Increasing the Profitability of Your Wines By The Glass Program

Nick Moezidis, Vice President, Sales & MarketingJayne Portnoy, Vice President Marketing & Brand Strategy

Napa Technology

Evolution of Wines By The Glass

Buy the Glass – market Value

Consumer expectations & Operational Pitfalls

Actionable Operations and Marketing Tactics.

Presentation Overview

Developed in Silicon Valley, Napa Technology is thedesigner and manufacturer of the WineStation®, aninnovative Intelligent Dispensing and Preservationsolution for the hospitality and entertainmentindustries.

First introduced in 2005, the WineStation® now poursnearly 3 million ounces of wine per month from itssystems serving restaurants, hotels, cruise ships,arenas, airports, wines bars, grocery stores andretailers worldwide.

This far reaching presence, coupled with acommitment to on going research, NapaTechnology can identify and provide insights onindustry trends and changes in consumer behaviorand consumption patterns.

Who is Napa Technology

Napa Technology National Partnerships

$27.8 billion 2011 total wine sales 43.8% account for on-premise sales 3% increase over 2010 Beverage Information Services the wine industry is

predicted to reach 317.3 million cases by the end of 2012.

U.S. wine consumption forecasted to surpasses France in 5yrs.

Wine By the Glass Menus avg 25 offerings High end varietals account for 10% of WBTG

offerings 86% of industry experts claim guests will choose a

high priced glass over bottle when available. WBTG pricing has risen by 15% in the last 3 yrs.

Value to your Venuethis year’s Napa Technology Wines By The Glass Survey unearthed a few facts and figures that you may find rather telling, for an industry that reported over 13 billion in on-premise sales, for which direction this trend is headed:

75% of respondents cited in increase in WBTG sales over last year

43% of respondents report increases between 11-25%.10% have experienced increases over 25%.

On average, wine sales account for nearly 70% of total beverage sales in fine dining venues.

The per glass price averages between $11-15 25% respondents reporting $26-30+ pricing.

15% of respondents added the half glass option to their menu within the last year

Consumer Expectations & Consumption Patterns

Our research revealed that 86% of respondents believe that their customers are far savvier about wine

up 11% from last year.

52% of respondents Report that their customers are able to identify a corked/spoiled wine.

sampling is no longer a standard for just bottle purchases 85% of respondents cite sampling occurring with wine by the glass selections.

Waste not –profits lost by the ounceThe daunting truth is that with this fragile commodity on the rise – Spoilage, theft and loss continue to gouge operators of Wine’s full profit potential.

According to Beverage Information Services, the largest loss in volume behind the bar is in the “call” spirit brands. However the largest margin is lost in the glass of wine.

Blended averages showcase an average loss of nearly10% in total beverage sales.

• Beverage Information Services has found wine sales tilt the scales in the 11-15% range.

Waste not – profits lost by the ounceLooking at both ends of the spectrum; a national casual chain restaurant like The Cheesecake Factory (PPA of $25), sells staggering volumes nearing 1000 glasses of wine a month, nearing levels similar to their fine dining peers, as Roy’s Hawaiian Fusion Cuisine (PPA $75) reports selling between 1,500-2000 glasses a month.

Independent operators report sales volumes ranging from 700-1,200 glasses a month.

So let’s take a look at what these losses look like to the bottom line:

An establishment that serves 780* glasses a month at an average of $11 per glass = $8580 in sales

Average Losses to Spoilage/Theft at a modest 10% = $858

Average Annual Loss = $10,300

*30 glasses a day x 26 days

1. Be in the knowAlthough you, or your beverage director or sommelier is making the selections for your wines by the glass list –it’s your service team that has to sell it. Free wine apps, websites and supplier/distributor training is readily available. Assure your team is a powerful tool in driving sales.

2. Does that varietal look good on you?Consumers today not only don’t like to guess when they are making purchases – they don’t have to. Sampling in both retail and restaurants has become the norm to support and encourage increased sales.

