A couple years ago I made 8 bold predictions for 2007. I decided to sit last year out after only the most obvious of the eight actually came to pass (increasing direct to consumer wine sales). But some progress was made on the list in 2008 with Tyler Colman, a.k.a Dr. Vino truly “going pro” with the publication of not one, but 2 wine books. Not to mention the entire Gary Vaynerchuk story which played out in a big way since I made that prediction. Some of my other predictions also made some progress toward fulfillment so I’m going to add six more for 2009 today.
The Year of Value – This prediction is really not that much of a stretch since the world economic downturn has made it a lot more challenging for wine producers to sell higher priced wines. Anything above $25 a bottle will be a tough sell in this environment with a lot of competition for consumers in the $10-15 price category. Look for some producers to just lower their pricing while others, such as Cameron Hughes, Mark West and Castle Rock, will be perfectly positioned to gain market share. 2009 is the year of extreme value that might also spark more interest in wine auctions as consumers look to maximize their purchasing power.
Wineries Really Go Direct – More wineries are exploiting direct to consumer sales and I expect to see a lot more growth in this area particularly for higher priced brands. The economics of direct sales and shipping will be a major advantage for wineries who can create enough pull with consumers. With wine tourism down due to the recession, I see the winners being those who create this pull online via ecommerce and, increasingly, a social media presence.
Alternative Packaging – As wine lovers become more concerned about the carbon footprint of their favorite beverage, more will look for wine packaged in bag-in-box or TetraPaks. As I’ve blogged here in the past, I hope to see better quality wines in these packages particularly those wines intended for immediate consumption.
Wine 2.0 Will Produce A Star – I’ve written about the intersection of Web 2.0 and wine for some time now but there has not been a breakout success story yet. This year will produce at least one star who will finally validate this space. My money is on Snooth right now but this could change as the year progresses. Stay tuned for a lot more on this subject here soon.
Wine Media Goes Digital -The traditional glossy wine magazines such as Wine Spectator and Wine Enthusiast will be forced to rethink their print business model this year and go more digital. I still think there will be the same amount of wine publications produced but the ones that are left will have figured out how to make money from their online presence and not just by print advertising sales. Of all of these magazines, Wine Spectator is the best positioned to flip the switch, open up their subscription site and become supported by their online advertising inventory. But I don’t expect to see them do this because they will see too much short-term risk in their current, but doomed, business model. 2009 will be a great year for new entrants trying to figure out this territory like Mutineer.
Americans Drink Less Wine At Lower Price Points – This prediction is linked with my first one but I think it’s important to note that the wine market in the U.S. will not grow as it has in the past. Not only will consumers drink less wine they will trade down to lower priced selections. With the U.S. dollar increasing in value, this will make imports more attractive especially from the Old World where vineyard land is a long sunk cost.
So there you have it; six bold predictions for 2009. I’ll revisit these in June and again in December to see what really happened.
Which ones do you think are right, dead wrong or what did I miss?
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.
I’m researching a post about Stormhoek and I came across this podcast with Jason Korman I had not yet heard. During this discussion Jason asserts that terroir applies to all wines wherever they are produced making terroir, “…a meaningless argument…” from a marketing standpoint.
On one hand, I agree with Jason that terroir is too often the de-facto marketing strategy for too many wineries. On the other, I’ve tasted different blocks of the same vineyard and found each wine quite different. So there’s something to this notion of terroir.
But the real learning from this podcast is that those of us who write about wine are too often obscuring the true enjoyment of the beverage with jargon and a learning curve that most people will not invest the time to learn. Perhaps that’s really at the center of the argument that most wine blogs are boring.
So I’m going to make an effort to change the way I talk about wine here and on my podcast to make the content easier to understand for the non wine geek.
I’m also hoping to tell the real story of what happened at Stormhoek in coming days.
I’ve been on more than my share of flights this summer, both domestic and international, and one thing that bugs me is how poor wine service has become on airlines.
Yea, I know, there is some pretty decent juice poured in business and first class, but I’m talking about the bottles served for $5 in coach. In my recent experience none of the wines on offer are worth the money and I tend to drink ice water on flights as a result.
It would seem to me that this is an interesting marketing opportunity for wine brands of a certain scale or brands known for consistent quality and value. Since bottling for airlines requires a special line out of reach for most small to medium wineries, only larger production brands tend to play here. Some are obviously using this as a way to expose their brand to new customers as about half the time the wines presented to me are from unfamiliar wineries (mostly from the southern hemisphere for some reason).
