Wine marketer Geerlings & Wade has had little to cheer about in recent years. To reduce expenses, Geerlings & Wade has been cutting circulation and reducing spending on customer acquisition, which in turn has hurt sales. The Canton, MA-based company’s sales, which peaked at $36.9 million in 1999, plummeted 28% last year, to $26.6 million for 2002. At the same time, its annual net loss widened from $4.6 million in 2001 to $6 million in 2002; its last profitable year was 1998.
But the company is now reaping the fruits of a newer labor: its two-year-old party club, the Traveling Vineyard. In fact, the marketer anticipates 20% annual sales growth from the new subsidiary, according to Traveling Vineyard president Rick Libby. The Traveling Vineyard currently averages about $80,000 in sales each month.
Geerlings & Wade started the wine-tasting party division in November 2001 under the name Taste D’Vine. The unit was renamed the Traveling Vineyard this past June. It operates similar to Tupperware’s customer network, but instead of throwing parties to sell the latest in plastic food storage, the Traveling Vineyard’s trained wine consultants hold wine-testing events.
The consultant pays for the wine sample set used at the party. Guests attending a party, which is typically held in a private home, sample the wines and can place orders for the wines tasted. After the event, the Traveling Vineyard pays the consultant $70 to help cover costs, Libby says. In addition, depending on the success of the party, consultants receive a commission of about 20% on wine sales generated during or as a result of the party.
The host of the party receives a gift (currently a decanter, with a retail value of $39.95) and a discount on their personal wine purchases, again depending on the success of the party. Party hosts also qualify for a discount off the price of the $250 starter kit should they choose to become wine consultants. Currently the Traveling Vineyard has 175 consultants in the program.
The Traveling Vineyard is not playing up its affiliation with Geerlings & Wade. “We want to keep it a separate brand as much as possible,” Libby says. But the Geerlings & Wade catalogs are helping to advertise the fledgling business: “We’re putting advertisements in the Geerlings & Wade catalog to entice people to host a wine-tasting party in their home or to become an independent wine consultant for the Traveling Vineyard.”
According to Libby, plans are under way to begin mailing a Traveling Vineyard catalog as early as next year. Though the division’s database has just 4,000 names, the plan is to catalogs to attendees shortly after they go to a party.
The wine-tasting program’s success could mean that consumers who had shunned the Tupperware-style sales model may be ready to party once again — if the product is right. In fact, Tony Cox, president of Richardson, TX-based Catalog Solutions, a consultancy specializing in food catalogs, says that he’s recently received numerous inquiries about party planning.
For catalogers of merchandise that lends itself to parties, such as food, children’s apparel, and holiday gifts, the model makes sense; the events “will bring more new people into the mail order fold,” Cox says. And the commissions that a program such as the Traveling Vineyard pays to its consultants are lower than the total marketing costs of a typical prospecting campaign, he adds.
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