As reported by the Wall Street Journal and Reuters, Amazon.com will begin to sell wine in a just few weeks here in the U.S. The announcement came from The Napa Valley Vintners association and not directly from Amazon. Also reported was that New Vine Logisitics will be Amazon’s shipping partner when they go live.

Rumors have been circulating for some time that Amazon would enter the market but most observers thought they would concentrate on high volume brands. But the Amazon head wine buyer was on the floor checking out wines at the recent Family Winemakers of California and I have spoken with several smaller wineries who have been in discussions with them.

As I posted back in March, I think his is the most signifiant development in wine distribution since the repeal of Prohibition in 1933. And Amazon’s actions in the past 6 months have validated my hypothesis that medium to small wineries are their target. Their decision to work with regional wine associations is a good one from an industry relations, recruitment and PR point of view. I don’t think it was an accident the announcement came from the Napa Valley Vintners and think we’ll see announcements from other winery associations before Amazon formally launches their wine business later this month or in early October.

This is a great development for both wineries looking for online distribution and for consumers looking for small production, artisan wines. I expect the shipping fees to be reasonable like Amazon does for all their other products but their Prime service will be a must for serious wine lovers. For $79 a year, you get free shipping on all purchases with second day delivery. No word on if that speed will be honored for wine but if it’s just free ground shipping for wine, that will be huge for sales. With increasing fuel costs, shipping is becoming a real problem for wineries as it adds significantly to their customer price. If this is a non-issue, then wineries stand to benefit greatly from what Amazon if offering.

This is not good news for other online wine retailers who do not have the deep pockets to cover the significant shipping costs or the economies of scale that Amazon has. But I still think there will be a place for niche e-tailers like domaine547 and wine marketing sites like woot and The Wine Spies.

I think this is the biggest wine story of the year and will be blogging about what this means for wine marketing over at my company blog.

Cheers to Amazon and welcome to the wine business.

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The new iPhone 3G rolled out this morning all across the U.S. completing it’s worldwide launch that started yesterday in New Zealand. Much has been written online about the new device but one of the biggest changes since last year’s first edition is the ability for 3rd party applications to run on the phone. And better yet, the millions of iPhones and iPod Touch models sold over the past year can also be upgraded to take advantage of these new appications.

In looking over the iTunes App Store this morning, I noted a few wine related applications in the more than 500 now available. I think this will be a hot area, even in something as niche as wine, based upon the ease of development and the millions of units sold worldwide. I would expect to see some applications targeted at the wine trade (winemaking and vineyard data collection, for example) as well as at consumers. The first couple applications seem targeted at non-wine savvy consumers which is what I expected. I should also note that I have only installed and tried one of the applications below at the time of writing but I think I got a good idea of the functionality from the pictures and descriptions.

The first application I noticed is called Wine Log, not to be confused with the eponymous Wine 2.0 site, which is a simple wine note taker. Although this might be handy for consumers wishing to keep track of wines they taste on the go, there is little here for the more advanced wine lover. But at just $2.99, this app seems to deliver decent value for those with modest needs. I also can see where this basic layout could be modified to handle other scoring systems and a few more bits of information to make a “pro” version in the future. I’m sure this will evolve along those lines with user feedback.

Wine Snob is an educational reference app that looks similar to others I’ve used on Palm and Windows Mobile platforms. From the screenshots and description, it seems to provide mobile access to wine terms, food pairings and other useful information. Like Wine Log, this app sells for $2.99.

In browsing the rest of the store, I noticed an iPhone version of my favorite note taking application, Evernote. Available as a free download, I installed and connected to my account on my duahgter’s iPod Touch. Like the Windows Mobile version I’m currently using, the feature set is limited to reading existing notes or posting text and photo notes. The iPhone version extends this with the addition of audio notes and direct integration with the onboard camera. This is a good start and might be enough for iPhone users looking to keep some wine notes on the go and syncing them with their desktop.

But I think we will see better wine related apps for the iPhone in coming months as Wine 2.0 players like Snooth and VinCellar look to extend and embed their web applications into the mobile space. As this space gets more interesting I’m sure I’ll be tempted to jump on the iPhone bandwagon even if I can’t type worth a darn on the thing

To be continued…

Sometimes posts take several days, or even months, to get published here. Along the way, details are added and subtracted as I think about the story and form an opinion.

This is one of those posts.