But what if someone like Cameron Hughes bottled some larger lots or a special blend just for airlines? They could change the wines over time to expose customers to something better than the average fighting varietal now most common. On the back label they could tell their direct marketing story.
I’d definitely fork over $5 for this kind of juice any day.
I worked in Napa last week and drove past some of the most well known vineyards loaded with fruit almost ready for harvest. I also drove past vineyards south of the city of Napa that appear to be setup for machine harvesting and are across the road from a lumberyard and tool rental place. This got me thinking about the differences in wines and what separates great wine from just well made, clean wine.
How much of this difference is due to the decisions of winemakers in the cellar and how much is due to the vineyard practices and place they are grown?
Terroir has long been part of the mythology of wine marketing. But is there really a difference between Cabernet grown at Martha’s Vineyard and the vineyards in American Canyon? Would we be able to taste the difference if both vineyards were made into wine by Heidi Barrett?
From my experience I’d say yes, but it would be interesting to see what some of the best winemakers would make from more humbly grown grapes. Alas, I don’t ever think we will see this in reality but it’s interesting to see what folks like August Briggs are doing at Castle Rock and his eponymous winery.
In the end, place matters but how much is open for debate. As with all luxury goods, scarcity and reputation drives wine prices but quality can be another story altogether.
Editors note: This is a cross-post of my “weekly” post over at Jeff Lefevere’s Good Grape blog. Since I’ve been silent there for a while, expect some more frequent posts some of which I’ll cross-post here.
It’s been a while since I posted here at Good Grape so I thought I would get back into action with a meaty topic I think a lot about in my day job as a wine marketer.
How has wine marketing changed in the era of consumer generated content?
At one end of the spectrum is the ground-breaking work by Hugh MacLeod harnessing the power of social media to reposition Stormhoek as a “social object.” You can check out Hugh’s account of his campaign by viewing a 25 minute video of a talk recorded at the PSFK Conference in London last month.
What is most interesting about Hugh’s story is how simply — and almost by accident — he implemented a global marketing campaign in a very fragmented and traditional industry. Like a lot of wine brands, Stormhoek is a volume play where critic’s scores, aggressive sales practices and shelf-talkers are the standard marketing approach. So what did Hugh and Company do? They engaged the blogosphere and started a global conversation about their brand. The result was more than doubling sales in less than 2 years for an investment of about £20,000 (approx. $41,000 USD).
The other end of the spectrum is where 99% of the wine industry is at the moment with their heads in the sand about the internet and little clue about social media. They live in fear someone uneducated consumer will bad mouth their wine on one of the new Wine 2.0 sites such as Cork’d. This level of spin control and anxiety is understandable given the subjective subject of wine tasting where a $2 Chardonnay could be judged superior to a $40 Chardonnay.
But I have three words of advice for winery owners – Join the conversation!
We have seen a few brave wineries start blogging and engage the growing wine blogosphere. Although the jury is still out on their efforts, I know wine has been sold and word of mouth has resulted in new customers.
Don’t have a tasting room? Use your blog to create a “virtual porch.”
The theme of this week’s Wine Industry Technology Symposium underscores the urgency of wineries adopting new online marketing strategies. My favorite quote was from wine podcast superstar Gary Vaynerchuk from Winelibrary.com who said in his talk to , “Embrace your website as your business.” Amen, brother; I hope a few wineries there got the message.
So the bottom line is that wineries who are not part of the social media conversation are doomed to let consumers determine their word of mouth. Like any online endeavor there are trolls but if you engage and extend the conversation you are more likely to encourage partisan customers to come to your aid. If you do nothing, you are likely to suffer in “Google Hell” for some time.
All it takes is a bit of time and focus. The rest — like what Stormhoek has done — could be history.
I’ve written quite a bit here about Twisted Oak winery but feel compelled to post once again as they continue to do interesting things from a marketing point of view. The latest is a commercial running on a local radio station in Calaveras County. California where the winery is located. Every winery wants to bring in both a local audience, who might become regular customers, and those from the surrounding region visiting on weekends. Most times this means inexpensive print ads in various visitor guides and stocking brochures around town but El Jefe is also doing a radio spot to drive customers into his tasting room.
