Good Grape Wine Company

April 22 2007

Wine Blog Navel Gazing and the State of the Wine Industry

The wine division of Silicon Valley Bank released their 2007 State of the Industry two weeks ago. 

You can find the full copy of the report here.  If you’re a wine nut, an insider, or both (or reading this post) it should be required reading.

Written by a gentleman named Rob McMillan, the founder of the division, the annual report, in my opinion, is the most lucid, and best written wine report of its kind.  It breaks down major trends in the industry in a manner that is accessible for the wine wonks amongst us (for example, it uses consistent relatable analogies from the movie ‘Rain Man’ and is refreshingly jargon free) and provides a guidepost to the strategic decision paths wineries should be capitalizing on.

Interestingly, the trends play towards our little slice of the online world—blogging and wine direct sales.  The wine blogosphere is and continues to be something of a test bed for winery direct consumer sales in addition to new and emerging concepts in the Web/Wine 2.0 world.

Essentially, the convergence of technology and the wine industry is only going to increase, not decrease.  Buckle up.  We’re already in something of the golden age for wine.  The next three, five and seven years should shake-up the entire industry. 

This excerpt from the report summarizes the excellent industry outlook:

With continuing brand proliferation, and easier access to information and international brands, more than ever before, fine wine is a recommendation-driven industry.  Blogs, podcasts, and the growing list of wine-focused social networks provide the ideal forum for viral wine marketing.  Think of every participant in an online community as a mini Robert Parker espousing an opinion on wine that will undoubtedly resonate with someone else, or at least be noted.  Emerging companies offering online reviews, user-driven wine communities, hyperlinks to online wine sales, or software that helps wineries better understand their consumers, are an attractive solution for the small direct-to-market winery trying to gain expertise.

To take advantage of this new and critical marketing approach, winery owners must find an e-commerce partner, and embrace rapid change and evolving marketing tactics.  In addition, they must be prepared to spend money to provide the same sort of support they might give their other marketing initiatives.  Direct-to-consumer is about customer service.  As a result, when these potential new customers travel from a wine blog to your winery Web site, they need to experience the same type of brand feel, message, service and support they would experience in your own tasting room. That will build the positive consumer experience needed for successful brand building of high-end wines.  And finally, as part of the direct-to-consumer solution, wineries needs to develop appropriate direct sales metrics, determine how to manage information, and staff for or outsource compliance activities.

This past week I was in a conversation with some import/export guys who were considering entering the wine industry.  Their question for me was, “With all of the guys that we see that are coming in and marketing wine on the internet, is there room for other people to do it successfully?”

My answer?  I pointed them to the SVB report online and told them the wine industry is on the cusp of a revolutionary change akin to the way we buy books vis a vis Barnes & Noble or Borders versus the Long Tail and Amazon.com from 1996 to today.  The winds of change are a blowin’ and it’s exciting to be a part of what will be considered in hindsight a revolutionary period of time in the wine industry.

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