Medlock Ames

Want to Increase the Profitability of Your DTC Program? Here's How.


It’s one of the most pressing concerns of the wine industry, here in the US.

Selling wine directly to consumers, that is.

Last week, we were glad to drill down on that topic by featuring a case study of Medlock Ames Winery in Sonoma, and how they’re using data to address that concern. Medlock Ames’ president, Julie Rothberg, described her attitude toward data analysis, why it makes sense for their business, and her main takeaways from an initial analysis of their sales and product history.

This week, we’re looking at the HOW.

Addie Nichols-Petsu is the analyst Rothberg engaged, when it was time to put Medlock Ames’ historical data to use for the future. I hope you’ll enjoy this Q&A with Addie, as she describes her background (Agribusiness major at Cal Poly), the analysis itself (30+ files, millions of lines of data), and her suggestions for wineries in general as they look to increase the profitability of their DTC programs.

Please describe a bit about your experience in working with data. Do you come from the wine world? If not, do you think your perspective is useful when working with wine data?

I’ve grown up in the wine world, in a sense. I was raised on the Central Coast of California and went to Cal Poly as an Agribusiness major, so I started becoming aware and learning about wine while in college. Post college, I worked for Nielsen (market research company) and was assigned to be an Account Executive for West Coast wine (and beer) clients. Since then, I’ve remained in the wine and spirits industry, working for two large wine and spirits companies in analytical capacities. Julie and I worked together at my last company, which was how she and I knew each other. 

There are actually a lot of similarities between big wine companies and smaller ones, given the increasingly competitive nature of the wine industry with the proliferation of SKUs and brands. Understanding sales patterns, looking for growth opportunities and determining customer unmet needs are objectives of both big and small wine companies. The difference may be that smaller companies may not necessarily think that they can tap into these insights as easily.

Obviously, understanding industry nuances probably helped in working with this data because it likely cut down on the time I used and alleviated a lot of the questions I may have had if I didn’t have the knowledge. That being said, I still had questions since a winery [like Medlock Ames] that is primarily DTC operates very differently than a large corporate entity whose sales are primarily through a distributor in a chain environment.

What can you tell us about the analysis itself?

Can I start by saying I had so much fun with this analysis? Maybe it takes a data geek like me to be handed 30+ Excel files with millions of lines of rows and a puzzle to put together.  

Julie and I had two key introductory conversations where we fleshed out the objectives she wanted to accomplish, while I asked questions and got a general background on the business. That is key with any analysis like this. I was tasked with several different objectives that needed to be accomplished. Julie and her team had a wealth of data that really hadn’t been tapped to the extent it could be. Which, by the way, happens everywhere (even in big companies). I was really excited to work with a client that recognized they maybe had the answers at their finger tips, and had theories, and were open to what could be found and what the truth was.

They had questions around their wine club and the demographics and value behind their wine club members. For example, top level questions around where Club Members were located (and club member average spend by state) led to our seeing the potential to focus on marketing efforts outside of California. I was also able to provide new insights around the frequency of visits and the length and loyalty of some of their club members.  

While working on this project, I learned that club members on average remain with a winery for two years. Medlock Ames has some club members that are incredibly loyal (and spend quite a bit on club shipments), and I recommended that they could grow some of their business by focusing on these members and providing them incremental opportunities for purchasing product.  

During this analysis, we gained an understanding of the value of each type of wine club membership, as well as their behaviors and sales performance. This was key, as the information could be used to help Medlock Ames determine where they could potentially narrow wine club offerings with minimal impact.  

I think that some of the most fun and exciting parts of the analysis were the “surprises,” meaning the unasked parts that just presented themselves by putting the data into a reportable format. What we learned was that the “non club” member sales were quite valuable and could be a key lever to drive future growth within the winery. 

I was also tasked with helping Medlock Ames build some new easy to use reports that updated their business sales in ways not previously looked at (on a monthly basis), as well as some new inventory reporting tools that helped understand run rates and sales by month. 

What have you learned through working with Medlock Ames that you think could be useful for wineries in general, as they look to increase profitability in their DTC programs?  

  • I think that it was a fun and eye-opening exercise for Medlock Ames to "slice and dice” the data behind their club members in new ways. Outsourcing some of their questions, theories and needs CAN prove to be beneficial in finding areas to be tapped further.

  • One theory was that there were club members who were potentially taking advantage of some of the club benefits. What we found was that these club members were a very small part of the universe, but they drove growth in sales at 3X the rate of other club members. They are likely “unofficial ambassadors.”  From a value perspective, it appears to be a beneficial relationship in this particular instance. I can’t say that this would be the case everywhere, as I’m sure it depends on the COGs, the frequencies and the sales generated.

  • It’s important for other wineries to know that the information that they collect from their sales, production, inventory, and club members CAN be used to further drive sales, understand their opportunities for new growth, and keep a fingertip on their current business trends. It doesn’t have to require new headcount resources to make it happen. It just requires a little bit of curiosity and support at the Executive and Management levels.

