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November 29 2006
At Good Grape, I spend a lot of time talking about things that I would like to see in the wine industry—occasionally on the winery side, but mostly from a consumer perspective.
I am, first and foremost, a wine enthusiast and a consumer.
One of the things that I would like to see from a consumer perspective is a greater abundance of boutique, artisan wines from small producers—that beautiful Pinot from a winery that does 1000 cases. The notion that a ½ dozen bottles show up at your local wine shop and if you don’t grab one now, you may never see it again.
Modern day distribution currently manages all wine at retail and restaurants. This limits the opportunity for our aforementioned 1000 case producer because a couple of good placements at restaurants will blow through that inventory before the restaurant even has time to reprint the wine list to feature it. This doesn’t even consider normal retail placement.
On the flip side, the above example assumes the best—sales. But, distributors don’t generally like to take in inventory on something unproven, tying up capital along the way that can quickly turn into dead inventory and lost revenue. And, distributors would also prefer it if there was something of a ready market for the wine—a couple of winery connections at a white table cloth restaurant or the like. This notion kicks off a chicken/egg conundrum that is very difficult to overcome—what comes first an account to sell to, or the wine to sell?
This is simplistic, but the net-net of the situation is, in most cases, small producers have been much challenged with not being able to secure distribution for their product in most major markets—Indianapolis included.
But, in ecommerce circles a significant splash has been made with a theory called “The Long Tail.” The Long Tail suggests that the future of commerce is in the economics of abundance. Therefore, the fact that labels, production and all measurable metrics in the wine industry is growing is a strength, not a weakness.
These growth metrics are a strength because just like Amazon.com with books, NetFlix with movies, and backlist music on iTunes, the Internet gives consumers/retailers/restaurateurs the power to find a niche item and buy it. For book lovers, gone are the days of scouring city bookstores looking for the lone copy of a book printed in 1986, ending in futility and frustration. Now, you just go online to Amazon.com and the book you are looking for along with 35 similar titles are all available for your immediate purchase. Dwindling quickly are the days when business was constructed on the premise that 80 percent of sales came from 20 percent of the product.
In a similar vein, wineries, should, finally, be able to deliver their wines, not only to consumers who want it, but also retailers and restaurateurs, as well. The Long Tail of wine is here. But, how will it be implemented?
Recently, I made a foray into the wine industry joining a smart bunch of folks at Inertia Beverage Group, a technology company that enables wineries to sell to and manage direct customer relationships via the use of our management and ecommerce solution.
My responsibility, along with a couple of colleagues, is to get our direct-to-trade initiative off the ground. Over the past two months or so we’ve been organizing and polishing the foundational elements that have been cultivated over the last year. At its essence, the direct-to-trade initiative picks up where the direct-to-consumer business leaves off and gives the winery the ability to sell direct to a retailer or a restaurateur using Inertia’s proprietary system and ecommerce capabilities.
It’s a cutting-edge, game-changing, paradigm-shifting, fundamentally different way of doing business. And, we think the growth opportunity will be significant—creating an entirely new category in the wine business.
The Long Tail in wine is the opportunity for small, boutique producers to have a sales channel that enables them to sell to a customer that is seeking that wine—a consumer, a retailer or a restaurateur.
Decanter.com ran a short piece on the initiative on November 28th. The link can be found here.
The official announcement/press release will occur later this week.
The upside to this program is you might think that this would be a threat to the three-tier distribution system, but, in fact, it’s a benefit. In many states Inertia is partnering with a distributor to aid in the administration of the program and the response from distributors has been strong because they see the value in allowing small brands access to the market so they can grow, without the risk of them having to take on inventory.
In our model, the winery fulfills all sales direct and we call this the “virtual inventory model.” The distributor participates, ecommerce facilitates the transaction, the winery gets a sale and sends the product.
It was an “a-ha” moment for me, too.
Eventually the winery might grow to the extent where they will need traditional distribution services and, oh, yeah, they would be in a position to have access to a distributor that has been a part of the ecosystem fostering a friendly introduction and, potentially, allowing those winery brands to take their sales to the next level with more “on the street” sales horsepower. We call this “brand incubation.” Wineries are developing and growing their brands.
It’s a win-win-win for everybody using some smarts, ingenuity, and good relationships with wineries and distributors while rethinking the process.
