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03 Mar 2021
Stirring up the Conversation w/ Katie Canfield and Rebecca Johnson, The Bâtonnage Forum
00:35:45
Bâtonnage, the French word for stirring the lees, is now about stirring up the conversation about women and wine. The Bâtonnage Forum, founded in 2018, is creating a safe space to have difficult conversations about gender inclusivity in the wine world. Katie Canfield and Rebecca Johnson, partners at wine PR agency O’Donnell Lane, are currently carrying the baton for the forum. They tell XChateau about transitioning the forum to virtual, launching a mentorship program, and filing for 501c3 status.
This episode is sponsored by Repour, the simple, effective way to preserve your wine...without planning ahead. Extensively used by top sommeliers, wineries, and wine students, Repour prevents wasted wine and saves money. Find out more at repour.com and listen to Episode 24, where CEO Tom Lutz gives us all the details on Repour.
Detailed Show Notes
The mission of The Bâtonnage Forum - to open up the conversation about women and wine and create a safe space to have difficult conversations
Founded in 2018 by Stevie Stacionis and Sarah Bray
Set up to “pass the baton” every two years
Katie and Rebecca are the lead organizers for 2020 and 2021
This brings in new ideas and changes to the organization
The Bâtonnage Forum has transformed from 1 day in Napa to a robust, active community from all sectors of the wine industry
The broad focus is a unique selling point
It’s a platform for education and engagement
They have gotten lots of positive, direct feedback (thank yous, emails, volunteers who want to be involved)
The Forum
1st two forums held in Napa
Went from 1 day to multi-day, multi-session virtual forum, expanding the audience to all of North America and some global participants
2021 - will be 3 days at the end of June
The issue
Only ~30-40% of wine businesses are women-owned
Only 14% of CA wineries have female head winemakers, though this has improved some
The Sommelier industry has meager female participation
#metoo movement has been helpful
How to Help
Step 1 - acknowledge and recognize the issue, join the conversation, including at the Bâtonnage Forum
Step 2 - improve HR and hiring practices
Step 3 - mentoring (spread the word about the mentorship opportunities to potential mentees), education (including WSET, MW, etc.…), and shaking up the conversation
Pivoted in-person forum (was planning to be at Sonoma Broadway Farms) to virtual due to Covid with 10 sessions, 35 speakers, and 20 winemakers and chefs for a virtual walk-around tasting
Filing for 501c3 non-profit status, targeting $10k/year for 3 years
Launching a Bâtonnage Forum branded canned wine with Nomadica
Want to dive deeper into uncomfortable conversations
Actively collaborates with other gender and under-represented inclusion groups
Diversity in Wine Leadership Forum - bringing the various diversity and inclusion groups together to understand what each group brings to the table and avoid overlap
Focused on helping the casual wine consumer buy better wine, Vivino has spent over 10 years building its database of wines, creating a structured tastings database, and network of merchants to make buying better wine more convenient. Heini Zachariassen, founder and CEO, tells us about the journey, what Vivino is up to today, and where it’s going. A must-listen for anyone interested in wine.
Detailed Show Notes:
Heini’s background
born in the Faroe Islands, with only ~50,000 people and no wine
An entrepreneur into technology
He got the idea for Vivino from “seeing a wall of wine and not knowing what to buy”
Vivino’s core challenge - buying wine is difficult. Vivino wants to help people drink better wine and know what to buy at stores through rating every single wine out there
1st slogan - “Never forget another wine” - because Vivino didn’t have the database to do more than capturing the wines
With the database, you can now say if the wine is good and what else you might like
Ratings with at least 10-20 ratings are highly correlated with expert ratings
Users -
50M total users
~20k users every day, ~10M users every month, ~20-25M active users every year (% of active relatively constant over time)
Top 3 areas of interest for consumers - #1 ratings, #2 price, #3 what does the wine taste like
A lot of people rate - 15-20% of scans rate the wine, 6-7% of scans review the wine
App use is 50/50 exploring wine (out somewhere looking at wines) and drinking wines (mostly at home, but could be restaurants, etc.…)
“Featured users” are pushed in the community. Some have 50-100k followers
The target audience is always the casual wine drinker first
Launched taste characteristics - a structured tasting note (both wine structure and tasting profile), uses AI to get the data into the system
AI recommendations (“Match for You”) - gives a % on the wine of how likely you’ll like it, leveraging structured tasting
Marketplace
700 merchants on the platform, 50% in the US, from small retailers to Wine.com
Sell in 17 countries right now
Today only a small % (single digits) buy wines through the app - he believes there is a big upside
Fully integrated w/ Vivino, users can use Google and Apple Pay
Money goes directly to the merchants, Vivino bills a marketing fee
Location matched by merchant's ability to ship to the location, the app only shows things you can buy
Can now search for styles of wine based on structured tasting notes
Wine sales - ~50% are pull (people looking for specific wines), ~50% are push (primarily surfacing what the app says is great value for money)
Sales can be 1,000s of bottles to 100,000s of bottles for the launch of Post Malone’s Rose in a few days
Revenue Streams
The marketplace is the biggest
Sponsorships - newer revenue stream, for wineries - don’t directly push wineries, but make them look better when people come across them (e.g., show them a video when they scan the wine), provide data analytics to the wineries (based on Looker connecting to Vivino data), do campaign follow up (e.g., get an email about the brand after drinking the wine)
No ads - always want to show what Vivino thinks is the best wine for you
Recently raised $155M round D (2021)
Vivino is currently ~200 people, looking to expand, particularly product engineering
Want to expand into more geographies
Do more marketing - today, only spend 1.5% of GMV (gross merchandise value) on marketing
Vivino vs. Delectable - Delectable was more focused on somms and wine influencers, which kept them on the platform, but pushed away from the casual wine consumer and felt very “insider” vs. Vivino focused on the casual wine consumer
Vivino vs. Wine-Searcher - Vivino values convenience more. Wine-Searcher focused on higher-end wines, looking for specific bottles of wine and where to buy it, don’t do transactions
Vivino vs. Drizly - the focus is on convenience for delivery, has a network of 1,000s of retailers, faster and less concerned about what exactly the product is, Vivino more focused on wine exploration and ratings
Sommelier turned wine consultant turned online wine retailer. Thatcher Baker-Briggs, Founder of Thatcher’s Wine Consulting, has continued to evolve and expand his presence, helping clients drink better and navigate some of the intricacies of Burgundy and other fine and geeky wines. He tells us about his journey, how email responsiveness is a competitive advantage, and how he believes some of the distribution allocations of top European wineries need to adapt to where the demand is. An engaging and insightful episode of XChateau!
Don’t forget - you can support the show on Patreon to help us keep bringing you excellent wine business content!
Detailed Show Notes:
Thatcher’s background
He started cooking at 10, worked in restaurants, was in the kitchen for ten years
Pursued sommelier route, spent time in Japan, came back to SF to work w/ Saison Hospitality
Helped collectors to manage the world of Burgundy and expanded from there
Launched a small, online boutique website pre-Covid
Has both an importer and retailer license (possible in California)
Import focus is on 1st and 2nd generation winemakers, often younger (in their 20s and 30s)
Wine Consulting
It started when a regular guest at the restaurant asked for personal wine consulting
He had to rely on other retailers, which was challenging for some short turnaround needs, and built a small inventory of products, which got put online for the retail arm
Clients are on an annual retainer basis - annual necessary to set goals for the cellar and wine education
Initial clients came from personal relationships
New clients are mostly through existing client referral
You don’t need a lot of clients to be successful and cap the client base so that each client can get enough attention
He doesn’t source exclusively from TWC retail but from a variety of sources
Challenges with wine consulting business - dealing with an old school wine world, inventory management, logistics of getting wine, and communicating “no” to collectors can be challenging
Wine Retail
Differentiation - wines highly curated by the team
Ability to source wines due to decades of experience and relationships with importers and retailers from sommelier experiences
Sourcing rare wine is complex, as often wines can’t be fully authenticated - TWC usually takes a very conservative approach, e.g., buys DRC only with a Wilson Daniels back label and from an original buyer
Essential to work with importers who are investing in building wine brands
General importer margin - cost converted to local currency, 1.5x the cost plus a couple dollars/bottle for transportation
Some importers take too high margins on hard to find wines, which leads TWC to need to source directly from Europe
TWC doesn’t undercut the market not to upset other wine merchants
European wine distribution is often flawed and challenging, creating market dislocations
E.g., Raveneau - has low ex-domaine pricing, the wine immediately sells out, the family makes a great living, and doesn’t require work, but may have more wine in Switzerland than in the US where it sells for multiples higher
Wineries often are small businesses without a lot of people working there
Nicolas Faure example - sells so cheaply ex-domaine that people buy everything upon release, primarily other retailers buying to resell for much higher levels
Library Release: Originally aired as Episode 5 in June of 2020.
In one of our original episodes, Robert and Peter discuss how competitive the wine market is, how wine scores used to differentiate wines from each other, but do that less today, and the use of wine scores has evolved over time. This episode provides another data point for the conversation around the evolution of the wine critic, as discussed in episodes 61 - 64.
