The Evaluation of Mid-Atlantic Wineries Websites: A Comparative Analysis

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The Evaluation of Mid-Atlantic Wineries

Websites: A Comparative Analysis

Gustavo Ferreira (Virginia Tech)

Paulo Ferreira (MAWAS)

Peter Caffarelli (Virginia Tech)

Presented at the

American Association of Wine Economists 7th Annual Conference

Stellenbosch, South Africa

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1. The Virginia Wine Industry

•The production of wine in

Virginia dates back to the early

17

th

_{century at the Jamestown}

Colony, and continued with the

efforts of Thomas Jefferson,

George Washington, and James

Madison to promote the

development of an American

wine industry.

• Most of the wineries are

located in the Northern Virginia

region, the Shenandoah Valley,

and the Monticello American

Viticulture Area (AVA).

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1. The Virginia Wine Industry

Wine Tourism:

• The Virginia government has made the promotion of state

wines and winery tourism one of its top agricultural and

tourism priorities (Johanson, 2012).

• There has been an increase in the number of visitors to

wineries - from one million tourists in 2005 to 1.6 million

tourists in 2010 (Rimerman, 2010).

• Wine Enthusiast has recently named Virginia one of the top

ten wine travel destinations for 2012.

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1. The Virginia Wine Industry

• Wine production in

Virginia has been

steadily growing,

particularly since the

mid-1990s.

• The number of Virginia

bonded wineries grew

from 129 in 2005 to 238

in 2013.

0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1 9 89 1 9 90 1 9 91 1 9 92 1 9 93 1 9 94 1 9 95 1 9 96 1 9 97 1 9 98 1 9 99 2 0 00 2 0 01 2 0 02 2 0 03 2 0 04 2 0 05 2 0 06 2 0 07 2 0 08 2 0 09 2 0 10 P roduct ion of B ul k W ine (G al lons ) Year

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1. The Virginia Wine Industry

Challenges faced by the industry:

• In 2006, a court ruling nullified Virginia’s self-distribution law

for in-state wineries.

• Only 35 percent of the wine volume produced in Virginia is

distributed through the three-tier distribution system

(Rimerman, 2010).

Winery Licensed distributors Retail Restaurants Three-tier system

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1. The Virginia Wine Industry

Challenges faced by the industry (cont.):

• Overall, Virginia wineries are predominantly small, and family

owned and operated businesses producing less than 10,000

cases.

• Wineries produce many different grapes and wines instead of

concentrating their limited resources on a specific product and

then develop expertise and a marketing image (MFK, 2007).

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1. The Virginia Wine Industry

Challenges faced by the industry:

• Small market share - Virginia wines sells account for less than 5

percent of wine sales within the state.

• Inconsistent quality and some bad reputation in the past.

• Grape production in Virginia is characterized by relatively high

production costs - high labor and materials costs for vineyard

spraying (Leahy, 2012).

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1. The Virginia Wine Industry

Segment

Average bottle price (750ml) Market share of table wines (2009) Value (<$3) $2.26 7.30% Domestic $2.26 7.30% Imported $2.95 0.00% Sub-premium ($3-$6.99) $5.55 31.90% Domestic $5.29 19.30% Imported $6.01 12.60% Premium ($7-$9.99) $8.79 24.50% Domestic $8.79 15.00% Imported $8.80 9.50% Super-premium ($10-$13.99) $13.21 24.90% Domestic $13.30 18.80% Imported $12.93 6.10% Ultra premium (>$14) $21.18 11.40% Domestic $20.39 8.90% Imported $24.52 2.50%

Total Table Wines $7.05 100.00%

Domestic $6.64 69.30% Imported $8.19 30.70%

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2. The Benefits of Winery Website Development

•The internet is arguably the most powerful and accessible information tool we have ever seen in our lifetime and it became a very important marketing medium.

• Wineries in the United States are facing a worldwide oversupply of wine mainly from large domestic wine makers (i.e. California) and emerging wine producing countries (i.e. Australia, South Africa, Chile, etc.).

• Small wineries find it increasingly difficult to influence distributors to market their products and to secure retail shelf space.

• Many of these wineries do not have the resources or the knowledge to implement comprehensive marketing strategies and consequently are markedly vulnerable.

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2. The Benefits of Winery Website Development

• Websites should be used as a marketing tool that enhances the

communication between a winery and its customers, and as an alternative distribution channel.

• Websites provide some basic information about a business that might otherwise cost considerable time and energy making available.

• A winery’s website is likely to be the very first contact that a potential customer may have with the winery.

• Because first impressions are critical in this industry, the winery should be sure to develop and maintain a site that is attractive, up-to-date, and easy to navigate.