I’ll have one or two other posts on this because I truly think it’s relevant, but, for now, the readers of Good Grape are getting the 100,000 foot overview and a U.S. wine blog world exclusive on this endeavor.
I’m sure you’ll excuse me for a moment while I pour a glass in celebration of boutique wine, The Long Tail, good people and technology.
November 28 2006
Something interesting is happening in the world of wine, albeit quietly with a sure, measured pace.
Negociants like Cameron Hughes, Don Sebastiani & Sons and consumer boutique vignerons like Crushpad are all popularizing a portion of the wine industry that used to be a very quiet corner of the business—creating labels for bulk wine or a quasi-custom crush with high quality markers.
But, there’s a next level over the horizon, and I wonder who will seize the opportunity to marry the bulk wine market with the hardcore enthusiast.
The next level is for a negociant outfit to start aggressively blending and to translate that blending ability to consumer preference so a customer might dictate the percentages of varietals that go into a bottle.
Take for example, a whiskey company: Compass Box Whiskey Company. In their own words:
Compass Box is a specialist Scotch whisky company. We are devoted to making some of Scotland’s premier whiskies through the art of blending.
We work like fine wine negociants. We choose individual casks of whiskies from different distilleries that offer complementary sets of flavours. We carefully blend these casks in small batches to make our proprietary whiskies.
These guys buy barrels, mix up their own blend and then sell it—as ultra-premium whiskey. I’m not much of a whiskey drinker, but I love this idea.
On the wine side there’s Mayo Family Winery in Glen Ellen. They have created www.theblendingcellar.com. The premise is simple enough, a consumer gets to blend his own wines using wines they have aged in French oak for a year—choosing from a couple of Cabs, Merlots, a Cab Franc and a Malbec, you can tweak until you find the right mix for your palate.
An even better bet for this is their blending kit that lets you do this at home. For $100 bucks you get all six wines, instructions and some equipment and a customer can do their own blending trials in the comfort of their own home. Once the blend is set, you place your order and your custom wine shows up shortly thereafter.
I Love this!
I think the long-term application is consumer retail. Can you imagine going into a combo wine shop & blending room? The store is using the Enomatic for sampling of all kinds of wines and then has a dozen wines on tap that can be trialed and blended and then bottled on site. The store has its own proprietary blends, ala Compass Box, which it sells, but also has “recipes” for other blends, as well.
Wine, on site sampling and participatory activity—what could be better? Let the cash registers ring!
November 27 2006
… Jay McInerney should write a blog. His 800 to 1000 words a month in House & Garden, and chronicled in book form with the A Hedonist in the Cellar is as satisfying of an airplane read as you’re likely to find. At turns witty, insightful and smart, you’ll wish you could go drinking with him, if only to share a bottle and hear him wax philosophical about the coke he’s snorted, the bottles he’s drunk and the models that flitted away in a New York society life that plays like Shakespearean tragedy. Unfortunately, I think he’s just capitalistic and just narcisstic enough to not even give a blog a moments notice. Sure, he blogs already on the House & Garden web site, but that’s more a chronicle of what he eats in Gotham, and not what he drinks. House & Garden can be found here.
… I’ve not known what to make of QPR Wines—the newsletter that ranks, by month, a wine by varietal and the best QPR—the Quality-to-Price Ratio. To a certain degree it feeds into the notion that a wines value is determined solely by third-party rating and subsequent price. Though, I do have to admit that ratings play into a ‘Wisdom of Crowds’ mentality that can’t be denied in a Web 2.0 world. The one thing they could do, though, is tell you where to buy the darn stuff. If I’m going to be a value sensitive point’s whore, I should at least know how and where to buy the stuff.
… To solve the dilemma of where to buy wine within contextual placement of a wine reference is Triggit. They have one of the very few solutions that has the potential to be a legitimate business within the Wine 2.0 business paradigm. The Triggit ad window appears when a reader at QPR (hypothetically), or a blog, mouse over a link to a wine. The window displays the merchants who carry that wine and the price they sell it for. By being a non-intrusive way with value-add to help a reader find a wine, this is actually a really valuable service that works the way blog readers want to buy …
The Wineinsiders Podcast is the best wine-related podcasts that you are not listening to. With coverage of rare and allocated wines like Nickel & Nickel, Orin Swift, Silver Oak and Pahlmeyer, this is a podcast that takes you into an audio conversation that is like overhearing a conversation at the tasting room—professional and polished, this is good stuff …
… if you dig the renaissance in bohemian culture like I do, check out the cool D.I.Y you can do with wine bottles at the D.I.Y web site. A table? Candelabra? An incense burner? It’s all here.