Detailed Show Notes:
Wine scores were the traditional method of differentiating a wine brand
The wine landscape is getting more competitive and crowded,
In 20 years, there were 8x more 100 point scores, making them less remarkable than in the past
However, the same percentage of wines (0.4%) got 100 points in 2015 as in 1995, as 8x more wines were reviewed by The Wine Advocate
How wineries use critic scores
In the past - wineries leveraged the followers of wine critics, gaining new customers
20+ years ago, thousands of buyers would flock to wineries with a 100 point score; today, that number is in the hundreds
Today - wineries use scores to promote and market their wines - they are used as a validation of quality, not necessarily dependant on a specific wine critic
It has become harder to follow a single critic than in the past
Wineries need to build their brands
E.g., Philippe Guigal once said, “we don’t do marketing” - and is able to do that because Guigal has already built their brand in the trade with over 20 Robert Parker 100 point scores -> this type of marketing may not be as effective today
Brands need to have wine quality as a baseline and more than scores to sell effectively
Critics leveraging scores to promote themselves - some critics may give higher scores to be the top score that is used to promote the wine by retailers and wineries, increasing consumers awareness of their own brand and media channel
What’s Next for Argentina? Why, Malbec...w/ Laura Catena, Catena Zapata
00:54:13
Laura Catena, Managing Director of Catena Zapata, Founder of the Catena Institute, and Owner of Luca Winery, used to frequently get asked, “What’s next for Argentina after Malbec.” While Argentina has diversity in wine, its core calling card, quality, and diversity can also reside in Malbec. From storied beginnings to becoming a new classic, Laura shares with us the stories of the history of Malbec, how Argentina and the Catena family have elevated it with tastings, books, and scientific research, and how the future of Argentina is truly...Malbec.
Detailed Show Notes:
Laura’s background
BA Biology from Harvard, MD from Stanford, also studied French
She grew up in the vineyards in Argentina, went to high school in the US
She wanted to help people, so she went into medicine, specifically emergency medicine
Nicknamed “La Lucita” by her grandfather for never standing still
ER doctors have shifts that enable other hobbies or careers, thus working both in medicine and wine
The History of Malbec
A background in French enabled Laura to read French historical documents about Malbec
Malbec was known in Roman times, w/ Cahors the main area
Cahors drunk by Eleanor of Aquitaine who married King Henry II, making the wine popular in the UK as well
In Bordeaux, Malbec was very popular, used to make Cabernet Sauvignon smooth and ripened at the same time as Cabernet, vs. the earlier ripening Merlot
After phylloxera, gets replaced by Merlot
Saved in Argentina, where there was no phylloxera
It was being pulled out in Argentina due to low yields (prone to coulure) when Nicolas Catena started to do something with the variety
The breakthrough moment in 1999 - a Wall Street Journal article about Malbec started to change things, Catena was noted as the top wine
Malbec gives different flavors from different regions
Salta - jammy, syrupy
Patagonia - spicy, herbal
Adrianna Vineyard - some are big and tannic, others more like Pinot Noir
Flying Winemakers in Argentina
Paul Hobbs, Michel Rolland, and others came and helped with changes to the winery (fermentation, oak barrel usage, etc.…)
But soils and altitude were unique and different, which required new study, leading to the founding of the Catena Institute
Promoting Malbec
Catena Malbec Argentino label - tells the history of Malbec through 4 women (including phylloxera)
Catena Zapata
Initially made Cabernet and Chardonnay for export (1990-1991 vintages)
1st Catena Malbec was 1994 vintage
Did lots of blind tastings, Laura’s mom went to stores and bought the best wine and blind tasted Chardonnays, claiming that every time, Catena won
By the time Malbec was introduced, the Catena brand was already known for its quality
The initial key market of the domestic Argentina market - provided income to support the cost of building up exports
Books
Vino Argentino - wanted an English book to highlight Argentina
Gold in the Vineyards - talks about special sites globally, shows concept via illustration to make it more engaging
A new book to be published on the history of malbec
Believes in not telling too many stories at once and making it interesting, usually for 1-3 years
Malbec Argentino - created a 20 min theatrical play of the story, hired a UK actress to perform
Current discussion - “Let’s Talk about Grand Cru and Gran Vins” - discussion of Catena parcella wines with Pinot Noir and Nicolas Catena with Bordeaux or Napa Cab, with Larry Stone MS
Shares all research for the benefit of everyone in Argentina
Established to solve a specific problem: how to elevate Argentina’s wines
Publish all work - must be of high quality for peer reviews, wanted to share it, and made other institutes want to do research together
Recent Study: Proof of Terroir through Malbec
It looked at 24 sites in Mendoza
50% of the sites have a fingerprint that is identifiable (via 10 different anthocyanins and 20 different polyphenols)
Shows proof of terroir and that some terroir is more identifiable than others -> showcasing the meaning behind “Grand Cru sites”
Making Malbec collectible
Need to be patient
Need to do a lot of tastings
Ratings are important
Tourism is also important - building a new hospitality center at Catena, want it to be the best experience in the world, something people will travel for
Digitization and Diversity in Wine Auctions w/ Jamie Ritchie, Sotheby’s Wine
00:49:52
In this episode, we learn about the wine auction market from Jaime Ritchie, Worldwide Head of Wine at Sotheby’s, one of the leaders in the space. We discuss how wine auctions work, how finding in-demand wines to sell is the current challenge, and the increasing digitization and diversification of the space. From moving to more online auctions, younger buyers from more diverse backgrounds and geographies, to how tariffs and taxes and reshaped the wine auction landscape, this episode is a must-listen if you have any interest in the world of fine and rare wines.
Detailed Show Notes:
Sotheby’s founded in 1744, wine division in 1970 - started with wine auctions in London
Expanded wine auctions to New York and London, which also has retail
Spirits getting to be a bigger part of their business, 3% in 2018, up to 19% in 2020
How auctions work
Find the wine and collections
Create auction estimates (low - high estimates) and suggested reserve (confidential between auction house and seller)
Logistics - go-to wines, photograph, and ship
Terms & consignment agreement with seller signed
Data entry and presentation of the collection to maximize value
Publish auction catalog and marketing
Live auction
Invoicing
The auction process normally takes 6 weeks - 3 months. Large collections often require 6 months - 2 years lead time
Auction vs. retail - auctions for rare wines or full cases, retail more for futures, latest vintages, more diverse way to buy wines (by the bottle or by the case)
The wine auction market - ~$500M / year
Sotheby’s had record sales in 2019 ($118M), up 20% from the prior year
The average lot size is ~$7,500 / lot (2019)
Covid impact - fewer wines on the market, makes operations more difficult -> lower overall sales value and volumes
Market pricing still strong, likely due to stock market strength and low volumes, unlike during the Great Recession where prices fell 40%
The buyer set is expanding
Age - buyers getting younger
Geographically - more Asian and South American buyers
Long-term - the price of wine will rise as more people want to drink, and a relatively fixed supply of the best wines
Asia market - Sotheby’s started in 2009 - $40M, $55M in 2010
Asian buyers are the least price-sensitive, used to be US market
Wines now go from EU/US -> Asia vs EU -> US before
Largely influenced by Hong Kong wine import tax rate going to 0%
The only cost to get wine there is to ship containers (~$6-10k / container)
UK market - less competitive auction market, more competitive fine wine market; Brexit impact - trying to find ways to mitigate the impact, expecting a minimal overall impact
US market - most competitive auction market, w/ tariffs, no collections being shipped to the US
Logistics - offer shipments from NY to Hong Kong 3x / year
Overall, it depends on the laws and customs of each country or state
In general, it is the buyer’s responsibility to move the wine after purchase
Digital transition
Planned only 6 online auctions and 20 in-person ones in 2020, ended up being mostly online
New digital Sotheby’s auction platform - was planning 3-5 year transition, did it in 3 months
Online to be the common marketplace with live auctions for special collections
Can still do events with online auctions - Robert Drouhin auction - dinner in Hong Kong with a live auction in London
Business Model
Online still costs the same to process wines vs. live auctions
Buyer’s premiums rising because the main issue is sourcing the wines
In 1990 - used to be a 10% sales commission with no buyer’s premium, now no commission and all buyer’s premium
Growth areas after the price of Burgundy has skyrocketed - Rhone, Italy (Tuscany, Piedmont), Champagne, German Wines; CA and Bordeaux have been flat
Investable vs. Auctionable wines - investable wine have a belief that they will increase in value, auctionable just need a secondary market value, may not need to appreciate, be in good condition, and authentic
The provenance of wines can drive big premiums
Lafite direct from Chateau auction (2010) - $7M sale vs $1M low estimate - 7x
Robert Drouhin sale of ‘45 DRC Romanee Conti - 17x estimate, $550k per bottle, a world record bottle price
Auction market good at maximizing value for wines that have appreciated and for re-setting prices, not good at launching new wines
Critics scores less important post-Robert Parker. No one has the same influence. People now aggregate 2-3 different critics scores, market-moving away from it
The Auction Buyer - getting more diverse from all angles
Mostly men, wish there were more females
50% of 1st-time buyers in their 20s and 30s
50% of Hong Kong buyers in their 20s and 30s
60% worldwide buyers in 30s and 40s
In 1990, the average age of a buyer was 65
Used to be heavy finance-driven, now more tech and real estate
Asia and N America consistent, with Mexico and Brazil buyers coming in and out
The Auction Seller
3 D’s - debt, death, and divorce -> even more with Covid; + doctor’s orders for wine
Most people have purchased too much wine, they can’t consume it in their lifetime, so it goes on sale
When people have children, they entertain at home more -> drives more buying
With a 25 year history, WineBid is the oldest and largest online wine auction site. The original wine re-commerce platform, Russ tells us about the auction process from the buyer and seller perspective as well as all the data they collect and display for the wines. This includes innovations such as a 360-degree bottle shot, price history charts, and new functionality like their customized shipping feature. He even spills the beans on a few tips and tricks to getting the best deals on WineBid!
