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Field Notes from a Wine Life – The Globally Domestic Wine Situation

Odds and ends from a life lived through the prism of the wine glass …

Crossover Hybrids

When wine coolers were introduced in the 80s they broadened the appeal of the good grape at the same time that wine was undergoing a revolution of interest amongst Yuppie Baby Boomers, creating a more egalitarian perception for the nascent west coast wine business that was burdened at the time with inherited, stuffy, legacy east coast Euro-centric leanings.

Flash forward 25 years and wine in California has self-actualized and we’re living in a global wine village, fully in the throes of another sustained interest and growth cycle.  Yet, this time, instead of wine coolers, we’re seeing new and different attempts at broadening the appeal of wine.

I call these new wine beverages, “Hybrid crossovers” – like the half car, half SUV, half gas, half electric cars that are rapidly gaining popularity in the U.S.

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For the purists that can barely stand the thought of the new wine brands hitting the market with residual sugar, I’m firing a friendly observationally-based warning shot across the bow – when ChocoVine (a sort of cream liqueur meets wine sipper), is projected to sell 1M cases this year, now is a good time to buckle up for the changes that are coming.

Besides ChocoVine and its emerging competitors, we’re seeing Pomula Wine Spritz (available exclusively at the trend forward Cost Plus World Market chain of stores), Courvoisier with wine, Ritzling, a carbonated Riesling from New Zealand served with a lime (Like a Corona) and other permutations.

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My guess for the next wine hybrid crossover to get packaged and find a wine audience?  The Kalimotxo—the Spanish name for a half cola, half red wine concoction that is consumed around the world with different monikers.

If the thought of Baker’s Dozen Chardonnay gets your dander up, if the name, “Wine Cooler” is a pejorative in your vocabulary, hang on because you haven’t seen anything yet.

The Longtail: Not so Long?

A recent press release from Wine.com offered an innocuous statement from CEO Rich Bergsund who was quoted as saying, “We look forward to growing further by offering an increasingly compelling blend of selection, service, value and information that’s impossible to get in a store.”

The “selection” part didn’t get my attention – that’s throwaway wording.  More interesting was the, “… Service, value and information that’s impossible to get in a store.”

Three of Bergsund’s four stated criteria have little to do with sourcing small wines and everything to do with using ecommerce to improve upon the in-store wine shopping experience.  This is key because over the last five years the wine business has largely viewed online wine sales through the lens of the “Longtail,” a pop-economic philosophy that says that the Internet can be a boon for niche products like wine because it enables small quantities of niche products (read:  boutique wines that aren’t in distribution) to be sold in a manner that could never be duplicated by inventory at physical retail.

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The Longtail is/was to be a growth haven for small producers. 

However, what I’m gleaning from Wine.com, the #1 online wine retailer for seven years running, and what their annual top selling wines list bears out, is not an attempt (nor the results) of selling small boutique wines àla the Longtail to a thirsty audience who can’t find these small wines at their local shop, it’s selling readily available wines to an audience who may very well be intimidated by the wine aisle at retail or unsatisfied with notoriously poor wine retail merchandising.

This notion is reinforced when viewing Wine.com’s top-selling wines.  Their #1 selling wine of 2010 was the d’Arenberg Stump Jump Shiraz from Australia.  Chateau St. Michelle Chardonnay was at #5.  A Louis Martini Cabernet at #6.  These are all big brands in national distribution and readily available.

And, while I’m not intending to besmirch anybody, I’ve long held the belief that Conundrum and Silver Oak are luxury brands for people that are heavy in the pocketbook, but light on wine knowledge, the exact same consumer who could or would be intimidated in the wine aisle despite their purchasing power.  Sure enough, Conundrum is #16 and Silver Oak is #35 on the Wine.com top 100 sellers list.

And, if you look at Wine.com’s channel-based positioning and top-sellers contrasted against recently released VinQuest direct-to-consumer (DTC) wine sales research (all direct channels, not just online), it’s interesting to note that VinQuest indicates that the second fastest growing category in DTC sales, neck and neck with online wine sales, is event sales – at 37%.  These are in-person sales, consumer direct.

Hmm.

The data suggests that when direct-to-consumer wine sales are spread out across all wineries, DTC is still a micro-channel of business for most, if not all U.S. wineries, no panacea for the small vintner and nearly equaled in ‘10 growth by offline direct sales.

Looking at a separate piece of data, Silicon Valley Bank research indicates that less than 4% of the domestic wine business is using a customer relationship management (CRM) software tool.

The problem now facing small wineries is betting on the right trend using anecdotal information:  Is online consumer wine sales growth going to come from an online ecommerce provider that facilitates an easy shopping experience, at the expense of conventional wisdom that says that online wine sales are small, hard-to-find brands?  Or, does the proverbial rising tide raise all ships?

Life sure isn’t easy for the small winery, but if I were making decisions for a 10,000 case brand I would double-down on a CRM software tool, and start building my one-to-one marketing capabilities, from both a digital and an event perspective because it sure looks like consumers are sowing the seeds of a trend that is independence-oriented, self-service online wine shopping while seeking a personal winery touch at events. 

In the next “Field Notes” edition – FedEx makes it easy for consumers to pick-up their wine, the “Wine Wars” and more …

Wine & Cola photo credit: Jorge Negreros
Longtail photo credit:  Chris Anderson



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Posted in, Free Run: Field Notes From a Wine Life. Permalink | Comments (8) |


Comments

On 06/21, Bill Smart wrote:

Jeff - your last point about doubling down on a CRM tool for one-to-one relationship marketing is spot on.  This will (if it’s not already) the new norm for the wine industry.  The trend for consumers to expect one-on-one service from the businesses they interact with is not new - it’s just that it seems the wine industry is always a step slow to recognize trends and act on them. 

We have fully integrated a CRM solution for our winery and are developing loyalty programs and other intiatives that proactively look at buying behaviors.  If a winery is react mode for customer service, they are really behind the 8 ball.  If I have a group of 50 customers that would rather get a phone call than an email, I better make damn sure I recognize that and proactively engage them the way they expect.

On 02/13, dress shop wrote:

yes i think so that one to one marketing can help to reduce the chances of less sale of Wine in the country.

On 02/15, .(JavaScript must be enabled to view this email address) wrote:

I have no doubt this is highly input of you. I just agree that CMR software tool working well in administrative issue. bodycare Thanks!

On 02/17, .(JavaScript must be enabled to view this email address) wrote:

Aha Wine! It’s luxuries drinks indeed. I like it. Mom said something about that so many times. webdesign  She also love it amazingly.

On 03/12, bag supplier wrote:

ery is react mode for customer service, they are really behind the 8 ball.  If I have a group of 50 cu

On 04/09, best weed wrote:

This web site is interesting. Discussing about grape and wine is good. The explanation of the procedure to make wine is good and explanatory. Good work guys. Keep it up. I had to present a seminar about this topic and this site helped me a lot.

On 09/27, hookup wrote:

Sure enough, Conundrum is #16 and Silver Oak is #35 on the Wine.com top 100 sellers list.

On 10/18, computer games wrote:

the Spirits and Wine, certainly not interested, Its better to drink water and stay healthy instead of drinking alcohol and deteriorate you.


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