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July 29 2009
If I were a small producer, say fewer than 5,000 cases, running my business via sales from the tasting room, wine club shipments, online commerce and spot distribution in a few states, I would use this time to build a beachhead in new markets.
All things considered, instead of frittering on Twitter, I’d work on retail accounts in new places.
By the numbers, the top 30 wine companies in the industry represent over 90 percent of the U.S. wine market by volume, according Wine Business Monthly. According to Wines and Vines Magazine there are over 6,200 wineries in the U.S. These two facts combined very plainly explain the sales problem gripping the wine industry: there are too many wineries fighting for a very small percentage of the domestic wine market.
Because traditional distribution seems closed off to new brands with uncertain velocity turns, is there more reason why the Inertia Beverage Group Direct-to-Trade program makes good sense?
Direct-to-Trade remains a very misunderstood solution for the industry. Were it understood, what Inertia has done and is planning to do would not create derision, but instead applause.
This is okay, of course, because it gives the savvy wine marketer time to work by the cover of other people’s confusion.
In the bad breath blowback that got personal amongst anonymous sources in the New Vine Logistics (NVL) meltdown and acquisition of assets by Inertia Beverage Group (IBG), a very important point has been missed – this combination of technology and logistics infrastructure can be very good for the wine industry.
And, admittedly, I missed the bigger picture on this one. In previous commentary about IBG and NVL I missed wide right in my field goal attempt at postulating their acquisition motives.
The net summary is I suggested that IBG’s interest in NVL was potentially a direct correlation to NVL’s compliance software and nascent relationship with Amazon.com. While that may still hold true, I missed a larger strategic component. The completed acquisition now points to a vertically integrated solution for the wine industry that combines direct-to-consumer and direct-to-trade software and shipping logistics. Compliance? Yeah, they can do that to.
This is a very good thing.
I recently had the chance to meet Ted Jansen, CEO for Inertia, and catch-up with former colleague Mitch Schwartz, VP of Sales, and I received some additional clarifying answers to questions by email.
I found Jansen to be a thoughtful, amiable (albeit reserved) businessman with a sharp intellect. It’s important to note the tangential aspect of my interaction because I believe it plays to a deeper core of some of the issues that have bubbled up around the handling of the NVL saga by IBG.
Coming from outside of the wine industry and having navigated the perilous waters of the incredibly competitive travel business, Jansen strikes me as very similar to many other leading executives in other industries – he’s strategic, has a vision, and views business as a competitive sport; a Texas Hold’Em game whereby you don’t place sequentially larger bets against the flop unless you know that the cards your holding can win the pot.
Texas Hold’Em is a game of strategy. Unfortunately, while good business, this flies counter to the very parochial, collegial and transparent aspects of much of the wine business.
By way of background, I should reiterate that I am a former employee of Inertia and worked with and for Mitch Schwartz. I remain cordial with several people at the organization (including Mitch); but, I have no particular affinity for the business outside that of curious observer for the piece of business that I directly impacted – the Direct-to-Trade program.
According to Schwartz, the Inertia Direct-to-Trade program will be available in 20 states by Mid-2010, up from the current 12. This access to market will address over 85% of the wine consuming marketplace.
Effectively, what the Direct-to-Trade program affords is a small winery to get access to new markets – again, currently 12, growing to 20 states. Using the Direct-to-Trade system as a technology enabler, a winery can now directly reach out to restaurants and retailers and have that trade account purchase wine legally via Winerevolution.com.
With the assets from the New Vine acquisition, that order can be fulfilled directly from Inertia (or a company of the winery’s choosing) in California, or a winery could stage wine at a regional hub with an Inertia partner, either a distributor who can pick, pack and deliver or another partner like Copper Peak, who has a wine quality warehouse and partnership with MaterialLogic based in St. Louis.
What remains unclear is the distributor “virtual book” program referenced in several media outlets. While the program itself is clear – distributors can sell wines they don’t have to stock in inventory, what is unclear is whether Inertia will make the move to customize a personalized version of Winerevolution.com for a specific distributor in a specific geography.
If that’s the case, watch out.
While it has been a long-time coming, the acquisition of the New Vine assets crystallizes significant potential for the Direct-to-Trade program – potential that can act as a complement to the traditional three-tier system, giving access to market to wineries who were previously shut out, creating an end-to-end solution for a channel of business that desperately needs it.
My bet is that any existing hardship people have will resolve itself as the organization goes through a rebranding exercise this fall. With a fresh coat of paint, 12 months from now, I suspect that Inertia and New Vine will be faded memories and the new entity will be providing significant value to wineries, and ultimately end consumers.
July 29 2009
After a recent trip out to Sonoma and Napa I was struck by how much of an afterthought enjoying the physical beauty of the surroundings seems to be for most visitors.