Detailed Show Notes:
Russ’ background - software and e-commerce at realtor.com, myfico.com, gazelle.com, and also had a vineyard in Temecula, California, growing Syrah and Tempranillo
WineBid - 25 years old, based in Seattle with operations in Napa, the oldest and largest wine auction site
Weekly auctions - open at 7:15 pm PST on Sundays, closes at 7 pm PST the next Sunday
All items open at the same time
Pro’s get 1st 5-10 minutes to view and place bids
What doesn’t sell rolls into the following week
Now introducing some wines mid-week, with most wines going in one week
Set good reserves upfront
WineBid Sunday Night is "appointment internet" - people watch the auctions' final minutes with a good bottle of wine, watching some wines get bid up
Can monitor all bids at once with WineBid
For Sellers of wine
Consignors are mostly private individuals
Most sales are for $10,000-$1M+, ideally $100+ average bottle value
Sellers send their list and get an estimate
WineBid does the appraisal and after agreeing with consignor, ships wine to the Napa warehouse
Wines are inspected, authenticated, and photographed
Once sold, sellers get a check or electronic wire transfer
As part of an estimate, for larger cellars, WineBid will help catalog and pre-inspect on-site
Reasons people sell wines
As in many businesses, the 3 D’s - divorce, debt, and death
People also have their tastes change and swap out what’s in their cellars
They move and want to downsize their cellar
Spouse/partners - may force sales before they can buy more
Basket of Burgundy wines would have outperformed the S&P 500
Basket of Bordeaux wines would have been close to the S&P 500
Need to think of total transaction costs- transactions costs higher for wine as an investment, as a physical asset
Consignment vs cash buyout for wine sellers - generally make more money consigning and capture more upside, but takes more time and can get paid sooner, at a discount, with immediate cash buyout
Business model
Seller commissions - at most auction houses 5-25%, larger the consignment, the lower the premium
Buyer’s premiums - generally 15-25%, 17% at WineBid vs ~20-25% for live auctions
Getting Inside Bordeaux w/ Jane Anson, janeanson.com
00:57:29
Accidentally filling the big shoes of Michael Broadbent and Steven Spurrier, Jane Anson, wine critic, author of Inside Bordeaux, founder of janeanson.com, and former Bordeaux correspondent for Decanter for nearly 20 years, is one of the world’s foremost experts on the wines, history, and region of Bordeaux. Having lived in Bordeaux since 2003, Jane shares her deep insights into how Bordeaux became as famous as it is, how the systems of La Place de Bordeaux and En Primeur work, and the complex terroir of the region. She gives us insight into the content of janeanson.com and how it will be a unique look into Bordeaux, focus on the drinkability of the wines, and many of the unique features to be released.
Detailed Show Notes:
Jane’s background
Living in Bordeaux since 2003, she thought she’d only be there for 1-2 years
Journalist background
Decanter’s Bordeaux correspondent for nearly 20 years, wrote a weekly column since 2014, the sole Bordeaux wine critic since the 2016 vintage
She took a tasting aptitude class at the enology school in Bordeaux
She chose Bordeaux because it’s still a big city (lived in London before), 2 hours from the Spanish border, 2 hours from Paris
Can be accessed by inside-bordeaux.com or janeanson.com
Saw a gap in the market for a website specializing in Bordeaux vs. ~4-5 for Burgundy
Value proposition
No outside investment, no advertising
Focus on drinkability
Covers all wines that sell through La Place de Bordeaux (including the ~90 wines that are not Bordeaux wines)
Regular verticals, en primeur, in bottle reports
Two weeks of trips during the year
One week - for high-end collectors
One week - “free” aimed at young sommeliers, people that want to work in the wine trade to showcase the dynamic side of Bordeaux
Launch specials
a translation of memoirs of a WWII soldier in Bordeaux
Vertical of tiny producer LaFleur Saint-Jean - lies in between Lafleur, Lafleur Petrus, and Petrus in Pomerol only sells direct, sells out immediately, had never done a vertical before
1% for the Planet - 1% of revenue goes towards environmental charities
Bordeaux’s rise and fall
Key advantages
A port city, far enough inland to be a safe port
12th century - duchy of the English crown, wines were sold in the London market
The system of chateaux, merchants, negociants was built for export
Terroir is very complex (which may be why it’s not talked about much), e.g., of the 61 wines in the 1855 Medoc classification, all of them are on two specific gravel terraces (#3 & 4) of the six terraces of the Medoc
Mostly clay underneath with gravel on top
Lots of micro terroirs
St Emilion - has pure limestone, clay, and gravel
Issues that have hurt Bordeaux
Every vintage is not great, though Bordelais often say that
Frustrate people based on the prices they ask (e.g., 2009/2010 vintages - many people who bought lost money)
La Place de Bordeaux
Business to business, sell to merchants that sell to consumers
Virtual marketplace - enables access to 10,000 clients globally
Includes chateaux, brokers, and negociants
Sells wine into every level of the food chain - has specialists for on-trade, off-trade, hotels, corner shops, supermarkets, etc.…
It doesn’t build your brand but makes sure it gets everywhere
Good at giving the illusion of scarcity
Can use La Place for specific markets - La Place has expertise in the Asian markets (e.g., China, Vietnam, Japan)
Very rare to have exclusivity for negociants
Downsides of La Place
Creates a very competitive environment - low-end wines compete with each other
Protects Bordeaux well; merchants need to buy in bad years to get allocations in good years
No direct contact with consumers for wineries
Less effective for small guys that aren’t established brands
Non-Bordeaux wines selling on La Place
Gone from nothing to 60 wines five years ago to 90 wines in 2021
Provides access to global markets - shows wines next to the great wines of Bordeaux
Opus One - the 2nd non-Bordeaux wine on La Place (after Almaviva), sold wines since 2004, opened an office in Bordeaux
Forced negociants to share client lists (created more transparency)
1st Champagne just joined - Clos des Goisses (Philipponnat) - only 600 bottles of 1996 late release
No Burgundy producers (not enough volume, no need for it, and the rivalry between Burgundy and Bordeaux)
Barriers to joining La Place - need enough volume to get everywhere, need to do your own brand-building work, and meeting customers
An increase in overseas wines has hurt smaller Bordeaux estates -> negociants have limited budgets and drop them
Marketing Bordeaux - unlikely to be another 1855 like classification, St Emilion’s classification every ten years is constantly litigated, some marketing organizations:
Pomerol Seduction - 8-10 Pomerol estates that band together
Bordeaux Oxygen - young producers, targeting younger audiences, no longer active
En Primeur
Due to export focus, Bordeaux always had samples shipped off overseas
From the early 1980s, Parker injected excitement into En Primeur system
People used to make money, and now they are often better off waiting until wines are in bottle with certain exceptions (e.g., tiny production Pomerols)
No longer has the same sense of urgency
Tranche system - release a small amount of wine at one price, then release more later at higher prices
E.g., 2010 1st growths came out at €600/bottle (these people made money), final tranche at €1,200/bottle (these people lost money) -> destroyed interest in en primeur in the Chinese market
non-Bordeaux wines price more consistently than Bordeaux wines
Grape DNA Profiling w/ Carole Meredith, UC Davis & Lagier Meredith
00:40:17
One of the world’s leading grape geneticists, Carole Meredith, Professor Emerita of UC Davis, and owner of Lagier Meredith winery, has spent decades identifying and profiling grape varieties. It was so interesting that the interview has been split into two episodes, this one about the background of Ampelography and DNA profiling as well as the definitions of key terms such as variety, clone, and hybrid. The second episode features how she uncovered the history of Zinfandel and how wineries use DNA profiling in wine marketing.
Detailed Show Notes:
Carole’s background
Worked part-time at a retail nursery, got into plant genetics, and wanted to be a flower breeder
Changed to doing a Ph.D. on tomato genetics at UC Davis
Worked in biotech for a few years on cotton, corn, and soybeans
She went into grapes because a position opened up at UC Davis
Ampelography - the study of grape identification before DNA testing
Grape varieties identified by their leaves, which vary distinctly, not by their fruit, which look similar
Before DNA testing, outside experts in Ampelography would often disagree with each other on grape identification
The upside of ampelography is that it’s very fast. Today grapes are usually first identified by ampelography and then confirmed with DNA testing
DNA testing for grapes
Started ~1991
Looks at segments of DNA to look at specific markers
Need a minimum of 6 markers to identify a variety and more to establish variety parentage
Vitis Microsatellite Consortium - a group of academics that came together to develop DNA markers for grapes
In 1-2 years, developed 100s of markers
Grape variety definition - used differently in trade or by scientists
Trade definition - grapes that make different wines (e.g., Pinot Noir and Pinot Gris) are different varieties
Scientific definition - a cultivated variety that goes back to a single seedling, scientifically, Pinot Noir and Pinot Gris are clonal variants of a single variety
Clones - variations within a variety
Clones are subtypes that have developed over time
Usually have something to do with the fruit (e.g., color variants like Traminer vs. Gewurztraminer, Pinot Noir/Blanc/Gris)
Clones arise through somatic mutations of the variety
Older the variety (e.g., Pinot, Syrah) - more likely to have more clones
Young varieties (e.g., Cabernet Sauvignon) have fewer clones (<400 years old, likely a natural seedling in the early 1700s, and likely singled out to do late budding, which provided spring frost protection)
Some varietals (e.g., Pinot) are more likely to have mutations
People need to notice a difference (e.g., looser clusters which can have less bunch rot, early ripening, which avoids rainfall during harvest, or higher sugar levels for grapes like Riesling in cooler areas) and be preferentially chosen to plant new vineyards
ENTAV - an institution in France that systematically identifies and registers clones
In Chile, Jean-Michel Boursiquot, one of the world’s top ampelographers, identified that Chileans were calling Carmenere Merlot
Grape Families
A term with no scientific meaning
E.g., Muscat - “muscat” is a type of flavor; all current varieties likely descendants of a couple of ancient varieties
Every variety is descended from 2 parent varieties
Hybrids
Genetic/scientific definition of a hybrid is an offspring of 2 different parents of the same OR different species (e.g., Cabernet Sauvignon is technically a hybrid of Cabernet Franc and Sauvignon Blanc)
Interspecific hybrid or cross is an offspring of parents from different species (e.g., hybrids of American and European grape varieties used to try and combat phylloxera)
Productivity and Community with Eric LeVine, CellarTracker
00:43:27
Building the app while on sabbatical from Microsoft in 2003, Eric LeVine, CEO and founder of CellarTracker, had been close to a one-person show until recently. Yet, he’s built one of the most useful productivity tools for wine collectors, an engaged community of geeky wine lovers, and a respectable business that he’s now investing in to grow and take to new heights for the benefit of the CellarTracker community. Eric’s openness and candor provide an in-depth look at how one of the leading wine platforms was founded, built, and where it’s going next.