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2. The Benefits of Winery Website Development

• Consumers will not return to websites that do not give them good

experiences, which may result in losses of direct wine sales or future visitors to the winery (Belanger et al., 2006; Nielsen, 2000; 2002).

• Many studies have identified the benefits associated with the adoption of Internet technology by wineries (Giraud-Héraud, Soler and Tanguy, 2001; Quinton and Harridge-March, 2006; Sellitto and Martin, 2003; Stricker, Mueller and Sumner, 2007).

• A total of 182 Virginia wineries were analyzed, and the quality of their website was measured based on four broad dimensions:

(1) General features of the website; (2) Wine tourism;

(3) Marketing; (4) Educational.

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2. Benefits of Websites Development for Wineries

1. General features of Web site

2. Wine tourism

3. Marketing tools

Perceptions from potential customers, distributors or

retailers

Visits to winery (Wine tourism)

Relationships with retail and distribution

channels Brand equity Increase indirect wine sales Increase in retail wine sales Increase in prices and customers’ loyalty 4. Educational

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2. Benefits of Websites Development for Wineries

2.1 General Features

While a well-designed site will give people a positive image of your business, a poorly designed website will project a negative image of your winery and give people the impression that your business is likewise disorganized or poorly managed (Mainville, Sterrett, and Mundy, 2009). ).

2.2 Wine Tourism

A positive perception from the website can encourage the first or repeated visits to the winery.

According to Getz, Carlsen and Anderson (1999) wineries should use their websites to transmit information about the wine tourism services offered by them, as well as about specific touristic attractions and events organized in the region.

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2. Benefits of Websites Development for Wineries

2.3 Marketing

Wineries, in particular the smallest ones, should use websites as a marketing tool to overcome limitations at the distribution channels and to expand both direct and retail sales.

The winery website can also be used as promotional platform in a cost

effective manner in the sense that, online promotional efforts cost less than printing services and promotion in television, press or radio whilst having a greater effect.

2.4 Educational

Literature shows that customer education has the potential to retain visitors and expand a winery’s customer base (Hall, 1996).

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2. Benefits of Websites Development for Wineries

An URL that is clear and easy to remember Updated website

Contact information (email, phone, social networks, address….) Legible fonts

Table 1. List of Recommended Website Features for Virginia wineries

Testimonials & feedback from customers

Direct marketing

Educational

History and/or stories about the winery

Information and/or links to local tourism-related business Gift shop and / or souvenir items

Information on wine production facilities

Links to web sites of wine and/or grape industry associations Maps and / or driving directions towards the winery

Opening hours of the winery

Wider regional information (e.g. attractions, activities) Links to wine-related web sites

General Features of the Websites

Wine tourism

Calendar of events

Profile of the winemaker(s) provide

Information on grape growing, grape varieties, wine making, etc. Food recipes pairing with the wines offered

Tips on wine drinking, tasting, health-related issues…. List of available wines with description and prices On-line store

Photo gallery about the products and/or the winery Awards given to wines

Newspaper articles FAQ

E-mail newsletter sign-up On-line wine club Social networks Pictures

Images or animations with added value Tasting room

Winery or wineyard tour Food items offered

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3. Methodology and Results

The 182 websites were individually reviewed and

rated by three different researchers, and the

Cohen’s Kappa was computed as an inter-reliability

test among raters (0.91 value).

Using a dichotomous scale, the researchers coded 1

if a particular feature was present in the website

and 0 if the feature is not included in the website or

it simply failed to meet a minimum standard and

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3. Methodology and Results

After computing the score for all wineries, the

mean “completion rate” for the entire state was

calculated.

Table 2. Percentage Share of Features Present on Virginia Wineries Websites

Percentage Share (%) 90

54 43 52

Source: Authors' own calculations

n = 182 Wineries Website Dimensions

Wine Tourism Direct Marketing

Educational

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3. Methodology and Results

Table 3. General Features of Virginia Wineries' Websites

Website Feature

Proportion of Virginia Wineries with this

feature (N=182) An URL that is clear and easy to remember 94%

Updated web site 79%

Contact information (email, phone, social networks, address….) 97%

Legible fonts 93%

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3. Methodology and Results

Table 4. Wine Tourism Features of Virginia Wineries' Websites

Website Feature

feature (N=182) 95% 67% 81% 45% 33% 78% 19% 29% 80% 82% 44% 29% 25% 40% Calendar of events Pictures

Images or animations with added value Tasting room

Winery or wineyard tour Food items offered

Source: Authors' own analysis of Virginia wineries' web sites.