I started writing this post on August 2, 2007 after 6 months inside what I began to call, “The Cult of Gary.” Of course, I was a lurker only commenting on the odd episode and not really participating with the discussion Gary Vaynerchuk has led for the past two years at Wine Library TV. And I think I nearly missed the point of why Gary connects with so many people; it’s his humanity.

But the first draft of this post did not mention humanity but focused on the ethics of using a scoring system in his reviews, lack of disclosure on the podcast of being a wine retailer and his unorthodox approach to palate training (I still would like to know what Bob Parker, Jim Laube or Steve Tanzer thought of Gary’s schtick on Conan O’Brien and Ellen). It also bothered me that Gary was so opaque to the wine blogger community who socialize on Twitter and often email each other on various subjects. Each time I hovered over the “Publish” button, something held me back from sharing my insights on the most celebrated wine podcaster in the world. Sometimes it would be to soften the language so it wouldn’t sound like sour grapes, other times it would be something Gary did that provoked more investigation.

So months past and the post stayed in my drafts folder waiting for more context in order to complete it. I found that context last week with this short video Gary published on his personal blog:

I have come to the conclusion that Gary is one of the most influential people in wine today not because he’s got the best palate — although he’s got mad skills there — but in the way he’s almost single handily changing wine marketing. He’s often quoted saying that the wine business is “broken” and he’s trying to fix it. I agree and applaud his efforts in demystifying wine and making it fun for those outside the wine blogosphere. Watching Robert Scoble’s video from last weekend shows this first hand:

My earlier concerns diminished as I realized that those of us in the wine blogosphere are not Gary’s audience. As the hardest working man in wine podcasting, he’s delivering the goods to tens of thousands who would be bored stiff reading about wine. Yes, I’d like to see some disclosure but this seems like a quibble when looking at the amount of good Gary is doing for wine podcasting and blogging.

So I think everyone interested in wine should watch Wine Library TV at least once a week. Because the kid has heart. And skills.

News broke this morning that online retail giant Amazon.com will enter the wine retail business. Since Decanter reported this story as an alliance between wine.com and Amazon, I was not sure if anything was really news since their relationship was announced some three years ago. And it appears the folks at Decanter have realized their error and have removed the story from their website. But the Financial Times pointed to a recent job posting for a “senior wine buyer” at Amazon which seems to me like Amazon is taking wine distribution seriously.

Twitter chatter broke out this afternoon as Steve over at Vinfolio posted a good analysis of Amazon’s opportunities and obstacles to success in the wine business. His conclusion was that Amazon would put pressure on, “…online retailers selling mainstream, high-volume wine brands…”

While I agree with Steve on one hand, I think he missed what we will look back on in 5 years as the most important change in U.S. wine retailing since the repeal of Prohibition:

Amazon will be the the first long tail wine retailer.

For those not acquainted with Chris Anderson’s work on the subject, a short aside. In 2004 he wrote an influential article for Wired magazine which was later turned into a best selling book, The Long Tale: Why the Future of Business Is Selling Less of More. Mr. Anderson’s premise is that businesses can exploit inefficient distribution and inventory costs and offer niche products to millions of customers. His hypothesis that 80% of the market — the Long Tail — can be significant to sales for these niche retailers who sell small amounts of goods to many customers is at the core of the Amazon business model and is used as a key case study in his piece.

I know of no other industry with a more inefficient distribution system than the U.S. wine business. In the 1980’s and ’90’s, I worked in the publishing industry and watched what Amazon did to that inefficient business, particularly in book distribution. I think they will repeat this again with wine.

But it will be quite a bit more difficult for Amazon to operate with all the entrenched special interests and government regulators who control the sale of wine, beer and spirits here in the U.S. While the book market is not nearly as regulated, with only differing tax rates as an annoyance, the wine business is far more complex with diverse shipping costs throughout the country and differing state and local taxes. Not to mention the burden of compliance record keeping and reporting and various shipping laws. In short, it’s a mess, but I think Amazon stands a fighting chance of changing the status quo which will only be good for consumers.

And I don’t think that just the high-volume brands will benefit from Amazon’s move but nearly every brand looking for distribution. The irony is that smaller wineries need more distribution help but often can’t afford it due to the costs of supporting the distributor. And vice-versa the larger brands, who do have feet on the street with distributors, get the majority of distributor attention but probably don’t need as much. This gap in the market is what I think Amazon will capitalize on and many smaller producers will find an efficient way to sell their wine online. Amazon will sell millions of customers small amounts of wine and literally make it up in volume. It’s their way as consumers can often find bestselling books cheaper at Costco or Wal-Mart while more obscure fare is often only available via Amazon.