Detailed Show Notes:
Eric’s background
“Tech geek” to “wine geek”
He was at Microsoft from 1992 - 2005; his last project was the “send error report” feature
1999 - took a biking trip to Tuscany and fell in love with wine and started collecting
Built a tool to keep track of his cellar, then let a few friends use it, which morphed a personal spreadsheet into a relational database
Eric created CellarTracker while on sabbatical from Microsoft in 2003, then in April 2004, launched it publicly and left Microsoft a few months later
CellarTracker overview
Core element - a productivity tool to catalog and manage every aspect of the wine experience (e.g., purchasing, tracking, consuming)
Byproduct - “Yelp for wine” - the aggregated wisdom of the community from tasting notes, drinking windows
User base
10M unique people visit the site
~750k registered users
~300k active users
Wine database
4M wines created
135M bottles in cellars
9.1M tasting notes in the community + 1.3M professional tasting notes
Features and functions
Optical recognition of labels - partners with Vivino
Most used features - tasting notes (~10M visitors/year on the website, most people reading or researching the tasting notes; ~9.1M tasting notes growing ~750k / year / ~2k / day)
Features collectors use - what wines do they have, when do they want to drink them, what are wines worth (the main premium feature)
Wine valuations - partner with Wine Market Journal for appraisals, overlaid with what people are paying for the wines in CellarTracker
Drinking windows - updated by users, partnership with review publications to overlay their data for subscribers of their content
Surprise & Delight feature - the ability to print a restaurant-style wine list
Geekiest feature - can print unique barcodes for your bottles and use a scanner to check them in and out
Default mode - creates a unique barcode for each specific bottle
For restaurants - uses same code for each wine of a particular size
Conducted research into the wine collector space
~18M people in the US store wine at home / in a wine fridge
~10% awareness of CellarTracker in the US
~5-10% awareness of CellarTracker globally
Data analytics
They just hired the 1st data scientist several weeks ago (as of Oct 2021)
They haven’t done a lot to date
User ratings - can track/follow specific authors, most often used for older wines at auction as one of the only sources of data for older wines
Never specifically built tools to enhance “influencers” in the system, was anti “gamification” elements to incentivize people to write tasting notes
Data accuracy - has a team of 4 (some PT/ some FT) to curate the wine database and look for duplicates, use both automation and humans to have duplicate detection
Business model
“Voluntary Payment” - one of the early “Freemium” business models
Established this because the value of CellarTracker is in the active community, and the data it creates makes the platform more robust and valuable
Suggested payment based on the size of collection - avg ~$57/year
$40/year for <500 bottles
$80/year for 500-999 bottles
$160/year for 1,000+ bottles
The lowest payment is $20, and some pay thousands
The majority of revenue comes from this
Some ads, but not in the app
Affiliate links with Wine-Searcher - the #2 referral source after Google
Key differentiators of CellarTracker
Cellar management - hardcore focus on scalable needs of collectors
Good engagement - attracted a set of people who keep coming back
Community - an “authoritative” audience - more geeky people that are in the community
Focus on privacy, needs of the community, up-time, neutrality (not affiliated with retailers or other businesses)
The next horizon for CellarTracker
Building a team - was only 3 people at the start of 2021, the goal is to be 11 by year-end (data scientists, engineers, UI designer)
Upgrade & deepen the existing experience, especially mobile app - they have seen a significant shift to mobile over the last 10 years,
More recommendations and automation of different scenarios
Connection to industry/wineries/other parts of the wine ecosystem (no natural interfaces today)
Better understand and engage with the 10M people who visit the CellarTracker website - many of whom use it as a research platform
Brought on a group of angel investors to reinvest cash flow into the business
The Future of Sommeliers w/ Mia Van de Water MS, United Sommeliers Foundation
00:57:24
Having gone through the most difficult period in history with an unprecedented shutdown during the Covid pandemic, restaurants and their sommeliers and beverage directors are in a new world and need to evolve. Mia Van de Water MS, of Cote Korean Steakhouse and the United Sommeliers Foundation, explains everything that has happened in the world of wine and restaurants. From the scandals at the Court of Master Sommeliers to the pivots restaurants have done during Covid to the work of the United Sommeliers Foundation, Mia takes us through the many evolutions and the future of sommeliers.
Special Announcement: XChateau Live!
When Robert & Peter started XChateau, the idea was to try and build a community around the business of wine. Part of that has been engaging with our listeners, as well as our guests. While it has happened on an ad hoc basis, for our 50th Episode / 1 Year Anniversary, we wanted to do it more proactively. So, we'll be doing a live podcast on Clubhouse and we hope our listeners join! We'll also have some former guests including Lauren McPhate, Juliana Colangelo, MBA.
Part of the class that had to retake the tasting exam from the “Cheating” Scandal in Sept 2018
“Cheating” Scandal was when an examiner released info via email about two wines on the exam to some candidates but was unsolicited, so candidates weren’t “cheating”
She re-took the exam in Dec 2018 and passed
BLM / sexual harassment scandals - has discouraged many people from taking the CMS route
Currently on the Board of the CMS
The CMS started as a fraternal brotherhood of wine geeks
Today - trying to re-orient the focus off the membership and onto the candidates -> building towards a better, more inclusive, safer, and a more engaging experience
The definition of a beverage director and sommelier
Key qualities - leadership and hospitality
Service is a critical component of the job - should be excellent at bussing tables, running food, etc.…
Job is to build relationships with guests, creating magical experiences from the beginning to the end
The Beverage director is also responsible for the financial health of the beverage program, which is the health of the restaurant
Pennsylvania - restaurants need to buy wine at the same price as consumers from the state liquor store -> has driven a lot of BYO
“Dollars trump cost of goods”
Mia’s strategy is to encourage people to buy more wine than they would otherwise
Still need a COGS engine, which is usually the BTG program (higher margin)
Encourages people to purchase a bottle
Pre-2020 trends (more NY oriented)
BTG prices had gone up substantially
Tons of new fancy, a la carte restaurants being opened
Everyone needed a fancy craft cocktail program
Larger wine lists
More floor sommeliers
Natural wine was popular
Covid pivots
CNN reported 110,000 (17%) restaurants closed in the US in 2020
Bev to go: Retail bottle sales, wine by the glass in small bottles, blind tasting kits
XChateau is a podcast about all things wine, from vine to your glass. We tackle the business of wine and keep you up to date with new and exciting developments in the wine industry.
In this episode, Robert Vernick and Peter Yeung interview Taylor Wilson (Instagram: @thiswaywithtay) about becoming a full-time wine influencer on Instagram from a career in real estate. Robert and Peter discuss how Taylor’s mother’s love of wine inspired her to learn more about it, wine education, building an 18,000+ IG following in one year, and how certain clothing choices can help engagement.
Other topics covered in this episode include:
Inspiration of wine love from Taylor’s mother
Wine Education - WSET 2 at Napa Valley Wine Academy - enabled her to ask winemakers more educated questions
Start as a travel blogger while a real estate agent with a degree in fashion
Other social platforms
Tried TikTok
Wants to expand into Pinterest, YouTube
About to launch a blog
Focus on food and wine pairing
Now full-time Instagram
Content creation
Writes captions the morning of posts to harness more creativity and authenticity, not as pre-planned
Spends ~20 hours/week on Instagram
Engagement with wine brands
~10 brands / day reach out on DM
~50% for samples / ~50% for business requests
Nobody asks to post for free anymore
Wine Access relationship
They are looking for more awareness
At the beginning - pay per post + $/new customer
Used link in bio and swipe up to track
Also did a discount code for tracking
Louis Jadot
Giveaway for 1 year IG anniversary
2 Zalto glasses
Hierarchy of paid relationships
Lowest - posts for free products
Stories
Giveaways
Paid posts
Most successful partnerships
Wine Access - longest running
Burgundy - going to do a new, big campaign
Love Jadot giveaway - best 1 post
Sends stats a week later to brands, wants to track more stats
Determining wine brands to work with
Must be authentic with brand / IG Max 2 things / week goal -> story must be about Taylor’s wine journey
Says no to a lot of things and free wine
Often tries the wine first before agreeing to promotions
# giveaway / contest - IG blocks the promotion
Uses brands’ contracts now, but will develop her own soon
Media Kit
Shows pricing, demographics of followers, engagement
Changed pricing 5-6x in the last 4 months -> as followers grew, one of the highest engagement in the industry
Following
18k+ followers
65% male, 35% female
25-54 years old
US (NY, Seattle, W Coast), London, Paris
US, Italy, France, UK, Brazil
Building a following
18k in 1 year
Being consistent
Posting regularly - didn’t post for 1 week, took 2.5 months to get back
Comment on every comment
Finding like minded people in the community - other wine blog girls, etc…
Replying to DM’s (IG loves this)
Hashtags
Used hashtag generators at the beginning
Made a list of relevant hashtags by size (small - up to 65k, med - up to 200k, large - 1M+ posts) - pulled a few from each section
Used to used 30, now 20, some say magic number is 7-14
Mistakes - not replying after posting, not posting for a while
Posting as creative outlet
Can make borderline inappropriate captions in posts
The “Tay” pose
Advice for brands
Email influencers, DMs are full
A lot goes behind posts
Influencers are a great tool, people trust us
If you loved this episode, we would love for you to subscribe, rate and review on iTunes or wherever you get your podcasts. Until next time, cheers!
