the Channel, DTC is no longer the sole domain of smaller winemakers. Nothing to fear though as this investment only benefits the entire industry and in doing so lifts the quality and diversity of consumer experience.
Against the above decrease, Off Premise DTC sales have grown by 8.6% and now account for 10% of all retail Off Premise sales in the US Average per bottle value for DTC shipping across 2016 was $38.75 USD. The average value that Americans spend with our NZ producer partners is $50.26 NZD. Allowing for the exchange differences these values closely mirror our own data. One note-worthy slide demonstrated the level of DTC activity by winery size. Instinctively one might think that DTC was solely the domain of smaller producers. Definitely not so based on US figures, nor
The conference formed part of a wider market visit including a detailed review of our import and direct to consumer distribution procedures with our US Partners. 9
SHORT BITS
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2018 FDA Registration Renewal
Streamline your online wine sales with our API
Important Note: the 2018 FDA Biennial Registration Renewal period is fast approaching. It is imperative that we have your valid and renewed FDA number on record for us to ship your wines to your US customers.
If your website is not already accepting sales from international customers, ask us about our API or Shopify App and we can help you get set up so you’re not missing out. Continued investment in technology has enabled us to develop Version-2, our dynamic “REST” Automated Programming Interface (API) technology. This tool provides all the critical cost and destination specific shipping information that your site requires in order to complete seamless e-commerce sale transactions directly between you and your international customers.
The renewal period begins 1st October 2018 and concludes on 31st December 2018. After 31st December, all current FDA numbers will become invalid if they have not been renewed, so in order to avoid any delays it is important that you get on to this renewal process as soon as possible. If we have obtained an FDA number on your behalf, we will complete this renewal for you.
And, with Shopify now becoming the preferred wine sales platform, we have recently built our own customised shipping App for Shopify hosted sites. Great examples of Shopify hosted sites that we have proudly partnered with include www.frommwinery.co.nz, www.kumeuriver.co.nz and www.framingham.co.nz.
FDA numbers can be renewed at www.access.fda.gov. We know this website can be difficult to navigate so contact us if you need any support or direction.
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Supporting you with your wine club logistics If you’re not currently running/offering a club or wine programme or perhaps you’re only offering it to domestic and not yet international - we can help! We work with many producers, large and small, to develop and execute the logistics side of their international wine club programmes. Not only can we share our knowledge on how best to systematically manage these larger scale programmes, we can also provide you with your individual historical sales data to develop a database that you can use to recontact and achieve repeat sales now, next year, and every year! You can also use our API to streamline your online wine club programmes. With the advent of seamless international e-commerce, more and more of our producer partners are now able to email wine club/programme offers to their members and direct the completion of purchase to occur seamlessly on their own site. This removes the hurdle of manual collection of sensitive credit card and address details by phone and email. We’ll see each and every order right through to a safe and timely delivery, helping to further enhance sales to your international members.
Team update After close to five years Geoff Wilson has headed off to new challenges within the financial services sector. We’re missing Geoff’s humor and depth of experience and know he will excel within his new profession. In November we will very sadly be saying goodbye to Steph McGregor. Having spent 12 years with us Steph has been instrumental in the development of our company and she will be very sorely missed by the nzwinehome family, and no doubt by many of our valued partners. We wish Steph all the very best and know she will enjoy some well-deserved time off with her family and her first full summer holiday in many years! Nikki Philips Ariana Storey Sarah Kemp Meanwhile we welcome Nikki Philips and Ariana Storey who have joined Sarah Kemp in our support office. Our export warehouse team is also growing with Stephen and Graham joining Neil.
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Snapshot back in time Since our inception in 2006, one significant constant has been the overwhelming popularity of red wine. Across the past twelve years red wine has, on average, accounted for 70% of our total export mix. For interest we took a dive into the makeup of the red wine exports and discovered that originally Pinot Noir wasn’t quite as dominant as it is today. Whilst there’s no denying Pinot Noir’s popularity over the past few years, Pinot Noir’s growth against full bodied red wine varieties has stabilised. Reassuring to know that full bodied red wine varieties still account for close to 40% of our total red wine direct to consumer exports. The next fascinating trend to watch is the Rosé category, traditionally not a popular style for DTC export due to its relatively lower price (compared to cost of shipping). Back in 2006 we measured Rosé as being .40% of total exports. In 2018 Rosé now accounts for 3.1% of our total DTC exports.
