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The Future of Wine Retailing and Why You Should Care

When is Amazon.com going to tilt the wine industry?  It might only be a matter of time. 

Some background:  Like most readers of Fermentation, I read Tom’s posts on the state of wine shipping in general and wine retail shipping in particular with a mixture of curiousness and fascination.  Tom, by virtue of his post as Executive Director of The Specialty Wine Retailer’s Association, has an opportunity to see with a level of depth and insight both the intriguing ongoing changes in wine shipping laws as well as the complete and utter confusion when lawmakers and subsequently regulators don’t seem to “get” the same things from the Granholm rulings that the rest of us have come to understand.

But, like a lot of my wine blogging brethren I’m sure, I’ve looked at a lot of this purely from the winery perspective—if the winery can ship to a consumer and that wasn’t possible before, that must be a good thing.  I kind of lumped Tom’s perspective in advocating for retailers into a separate mental category—something along the lines of “too bad for them, but my own interests are served so I don’t care too much.”

Shame on me.

Anybody with a blog, or that reads a blog, or that has ever bought wine online should care about the ability for retailers to ship wine just as wineries and here’s how I came to this conclusion and why you should care, too:

First, let me say that all of the conversation online about Winelibrary.tv and Cork’d, tasting note sites and online wine commerce pales in comparison to the opportunity that exists for an 800 lb gorilla to enter the market—the proverbial rising tide that raises all ships.  That gorilla or the rising tide is Amazon.com, and anybody with a blog is the ship, but I’ll get to that in a second.

Lenn at Lenndevours has a New York Cork Club wine club that he does in conjunction with a retailer—Lenn picks the wines and The Greene Grape Company does the logistics and the shipping.  It’s unfortunate that Lenn couldn’t secure his own wine retailing permit and run this enterprise himself.  He has cultivated a following, people trust his opinion related to New York wines and there’s nothing wrong with providing a good service to paying customers.  And, besides, this blogging thing is going to merge with commerce sooner rather than later, it just makes good sense.  You have a niche book seller for every genre and soon, perhaps, there will be the wine equivalent.  Gruner Veltliner aficionado’s rejoice. 

If you’ve poked around this site you’ll note that I have a super-charged Amazon.com store embedded in my site.  I use a little bit of programming help from a third-party, but Amazon.com also offers this same ability with an affiliate program called aStore.

So, imagine if Amazon.com got into the wine game—every wine blogger, easily and simply, would have the ability to create a wine shop, specify the wines they want to focus on based on available inventory from Amazon.com and tailor their offering to their audience—Perhaps I might focus on Midwest wines—those from Michigan, for example.  It’s no skin off my nose, I don’t have to own the inventory, and I just take a small commission for bringing the customer to Amazon.com. 

This is the easy entry way for Amazon.com—perhaps they overlay or acquire a wine retail company, don’t manage any inventory and just pass the order down the chain to a company or subsidiary that owns the logistics for a good number of states—there a lot of these guys out there, by the way—Geerlings and Wade comes to mind.

Or, perhaps, even more intriguing is the fact that Amazon.com, according to this recent New York Times article, is continuing to expand its “Fulfillment by Amazon” program—a program whereby:

(the) program is designed to allow independent sellers to use its network of distribution centers to store and ship their products, according to Jeffrey P. Bezos, Amazon’s founder and chief executive.

Since last fall, the program, Fulfillment by Amazon, has allowed independent sellers who list their goods on Amazon.com to use its network of more than 20 distribution centers around the world to fill orders. Now Amazon, which is based in Seattle, is opening the program to vendors who list their items elsewhere on the Web — on their own site, through Google, or even on Amazon’s e-commerce rival, eBay.

The program is part of a broader set of tools called Amazon Web Services, an effort by the e-commerce pioneer to rent out complicated parts of its infrastructure to smaller companies that might benefit from its hard-earned expertise, and who will pay for the privilege of lightening their workload.