Becoming a Wine Retail Institution w/ Phil Bernstein, MacArthur Beverages
00:40:35
An early mover focusing on fine wine, Bordeaux and California futures, and becoming a dual importer/retailer, Addy Bassin’s MacArthur Beverages has become a wine institution in Washington DC. Phil Bernstein, General Manager of the brick & mortar wine retail store and importer, tells us about how he thinks about wine pricing, direct importing wines, the changes in consumer buying patterns, and more as we continue to delve into the future of wine retail.
Detailed Show Notes:
Phil’s background
He grew up in Long Island, played Trumpet, and pursued a career as a professional trumpet player
He ended up begging for a part-time job at a retail shop in Ann Arbor, MI, and got his start in wine
Used to have tastings every Sat in-store to drive foot traffic
People now do curbside pick up after ordering online
Does a lot of DC area delivery (can only legally deliver in DC, not nearby suburbs in MD or VA)
Physical store for wine retail - “nothing beats the human interaction”
Pricing for wine retail - “price is everything”
Believes that price often trumps customer loyalty
Looks at wine-searcher.com when pricing wine, having the best price on wine-searcher meaningfully drives sales
Used to do a standard markup with a case discount, but believes now having the best price upfront is key
“Reliability” for MacArthurs is good customer service
Take care of the wine (temp control, only ship when weather is good)
Never makes vintage substitutions
Always makes good on promises, even if they end up losing money on the sale
Both an importer and a retailer
Only possibly in DC and CA in the US
Can buy Bordeaux direct from negociants
Have access to more fine wine from overseas
Can cut out the middle man - improving profitability and reducing the price to the customer
Finding their wines to direct import - have exclusivity, mostly locally
Imports 6-7 full 50ft containers a year
Not allowed to sell to other distributors or retailers
~60% of business from wholesalers, ~40% imported
Believes more importers will sell direct over time
Bordeaux Futures/En Primeur
The value of it can vary a lot by campaign
The only way for it to work is for wines expected to either be sold out or at higher prices when the wines are released for customers to tie up their money
In most years, En Primeur only works for the top 50-75 wines, which doesn’t make sense for most Petit Chateau
2019 campaign - Bordelais knew people couldn’t taste during En Primeur due to Covid, Pontet Canet and Angelus came out early with low prices and set the tone - lots of interest and buying
2020 campaign - “somewhat of a dud,” Bordelais took prices back up to between 2018 and 2019 levels
California Futures
Starting to go away from this model
In the early 1980s (pre-internet), set up barrel tasting of CA wine producers, people could taste the wines and order futures at a discount
XChateau is a podcast about all things wine, from vine to your glass. We tackle the business of wine and keep you up to date with new and exciting developments in the wine industry.
In this episode, Robert Vernick and Peter Yeung interview Georgia Panagopoulou (Instagram: @wine.gini) about creating digital content on social media and supporting wineries in the digital marketing space. Robert and Peter discuss Georgia’s experience with the OIV Masters of Wine Management, how she built her brand and @wine.gini, and working with wineries to tell their stories as both a wine ambassador and digital marketer.
Other topics covered in this episode include:
Falling in love with wine in Spain - through a university exchange with the Erasmus program
Getting a Masters in Chemical Engineering and how she approaches communication with an engineering mindset
Moving to Santorini, the center of wine in Greece
OIV Master of Wine Management - traveling to 30 wine-producing countries, based in France, mostly for wine entrepreneurs and executives
Moving to New Zealand - to blend the old world and new world perspectives
Engaging with wineries
Smaller wineries want her to travel to the property and work as a wine ambassador telling the story
Bigger brands mostly want wine placement and building brand awareness
Brainstorms with brands on how to bring more value than just executing what they want
Zonin Project - annually invite sommeliers to the property, engaged Georgia to work as a social media ambassador for the event
Greek wineries - mostly use traditional marketing techniques currently
Measures of success
Mostly brand awareness - people reached / impressions
Don’t really ask her to sell wine
Wine.gini audience (100k+ followers)
Both wine lovers and wine professionals
Top markets: US, UK, France, Italy, Germany, Canada, & Brazil
25-50 years old
50/50 split male/female
Ways to grow a social following
Much easier in 2017 (when she started) - could get 100 followers/day easily, if you posted a lot, IG would promote you, started posting pics of herself to do more storytelling and created a personal style and brand
Hit 40,000 followers in 1 year
Today - more difficult to build a following - do advertising, be super niche and special, or post bikini or ab photos
Ways to not grow a following today
Follow and unfollow people
Interact with accounts that aren’t relevant
Don’t fall into the trap of always doing what works well, vs expressing your unique style
Wineries want help building the story and better communicate with consumers to get the right message out
If you loved this episode, we would love for you to subscribe, rate, and review on iTunes or wherever you get your podcasts. Until next time, cheers!
Adaptation: 2021, a Year of Re-Opening, Wine Pricing, and Clean & Natural Wine
01:05:52
2021. A year with big expectations. The re-opening of economies around the world with Covid vaccines in distributions instead led to fits and starts with the Delta and Omicron variants. Wine pricing and costs went through gyrations with the tariffs between the EU and US imposed and then lifted and supply chain disruptions creating both cost and availability issues. And clean and natural wines continued to become a broader topic amongst wine consumers and the trade who struggle with their definitions and impact. XChateau assembled a panel across the wine value chain (Producer - Diana Snowden Seysses of Snowden Vineyard and Domaine Dujac; Importer - Xavier Barlier of MMD; Distributor - Michael Papaleo of Banville Wine Merchants; Retailer - Kyle Meyer of The Wine Exchange; and Lisa Perrotti-Brown MW of The Wine Advocate) to discuss these issues and answer audience questions live on Clubhouse. A wide-ranging and captivating conversation!
Also, people have asked us how they can support the show. So, we recently launched on Patreon, where your contributions will help keep the wine business content flowing!
Distributor perspective - Michael Papaleo, VP of Sales at Banville Wine Merchants, an importer and distributor focused on the New York, New Jersey, and Mid-Atlantic region
Retailer perspective - Kyle Meyer, Managing Partner of The Wine Exchange, a leader wine retailer in Orange County, California
Wine Critic / Reviewer perspective - Lisa Perrotti-Brown MW, Editor-in-Chief of Robert Parker’s The Wine Advocate for the last 13 years
Topic: Re-opening from Covid
Diana - producers in Napa and France weren’t required to close. Their biggest concern was keeping employees safe
Mike - learned how to conduct non-in-person sales (online and on the phone) by creating compelling content and using humor to find ways to engage accounts
Luxury wines did well - the average case price pre-pandemic was $136/case; increased by $30/case
On-premise recovered, but not all the way - 2019 - 55% on-premise, 2020 - 27% on-premise, 2021 - 44% on-premise
Collectors who were drinking through their wines started re-filling their cellars
Banville Wine Merchants was able to expand through the crisis (headcount went from 12 salespeople in 2020 to 16 in 2021, with 21 expected in 2022)
Kyle - 2020 Q2/3 - online orders went up dramatically - people bought everything
2020 Q4 - needed more inventory, supply chain issues created lack of access that persisted into 2021
A lot of people are now comfortable buying wine online, do to a big pick up business
75% of sales online pre-Covid, now 85-90%
2021 felt more normal, like 2018 (2019 had issues w/ tariffs, etc.)
Xavier - MMD’s luxury portfolio was positioned mainly towards on-premise
Pivoted to off-premise (e.g., high-end Safeway stores in Los Angeles)
Champagne shortages in 2021 - Roederer is sold out, pricing of Champagne is higher than it was before, bubbly is more popular than ever
Lisa - The Wine Advocate piggybacked on the success of online wine sales -> web views were up 10x vs. pre-Covid, subscriptions showed strong growth, but not as much as web views
Events had to be canceled in 2020, tastings re-factored, including re-packaging wines into little bottles for tastings
Pulled off some events (e.g., Kings of Rhone, Bordeaux 2010)
End of 2021 - lots of Zoom fatigue, people want in-person events, but push for smaller events (e.g., masterclasses, dinners) to avoid large groups
Hope to keep some virtual events in the future w/ hybrid elements
Xavier - used to have to travel a lot before, pivoting to virtual staff training in the B2B context in 2021 was more efficient and convenient
Topic: Inflation / Wine Pricing
Kyle - some prices have gone up, but more steady than expected
CA prices are going up because of the light 2020 vintage (fires)
Bordeaux 2020 releases prices much higher
Burgundy - pretty steady pricing with slight increases
Germany - top producers are increasing prices as they were underpriced before
Xavier - w/ tariffs and increased shipping costs, MMD has tried to absorb the impact with their partners - sharing ⅓ producer/supplier, ⅓ importer/MMD, and ⅓ distributor
Mike - bought long on some products pre-tariffs, which helped through the first half of 2021
Did reduce some margins and tried not to pass on increased costs to customers
Some allocated Burgundy had to pass on cost increases
Lisa - people looked more at domestic wines than usual, specifically 2018 and 2019 Napa wines, primarily because of 2020 fires and short vintage
Bordeaux 2020 is a lot higher pricing than 2019, even with a less consistent vintage
Diana - had supply chain issues pre-Covid, including a glass shortage (as only river sand can be used, not desert sand)
Have learned to order early to deal w/ shortages (e.g., glass, labels, capsules)
Facing labor shortages globally
Wineries have absorbed increased costs of glass and corks
Topic: Clean & Natural Wines
Lisa - there is no definition of clean wine. It’s just a marketing fabrication
Natural wine is a misleading term as well. It means different things to different people
Kyle - no one has asked for clean wine yet
Customer curiosity around natural wine, but people believe they are faulty wines (e.g., mercaptans, Brettanomyces)
Wine merchants need to educate consumers around these topics
Xavier - positive part of this trend is that it creates a conversation around wine
Diana - need to educate consumers around sustainability. It’s positive that people are worried about the climate and sustainability. If there’s no definition of the term, it becomes greenwashing
Audience Questions:
Matthew - how do you best educate, communicate organic sources, and implement sustainable practices without greenwashing?