This will be a very interesting story to follow and I truly hope that Amazon, along with Costco, will change the U.S. wine distribution business for the better.

View my page on OpenWine Consortium

A while back I predicted that Facebook would most likely be the “Facebook of Wine” but today I’m not so sure after spending a few minutes inside the OpenWine Consortium social network.

“Great, just what we need, yet another social network,” I expect to hear from some but hear me out first.

Unlike Facebook, the OpenWine Consortium is narrowly focused on the wine industry and seems to be initially interested in bringing together Wine 2.0 developers and wine industry business leaders for networking and to drive open standards online. Early membership is a who’s who of the wine blogosphere where I’m sure lively discussions will ensue, when we’re not on Twitter. I also don’t expect to see all those annoying requests to compare movie quiz scores or install another application as is the standard on Facebook these days.

Where his goes is anyone’s guess but I’m impressed with the potential I see with this platform. If you are in the wine industry or interested in Wine 2.0 then join me.

One of the announcements at last month’s Macworld Expo was Apple TV Take 2, an update — rethinking really — of the unsuccessful media player released a year ago. Apple CEO Steve Jobs featured the new iTunes movie rental service as the killer new feature of this update but I think video podcasts will be the real winner here. That’s because for the first time it will be easy to consume this content on your TV and not the exclusive domain of the computer or ipod.

I think this development has profound implications on wine podcasters, particularly video podcasters like standard-bearer Gary Vaynerchuk of Wine Library TV. This is not lost on Mr. Vaynerchuk as he is putting up 5 Apple TV’s as prizes for a contest he is running right now (BTW, Gary, subscribed). And I fully expect the circulation of Wine Library TV to double as a result of the improvements to Apple TV.

This will provide the first platform for cross-over of niche content to a larger audience outside the digerati. I might even dust off my video podcasting skills and produce a Tony Bourdain influenced wine show if I can raise enough money to do it properly. Plenty of others in the growing Wine 2.0 movement will also jump on board and I expect to see another surge of interest in wine podcasting.

So if you have ever wanted to be on TV, now is the time to get started.

A fair question posed by Josh at Pinotblogger today reacting to yesterday’s news that Stormhoek’s UK partner, Orbital, has closed.

How could this happen to a wine brand that has grown so quickly in sales while spending so little on marketing?

The retail wine business is cruel and unforgiving. And it’s worse in the UK.

For those not in the wine trade, a winery sells to distributors for 50% of the retail bottle price. The distributor, in this case Orbital, then sells to retailers and restaurants to give them something like a 25-30% margin. They also have to pay for shipping of the wine, storage, some taxes, marketing and staff expenses. So what seems like a large margin becomes razor-thin particularly when dealing with large retailers like supermarkets.

Since the UK market is not nearly as fragmented as in the US, retailers have more leverage to get the lowest price for wine especially for products in the ₤10 and lower range. It’s also sort of a Catch-22 situation with wines selling in this range since shipping cost becomes such a large factor unless consumers buy in case lots; thus a totally direct strategy is not possible for brands like Stormhoek.

So to answer Josh’s question, yes, social media does work for wine, particularly for lower production, higher-priced wines like he will be selling. For brands like Stormhoek, they will need to forge distribution relationships with those who have a portfolio to support the low margins in their price range. From Jason’s post today, it seems that process is now going on.

Stormhoek is far from dead and social media is the future of wine marketing even if most of the trade in the US hasn’t yet noticed.

Cartoon by Hugh MacLeod of gapingvoid.com

Not a week goes by without an email announcing a new Wine 2.0 community. I check these out to maintain my list of links but I’m also very interested in where this space is going. A few, such as Snooth and the newly launched Vinquire, are interesting takes on the Wine-Searcher/WineZap business model that I will be covering here in more detail in coming days. Unfortunately, however, most of the new sites are Web 2.0 versions of online wine stores with social media features bolted on.

We don’t need another online profile to manage; please, stop the madness!

What we do need is a place online for wine lovers of all levels to gather and share their passion for wine. Perhaps features like cellar management and finding wine online and off-line would also be part of this wine community. It would be one part eBob, one part CellarTracker, one part Wine-Searcher/WineZap/Snooth, a dash of Twitter, all chased down with a bit of Scrugy and Wine Life Today.