Simply put, with distribution centers across the country and more likely to come in ongoing expansion, Amazon.com could, with some marginal effort, turn itself into one of the largest wine distributors in the country present in twenty states, selling through a band of online wine shops—you, me, the next guy with any fecundity.  Presuming I can be licensed as a wine retailer in my town, I could be in business with Amazon.com managing all of my logistics. 

This is truly the Longtail theory come to life.  Amazon.com could pick up inventory from any winery or importer and be in complete business, allowing me to craft an online sales presence around any niche in the wine industry in a heartbeat.

You could, too. 

So, why do you care about retailers being able to ship wine?  You care because Amazon.com (and others) have the infrastructure and wherewithal to turn the three-tier system upside down.  No longer will we be lamenting the availability of wines in our states, we’ll be busy buying wine that was previously unavailable and also, and more importantly trying to sell wine to a growing audience into an ever growing expansion of niches.  Next to wine porn is the only other thing I can think of with as large of an expansion of individual specificity and, well, we know how well porn does on the Internet.

The clock starts now.  I give Amazon.com less than two years before they jump into the fray and when they do the game immediately changes.  Because of this, I now care deeply about Tom and the Specialty Wine Retailers Association fighting the good fight allowing wine retailers the ability to sell and ship into as many states as possible.  You should, too. 


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Laws, Sausage and Wine Reviews

A local wine merchant (and one of the best, if not the best) in the Indianapolis area, Grapevine Cottage, sends out a weekly email with an article (a blog post if it were set-up as such a thing) written by owner Doug Pendleton.  In June I posted one of these articles on an Oregon winery, The Pines 1852.  Doug always writes good, insightful, transparent articles on the wine business and the below is another fine example of that.  Here, he takes us inside an Australian trade tasting attended by Jay Miller from The Wine Advocate and Josh Raynolds from Stephen Tanzer’s International Wine Cellar.  For additional reading on tasting and Jay Miller, check out Dr. Vino’s recent post here.  Thanks to Doug for letting me share his article:

Last week, I took advantage of one of those offers that you just can’t bring yourself to refuse.  The Australia wine importer, Southern Starz, invited me to a “new release and reviewer tasting” they were holding in Washington DC at the Australian Embassy.  They were bringing the winemakers and/or winery owners from all of their properties for the reviewers from Robert Parker’s Wine Advocate and Stephen Tanzer’s International Wine Cellar.  So, never having been in an Embassy before, and further tempted by dinner at the embassy after the tasting, I bought a plane ticket.

The tasting was set up in an art gallery adjacent to the embassy lobby with two small conference rooms on either side reserved for Jay Miller from Wine Advocate and Josh Raynolds from Steven Tanzer.  22 wineries were represented with almost 100 wines available for tasting.  The professional reviewers worked for 2 days and began tasting at 10 am and worked until 4 pm, while the invited retailers and distributors tasted through the wines in the gallery on the first day.

This was a great opportunity for me to put faces and stories together with the wines we sell.  It’s always amazing to me to discover how many of them are really very small businesses.  For example, Oliverhill owner/winemaker Stewart Miller, who produced the outstanding Jimmy’s Shiraz we just sold out of, only produces 3,000 cases a year.  From a dollar volume stand point, he’s smaller than we are!

It was also a chance for new finds….and a great find was the Casabel Winery in the McLaren Vale.  Spanish winemaker Susana Fernanez devotes herself to Australian expressions of Spanish varietals, producing small amounts of Tempranillo, Grenacha, Monastral and Syrah.  Her version of a GMS blend (Grenache, Syrah, Mourvedre in Aussie) may be one of the best I have ever tasted…. 12 of the 90 cases she produced of it are coming soon!

The real story here, however, was how the professional tastings (and the subsequent reviews that were assigned) happened.  With Josh and Jay in small conference rooms behind frosted glass, you could only catch a glimpse of what was going on thru the side lights or when the guard changed.  One of the Southern Starz owners would appear in our midst every 30 to 40 minutes and tap a winemaker on the shoulder.  The winemaker would gather his bottles and be ushered into the little conference room with a reviewer.

