Wednesday April 1, 2020
appreciating curve balls
Just when you think you’re on to something you get hit by a curve ball! The curve ball in this case, of course, is COVID-19.
I spend a lot of time at the end of every year digesting how we did as a business to help me navigate the coming year, and to hopefully make tweaks that will continue the growth. Last year was a tough year. There wasn’t much growth, and I was trying to discern what was causing that. Although I knew that tasting room traffic was slowing down, and has been for a couple of years, I wanted to get into the weeds to really assess.
Most of you know we not only grow grapes and make wine (our core business), but we also grow olives and walnuts. Olives we make into oil and sell mostly through the tasting room, and walnuts we wholesale to a processor. Growing walnuts in the Central Coast is a dying business, but we maintain the remaining 22 acres of trees because we think they’re beautiful, and every once in a while, we make a few bucks. I bring this up, because a big component of the flat revenue last year was due to less production (and therefore less revenue), from these crops, in addition to the slowing tasting room traffic. When I just looked at the wine business it became obvious that, although traffic was slowing, our club membership grew by about 30% last year. Now that made me feel good! We are driven to make artisanal wines and get them into the hands of consumers who love and appreciate the hard work that goes into making them. Membership is the core of our business.
So, I was feeling pretty confident with how kukkula was doing early in the year and feeling optimistic that club membership will continue to grow as it has for the last several years. Like most of you, around the first of February, I became somewhat concerned about this growing virus conversation and soon started noticing dwindling traffic in the neighborhood. When the doors closed on 15th of March, there may have been a few expletives uttered!
Two months into this, I have to say that the sky hasn’t fallen. There’s nothing like a crisis to make one think out of the box.
We immediately announced that until our tasting room re-opens, we will offer a 15% discount for all six-bottle purchases from our website. Club members receive their respective membership discounts on top of this. That has worked out wonderfully well. We are beyond appreciative of the support many of you have given us, and we’ve realized that being trapped in our homes inevitably translates to higher wine consumption. Maybe we’re on to something!
Beyond that, Paula and I have had great fun doing the dinner@kukkula series. Many of you followed us on these, prepared Paula’s recipes, and enjoyed my wine pairings. That was followed by a brunch@kukkula for Mother’s Day.
Hopefully we’re back to some sort of new normal soon, and we can see you all in person again. But we’ve certainly realized that adapting to this curve ball hasn’t been too difficult.
Paula and I are spending more time together. We’re working as hard as ever, but we watch more movies. We connect with the kids more often, with friends more often. We’ve learned how cool Zoom is (I’ll bet Zoom is appreciating how cool we think Zoom is!) and use it regularly. We wear clothes a little longer; I shave quite a bit less often; the air is cleaner; traffic is almost forgotten; people are nicer, more patient, more appreciative. I’m writing this newsletter in my home office enjoying the views of a post-rain partly cloudy sky with layers of green hills as far as my eyes can see. Far from purgatory!
While we’re on the subject of curve-balls, we are dealing with another curve ball, a Finnish curve ball.
A couple of months ago, Paula and I were about to embark on a trip to Finland to attend several kukkula exclusive wine events that we were really excited about. Of course, that got cancelled, but just before it did, I had a call from my distributor there who wanted to share with me that they had submitted my ’17 vaalea, ’14 Aatto, and ’14 sisu to a national wine competition, the biggest annual wine event in Finland. It’s called Vuoden Viini (Wine of the Year). I learned that Aatto and sisu had placed 1st and 2nd in the New World red wine over 18 Euros category, and although I was pleased to hear this, I didn’t feel it would really move the needle much.
Well, to my surprise, a few weeks later I received another call from my distributor and now Viini Vuoden was about to announce that Aatto won 1st place for all red wines worldwide, and two weeks later Aatto was going to be named the 2020 Wine of the Year in Finland. Pretty sweet!
As you can imagine, they ordered a lot of wine. Aatto is sold out.
I am really proud of my Finnish genes. I have always felt a strong pull to be connected with the people, the culture, the country. Since starting kukkula, I’ve dreamed about getting a strong following there, and for many years I’ve tried a bunch of angles with little success. Although I never entirely gave up, I’ve been really focused on building a direct to consumer business, which meant US sales. But it was always lurking in my thought process.
I believe hard work drives success, and the doors opening up in Finland in the last year is a manifestation of that hard work, strategically dripping on people over time till you hit the right combination. That said, I’ve been feeling this sense of divine intervention at work behind the scene.
In the last couple of years I’ve been fortunate to meet some pretty connected people from Finland. It started with having San Francisco’s then honorary Finnish Consul General, Michel Wendell, visit kukkula, followed shortly by a former Prime Minister, Esko Aho, whom Michel introduced to me, followed by a friend of Esko’s, Lauri Kivinen, which led to an introduction to a distributor in Finland, and coincidentally another distributor who had arranged a one-time pallet sale to Finland a few years earlier reconnecting with me the very day I was introduced to the first distributor. That all culminated in a distribution agreement with the latter distributor in December of 2018. I remember pondering this notion of divine intervention, that after all of these years of getting nowhere, suddenly I have two distributors independently talking to me on the same day.
I now have an excuse to make at least annual trips to Finland, and last June when we rolled out the wines there it seemed like there was a really palpable excitement about kukkula in Finland. It became pretty apparent, though, after the first several months that it would not be easy. Not because of lack of interest, but mainly because finished prices for our wines are quite expensive after all the math is done.
The corona virus has put some real worry into all of us. I was not thinking there would be a lot of expensive kukkula being consumed in Finland, at least until this crisis passed. The announcement of this great honor, to this Canadian born son of Finnish immigrants, at this precise period of time, seems suspiciously like a strong argument for divine intervention!
And it really makes me appreciate my family, my friends, our loyal fans, hard work, the beautiful views from our part of the world, and (of course) really good wine. I’m going to try to keep this all in perspective when the rat race begins again. Let’s all reflect on what’s good in this strange new world we’re experiencing and try to appreciate those curve balls.