Technology Your Winery Needs in 2021

Woman using software to monitor wine production tanks

In our 2020 State of the Wine Industry report, Ekos surveyed nearly 300 wineries about how they’re using technology to grow their businesses, what challenges they’re facing, and how they’re dealing with a changing business environment.

In this post, we’ll discuss some of the data we collected around technology adoption, what it means for the industry, and how your business can use these insights to address key pain points in 2021.

Tech Adoption Self-Grading

When asked how well they felt they have adopted available technology, industry professionals graded themselves at a B-. As you might expect, smaller wineries graded themselves slightly lower (a C), perhaps due to a perceived lack of resources to invest in technology. Winery owners reported a C+ in technology adoption, which was the lowest among the various personas we surveyed.

The most significant deviation in the data, however, was among wineries that use or don’t use inventory management software. Our data revealed that wineries not using inventory software graded themselves a C on average, and 31% of those wineries graded themselves a D or F. Even more interesting, the wineries that use inventory management software were 23% more likely to say they expect their sales to increase in the next year compared to those who don’t use inventory software.

Wineries were 23% more likely to expect increased sales in the next 12 months when using software to manage inventory and production

Current Challenges

When we asked wineries about the biggest challenges they’re currently facing, the top answers were:

  1. The impact of COVID-19 (66%)
  2. Increasing sales (53%)
  3. Planning for the future (47%)
  4. Reducing costs (35%)*

*Respondents could choose more than one answer, so these percentages add up to more than 100%.

In the end, what that really means is that wineries are concerned about profitability and growth. Each of the factors mentioned above has a direct impact on a winery’s profit margins. But if your business is looking to pull any one of these levers to boost your bottom line, you’ll need to have insight into current performance and your unique operational or financial challenges.

Strategic Initiatives

Respondents to our survey reported these strategic priorities over the next 12 to 18 months:

  1. Increasing sales and growing the business (67%)
  2. Increasing profitability (48%)
  3. Increasing efficiencies and reducing manual processes (35%)
  4. Gaining better visibility into the overall business (20%)
  5. Increasing production capacity (19%)
  6. Launching new products (19%)
  7. Improving internal communication (18%)
  8. Improving forecasting capabilities (16%)
  9. Adopting new technology (12%)*

*Respondents could choose more than one answer, so these percentages add up to more than 100%.

Again, the top four responses point to concerns about near-term profitability, which is top-of-mind for many owners and managers in the pandemic business environment. However, it’s interesting to note that so few professionals plan to adopt new technologies, which could help them achieve the goals they’re most focused on — including increasing sales and profitability, increasing efficiencies and reducing manual processes, and gaining better visibility into the business.

In the rest of this post, we’ll break down how technology solutions can help address many of the common challenges wineries face.

2021 Challenges & How Tech Can Help

Pain Point: Lack of Visibility Into Available Inventory

Let’s start with the basics. The more data and insights you can gather around your inventory, the better equipped you will be to make tweaks that lead to increased profitability.

The mess of systems, spreadsheets, and notebooks that many wineries use is not only incredibly inefficient but also difficult to glean insights from. If you’re using separate notebooks to track purchases, log production, and record DTC sales, what do you do with all that information once you write it down? Most likely, you spend a fortune on bookkeeping and accounting services to make sense of it, and pray at the end of every month that the books end up in line.

Inventory Management: How Tech Can Help

Just a reminder: the wineries that use inventory management software (or a comprehensive winery management software that includes inventory) were 23% more likely to say they expect their sales to increase in the next year. If that’s not enough to convince you that this is technology you need, consider the headache you’ll save yourself by streamlining all of your inventory management processes into one system.

With this technology, you can quickly and visually see where inventory is stored and make inventory tracking a standard process across departments by having every team member use the system for their specific role. Plus, if you take advantage of an accounting integration, you can save 15 to 20 hours per month on manual reconciliation.

Using software to manage inventory helps you allocate it to different channels appropriately. If you don’t know what you have available to sell, it’s hard to sell it. Tracking this information — along with the movement of bulk wine, destroyed inventory, and more — enables you to grow your bottom line by identifying opportunities for improvement.

Pain Point: Understanding Cash Flow

Many winery owners have difficulty understanding the flow of money in and out of the business. If you’re only trained to look at your profit and loss statement, you may be thinking, “If I made profit, where’s my cash?” When you’re dealing with multi-year inventory like most wineries do, cash is reflected on the balance sheet. But how can you ensure your balance sheet is accurate in the first place?

Cash Flow: How Tech Can Help

Decisions in every department affect cash flow. So, if all that disparate information isn’t synced into one system, you’ll either have to pay someone for hours of work to combine it or end up with bad financial data. You can bring stability and predictability to your cash flows with a core business management software that helps you track inventory, accounts receivable, and sales to gain real-time insight into every data point related to your purchasing and selling activity. In other words, you can spend less time tracking down the data and more time putting it to use.

Pain Point: Identifying Business Costs

Industry professionals and advisors talk a lot about driving sales, but understanding your costs can be just as important to improving profitability. At the end of the year, your CPA rounds up all the numbers and presents you with a costing breakdown, but many owners don’t understand how their accountants got to that number or what they as owners can do to affect it.

Costs: How Tech Can Help

With software that tracks all your purchasing and production activities, you gain immediate insight into the precise costs that go into each bottle of wine. When you also track your sales data in the same system, you can glean profitability metrics by vintage, varietal, sales channel, and more. And if you integrate with your accounting software, you can easily see your cost of goods sold and make adjustments to your purchases, production processes, or sales tactics as you see fit.

Pain Point: How to Reach Consumers in a Post-COVID World

If you want to expand your reach, match consumer demand, and pandemic-proof your business, a modern DTC platform is a non-negotiable. Wineries deserve a lot of credit for embracing ecommerce and digital wine club systems long before other segments of the alcohol industry. But is the system you’re using the best for your needs? And does it connect with the rest of your business (inventory and accounting, in particular) to help sync up vital financial data?

DTC: How Tech Can Help

The most important thing is to choose a core tech platform that will evolve as the business and market expand over time. But in addition to choosing a best-in-class system with flexible options for POS, ecommerce, and wine clubs, you want to ensure it can connect to your inventory management and accounting software so you can keep your packaged inventory, DTC sales, and related financials up to date.

The time savings and improvement in data accuracy that come with syncing your DTC sales with your business management and accounting platform are immense. With these software integrations, you can save your business as much as 30 to 40 hours per month on data reconciliation, not to mention the enhanced visibility into your business.

Download the Complete State of the Industry Report

The complete report includes additional technology adoption statistics about inventory management, accounting, POS, and ecommerce platforms, as well as guidance on:

  • The importance of inventory management and the benefits of a digital system  
  • Tips for choosing technology partners and questions to ask potential vendors  
  • A breakdown of direct-to-consumer (DTC) and ecommerce adoption  
  • Advice on reaching younger, more digital-savvy consumers 

Download the paper for free here.

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Written by Becca