There, I was told, he would describe his wines and the production techniques, and then answer questions while the reviewer tasted and took notes.  He would then be ushered out, and I am sure that scores were assigned before the next supplicant arrived.  Returning to his table, other winemakers from nearby tables would question him on the reviewer’s reaction.  In Jay Miller’s case, none of these winemakers will know the scores that will drive their sales until the October issue of the Wine Advocate arrives.  I wonder how much sleep must be lost over noticing a random facial expression or an eye movement, here or there, when Jay tasted a wine.
 
On my part, palate fatigue began to set in!  By 1:00 pm, when I couldn’t tell the difference between three Shiraz tasted in a row, I opted to retire to the hotel for lunch.  Taste spit, taste spit… it all starts to blur together.  After lunch, I returned and finally worked my way through the assemblage.  Yet, in retrospect, I still don’t think that I could effectively describe most of what I tasted during the last hour, even with notes.

As a contrast, when Linda and I review a wine, we taste it when we first open it, then decant if necessary, take notes and leave it while we finish preparing dinner.  After dinner we may adjust our notes based on how well it paired with food. Overall, it’s a pleasant, reasonably leisurely process.  How Jay and Josh taste 100 wines, even over two days, while taking voluminous notes and assigning scores, is almost impossible for me to comprehend.  I have to think that to be judged on a swish and spit has to be excruciating for these winemakers.

And here is where the “making sausage” comes in to play…because many times it is still all about personal taste.  We use Wine Advocateto choose wines because their tastes tend to reflect mine and most of our customers.  Steven Tanzer’s publication tends to lean toward old world styles, in contrast to the Parker taster’s new world palates. And here is a great example of what can happen…the Marquis Philips 2005 S2 Cabernet has been our best selling over $20 Cabernet this year.  Earlier this year both Robert Parker’s and Stephen Tanzer’s publications reviewed, it and here is what they thought.

Marquis Philips S2 Cabernet Blend 2005 McLaren Vale, Australia $34

Jay Miller, Wine Advocate 94 Points
Marquis Philips’ luxury cuvées includes the 2005 S2, boasting an inky/blue/purple color in addition to a sumptuous, toasty bouquet of grilled meats, blackberries, crème de cassis, licorice, and subtle herbs. With superb purity, richness, body, intensity, and length, it should drink well through 2016.

Josh Raynolds, Steven Tanzer’s International Wine Cellar 87 Points

Ruby-red. Oak-dominated dark berry and kirsch aromas accented by dark chocolate and vanilla. Sweet blueberry and blackcurrant flavors show a liqueur-like aspect, with a strong vanillin oak quality gaining the upper hand on the back. Finishes slightly sticky and sweet, with toasty oak spice and roasted coffee lingering. I’d have guessed this to be a Shiraz, or maybe a dessert wine such as Banyuls.

Wine is the most reviewed product on earth.  Perhaps only the Broadway stage and fine restaurants are more dependent on reviews.  And there is a reason… there’s an ocean of wine out there and a finite amount of shelf space.  You have to have something to help you choose what to put on those shelves and I still believe the ratings provide that qualification.  Often I am forced to select direct import wines untasted and unseen, often hundreds of cases at a time.  I have used Wine Advocate and Wine Spectator reviews for making my selections over the last 7 years, and I’ve never yet bet on a clunker based on those standards.

My bottom line is still buying by the numbers ... yes, it’s messy, it applies the objective to the subjective, it quantifies art ... but it still works.  I really feel that it helps guarantee that my customers don’t get many bottles of mediocre wine. But you just may not want to think too hard about the process.


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’04 Cosentino “The Zin” Lodi Zinfandel

Ah, Cosentino wine.  Apropos to the movie “Hairspray” that is in theatres now—the high school humdrum, Tracy Turnblad, falling for and getting, in this case, the guy—Link Larkin.
Cosentino winery is similar to the high school archetypes to me.  You’ve seen Cosentino in your wine shop dozens of times.  It sits on the shelf benignly innocent.  It’s non-descript label blends into a blurry maze of labels; its khaki-ness not jumping out against the clarion call of more flashy labels while the price point leads you to pick up something intangibly more familiar, more famous, better known; something somehow better looking and sexy.