On one hand this seems so 20th Century in the age of iPods but even I will switch from “AUX” to the radio when coming into an unfamiliar area to pickup local news and information. If a spot for a winery came on during those times I would certainly take notice and probably stop by the winery if I had a few extra minutes. And there is additional utility for the ad if the marketer posts an mp3 version on his blog that will gain much more exposure there than on the radio.
The bottom line for me is anything that continues the conversation about your winery is money well spent. Nice one, El Jefe!
Note: This is a cross-post of my “weekly” article at Good Grape. I’ll be posting there a couple times a week to catch up this month.
I’ve been doing some work recently that got me thinking about how much a wine’s price is determined by the actual quality of the wine in the bottle and how much by the demand created through marketing. Aside from a few very rare exceptions, wine needs to be marketed to be sold. This is normally done through retail stores, the winery tasting room, to wine clubs and increasingly through online wine merchants. All these add to the costs a winery has to pay in order to get their wines to the customer but they are not the main cost driver; the grapes are.
If you are Fred Franzia making his famous “Two-buck Chuck” you are paying about $100 a ton for your over-cropped Central Valley Cabernet Sauvignon. The yield per ton is probably something like 7 tons per acre which doesn’t produce the most concentrated fruit. That ton of fruit will make around 60 cases or 720 standard bottles so Fred’s got around 14 cents per bottle in fruit costs. Now you can start to see how he can make money selling it for $1.99 at Trader Joe’s. Contrast that with the premium producer in Napa Valley who spends $6,000 a ton on fruit and up. There the yield is between 3 and 4 tons per acre that will produce a more concentrated, complex wine. Assuming the same 60 cases are made, the Napa Valley producer has around $8.30 in fruit costs. Not too bad if the wine will be selling for $50 or $60 a bottle but still 60 times more costly than Mr.Franzia’s wine. But this post is not intended to be a forensic dissection of the wine cost structure, for that, visit my friend Vini.
So getting back to the wine in the bottle, the basic difference is in the quality of the fruit and cellar treatment (i.e. new oak barrels vs. chips, aging time, etc.). For producers making the finest wines they tend to spend a lot more on these items but in the final analysis the most extravagant producer might have something like $30 of cost in each bottle produced. Since distributors buy at an average of 40% off retail, this wine would sell for a minimum of $57 a bottle assuming a 10% winery profit. But what if this wine is priced at $150 or $500 a bottle? Well, the profit margin is certainly higher but there are probably higher marketing costs, as well.
As I learned last week, there seems to be a point where price and quality diverge. The reputation of a winery, bolstered by glossy treatment in the wine magazines and 95+ Parker scores also help to push the demand, and price, for these wines. But are they the best example of a certain wine region or variety? Well that, my friends, is in the eye, and palate, of the beholder. You might think Screaming Eagle is the zenith of Napa Cabernet while I prefer what Ladera is doing for a lot less. Preferences aside, there are many great quality wines from all over the world that compete for our hard earned wine dollar. What really separates them is not the quality of what’s in the bottle but the demand that is created for those bottles. That, in a nutshell, is the essence of marketing… at least in my book.
Note: This is a cross-post from my weekly entry at Good Grape. Since I’m behind again, I’ll post another article on Sunday. As a wine marketer, I’m always on the lookout for new and innovative strategies to sell more wine. As the first wine podcaster, I feel a certain responsibility to keep current on the [...]
El Jefe, proprietor of Twisted Oak Winery and frequent Winecast commenter, has just posted a contest to write the back label of one of his wines. This is a great marketing idea similar to the Fortune Corkies I wrote about earlier in the month. Basically, Twisted Oak is asking it’s customers to write the back [...]
Wineries today are facing increased competition from imports and the proliferation of new domestic brands so it’s interesting to me that only a few medium to small brands invest in marketing. That’s due to the cost of having additional staff focused on marketing and a traditional approach in an industry that seems to still be [...]
Speaking of wineries way ahead of the curve, the folks at Stormhoek have a very interesting campaign going on in the UK for Valentine’s Day. To promote their new labels featuring gapingvoid.com cartoonist Hugh MacLeod’s creations, they have taken him on the road to sign drawings, bottles, etc. This is nothing new, but the new [...]
Alternative Packaging – As wine lovers become more concerned about the carbon footprint of their favorite beverage, more will look for wine packaged in bag-in-box or TetraPaks. As I’ve blogged here in the past, I hope to see better quality wines in these packages particularly those wines intended for immediate consumption.![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=6c132364-2f30-4d6b-af1f-d348c07b6bee)