3. Make half a wholeConsumers are splurging on small doses and the advent of the half glass provides the freedom and encourages them to splurge on higher priced wines.Use half glass offerings as a means to compliment small plates/tapas, create wine flights

Operational changes that increase profits

4. Pristine = Profits; Put a cork in your sales lossesToday’s wine consumer more savvy on what to look for in a good glass of wine hence visible corks in bottles often raise questions of how long a bottle has been open Spoilage and waste are significant detriments to profitability.Optimize your profits by utilizing effective preservation techniques that enhance a bottle’s shelf life allow for eradication of waste on your most volatile, costly products behind the bar

5. Too Hot, Too Cold – Too BadWine served at the wrong temp not only tastes bad, it’s bad for sales. Over chilled white wines will over power any chef’s creation and ruin a meal.A too warm room cooks the red wine and ruins the experience and actually will fill your guest more quickly.

6. Operate on Auto(mated)Technology has provided so many advances in operations and it does translate to profits behind the bar. Today’s technology is replacing glass markers with automated controls.Use of automated dispensing systems not only provides sales management and product reporting but insights on consumer usage patterns as well.

Operational changes that increase profits

Ten immediate changes To Improve Profits1. Show Off

24% of wine consumers cite examining a wine list online before visiting a restaurant.

With mobile and smart phones readily available assure today’s consumer can find your current and accurate wine list on your website.

2. Use your Most Valuable Real Estate – Your Menu Cleverly weaving wine offerings into the food menu is

proven to increase overall wine sales by 10%. Descriptive wine notes and pairings are instrumental in

communicating both your selections as well as helping the guest best navigate their experience.

3. I’ll Take Half Please A growing and effective trend is to offer 2-3oz offerings to

the WBTG menu. When doing so, operators saw a 47% increase in total sales

Wine List USA

Ten immediate changes to Improve Profits4. When Less is more

Although wine lists have become broader and more expansive, assure that your wine list still provides well-known respected brands.

25% of respondents cited being intimidated by vast menu offerings when left to their own devices to make a selection.

5. Go big – Offer the Reserves Finer wine selections ($15+) have seen a dramatic rise in

the last 5 years. Appeal to the guests that are willing to splurge in small doses by allowing for 5% of your menu to be in a premium price range.

6. Don’t Forget the Bottle As wine lists become more intriguing, don’t cut off your

bottle to spite your glass, and provide a compelling number of selections under $50 a bottle.

Ten immediate changes to improve profits7. Honey, didn’t we buy that at the Wine Shop?

In a cyclical trend that encourages consumers to experience new wines at restaurants and seek them in retail, can also leave a bad taste in ones mouth. Be cautious of excessive up-charges on largely popular brands.

8. $ Signs = Less Sales According to Cornell’s Center for Hospitality Research,

dollar signs and un-rounded price points (ie $12.50 v 13) are off-putting to guests and leads to a decline in overall sales.

9. When More is Good Today, the average number of wines by the glass

selections is 23-29. And this isn’t just for fine dining. Consumers are looking for offerings with depth and diversity.

Ten immediate changes to improve profits10. Tell me, Sell Me

The number one most influential element in driving positive wines by the glass sales lies in the hands of your service staff.

28% of respondents cite choosing higher priced wines when a server made a selection.

Be cautious of overkill – like any salesman – the guest will only be receptive to 5 or fewer recommendations and/or Special Features.

Improve profits through staff education

Knowledge is power Utilize online, free wine apps and supplier/distributor supplied

materials to further educate your staff. Let your staff sample wine pairings & featured selections prior

to their shift so they are familiar with the varietals.

Keep Good Notes Suggesting wines is virtually impossible if your service staff

doesn’t know what the wines taste like. Prepare daily tasting notes for your staff. Utilize technology such as LCD screens found on Preservation

systems like the WineStation.

Vino University Assure your staff knows what an oxidized/corked glass of wine

tastes/smells like to avoid serving. Proper temps are key to the overall dining experience – make

sure your wines are held and served at proper temps.

Thank You

Please Join UsFor our Next Webinar:

Visit NapaTechnology.com for details

Effectively Creating A Try Before You Buy Program at Your Retail

or Grocery Store