Perhaps, Cosentino is like members of the high school clique two notches below the cool kids in the high school caste system—they don’t wear exactly the right shoes, or have the latest clothes, they’re not invited to all of the parties; they’re not uncool, just not completely cool based on the fickleness of groupthink—a sensibility that ultimately belies their smart and sexy interior.

And so it is with Cosentino—a winery I’ve seen many, many times, but never had the notion, gumption or verve to pick-up and try, until now. 

Man, what a mistake because ultimately this is a completely cool, smart and sexy wine—enough so to make me mentally recast every girl I ever went to high school with into potential bombshell.

My review is here.

 


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Breaking News:  Millenial Research Study Indicates some think there is Snobbery in Wine

I’m envisioning a Saturday Night Live Weekend Update report here with something snarky as the punch line to the “new” research that indicates young consumers think there is snobbery in wine.  Maybe a quick pan to Seth Meyers and he says, “In other research, college students are alleged to drink too much at keg parties.”

On August 9th, I read an article from Beverageworld.com about research that VinExpo released on consumers aged 20 to 25 and their perceptions of wine.  I have to hand it to Beverageworld.com—better late than never.

For some reason, this “news” seemed like I had read it before, despite its publication on August 9th.

After racking my brain and doing some research on Google I found that, lo and behold, the same study was released in the same issue of Wine Business Insider that my company announced a capital investment—in April of this year.

Can a press release from April be propped up as news in August?  If so, call this Wine Business Insider article the “exclusive” of the century.  If only Lindsay Lohan news could be kept under wraps for several months while “People” magazine mines the information, getting a head start on “Us” and the rest of the scandal rags. 

Not only did Wine Business Insider get first access at the story, they got it all to themselves for a whopping four months. 

Speaking seriously, I’m not sure if a lazy editor is at work here and the press release surfaced from underneath a pile, or if VinExpo is guilty of sending the same press release out twice, four or five months apart; both are egregiously bad form.  And, on top of that, here’s the kicker—there’s no news here.  See the headline for this post—this Millenial research breaks exactly zero ground or new information.  In fact, Sonoma State University released essentially the same findings two years ago.

A couple of nuggets from the article: transport yourself to 1970 or 1950 for that matter and tell me where the groundbreaking information is:

• “Drinking wine is a part of the new identity that young people create for themselves.  Drinking wine is a ‘marker’ of adulthood
• The perception that good wine is expensive and confusion about how to select a wine with so many brands and varieties available continues to be a hindrance to many young people drinking wine more frequently
• There’s a lot of snobbery and pompousness around … An impression that it takes years of experience to learn

The Wine Business Insider article summarized the VinExpo four recommendations as:

• Make wine’s image younger
• Make it more accessible and less elitist
• Take the myth out of wine culture, but keep the magic
• Give more guidance in getting to know wine

I’m reminded that in a current Fast Company article that Al Gore’s resurgence in popular culture is based off of environmental research and a presentation he was giving in the first term of the Clinton presidential years.  Just now has it resonated, 12 or 13 years later.

Here’s the bone I have to pick with the wine industry:  none of this Millenial research stuff is a revelation.  Neither is it a revelation is how quickly wine folks react to the news to make changes to target an emerging market—which is slooooooowly, molasses in January slow.  In a business world that reacts in quarterly increments and an online world that deems this stuff old news inside of 72 hours,  maybe four months time isn’t so bad for the wine industry that reacts in yearly swaths of time and an International market that works slower than that.  Maybe this article is right on time with the pulse of the industry.  Regardless, hopefully the Internet is bringing to bear a greater sense of urgency, even if our research reports aren’t.

For more information on Millenials and wine, additional research below from Liz Thach from Sonoma State University—these findings are from 2005. Undoubtedly, there will be an updated research report in 2008 that confirms, yes, what we knew in 2005 is true, yet; still, not much has been done about it.  Beverageworld.com will update this story sometime in ‘09.

How to Market to Millenials

Sonoma State University Sonoma Insights

 


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Is it Time for a “Slow Wine” Organization to Take Root?