It seems most of the new entrants are trying to be the Facebook of wine, which is not the right model as I think Facebook will fill this role. What we do need is one place to go with a single sign-on (OpenID, please), slick user interface and engaging feature set that will attract everyone who is now scattered across the multitude of Wine 2.0 sites.

So who will build such a service? Certainly eBob could be expanded and improved but I don’t think this will happen as the current model is working well right now. The same goes for the folks at Wine Spectator who seem so focused on their paid service that you have to even pay for their blogs. I think it’s likely that there will be a roll-up of leading Wine 2.0 contenders to make up such a service; my money right now is on Snooth doing this next year.

But another player has recently emerged that I think bears closer study: WineZap (disclosure: I am a WineZap affiliate). They have added social media features to their core wine search service turning it into more of a community site. Although they don’t have many of the features of the ideal wine community outlined above, I think they have the potential to roll these elements together. I’ll post a review and comparison with Snooth and Vinquire over the holiday break.

Interesting times ahead and perhaps it’s time to make a few more predictions.

There’s an interesting article over at BusinessWeek about Wine 2.0 that features many of the sites linked on my right sidebar. In the year that I’ve blogged about Wine 2.0 I have often wondered who will break out and become the “Facebook of Wine.” Since wine is a social beverage, I reasoned, someone would create a site that would combine Web 2.0 with wine and create a social network around this concept.

But this has not happened. Today we have about a bunch of wine social networks all fighting for attention. The only ones that have built any critical mass are WineZap, Snooth and Cork’d/Wine Library TV. And it’s not clear if any one of these will break out of the pack and become the de facto Facebook of Wine. Right now I think that Facebook itself stands as much chance as any Wine 2.0 sites but it will be interesting to see how this plays out over the next few months. I expect to see consolidation in this space and one or two leaders emerge.

Check out the article here and slideshow profiles of some of the leading Wine 2.0 sites here.

In my blog reading today I came across a post about recent domain name auctions in the .mobi top level domain. For those not familiar with this TLD, it was created in late September of 2006 to bring the mobile web to cell phones and other devices. I looked at getting winecast.mobi at the time but decided it wasn’t worth the effort.

Fast forward 15 months and wine.mobi sells at auction for $30,000. Not bad for a few moments of work and several months. It remains to be seen what will come of this domain but this sale was enough for me to buy my .mobi domain today. What I’ll do with it is another story.

The wine search and review site Snooth has just raised $1M in financing as reported on Mashable. This is in addition to $300,000 of seed funding that was raised last year.

Of all the Wine 2.0 sites I’ve seen to date, I think Snooth shows the most promise to make a business out of this category. The design and feature set are very well done and the wine database is impressive. The only thing that remains to be seen is if they can attract enough users to make the social networking and ecommerce elements of Snooth viable. My guess is yes, but we shall see in coming months. My full review of Snooth will be posted here soon.

Congratulations, Philip and team on this milestone!

Now that harvest is getting into high gear in California, it’s time to make some decisions on the winemaking plan for the Roussanne we will be making together at Crushpad. Being a late ripening varietal, our Roussanne will not be ready to harvest until mid-October but there are 30 decisions to make in the coming 4-5 weeks before the grapes are picked.

So everyday from now to harvest, I will blog about each decision and invite readers to comment that will influence our decisions for each item. Those who join the Winecast Crushnet group will have inside access and directly effect these decisions because this is our wine, not my wine. The first 50 members will be assured a one-case allocation of the final product and the opportunity to lend a hand directly in San Francisco or virtually via the internet. Should the group exceed 50 by harvest, I will work with the folks at Crushpad to increase production.

To join the group, just sign up over at Crushnet and request to join the Winecast group. It’s free and easy to do in just a couple of minutes. Depending on the timing of the harvest, I will be on hand for the sorting and crushing of the grapes at Crushpad. I hope to see many group members there. We’ll also get together for barrel tastings in San Francisco and Minneapolis as the wine develops.

When I first announced this project a few weeks ago, I knew there was another blogger/podcaster working with Crushpad on a wine but had no idea it was Gary Vaynerchuk from Wine Library. I think this is great and will definitely join his group to make a Napa Cab. I also hope to be able to get Gary on Winecast to compare notes on our approaches in making our first commercial wines.

A very interesting Wine 2.0 adventure awaits, join us.