Recession-Proofing The Cellar

The MacPhee's Story

In 2001, over a glass of Chianti at a bar in Rome, Tania MacPhee and husband Craig MacPhee decided to pursue a passion and a dream: to establish a wine storage business. Over the next eight years of economic boom times in Australia, they built a successful multi-faceted business that caters to all wine lovers' needs. Now they face the challenge of shepherding a quintessentially luxury business through the chill years of the world economic downturn.

The wine industry was familiar territory for Tania. Her grandparents had run wine bars in Smith Street, Collingwood and Brunswick Street, Fitzroy; her parents were the Victorian and Tasmanian agents for De Bortoli Wines for over 20 years. The factory was next to her family home in suburban Melbourne. The wine arrived each week in big barrels on the back of a semi-trailer. Tania says: "Every school holidays from the time I could lift a case, I was bottling wines, washing flagons and putting labels on."

Tania and Craig weren't business amateurs: she has a Bachelor of Business (Marketing) degree and a Diploma of Financial Planning; Craig has an Executive MBA and has worked in finance for 17 years. But that didn't stop the new-business butterflies. Tania says: "It was scary. We started without one case of wine in the cellarage." Now MacPhee's purpose-built, climate-controlled warehouse in South Melbourne stores hundreds of thousands of bottles of wine for private collectors, restaurants and corporations.

The couple started by spending eight months researching the industry. In particular, they spoke to wine enthusiasts to find out about their needs. One said: "I just want to be able to come down and look at my collection and play with it." The couple's research showed a variety of needs when it comes to wine-storage, which lead the MacPhees to develop three wine-storage products within the climate-controlled warehouse: managed cellarage, private cellars and private vaults.

In January 2003, MacPhee's became the exclusive agents in Australia for the global brand Eurocave, importing wine cabinets, cellar conditioners and wine racks. In 2004, MacPhee's began developing a market for custom-built cellars. Tania says: "Clients liked the romantic notion of having a cellar ... so Craig developed expertise in this area by attending Eurocave conferences in Europe and travelling all over Australia looking at cellars and advising customers."

The couple try to meet each customer's needs - even if the customer is unclear about what they really want. Tania remembers the day she heard Craig saying to a customer ‘You don't really need to spend $5,000 on a Eurocave wine cabinet. What you really need is to put your wine into our cellar because you live locally, it suits how you drink'. "I said to Craig ‘What are you doing?' He replied ‘It's the right thing to do.' And that has come back in spades for us."

In 2007 the couple opened a light-filled wine retail and accessories store in Coventry Street, South Melbourne. It is a treasure trove for wine enthusiasts, with everything from vintage corkscrews to exquisite glassware and wine art such as vintage posters printed in France in the 1800s.

The Challenge

How to recession-proof a luxury services business.

The Solution

The recession has forced the couple to reassess their marketing spending. Tania says: "Gone are the days when we'd simply allocate tens of thousands of dollars to the annual marketing budget. Now we analyse every single dollar we spend on marketing, from the sign downstairs to the art catalogue. We analyse the return and allocate funds accordingly. We don't just want to survive this recession; we want to thrive."

In December 2008 the MacPhees launched the fortnightly e-newsletter MacPhee's Newsletter, which is designed to improve sales and strengthen their client base. It is filled with wine tips, wine reviews, retail wine prices, specials, information about wine accessories and wine events. Tania says: "We like to educate and include the human element behind wine making." Sales figures are tracked in the fortnight afterwards. Tania says: "There are always instant sales within hours of the email going out."

In 2007 MacPhee's made a significant investment in a software system called Qdos that runs every aspect of the business, recording information about products, sales and customers. Tania says: "If we drill into a customer's profile, we can see what events they attended, which email campaigns they received, how they responded, which products they bought." The couple pay a monthly fee to Qdos software consultants to maintain the system. Tania says: "They're constantly improving it from our feedback. We want to be able to track every sale, find out where it came from and how people heard about MacPhee's."

For example, Tania asked her software consultants to compare two email campaigns. Why did one have a click-though rate of 17% of visitors to the page while another campaign achieved a click-through rate of 25%? It came down to the emails' subject headings: the first one simply said "MacPhee's Newsletter" whereas the more successful one had much more detail in the subject line ("Decanting, Barossa Festival, Barossa Shiraz"). It appeared that more people were willing to open the email if they were able to identify its contents.

Tania says that before MacPhee's installed the software system, the business wasn't running as efficiently as it could have; now it has the platform for great communication with its customers. "Now, if a customer rings and says ‘We bought a Eurocave four years ago and we want to buy one for our holiday house', our staff can look at the database and say ‘Yes, Mr Smith, I can see you bought the V100 model: what do you like about it, does it have enough capacity for you?'".

The software system backs up the attentive, personalised customer service, which is central to the business's success. Tania recalls Craig's approach to a customer who came in to buy a dozen bottles of wine. "Craig said ‘Look, you don't need to buy a whole dozen. Try these two different bottles first: open them with your wife, make sure you use a decent glass and come back and tell me which one you and your wife prefer before you buy a dozen'. So people come back because we look after them."

MacPhee's staff are trained to provide a high level of personal service. Sometimes the smallest touches can produce big dividends. For example, one customer was impressed by a handwritten ‘With compliments' note attached to his purchase. Tania says: "He was just over the moon and blown away that Daisy went to that extra trouble. He rang, bought a wine cabinet and sought a quote on a cellar as well. It's all those little things that sound tiny and are not expensive to do, but they make a difference. They make the customer think that you really care - because you do."

Tania's other tips to recession proof the business include looking after the staff. The couple recently gave staff member, Andrea, some artwork that she loved, to celebrate her fifth year with the business. They also take the staff out for dinner twice a year. One gastronomic trip was to the elite Melbourne restaurant Taxi, which had purchased 11 Eurocaves from MacPhee's. "We like to support the people who support us."

The business has thrived by establishing recurring income streams that keep flowing in without further investment of time or money. A good example of that is the wine cellarage business. Superb wine is an investment that must be carefully maintained and people pay $1.85 per case per month for one to fifty cases and $1.50 per case per month for 51 to 100 cases. A half case costs $1.15 per month. Tania tells of one client who said he only wanted to store ten cases of wine, but now has an enormous cellar. "He loves it and has become a very good customer."

The Result

Tania says that January and February were the two best months of sales for MacPhee's Eurocaves. Tania says "People are saying ‘We won't buy the new house, we'll buy a Eurocave'. It's another way to recession-proof."