Lisa - be very honest about what you’re doing
Kyle - make them “a” point vs. “the” point, the wine should be “the” point, make the best wine you can
Ziad - how is the wine sector coping with climate change?
Lisa - need to live w/ extreme events (e.g., wildfires, water shortages) more frequently, all over the world
Xavier - Piemonte & Champagne have benefitted from climate change, and some have adapted winemaking; e.g., Louis Roederer has evolved their Brut Premier multi-vintage wine to “Collection 242,” a new multi-vintage wine that will have a unique number and release each year as the wine is now based around a single vintage
Diana - there are two conversations - one on adaptation and one on decelerating climate change through GHG emission reductions
Adaptation - France has to deal with frost issues, especially in Burgundy, Napa has drought and heat
Bringing Wine to Life w/ Jacki Strum, Wine Enthusiast Media
00:46:48
Growing up around wine has not dimmed the passion Jacki Strum brings to her work as President of Wine Enthusiast Media. In the first of a series on the evolution of the wine critic, Jacki tells us about how Wine Enthusiast has expanded its platform from print into web, social media, podcasts, and even Tik Tok. As well as how they assess wines (blindly) as a wine critic and how those ratings are used to help people buy wine. We really get under the hood of the wine media business in this episode of XChateau!
Detailed Show Notes:
Jacki's background
She grew up in wine (her parents founded Wine Enthusiast in the late 1970s)
Founded Thirsty Nest - a wine & spirits gift registry platform, media, and commerce hybrid that is part of Wine Enthusiast
Wine media in the late 1980s
Wine Enthusiast(“WE”)magazine founded in 1988, Robert Parker wrote for WE for a while
Wine Spectator was around, but not much else
“French Paradox” on 60 Minutes(1991) about the health benefits of wine was the catalyst for the entire wine industry in the US, which helped the magazine take off as well
WE media platform
Print publication - still successful
Did well during Covid as people were sick of screens and hard news
Website - growing exponentially
Houses the entire database of wine reviews
Buying guide went “through the roof” during Covid due to an increase in online wine sales
65% of visitors go to the website to buy wine
Social media
Instagram - now the biggest platform, easy to shop, easy to comment
Facebook - still important, but fading vs. Instagram
Twitter
Testing Tik Tok - believes will be the future of educational content
Podcast - done well and testing a few other series
It plays into the journalism approach - including the lifestyle elements of wine
Ratings help people buy wine
Core demographic - “the curious wine consumer,” which is more of a mindset vs. an age or gender
Wine criticism and ratings
Taste completely blind
Taste w/in 1 region
Advertisers have no say on ratings
Do points still sell wine?
100 points or Wine of the Year can still build a brand
Most ratings are a powerful tool in the marketing toolset, but just a piece of the puzzle
Certain critic/magazine names still carry more weight than others
More at the bottom of the marketing funnel - helps close the sale
At the top of the funnel - general brand awareness - WE builds partnerships with brands for marketing, including various content and social influencers
WE Buying Guide (ratings)
It comes up 1st on Google, which gives it more credibility
Review ~25,000 wines per year
Path to building a wine brand today
Scores are still helpful and free
Need to build out the marketing stack and figure out the storytelling - start with social media
The catalog did well during Covid - people needed wine storage, upgraded glassware, etc.…
Return on ad spend with WE
Partners wanted to get closer to the sale, have become more ROI driven
Implemented digital shopping carts to track purchases
Key metrics for ROAS (return on ad spend)
Email acquisition
Wine sales
Impressions
Podcasts - can use discount codes to track the impact
The natural feeling of podcasts make an ad feel more real
Webinars did well for email acquisition
Any campaigns that boosted DTC sales or signups did well
Digital advertising has grown a lot during Covid
Lots of influencer marketing - leverage 40 Under 40 contacts, usually people WE has written about
Often custom build ad partnership plans with clients
WE Catalog provides the richest database in the industry to create good ad targeting
Innovating for fun and interaction in wine auctions w/ Jeff Zacharia, Zachy’s
00:44:49
Jeff Zacharia, President of Zachy’s, the global leader in wine auctions, tells us about how they made wine auctions more fun, have been moving to studio sales and bidding parties without live auctions, and how they narrowly escaped being swindled by Rudy Kurniawan’s wine fraud scheme. We learn all about the wine auction process, what regions are trending, and where he sees the market going. Don’t forget to rate and review XChateau wherever you get your podcasts!
Detailed Show Notes:
Zachy’s founded in 1944 by Jeff’s grandfather, Jeff joined in 1983
Zachy’s wine auctions started in 1995 when wine auction became legal in NY, started with a partnership with Christie’s, and then went independent in 2002
Expanded to Hong Kong in 2008 and London in 2020
London is to expand in Europe, believes it is underserved from a wine auction perspective
Having wines in Europe enables quicker delivery for European customers
London was the wine auction capital, then became New York, then Hong Kong, now it’s in between New York and Hong Kong
Auction Process
Send a list of wines, get a low and high estimate, sign a consignment contract
Organize wines to Zachy’s warehouse, catalog wines in detail (including fill, labels, etc.…), and print catalog, either electronic or print
3 methods of auctions - live auction, studio sales (live auctions online), and internet / timed sales
Zachy’s differentiation - great effort in researching and inspecting the wines
Auction Market
Saw steady growth year over year, with a spike in 2019 due to big sales
Zachy’s leadership - how they became the #1 wine auction house globally
Wine is all they do. They are focused and passionate about it
Jeff has been in the wine business for 40 years and built deep, long-term relationships
The team has invested years building their relationships with collectors and wineries
Innovations - centered around making auctions fun and engaging
Changed from the classic auditorium-style auctions to restaurant-style with food and wine
Bidding parties - often for studio sales, smaller gatherings around the world (e.g., Sweden, London, Germany, China, Hong Kong) that have the same food and wine atmosphere connected via Zoom to the auction
Investigating how to make virtual auctions more interactive
Auction business model
Currently focused on buyer’s premium
May have seller’s commission, but depends on consignment size - the larger the consignment, the smaller the commission; substantial sales may even have rebates from the buyer’s premiums
Getting more consignors is the challenge currently
Expect prices to continue to rise - quality keeps rising (especially weaker vintages), and more collectors out there for a relatively inexpensive luxury
Growing auction markets - Burgundy remains strong, some growth in Champagne and Rhone, California hasn’t yet gotten traction - potentially due to a different style of wine than those who are buying Burgundy
Provenance premium often from ~20-200%
Producer direct - can introduce or reintroduce wines to Zachy’s buyer base, sharing these wines for them to taste, and another way to help build the brand
Scores declining in importance with more wine critics
To be auctionable - need quality, rarity, and fashionable - what people are looking for
Rudy Kurniawan story - bought a lot of wine from a Zachy’s auction and never paid, sent a list of wine to be sold in order to pay, but Zachy’s was uncomfortable with the wines (~60% seemed suspect) and rejected the whole consignment
XChateau is a podcast about all things wine, from vine to your glass. We tackle the business of wine and keep you up to date with new and exciting developments, so you always know what goes into your bottle.
In this episode, Robert Vernick and co-host Peter Yeung discuss social media for wineries and the importance of creating your social presence to grow your brand and build a solid client base. Robert and Peter will delve into the pros and cons of each social media platform, as well as managing your brand page, social media influencers, and social media paid advertising. This episode will help you to navigate the continually changing world of social media, even if you’re a newbie, and discover how to create more compelling content and branding for your winery business.
Other topics covered in this episode include:
Best platforms to use, specifically for wineries
Best practices for starting in social media for your business
Tailoring content for different social media platforms
The benefits and downfalls of individual social media platforms
The importance of social media for a wine brand
How to engage your customer base and attract and find new customers
Social media influencers - how to engage, interact, and pair with the right ones
The pros and cons of having multiple social media pages
Call-to-actions: what are they, and how do I use them to benefit my business
How to leverage social paid advertising
Trends versus fads; what’s coming and what’s on its way out the door
If you loved this episode, we would love for you to subscribe, rate, and review on iTunes or wherever you get your podcasts. Until next time, cheers!
Marketing to Millennials w/ Damien Wilson, Sonoma State University
00:37:07
Part two of our interview with Damien Wilson, Hamel Family Chair of Wine Business at Sonoma State University, focuses on what wineries can do to align their brand, marketing messages, and how they sell wine to Millennials. From hospitality to various marketing channels, with social media, Damien provides examples of what works and tips on what to do. This episode also includes a “lightning round” where Damien and Peter discuss some of the major trends in wine marketing.
Detailed Show Notes:
Millennial Wine Buying - tips for wineries
Limits on brand loyalty/retention mean wineries need to make more customer acquisition
High price points will put off younger consumers
Low-end wine brands (e.g., Charles Shaw) are not targeting Millennials well - they appear to be more about consumption (e.g., Carlo Rossi jug wine, Bag in a Box brand) vs. Millennial values
Seltzer likely hitting a peak as the category is starting to fracture and fragment with many new brands and brand extensions
Hospitality best practices
We need to be better at the digital era
Wine industry good at talking about the product and quality (e.g., winemaking, terroir, product characteristics) but needs to know how to get people to the glass before what’s in the glass
Responses from wineries on social media are very slow or unresponsive
Good examples
Jason Haas of Tablas Creek in Paso Robles - very responsive, got back to Damien in 10 minutes of tagging, Jason responds himself
Randall Graham - remains relevant but admits to not figuring out how to make money from social media
Macrostie - has 12 different locations in their facility with different experiences - creates a reason for people to come back
Tagged 27 wineries on a trip to Paso Robles, and only 2 got back to him (1 of which was Tablas Creek)
Automated monitoring can help - so people get notified when activity occurs
Millennials have a strong attachment to people behind the brands and ones that reflect their values
Millennials ask questions, and they will tell you what they like
Marketing channels that work
Social media
Retail with smaller producers/experiences (e.g., Whole Foods showcases smaller producers and is more experiential shopping)
Marketing Lightning Round w/ Damien and Peter
Augmented Reality - “brilliant” according to Damien, cost of adoption is falling, e.g., 19 Crimes and Snoop Dog Rose
Natural / “Clean” wines - a way to premiumize lower-end wines with marketing; natural wine suffers from lack of consistency, making it harder to adopt; Clean wines - unsure if success is related to clean or celebrities that back them
Low/No Alcohol / No sugar wines - could work if they get people into the wine category, likely more a niche long-term
Celebrity wines - will likely grow but needs to be authentic - e.g., Kim Kardashian was behind a vodka brand but didn’t drink, which turned people off of the brand
XChateau is a podcast about all things wine, from vine to your glass. We tackle the business of wine and keep you up to date with new and exciting developments in the wine industry.