… I really wish there was an out-of-print book publisher that traffic’ed in wine related books. I could buy a book onesy-twosy and it would print … none of this out of print stuff on Amazon and the associated premium price … three books that I’ve been looking for that are currently out of print include Waugh on Wine by Auberon Waugh, Understanding Burgundy by Matt Kramer and Red Wine with Fish by Joshua Wesson.
… I think any self-respecting wine lover that weighs in on the relative merit or goofiness of Biodynamic wines should read Rudolf Steiner’s writings … and then decided whether he’s a quack or not. Amazon.com carries a number of annotated books on his theories. Search for Rudolf Steiner …
… Stormhoek isn’t just the best winery related blog, it might be the one of the best wine blogs period. It’s mix of frequency, relevancy, and intimacy that makes for blog goodness.
… As much as I want to congratulate Wine Spectator for their October largesse in offering free access to their site for two weeks, they also, ironically, used that period of time to close a security gap in their site so big you could drive a truck through it. It used to be that the site was subscription only, but if you did a Google search for a headline, you could read the entire article, inside the password protected area for free. Coincidence that their free offer coincided with the closing of this security breach? Um, probably not. But, good business on their part to grab some new subscribers while they were fixing an obvious gaffe. For what it’s worth, I think their online content is worthy of consideration for subscription. It’s more immediate, more casual and more relevant than the boring trifle that is frequently their print magazine.
… did you know that the Japanese love the smell of banana’s? How else to explain the following:
The Hakone Kowakien Yunessun is bringing out a real sommelier to pour a dozen bottles of the Beaujolais Nouveau, produced by France’s Cordier, into its open-air wine spa every day.
We installed the wine spa last year, and did the Beaujolais Nouveau celebration. It was a great success, said Seiji Sanada, an official at Yunnesun. The aroma of Beaujolais is very pleasing, very nice. From the open-air spa, you can see the mountains, leaves turning color and hear the sound of a nearby ravine. It’s very pleasant, he said.
You can read the full article here.
My Dream … opening a winery … yes. My nightmare? Sharing this in a You Tube -style corporate sponsored Lincoln web site. The Content? Not bad. Form and function? Gagbarf.
November 26 2006
… Is it a little disingenuous for Trinity Oaks, a label of Trinchero, to position itself in its advertising as wines, “That were especially made to go with the foods you love.”
Aren’t all wines a natural complement to food, and at $4.95 to $7.95 can it be said that they might be preying on the wine naïve in the grocery aisle? This point is particularly salient when you consider that there is absolutely no supporting or substantiating detail on how or why the wines were made to go, “With the foods you love.”
Oh yeah, they never got the memo, either—the one that said that the low-carb craze was over in late 2004. They are still touting the carb counts in wines, a bad idea at the time and even worse two years later.
Time for a new advertising agency.
… Or, take a look at Beringer’s advertising … their current campaign with the tagline, “How to get Napa Valley” is an excellent mix of selling lifestyle and incorporating food and wine together.
… After reading numerous recent articles about the resurgence of Riesling and recently reading an article in Wine & Spirits Magazine about Lambrusco, is their an unspoken trend in the wine industry towards semi-dry wines?
We already know that virtually every winery not in California, Oregon or Washington has a semi-sweet wine that is undoubtedly a good seller …
It’s the elephant in the room, but I think that some residual sweetness in wines has an audience for folks that have a refined palate … but, frequently, the White Zin crowd gets lumped in with wines that have a touch of residual sugar.
… For anybody that wants to create their own subversive comics for their blog, check out: www.com-mix.org
… I like Jess Stonestreet Jackson, Kendall-Jackson wine, the 366th richest man in America according to Forbes tally in 2005, because he’s a self-made man and isn’t sitting on his thumbs (or his money). With a net worth of 2.2 billion according to the 2006 Forbes tally, he’s spent a reported $200 million in the last three years on thoroughbred horses and horse racing operations.
… You have to admire them for trying, but I’m not sure you can brand a high end appliance by using affinity marketing tactics as Viking is trying to do. A Mini Cooper – Yes! A Volkswagon Beetle –Yes! A Viking range … ah, I’m not seeking out other owners to share my passion for the range … as they are trying to do with their “The Viking Life.”
