Tech Audit: A Virtual Winery’s I.T. ChallengesBy DAVID H. FREEDMAN
This is the second in an occasional series on how business owners are succeeding and struggling with their technology needs.
The business: Cannonball Wine (the name will be changing to Cannonball Winery), based in Healdsburg, Calif., is a five-person virtual winemaker. Rather than owning vineyards and processing facilities, the company contracts with various larger companies that provide grapes (mostly from Sonoma and Mendocino counties), as well as fermentation, aging, finishing, bottling and warehousing services, all to Cannonball’s specifications. Founded four years ago with financing from the partners and their families and friends, as well as a Small Business Administration loan, the company is now shipping 35,000 cases of its Cabernet Sauvignon and Merlot a year to wine stores and wholesalers.
The owners: Dennis Hill started the company with Greg Ahn, a wine-industry marketing executive, and Yoav Gilat, who heads up sales. Mr. Hill, who has some 35 years of winemaking experience, was the top winemaker atBlackstone Winery, a pioneer of the virtual winery business model in the early 1990s. Now the model is an increasingly popular one, said Mr. Hill, and many vineyards and processing facilities all over Northern California are reorienting themselves to servicing virtual wineries. “It’s a much smarter way to do it,” he said. “We can focus our time and capital on overseeing production, building a brand and selling — instead of on real estate and other expensive assets.”
Sources of expertise: The partners handle their information technology on their own, without help from consultants or other specialists. Mr. Ahn is sort of the tech guy, by default, and he’s knowledgeable about I.T., though not a pro.
What’s working: Cannonball relies on the online version of QuickBooks for accounting, and on the online service Expensify for tracking expenses — especially those related to the extensive travels of Mr. Gilat and the company’s salesperson but also for various small tools and other miscellaneous purchases Mr. Hill and his partners sometimes ring up on their charge cards.
But for managing the heart of the operation — the wine production, bottling and distribution — the company needs specialized applications. “There’s a lot to keep track of,” said Mr. Hill, “and if we had to do it with spreadsheets it would be laborious.” In order to control the winemaking process, as well as to be able to tell customers exactly what they’re buying and to comply with federal alcoholic-beverage record-keeping requirements, Cannonball has to track every aspect of the product from the harvesting of the different grapes to when a bottle of wine leaves the warehouse for a customer. That gets pretty tricky, considering that a bottle of wine is actually a blend of different batches of wines that might each come from different types of grapes that have spent different amounts of time aging in different types of oak barrels — with the process stretching out over four or so years.
Fortunately, the companies that provide the various contract services have all set up Web-based tools that Mr. Hill and his partners can log into directly. “We tie into five or six different systems,” said Mr. Hill. “I can find out exactly what’s happening with each vintage and appellation at every step. I know which tanks or barrels each wine is in, what chemical analysis is coming back from the labs, and what aeration or other treatment the wine is getting or might need.”
What the company has figured out: With partners and employees scattered across small offices and frequently on the road, the company has made a point of adopting online-based applications for easy collaboration. “We haven’t even looked at PC-based options,” said Mr. Hill. Much of the work is done on Google Apps, including e-mail, documents, calendars, chat and video conferences.
Mr. Hill is sensitive to the fact that a virtual winery risks sacrificing some of the control that traditional winemakers can exercise by being on-site. He says he makes up for it by paying close attention to every detail he can wring out of the online systems and by staying in close touch with managers at the different facilities every step of the way — by e-mail, by phone, and with frequent visits. “I like to meet with them personally to make sure they understand everything I’m looking for, to discuss timing with them, and to do my own sampling,” he said. “It’s really about developing good relationships with the people there, and giving them the support they need.”
What’s still causing pain: The applications for tracking wine that’s aging in barrels don’t always provide enough detail to make it easy for Mr. Hill to locate a particular barrel of wine. That can be a big problem when wine is moved, as is routine. The barrels are bar-coded and labeled, so it’s not as if anything is going to be lost or mixed up, but hunting down barrels for a sampling can take up a chunk of a day if there’s confusion. To cut down on the searching, Mr. Hill tries to work with the facilities to minimize the movement of wines and barrels. “I wish I could have all the information about barrels right at my fingertips,” he said, “but I don’t want to create a lot of cost by having to continually update that data.”
Also calling out for more attention are the company’s Web site and social-media efforts. The Web site, for example, doesn’t provide a list of retailers that carry Cannonball wines, which means that Mr. Hill and Co. spend a lot of time responding to consumer e-mails asking where they can buy. “We’d love to get that list up,” said Mr. Hill, “but it’s a lot of data to put in, and it would need constant updating.” He says he expects they will bite the bullet and do it soon, though.
Meanwhile, the company has several hundred fans on Facebook and a few hundred followers on Twitter, but both Mr. Hill and Mr. Gilat feel they need to do a better job of posting frequently and building the fan base. “We’re reacting instead of being proactive,” said Mr. Gilat. “We get e-mail all the time from people who want to buy our wine and visit our winery, and at some point we may want to sell directly to consumers. We need to stay in contact with these people.” Mr. Gilat has been letting fans and followers know of local wine tastings that Cannonball occasionally sponsors, but he wants to do a lot more of it.
Does anyone have suggestions for Cannonball?