It’s not an indictment because I’m guilty of building the same manic itineraries that call for packing in as much as possible using four wheels fueled by petro. I do, however, think that it’s circumstantial fact that most people don’t think to take the slow and easy off road by building in a nature adventure in between sips of wine. It’s a shame, too. Somewhere in between the tour buses and the wineries exists unbelievably beautiful terrain—views that rival any vantage point in the world.
Yet, as Hwy 12 and 29 slow to a meander with traffic, most of the natural beauty remains untouched (to the feet of visitors at least). Not that some companies don’t try, though. Companies like California Wine Hikes, Sonoma Vineyard Walks, and Napa Valley Bike tours all try to earn a share of visitor’s dollars by providing a unique experience, part wine and part nature – replenishing the soul in two good ways that a church can’t offer.
Next time I’m out in wine country I’m going to make it a point to do a biking tour, covering a decent stretch of ground across varied terrain, the kind of ride that makes you grab for the water bottle and an energy bar while looking forward to enjoying the vista with a nibble and glass of vino.
To get the wine, you have to go through the energy bar.
And, little did I know that California has not one, but two energy bar luminaries making wine in their midst.
Many around the online wine scene are familiar with Clif Family Winery. I’ve been a hardcore consumer of Clif energy bars (my choice for breakfast on the go) for years and I’ve read founder Gary Erickson’s inspirational business book, Raising the Bar, as well. Suffice to say, I’m predisposed to liking the wines. And, true to form, while not overly complex, and perhaps priced a couple dollars higher than they need to be, both of their entry wines, the Climber Red and the Climber White pack a good amount of enjoyment in for not a lot of money ($17 and $14 respectively).
Clif is the energy bar story splashing onto the wine scene that many are familiar with. Apparently, however, one of the scientists behind the development of the PowerBar is quietly making some good juice out in the Sierra Foothills, as well.
Chaim Gur-Arieh, Ph.D. is the owner and winemaker at C.G. Di Arie, a winery located about an hour due east of Sacramento in the Sierra Foothills. Amongst his stated accomplishments, in a long career as a food scientist, is development of the PowerBar.
Who knew? I do know he makes a killer Rosé. Fortunately, many of his wines are well distributed even if his production is modest. Just 375 cases of the Rosé were produced.
It has been said that as a society not only is technology causing us general attention deficits as we toggle back and forth balancing out information overload, but we also have a nature deficit. It seems to me that a glass of wine after a commune with nature is the perfect way to refill the spirit, if not the stomach, even after an energy bar.
July 27 2009
The new book Au Revoir to All That: Food, Wine, and the End of France by Michael Steinberger delivers on what fans of his writing have come to expect; it’s an immersive, well-reported, well-written book that zips and crackles with a smartness that doesn’t talk down to the reader, but rather assumes they are an equally educated and empathetic soul to the lesson that follows.
The book is a “State of French Cuisine” continuing education course for life-long learners.
Oddly enough, while an inveterate learner (with a very French last name – Lefevere), I don’t consider myself much of an “Old World” guy. Save for the occasional Chateauneuf-du-Pape or other Rhone-style red from the South of France, I rarely drink French wine, have never visited the country and don’t consider myself overly sympathetic to the premise of the book and the decline of the French as worldwide standard bearers for epicureans. I bought the book mostly to read Steinberger in long form. Despite this, the book still delivered for me.
This cultural treatise, acting as something of a melancholy paean, will not disappoint Francophiles, either; the foie gras eating, Bordeaux loving cultural arbiters who number in the millions around the globe, upholders of all that is glorious about the French food and wine tradition, have artfully been served notice that standards, benchmarked against traditions, are declining quickly. And, as Steinberger points out, it’s that very rigidity in tradition that acts noose-like for the future of French food.
Only glancingly referencing wine (one chapter), a fact that belies readers of most of Steinberger’s other professional work, this book acts like a survey of various elements that, taken together, present a multi-faceted case on the peril the French face as the first name in gastronomy.
Steinberger looks at a short history of French cuisine, with fascinating trivia on Georges Auguste Escoffier, the socio-political environment in France over the last 25 years, rife with bureaucracy, the rise in culinary prowess of the Spaniards, the development of Chefs as global brands, the Michelin Guides and their end-all, be all star system, large and small scale production of Camembert cheese, the rise of McDonald’s, and the uncanny ability for the Japanese to co-opt culture and make it better, amongst other topics.
Each of the chapters makes up a satisfying and self-contained slice of diversion. And, that encapsulates one of the two small quibbles I have with the book. Each chapter reads like a long-form article and there is no unifying device to tie it all together and provide a satisfactory finish to the proverbial meal.