In this episode, Robert Vernick and Peter Yeung interview Greg Lambrecht, Founder & Chairman of Coravin, leading wine preservation and access technology. We discuss the technology, how to get the most out of the Coravin, how people learn about coravin, and what is in store for the future.
Other topics covered in this episode include:
Greg fell in love with wine in Napa at age 16
Works in medical devices
Was frustrated with how to explore wine without committing to the whole bottle
Coravin’s goal: to change the way wine is served and sold
Founding:
1st prototype - 1999
A patent filed - 2004
Company founded - 2011
The product launched - 2013
Technology - basic components existed before Coravin but needed a lot of refinement
Surgical grade needle - started with 3 types
Gases - started with 4 types (CO2, helium, argon, & nitrogen)
Gas pressure - biggest invention is the pressure regulator
Capsule uses
Don’t hold the trigger for a long time; use multiple very short presses to get the most out of the capsule; Want to hear as little as possible when the Coravin is tilted back up
The average is 15 full glasses/capsule - can get up to 20-24 if used right
@ 15 glasses/capsule, each glass is ~$0.50 for argon gas
Coravin models
Model 3 - $199 (entry pricing) - all the functionality, but only in grey and single design
Model 5-6 - has different colors and finishes
Model 11 - removed hand clamp, now uses a smart clamp (which is now across the range); automatic pourer - can set up the amount to pour on you phone
Needles
Vintage needle (silver ring) - pours more slowly, can use up to 19th-century wines
Fast flow needle (red ring) - 30%+ faster, can use for corks up to 15 years old, mostly for restaurants
Standard needle (black ring) - can use up to wines from the 1960s
Professional needle (gold ring) - rare and expensive, like a blend of the vintage needle and standard needle
Need to replace needle every 500-1,000 uses, if it’s hard to insert the needle and/or there is silver at the end (the Teflon is wearing off), it’s time to replace the needle
Cut foil to improve needle life
Don’t use on synthetic corks, vinolok (glass corks)
Northern Italian wines and Diam corks - corks are harder and reduce needle life, but okay to use
For best usage - use the 4 C’s
Clean - need to wash it after use, rinse with hot water through the spout at the end of the evening
Clear - give the trigger a quick press before you go onto the next bottle
Cellar - still need to protect the bottle and store wine as you would for aging
Cork - don’t use on bad corks - a simple trick, push down on a cork, if it slides, don’t use Coravin
The drop of wine at the top - when you remove the needle, it drags a bead of wine as the cork closes, does not mean the cork has not sealed
“Cold and old” - colder and older bottles have less elastic corks and take longer to heal. Leave them standing up for five minutes before putting in the cellar
Coravin screwcap
Markets that wines will last for 3 months, but has seen 10-18 months
Trick - only need 1 screwcap module for long-term storage, put the original screwcap back on after pouring with Coravin, and will be fine
Coravin marketing - how people hear about it
#1 - at wineries - for pouring library wines, etc.…
#2 - restaurants and wine bars
#3 - at a friend’s home (word of mouth) - this is becoming the #1-way people hear about it in the US
Distribution
In 60+ countries
Start almost exclusively in trade. Over time, consumer demand outstrips trade
US - 80-90% sold to consumers, China - predominantly trade
With the Covid pandemic - 75% of business is now online
The Future - the mission is to make it faster, easier, and more fun than opening a bottle; sparkling wine is in the works
An MW tested preservation technologies for his research paper, and the Coravin was the only product that worked
If you loved this episode, we would love for you to subscribe, rate, and review on iTunes or wherever you get your podcasts. Until next time, cheers!
Engineering Wine Criticism w/ Jeb Dunnuck, jebdunnuck.com
00:37:50
Becoming a wine critic sounds like a dream for many. However, even though the cost and effort of setting up a website and putting out information have declined dramatically, doing the work of becoming a professional is no easy task - the time and effort it takes to taste and review thousands of wines a year is daunting. Jeb’s journey from aerospace engineer to reviewer of The Wine Advocate to being the Editor-in-Chief of jebdunnuck.com highlights the passion required for the journey. Jeb talks about his journey, critics going independent, blind tasting, score inflation, and more, all in service of helping his subscribers make informed wine buying decisions. Another unique viewpoint on the evolution of the wine critic on XChateau!
Detailed Show Notes:
Jeb’s background
He grew up on a farm in rural Indiana - no wine on the table
Self-trained in wine
He traveled through France and fell in love with wine
He never had an epiphany wine
Worked at Lockheed Martin in upstate New York - was an aerospace engineer for his initial career
Did a part-time job at a wine store in Denver
2008 - created a website - The Rhone Report
Released a quarterly pdf for free for 3 years
Built a subscriber base for 2 years
2013 - Robert Parker asked him to work at The Wine Advocate (“TWA”)
Worked at TWA for 5 years
Having a chance to work with Robert Parker was key to joining
2017 - left TWA and started JebDunnuck.com
The Rhone Report reviews were morphed into JebDunnuck.com
Left TWA because Jeb disagreed with the direction of the new ownership, the culture changed dramatically
Wine critic vs. wine publication
Believes the person writing the reviews is more important than the publication
The business model of publications lean them to emphasizing the publication over the critic
It’s up to the consumer to know their critics
JebDunnuck.com (“JD”)
More of a “singular voice”
He doesn’t believe in large teams of critics
JebDunnuck.com has a small group of critics covering multiple regions each
Jeb doesn’t pretend to be a writer as he comes from an engineering background => his goal is to help the consumer make buying decisions and find the wines they like
Writes concise vintage reports, talks about style and structure of wines
He doesn’t write opinion pieces, commentary, or do events
He doesn’t take money to review wines, completely subscriber funded
Reviews 9-12k wines/year
Critics going independent
Believes the trend is actually towards more business-driven, team-driven critic reviews => the size of the wine world is so big that it is pushing that way
If the critic is the most important thing for reviews, going independent is the way to do wine criticism
Best practices for wine critic ethics
Don’t take money from people making the product
There are shades of grey - e.g., sometimes people pick up the tab at a dinner
Critics should pay their own way (airfare, hotels, meals, etc.…)
JD buys a lot of wines but could not purchase them all
Cost of being independent
Website and getting information out is low now
But providing professional (e.g., extensive) coverage is hard and expensive (time, travel)
Blind tasting
Jeb is a fan of blind tasting for how to approach wines
Believes the role of the critic is more than the tasting note - it’s to provide context on the region and the producer (which can’t be done with blind tasting)
People promoting blind tasting are taking money from the trade, so Jeb believes they have to sell their process
Impact of top scores
Less impact today because so many great wines out there
More great wines than ever before => lots of substitutes, even at 95+, 100 point scores
Pathway for wineries to become iconic
Make a consistently great wine, takes time
Need to have wines tasted and reviewed by top publications
Need to make enough so people can try it and get exposure globally
Score inflation and compression
“I do think scores have increased”
Believes there’s less compression - more critics are using the whole scale (up to 100) with more highly rated wines than in the past
The format of score presentation now gives the appearance of score inflation
Scores used as email marketing will only be high ones
Most people access scores online via a score database, sorting by the highest score vs. having to read through a printed document
Scores used for large reports to give delineation between wines
100 point wines for Jeb must have the following:
Hedonistic pleasure
Intellectual pleasure
Intensity of aromas and flavors
Age ability
Singularity (they stand out)
Barrel samples
Similar to evaluating a young wine, can still be useful
Range ratings for barrel samples are important because the scores can come out before the wines are released, giving subscribers guidance for purchasing
JD’s subscriber base
Don’t have a lot of demographic info on subscribers
Pretty serious about wine, mostly collectors
~80% US-based, so CA wines are important to them
User-generated reviews
CellarTracker - useful because you can follow individuals
When Robert & Peter started the XChateau Wine Business podcast, the idea was to try and build a community around the business of wine. Part of that has been engaging with our listeners, as well as our guests. While it has happened on an ad hoc basis, we wanted to do it more proactively for our 50th Episode / One Year Anniversary. We recorded our 50th episode live on Clubhouse to have a broader interaction with former guests (Juliana Colangelo, Lauren McPhate, and Maureen Downey), other guest partners (Barb Tyree from Repour and Tess Roche from WineBid) as well as listeners. We covered topics around the current status of re-opening in the US, an update on the fine wine market, favorite episodes, and ideas for future episodes. Listen in and let us know what you think!
This episode is sponsored by Sonoma State University’s Wine Executive MBA program. A 17-month, transformative program that builds leadership skills and business acumen focused on the specific needs of the world of wine. Learn more about SSU’s Wine MBA programs here. If this is something you’re considering, the next Global Wine Executive MBA session’s enrollment deadline is June 30, 2021, for courses starting in October!!
Special Announcement: Repour, one of our sponsors, has also created a special discount for XChateau listeners through May 21, 2021. Use the code: XChateau on the Repour website and get 20% off for both retail and wholesale orders! If you haven’t heard of Repour, find out all about it in Episode 24, where CEO Tom Lutz gives us all the details.