Information and/or links to local tourism-related business Gift shop and / or souvenir items

Information on wine production facilities

Links to web sites of wine and/or grape industry associations Maps and / or driving directions towards the winery

Opening hours of the winery

Wider regional information (e.g. attractions, activities) Links to wine-related web sites

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3. Methodology and Results

Table 5. Marketing Features of Virginia Wineries' Websites

Website Feature

feature (N=182) 7% 52% 35% 69% 90% 51% 69% 28% 22% 10%

FAQ

E-mail newsletter sign-up On-line wine club

Social networks

List of available wines with description and prices Photo gallery about the products and/or the winery Awards given to wines

Newspaper articles

Testimonials & feedback from customers On-line store

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3. Methodology and Results

Table 6. Educational Features of Virginia Wineries' Websites

Website Feature

Proportion of Virginia

Wineries with this

feature (N=182)

85%

50%

68%

38%

18%

History and/or stories about the winery

Profile of the winemaker(s) provide

Information on grape growing, grape, varierity, wine making, etc.

Food recipes pairing with the wines offered

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3. Methodology and Results

• Null Hypothesis: There are no significant

differences between winery groups’(inside

and outside the two clusters) mean scores of

each website features dimensions.

• Alternate Hypothesis: There are significant

differences between winery groups’ (inside

and outside the two clusters) mean scores of

each website features dimensions.

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3. Methodology and Results

Educational Outside Inside 0.529 0.524 0.271 0.271 56 126 126 Marketing Outside Inside 0.414 0.442 0.186 0.192 56 126 56 126 Wine Tourism Outside Inside 0.565 0.535 0.240 0.205 56 Outside Inside 0.933 0.92 0.131 0.148 General Features

Table 7. Summary Statistics of the Four Website Features Dimensions for Groups of Wineries Inside and Outside the Clusters.

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3. Methodology and Results

DF SS MS F-value P-value 1 0.010 0.010 0.510 0.477 180 3.686 0.021 DF SS MS F-value P-value 1 0.036 0.036 0.760 0.383 180 8.401 0.047 III. Marketing DF SS MS F-value P-value 1 0.321 0.032 0.890 0.348 180 6.543 0.036 IV. Educational DF SS MS F-value P-value 1 0.001 0.001 0.010 0.913 180 13.222 0.073

Bartlett's Test for Equal Variances

Table 8. One-way ANOVA for the Four Website Features Dimensions. I. General Features Source Between groups Within groups Within groups Chi-square = 1.203 P-value = 0.273

II. Wine Tourism

Source Between groups

Within groups

Chi-square = 1.850 P-value = 0.3834

Chi-square = 0.001 P-value =0.993 Bartlett's Test for Equal Variances

Chi-square = 0.068 P-value = 0.794

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4. Mid-Atlantic Analysis (Virginia, North Carolina,

and Maryland)

Number of Wineries Analyzed: 110 182 48

Evaluation of Wineries Web Sites North Carolina Industry Average

Virginia Industry Average

Maryland Industry Average

General Features of Web Site 89% 92% 90%

Clear and easy to remember URL 93% 94% 92%

Updated web site 71% 80% 75%

Contact (email, phone, social networks, address….) 100% 98% 98%

Readable fonts 93% 96% 96%

Wine Tourism 59% 55% 55%

Pictures 93% 96% 88%

Images or animations with added value 66% 70% 58%

Tasting room 87% 83% 83%

Winery or wineyard tour 73% 45% 35%

Food items 28% 34% 21%

Calendar of events 72% 78% 77%

Gift shop and / or souvenir items 35% 20% 25%

Information on wine production facilities 68% 30% 77% Maps and / or driving directions towards the winery 96% 85% 88%

Opening hours of the winery 91% 86% 83%

Wider regional information (e.g. attractions, activities) 43% 45% 38%

Links to wine-related web sites 30% 31% 21%

Links to web sites of wine and/or grape industry associations 14% 25% 29% Information and/or links to local tourism-related business 28% 41% 44%

Direct Marketing 47% 44% 46%

FAQ 8% 7% 6%

E-mail newsletter sign-up 44% 53% 44%

On-line wine club 42% 37% 44%

Social networks 63% 70% 71%

List of available wines (with description and prices) 92% 90% 88%

On-line store 50% 53% 52%

Photo gallery about the products and/or the winery 72% 70% 54%

Awards given to wines 52% 29% 65%

Newspaper articles 34% 23% 31%

Testimonials by customers of the winery 17% 10% 2%

Educational 59% 53% 49%

History and/or stories about the winery 79% 86% 83%

Profile of the winemaker(s) provide 31% 51% 44%

Knowledge on grape growing, varierity, wine making, … 71% 70% 60% Recipes on food pairing with the winery's wine 65% 40% 52% Tips on wine drinking, tasting, health-related issues…. 50% 18% 4%