Handy sales tip
For example: ‘Silver’ level purchase incentive could be: "Spend over $600 on wine and receive a $60 discount (i.e. equivalent to a 10%) on International Shipping”. For Australia that would reduce shipping to $38 per case.
It’s our firm belief that producers should hold 100% of the relationship - DIRECTLY with their customer, the end consumer. We see our role as a support partner, providing global distribution solutions to enable our producer customers to optimise their sales achievements within the Direct to International Consumer Channel.
This tactic combined with creative use of the volume discounts (that we provide you) could be applied concurrently with your own diverted discount (e.g. level one idea above) to provide your customers with further incentive to purchase multiple cases. Potentially turning a $60 shipping discount into $75 (on 2-3 cases) OR a whopping $85 dollars per case shipping discount (on 4+ cases).
Under our model, the fixed rates that we charge you are not published anywhere. Therefore you, as the seller of your wine, hold 100% discretion over the delivery price that you choose to present to your customers.
Please note: These examples would still impact your net wine margin, in the case above reducing it by 10%. Following this, or any other diverted discount approach does not change the value of delivery expenses that we will charge you.
We certainly do not advocate discounting, however if you normally apply discounts to incentify purchases we would encourage you to apply these against our freight prices. Consumers tend to see much more value in your wine than their shipping expenses. It is purely a psychological tool; however, it has proven over time to be very effective.
We have developed online tools to help you calculate and present these diverted discounts to your customer and simplify the process for you. An additional benefit of this practice is that your wine price positioning remains at target levels. Thereby enhancing quality perceptions and maintaining price parity within the wider retail environment.
Across the country numerous recipes are being utilised to optimise sales success. One very effective example is pre-setting one or two value levels, then applying any discretionary wine discount to our freight costs. 13
Shipping programme review Over July and August we have completed a comprehensive review of all shipping routes. In addition to expense reviews and contract negotiations with Air New Zealand we have also carefully considered consumer quality factors - in particular, time of transit and wine handling across our routes.
significant and ongoing shipping disruptions around Panama. Not only have the disruptions caused extensive delivery delays, but they have also called into question the handling of containers in this warm region. Whilst we have received assurances from shipping lines the only way for us to mitigate potential impacts is to utilise airfreight. In doing so we will reduce delivery times (now 3-5 weeks) but also unavoidably incur higher airfreight expenses.
One of the key review outcomes is that we are shifting our UK & EU service from Seafreight to Airfreight. Effective 1st November 2018 this decision is due to
Destination
8-bottle cases (std packaging)
12-bottle cases (std packaging)
15-bottle cases (std packaging)
United Kingdom
$ 200.00
$ 275.00
$ 275.00
Non-Mainland
$ 250.00
$ 325.00
$ 325.00
European Union
$ 250.00
$ 325.00
$ 325.00
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Direct to Hong Kong consumer exports have grown by 27.8% between 2016 & 2017 financial years. As a result of these increased volumes we’re pleased to be able to pass on lower fixed rates.
Destination
8-bottle cases (std packaging)
12-bottle cases (std packaging)
15-bottle cases (std packaging)
Hong Kong
$ 75.00
$ 95.00
$ 95.00
A note regarding Australia. During the long lead into recently introduced WET reform law, much rhetoric was made of Kiwi entitlement to the rebate scheme. Because of this it is more important than ever to ensure transparent import practices are followed with Australian Customs and Australian Tax office. Whilst we might be able to achieve further freight reductions the compliant processing and payment of WET & Australian GST does heavily influence our ability to decrease prices into this ever-popular destination. As we go to press we continue to work with the airlines on rates to Australia. Please be assured that we will pass on any gains achieved as we know the importance of competitive rates. Fixed rates to all of our other destinations remain unchanged.