… Speaking of big brands, the Sub-Zero wine blog would be more effective if it played like a straight blog and was sponsored by Sub-Zero. Instead, it’s a Sub-Zero web site with wine celebrity content. The effectiveness is greatly reduced because of the overt corporate influence.
… The Wine Institute launched its first major export program last fall (‘05) and some of that effort is designed to attract Japanese tourists. California wine represents 90% of U.S. wine imports in Japan. Stag’s Leap Winery enjoys a good reputation in Japan and supposedly welcomes 2,500 Japanese tourists a year.
In Vegas they call the wealthy, high-roller gamblers, who are often International, “Whales.” Anybody think that they might have a kinder and gentler euphemistic name in California Wine Country?
November 23 2006
Over the last month or so, I’ve been spending a good amount of time checking out blogs—and blogs outside of the normal sphere of blog reading that I already do with wine, food and technology.
With the re-launch of Good Grape I’ve been trying to get a read on what other pockets of the blogosphere are doing with their sites.
And, frankly, I’m trying to get a bead on why wine writing isn’t toppling other forms of wine media like we’re seeing in other mainstream affinity areas. We have no Arianna Huffington. Certainly, wine blogging triumphs are happening on a smaller scale. Though, it’s almost as if we’re granted a seat at the adult table at Thanksgiving, and not barbarians at the gate toppling the Gestapo of traditional media (as we’ve seen in other verticals).
I’m seeing an interesting mix of evolution, overall. Blogging started out as a shorter form of writing; it was a sort of diary style mode of communication. Blogging is slowly, but surely morphing into longer form pieces—not reporting, but certainly more reasoned analysis. In a lot of instances, blog writing is better than mainstream pieces.
I’ve read a couple of football related blogs that break down the nuance’s of a Cover-2 defense in a match up between team A and team B that is not only insightful content, but likely information that couldn’t be produced in a newsroom and if it could it would never see the light of day.
An undeniable trend is the fact that people expect context with their information. Straight news reporting that gives just the facts is leaving people short—folks want to understand the situational or dynamic context to a situation.
The other undeniable fact is that people want opinion. When you take somebody’s opinion counter-balanced with analysis that provides context than you’re coming close to having a 360 degree perspective on an issue that allows you to render your own opinion. They say the definition of intelligence is being able to argue both sides of an issue.
Blogging is and has been moving away from a form of personal expression and more into a communication vehicle to help people learn and understand.
Unfortunately, I think the wine blogosphere can do a lot better in the “providing opinions” department.
I’ve been reading numerous established wine bloggers give an overview of their ethical wine compass over the last couple of months replete with full tasting methodologies and, predominantly, the notion that they don’t write about wines, media, or anything that they don’t like. Simply, those opinions go unexpressed; they are repressed into the “Dale Carnegie” school of politeness.
I find this curious. And, I’m willing to offer up my opinion and say that the benign amongst us would be better stewards for the wine blogosphere if a strong dose of opinion was offered up.
Undoubtedly, the wine industry is genteel, friendly and a bastion for folks that do right for others as much as they do for themselves, but that stance in wine writing will never topple the media elite in the industry and create a truly egalitarian approach to wine, breaking down the snobbery that everybody purports to be working against.
I was browsing Slate, the online NPR-like news magazine, the other day and they’ve figured out this quasi opinion-analysis-reporting angle. Their wine writer, Michael Steinberger, is writing primarily in this first-person style and proffering positions. Headlines, too, leave little doubt about the magazine’s support of his position.
In reference to the Oxford Companion to Wine the headline reads,
“The Most Useful Wine Book Ever”
In reference to Thanksgiving the headline reads,
“The Perfect Thanksgiving Wine”
A Book Review headline reads,
“The latest edition of The Joy of Cooking falls short”
Unequivocally, I know where Slate stands—just as I know what a movie critic thinks about a movie and just as I know where a columnist is coming from … and I’m reminded that Parker attained his position in the industry by indefatigably defending the correctness of his opinion, changing the industry as he went.
Generally speaking, the wine industry is years and years behind other industry in progressiveness, resisting and clinging to a bygone way of doing business. The wine blogosphere should be leading the way, pulling the industry kicking and screaming into a new day of kicking ass and taking names, complete with opinions, complete with calling a spade a spade. Media, influencers and alpha consumers lead the way. Who will join me in this call to arms?