Earlier this spring I had a moment of exceedingly rare clarity and I wondered to myself if there was a Slow Wine USA organization, the vinous equivalent to the Slow Food movement.  Food and wine go together, right?  And, there’s a similar companion movement in the wine industry for small, hand-crafted artisan brands, many that are organic or sustainable in nature.

By way of background and context, the Slow Food Movement was started by Carolo Petrini in 1986 and recognition that:

The industrialization of food was standardizing taste and leading to the annihilation of thousands of food varieties and flavors.  He wanted to reach out to consumers and demonstrate to them that they have choices over fast food and supermarket homogenization.  Soon after, Petrini realized that in order to keep those alternative food choices alive, it was imperative to be an eco-gastronomic movement—one that is ecologically minded and concerned with sustainability and sees the connection between the plate and planet.  Today, the organization that Petrini and his colleagues founded is active in over 100 countries and has a worldwide membership of over 80,000.

When I had this thought, my first notion wasn’t to do a bunch of searches on Google; my first thought was to head to godaddy.com to see if a URL has been taken.  Lo and behold, the Slow Food movement in the states called Slow Food USA did not have a slowwineusa.org or slowwine.org equivalent.  Somebody registered slowwine.com in 2000, but hasn’t done anything with the web address.  So, I registered several addresses with a couple of variations, not knowing why or what value the $50 odd bucks would yield—and I still don’t know that value, by the way.

At the same time, I’m on the mailing list for the Wine Aficionado’s Group for Indianapolis organized through meetup.com (similar, large grassroots wine groups exist across the country on meetup.com) and it has doubled in size in the last seven months and now numbers 150 + people.  My impression is, however, that it’s light on knowledge in its membership base.  Perhaps light to the extent that ‘Drink the Pink’ means that White Zin and Rośe might be one and the same in the eyes of the members.  And, I look at another local Wine Enthusiast group in Indianapolis that seems to be seemingly shut off from new members and very clique-ish.  Likewise, The Taster’s Guild International has chapters all across the country, but is positioned towards the high-end of the wine lover spectrum, and even if that point is argued, it’s hard to argue with the notion that they are not positioned to capture the new breed of wine lovers i.e. people under 30.

As I reflect on the divisive issue of boutique wineries versus national brands, medals, notoriety, production volume, etc and the overall base of consumers that drink wine and I examine that against the food and wine experience and further juxtapose that against on and offline groups of wine enthusiasts, I’m wondering if a Slow Wine USA organization isn’t an idea whose time has come.

It makes perfect sense—create a national social group that focuses on smaller wines with chapters in cities across the country and move the entry-level focus away from swilling and education and the high-end focus away from cult wines, futures and other seemingly impenetrable topics and focus it on something everybody can enjoy and appreciate—food and wine as a match.

By developing a social entry point that engenders the same values as the Slow Food movement (back to the earth instead of haute cuisine), and translates it to wine, and creates a complementary focus on food and wine with the same intrinsic, crafted ethos, wouldn’t we be doing a favor for the industry by bringing wine lovers from all ends of the spectrum while focusing the conversation on wines that have a “small” sensibility and at the same time focusing on food and wine as a combination that enhances overall social intercourse?

Perhaps not surprisingly, the Robertson Wine Valley in South Africa has created the Robertson Slow Wine Festival going on now.  This appears to be only glancingly related to the Slow Food movement, but with similar principles:

From 9th -12th August 2007 time will go by exceptionally slowly in the beautiful Robertson Wine Valley when the inaugural Robertson Slow will take place.  19 wineries from Ashton, Bonnievalue, McGregor and Robertson will welcome visitors into their homes, to their dining tables and onto their farms to spend some time … slowly.

I still don’t know what I’ll do with the URL’s, if you have any ideas, let me know.  But, I do think that the wine industry and wine lovers would be well-served by having a social organization and a common bond engaged around food and wine with a strong undercurrent of philosophy like the Slow Food Movement espouses.  Snobs and wet behind the ear newbies could then co-mingle in relative peace around a shared understanding.

Have a thought?  Leave a comment, please.


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