While Steinberger does a nice job of not veering too far off in any one direction, the book could have used a central pivot point; an expediter that makes sure the back of the house is in communion with the front of the house. Yes, in lesser hands, the book could have easily developed one of the factoids presented—the fact that “by 2007, (McDonald’s) had more than a thousand restaurants in France and was the country’s largest private-sector employer” while also becoming its second-most-profitable market. He artfully doesn’t make this another “Fast Food Nation” even if the chapter title is regrettably borrowed. Nor does Steinberger cast the Michelin Guides and their star system as the total bad guy.
However, unfortunately, a book of this type should steer the viewer in a direction of opinion more forcefully, as opposed to the slight nudge he gave with each chapter.
One aspect left unexplored is the impact that culinary schools (those worth their salt) have on teaching THE French cooking foundation to legions of students every year who then go all over the world upon graduation. Viewed through that lens with other chapters to support and complement, the book would have been a satisfying whole, particularly because of the treatment he gives to Spain and Japan as rising culinary super powers.
Ultimately, however, perhaps Steinberger’s point is more subtle with purpose – an avowed Francophile taking a laissez-faire attitude. With the French government ultimately getting in their own way through excessive bureaucracy, the future of France’s gastronomical reputation is ultimately in their own hands and Steinberger is merely there to point out the individual tide pools of change.
This is a good read and highly recommended.
July 24 2009
By personality, my daily joy doesn’t manifest itself in the kind of palpable sense of joie di vivre that I wish it did.
Blame it on one third German heritage, one third weariness from the grind and one third self-flagellation that comes from the achivement-oriented perfectionist gene.
That said, there are things that give me joy on a consistent basis—my friends and family (my wife and dog, the fact that I have more than three people I could call to bail me out of jail at 3am, my parents, and especially my nieces), Notre Dame football, music, wine, writing about wine and sense of perpetual optimism and confidence in myself: what’s around the curve is going to be better than what just passed.
One of the things that I enjoy about wine is the fact that I have a calling card, I have a shared bond with people from around the world. I can go to innumerable countries around the world and have a lingua franca, shared common ground.
The guy in the video dances around the world, a sort of goofy white man dance. That’s his calling card. This video also gives me a small bit of joy today.
July 23 2009
With a bountifully open mind seasoned with a dash of irony and intrigue, I opened the emailed titled, “CASTING CALL FOR REALITY SERIES ON WINE.”
It was a just a shade over six months ago that I wrote about the potential wine reality series, The Winemakers, now almost four and ½ years in the making, and pondered whether or not it would ever make it to broadcast.
In doing so, I took a brow beating; literally a raised voice diatribe filled with anger, from the producer of the show, Kevin Whelan, based on what I wrote in my post. Jesus-H. Upon re-reading, it’s pretty benign. I’m actually still mad at the way this guy treated me. You can read the original post here.
In a prologue to my post I mused whether blogging about the show would help or hinder the opportunity to be on the show for its second season, filming this year.
Well, either by coincidence or a Machiavellian attempt at ipso facto comeuppance, I received an email from a couple of folks from the production company producing The Winemakers letting me know that casting calls are going on now with a very aggressive timeline.
Crushpad in San Francisco is the scene for an open casting call on Monday, July 27th and there will be an additional casting call in New York, as well. Alternatively, potential contestants can also upload a two minute video to YouTube as an audition. Be prepared to jump, though. Final casting decisions will be made quickly (August 7th according to a press release dated July 15th) and filming starts in the Central Coast on August 15th and will be followed by a four week stretch of filming in France in October.
Ah, to be fancifully single and impetuous enough to leave a job to be on a television show for no money.
Unfortunately, I won’t be auditioning, not that it’s not tempting, though. I left my reality television aspirations behind as a sophomore in college when I made a failed bid to earn a spot on The Real World, San Francisco. Apparently my Midwestern fish-out-of-water archetype wasn’t compelling enough. Or, perhaps it was the cheesy picture I sent in—wearing an ill-fitting gray wool/polyester blend suit, lounging on a hotel bed. The photo taken after a sorority dance; heavy eye lids and rosy cheeks hinting at the amount of Skol Vodka Tonics I had consumed.
I will, however, dutifully watch the first season of the show, and probably even blog about it weekly. Mercifully, it is finally airing in September on a PBS station near you. Finally.
Beringer, Gallo and others have stepped up to the plate as sponsors. It was dollars no doubt that caused the very lengthy delay in the show coming to air, so kudos to two California wine titans for helping lend a sponsorship hand.
And, I already have a show favorite – Eryn Supple, a contestant from Santa Cruz who commented on my initial blog post and can be seen throwing the bird in her Twitter avatar picture (@softnsupple). A grocery buyer in real life, methinks she might be the one to seize the opportunity and give good drama-inducing TV. At the least, with her first ever Tweet stating, “Wondering if it is physically possible to have more balls then a good handful of men (I) know?” I do not doubt her.