Using Data to Sell Wine DTC: The Case Study of Medlock Ames

Photo Credit: Ames Morison, California Wine Country

Photo Credit: Ames Morison, California Wine Country

“Facts also need curiosity.”

If you remember nothing else about this week’s post, please remember those words.

They were spoken by Julie Rothberg, President of Medlock Ames Winery in Healdsburg, who’s the subject of our Q&A this week. Last week we promised to highlight more real-world case studies of people in the wine industry who are using data in smart ways to move their businesses forward, and Julie’s first in line.

That she adds curiosity to the facts of data is a very big reason why.

Please enjoy this interview about a very prominent topic in our industry right now, particularly for smaller to midsize wineries: selling wine Direct To Consumer.

Medlock Ames is all in on this front, as 100% of their sales are DTC. We hope very much that their perspective will inform, and help, your own.

How did you come to appreciate the value of data analysis?

Ever since my days at Columbia Business School and later as a management consultant, the power of data became clear. You can see it everywhere in our lives [where] facts and figures are used to provide validity to a point being made. Data lends credibility to your argument and allows for greater persuasion even when your “gut instinct” tells you what is right.

It’s amazing how simple-but-powerful insights about sales patterns, customer behavior or profitability can be in terms of driving your strategic thinking. I’ve found that facts help win an argument or provide persuasion. It’s a very useful management tool, either to get superiors to approve of your plans because they are rooted in logic or to persuade your team who are acting on assumptions. It’s hard to say no to facts. 

Facts also feed curiosity. 

How did you know that you wanted to apply data analysis to the DTC program at Medlock Ames?

 When I first got to Medlock Ames, I had all sorts of questions about our business which is unique in that it is 100% DTC through our wine club and tasting room, our Bell Mountain Ranch property, and online. But there weren’t a lot of answers to be found and even less data being used. This is pretty typical with smaller wineries, as often data mining software solutions or deep analytics work can be costly or overwhelming. 

We had the data in our ecommerce and point of sale systems; it just wasn’t being analyzed. There was clearly so much potential to be unearthed. I wanted to take a fresh approach and use the past to help us decide how to move forward into the future. Proving to the team that some practices were harmful not only to our image but factually to our bottom line was a powerful first step in changing behaviors.

What steps did you take (are you taking) to identify patterns in your sales and product history?

The first step was to identify a partner who understands how to manipulate data in a way to derive meaningful insights. I had the perfect person in mind as I’ve worked with Addie Nichols-Petsu before. The next step was to source the data, so we pulled two years of our club member and sales history. Lastly, we talked through probing questions to provide guidance before we started digging in.

When I got to Medlock Ames, there were four levels of club membership with different customizations that translated into 14 different types of clubs to be managed. Club membership came with lots of perks including a range of discounting and unlimited visits to our tasting room.  The focus wasn’t as much on the delicious wines and the access to club-only wines that members were getting which really is a top benefit to being a club member. In looking at the various tiers, there wasn’t a clear understanding about the value of each of them, or the maintenance cost of each. 

In hospitality, we want customers to get the full immersive experience to really understand and soak up Medlock Ames. It’s critical that we are able to provide a warm, inclusive and educational experience to everyone we interact with. Yet no one knew how profitable each tier of membership was, for example, or what the value to customers might be for free shipping for those who live far away, compared to more frequent visits to our tasting room for those who live nearby. 

I also wanted to really understand our customer profiles. Who were our most valuable club members? Where did they live? How long were they in the club? What benefits were most important to them? And what did their behaviors mean to our business?

What are your main takeaways from this initial analysis for Medlock Ames?

  1. Customization of our offerings and experiences is critical. The average spend for our California customers is at least $65 less than our next five biggest states. However, we pull heavily from the Bay Area, and we now know these “locals” are more likely to come to visit us frequently, bring friends and buy more wine. For those who live farther away, we want to ensure we’re connecting with them on a different level. We are launching “Medlock Ames On the Road” as an outreach effort for greater connectivity with our customers in their homes and home markets.

  2. It’s not just about The Club. In the past year, a quarter of our sales were to non-club members and this group is driving declines whereas our club members are driving sales in the double digits. This points to us being so focused on bringing people into the club which is a success, but we need to recognize that not everyone will want to be part of a club. 

  3. Reward loyalty. While the industry standard is for club members to only stay in a club for about two years, we have a pretty healthy number who have been with us for five to ten years or more. There is the opportunity to do more to offer different wines or experiences to our most loyal club members to keep their experiences fresh, while continuing to offer them value as club members beyond the wines.

  4. Wine clubs are so much more than just the quarterly shipments and free tastings. We have many club members who get three bottles quarterly and, while they are the heaviest users of our tasting room, they also are more likely to bring friends to introduce to Medlock Ames and our wine club. They also are more likely to take advantage of our sporadic ecommerce offerings of library or special format wines, adding to their collections. We cherish these club members and love that they come to visit us often to engage with our team and enjoy the wines.