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Spotlighting star winemakers Grant recently caught up with Tony Bish over a beer at his impressive new Urban Winery in Ahuriri Napier.
It’s very motivating to hear Tony’s passion for making great Chardonnay and doing things differently. Despite the seasonality exposure Hawke’s Bay experiences through the quieter winter months, Tony & Karryn have firmly established their visionary experience within the local winery landscape.
I just love getting out and about and meeting our amazing winemakers. Nothing beats it. So I thoroughly enjoyed a recent visit to The Urban Winery where I spent some time catching up with Tony.
If you’re in their neck of the woods be sure to visit their unique Urban Winery venue, try Tony’s wine and, if your time permits, their beer selection is also outstanding. Thanks for the hospitality Tony, and congratulations to you and Karryn!
Tony graciously shared his and his wife Karryn’s challenges and successes while establishing their Chardonnay specialist winery within the old “Rothmans” building, an iconic Art Deco building in Ahuriri, within the Port precinct of Napier.
For more on The Urban Winery visit www.tonybishwines.co.nz.
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In G rant’s words
There is no ‘glass ceiling’ It’s my firm belief that we, as an industry, haven’t yet even scratched the surface of the international direct to consumer channel. I love doing what I do because of this huge potential and because, with 27 years’ experience in the wine industry, I know firsthand how challenging it is to find avenues that will respect and champion wine labels based on their superior quality, rather than their super low price. I don’t blame the FMCG channels as they have a market to service. But I do bemoan the lack of respect and acknowledge that many New Zealand winemakers are exposed to whilst trying to get ahead in their relatively high risk and capital-intensive businesses. Often their efforts are not considered by the powerful buyers that are purely seeking to extract maximum return. There’s no longer any loyalty within re-sale. The extreme consolidation of power at the top end combined with high overheads (rent etc.) has pretty much killed most traditional wine retailers. To survive, retailers must jump from deal to deal forever chasing margin. I’m a realist though and believe that
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successful wine companies will need to have a controlled presence in most, if not all channels. For many, financial survival (i.e. profit achievement) can only be secured through the direct channel. Domestic DTC holds limited opportunities, our small population combined with narrowly defined demographics and relatively high volume of wine labels (for our country’s size) intensifies competition. Thanks to Tourism though, and now supported by the digital revolution, it really is straightforward to directly reach lovers of New Zealand wine around the world. Wineries that have made a strategic investment in time, resource and commitment towards identifying and developing their unique competitive advantage and defining ‘their story’ are well positioned to share their story with a receptive and thirsty audience. Witnessing the way many of our producer partners embrace the opportunities that the direct to international consumer sales channel can deliver is nothing short of inspiring. It is this potential and the benefits that flow once the potential is unlocked that is still a huge motivation for me every day. As a company we have some serious
initiatives still in the pipeline and very much look forward to partnering with our producers to establish international success standards.
and every single bottle, across the approx. 120,000 bottles that we are entrusted with, will complement the extensive quality efforts of our Producer Partners.
A final note on our new Thermo-Eco packaging
Myself and our small team feel particularly satisfied to have finally developed our solution to enable us to make a positive contribution to the industry’s sustainability goals. We’re not stopping here though, we’re committed to continue to identify and implement ways that we can further reduce our carbon impact.
I couldn’t sign off without also highlighting this milestone advancement. In my younger years, whilst working in various production roles, I was part of the initial foray into sustainability back in the early 1990s. For me the process has also been a valuable experience in unexpected ways as it has forced me to get closer to our warehouse and repacking function. As the volumes that we export on behalf of our Producer Partners grow the temptation is to speed things up in the pursuit of efficiency. Efficiency is certainly important, however so too is quality and accuracy and that’s been the big reminder for me. In implementing our new Thermo-Eco packaging we’re actually expecting to slow down our repacking function. In doing so though we will be seeking to find the optimum balance of efficiency and quality of care. In much the same manner as winemakers hand sort their fruit, our hand care of each
Our sincere thanks for the opportunity to partner with you. All the very best for the coming summer selling season!
Grant Rimmer Founder & Managing Director
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0800 946 649 | support@nzwinehome.co.nz | nzwinehome.co.nz