Detailed Show Notes:
This episode was recorded live on May 4, 2021, on the Clubhouse platform
US Covid business updates and trends
Lots of open jobs right now, especially in hospitality, the US is recovering from Covid quickly
Juliana Colangelo (Colangelo & Partners) - returning to normal media relations, going through a transition period with both in-person and virtual; a client is hiring a virtual tasting room manager, there will still be demand for virtual events
Barb Tyree (Repour) - restaurants are coming back online quickly
Nadine Brown (sommelier in DC) - retailers did well in DC during Covid, huge staffing issue in DC
Fine Wine Market update
Lauren McPhate (Tribeca Wine Merchants) - in fine wine, people are still more adventurous with their purchases, buying new regions; the store in NYC re-opened a couple weeks ago; tariffs removed from Europe leading to buying again from Europe, but shipping is the big issue currently
Maureen Downey (Chai Consulting) - wine collectors have drained their cellars, tariffs haven’t impacted buying at the very high end; Italian wines are trending, increased sale of counterfeits (e.g., Acker sold a counterfeit bottle of whiskey)
Juliana Colangelo - more wineries selling back vintages from their library
Tess Roche (WineBid) - continuing to see lots of new wine buyers on WineBid, increase of younger buyers purchasing, more mobile orders, increase in unique wines that haven’t had much auction activity in the past
Maureen Downey - fine wine has always been bought site unseen, so online is “normal,” but people who would have bought in the grocery store before have moved online
The American Negociant: Brian Retherford, Claudine Wines
00:41:40
XChateau is a podcast about all things wine, from vine to your glass. We tackle the business of wine and keep you up to date with new and exciting developments in the wine industry.
In this episode, Robert Vernick and Peter Yeung interview Brian Retherford, founder of Claudine Wines, a modern, American micro-negociant. We discuss the wine market inefficiencies that make a negociant model possible, how the wines of Claudine differ from the wineries’ wines, and where the best deals will be going forward.
Other topics covered in this episode include:
Brain’s background - 15 years in the US Army, now a cybersecurity consultant
Started by doing a Crushpad project - micro winemaking project that ended up being too expensive with insufficient quality
Types of negociant models
Buying fruit
Buying bulk wine
Buying finished wine in a barrel - Claudine’s main focus
Buying bottled wine
Market inefficiencies in the wine industry
Takes 3-4 years from harvest decision to selling wine, which creates supply/demand mismatches
Other opportunities: tasting room that burnt down in the fires, the winery decided not to release a wine it made to focus on the core region, yield variations year to year creating more wine
What can Claudine put on the wine label
Try to be as specific as possible - using the AVA, but can’t discuss producer, winemaker, or vineyards usually
Often shares a copy of language with winery before releasing
Sustainability of the business
Keep small scale (3-5 barrel projects) and do more projects vs bigger projects
Focus on higher-value - if a similar wine could be bought at Costco, won’t do the project
Curating great product and building customer trust over time
Differences between Claudine and the winery’s wine
Might be the same - “the last 100 cases off the line” or already bottled wine
Some wine that didn’t make it into the final blend and have extra barrels
The wine bulk market
Bifurcated between top juice and commodity wines
The upper end is more competitive
Winery options other than negociants to sell excess wine
Don’t produce (often not done b/c the marginal cost to produce is small)
Lower price (not a popular option in the US)
Sell to flash sale sites (e.g. - Last Bottle, WTSO)
Wine gets “poured out” or destroyed
Claudine customer demographics
CA - had wine events pre-COVID
NY, Boston, Kansas City - where Brian used to live
Brian knows about 1 in 10 customers now
Skews older in the age group
Upcoming deals - likely good opportunities by focusing on deepening relationship in Napa
If you loved this episode, we would love for you to subscribe, rate, and review on iTunes or wherever you get your podcasts. Until next time, cheers!
The Hardest Wine Exam in the World w/ Mark de Vere MW
00:43:27
The hardest wine exam in the world, an elite community of >400 wine professionals, and learning how to engage with wine more. All those elements are used to describe the Institute of Masters of Wine and the Master of Wine (“MW”) exam. Mark de Vere MW tells us about how becoming an MW landed him a full-time job in Napa to all the rigors required to pass the MW exam. A must listen to episode for those thinking of applying for the MW program or those who just love learning about challenging wine exams.
Detailed Show Notes:
Mark’s background
He grew up in Oxford, United Kingdom
Studied wines through a wine tasting group at university
In 1997, he had a summer job at Robert Mondavi, passed the Master of Wine exam during that time, and was hired on full time and still at Robert Mondavi / Constellation Brands
MS has a more laddered programs (i.e., more levels before the master level)
MW has no practical, service element
MS exam is oral, MW is all written
The MW Study Program
Goal: to help orient people to understand what the end goal is - to gain the depth and breadth of the challenge of the MW exam
Need to know every step of the wine business, from the vineyard to wine landing on the table
3 Stages
Stage 1 - 1st orientation to the program, has the Stage 1 assessment - proving you can understand the issues, 12 wines blind, 1 set of theory essays
Stage 2 - preparation for the MW exam, which is 3 x 2.25-hour blind tasting exams with 12 wines each, 5 x timed theory exams
Stage 3 - research paper, developing something new for the world of wine
There are time limits for getting through the program now, ~5 years, with the goal of not getting people stuck in it
Pass Rate of the MW exam
Used to say ~10% of people that sat the exam
Hard to calculate a rate due to people who sit multiple times, and you can pass certain portions of the exam
IMW actively trying to increase the pass rate by making it more difficult to get in and sit the exam
~15-20% of people who enter the program actually complete it; ~75-100 are admitted to the program each year and ~10-20 people become MWs each year
Value of the program, if you don’t complete is learning how to understand the issues around wine better, engaging with wine differently, and building communication skills
More people are applying for the MW program and it’s becoming a more global program
The IMW and diversity
The exam is completely blind, making it unable to discriminate via grading
Conduct outreach to all parts of the world to generate a diverse pool of candidates
~150 female MWs today
Being an MW
Titles do carry some weight within the wine world
Got Mark a permanent job at Mondavi after being hired for only a seasonal position
Join a community of MWs, where giving back to the wine world is one of the core tenets
Breaking Down the 3-Tier System w/ Tom Wark, National Association of Wine Retailers
00:55:45
Instituted in a different time, post Prohibition, the 3-Tier system of alcohol distribution and sales in the US creates inefficiencies in matching inventory with demand. Tom Wark, Executive Director of the National Association of Wine Retailers (“NAWR”), founder of Wark Communications, and writer of Fermentation - the Daily Wine Blog educates us on the history, key issues, and challenges of navigating the 3-Tier system for wine consumers to get the wines they want. The NAWR is on a mission to modernize the regulatory landscape for alcohol and bring choice to consumers. Listen in to Tom’s decades of war stories on wine regulation!
Detailed Show Notes:
Tom’s background
He grew up in Northern California and got interested in wine at an early age
Amazon could get into the wine space w/ Whole Foods alcohol licenses and ship to anyone locally -> The only way for independent retailers to compete is to do interstate shipping
16 states currently allow interstate shipping
Wine.com has retail licenses in many states to ship to most states
Secondary issue - procurement of inventory
Retailers must buy from in-state wholesalers who have a limited selection
Retailers desire to purchase directly from importers or wineries no matter where they are to broaden their selection
NAWR mission - to modernize the regulatory landscape for alcohol
Most regulations were written in the 1930s-1950s
Alcohol is more regulated than tobacco
E.g., if a brewery wants to sell direct to consumer, it needs to sell to a wholesaler and then repurchase it to sell to the consumer
Franchise laws - binds producer to a wholesaler for life, even if the wholesaler is no longer supporting the brand
Advocate litigation for change - e.g., states that allow their own retailers to ship to other states but don’t allow out-of-state retailers to ship in, believes that violates the dormant commerce clause of the Constitution
Lobbying, education of retailers, cultivation of allies (very few - consumers and media; most against - distributors, non-online retailers (believe it will create more competition), wineries (indifferent), importers (were not active supporters))
The 3-Tier system in the US
1930’s - post-prohibition (1933) - each state had to regulate alcohol, and each did it a bit differently
Two main concerns - prevent tied house laws and organized crime
Tied house - producers controlled retailers => got bars to do sketchy things and promote high alcohol consumption
3-tiers - producer, wholesaler, retailer
Retailers must buy from wholesalers
Stopping tied house - wineries can’t own retailers
Historically - lots of wholesalers competing to represent producers
Today - 10,000+ wineries, fewer wholesalers -> wholesalers act as gatekeepers, not required to bring producers in and shut out small producers who aren’t worth the time and effort to represent them
CA producers and importers can sell direct to retailers/restaurants
Wholesalers are very powerful - contribute meaningfully ($10M+/year) to state political campaigns, 10x more than wineries and retailers combined
Each state has different 3-tier regulation, creates an enormous compliance burden
IL - wineries can sell directly to retailers only if they produce <25k cases/year and must sell <5k cases/year w/in the state
CA/WA - all direct sales from producers to retailers/restaurants
E-commerce
~10-12% of wine retail today, includes Drizly, Instacart, & grocery delivery
Shipping far smaller than delivery
To be successful, retailers need to engage consumers digitally - cultivate an email list, create an experience for customers
Challenges
Getting wine to consumers (illegal to ship to many states)
Hard to make time to do outreach to legislators, regulators while running a small business
Restaurants become retailers during the Covid pandemic
The 1980s & 1990s - number of wineries exploded, they needed to sell directly to consumers since distributors wouldn’t represent them, became legal a precedent with the 2005 Supreme Court Granholm case - which specified if states allowed in-state wineries to ship to consumers, it must allow out-of-state wineries to ship into the state
Taxes
If states allow retailers to ship in, retailers are required to remit local sales taxes and have a permit
Software systems set up for wineries also can cover retailers (e.g., ShipCompliant, Avalara), makes compliance easier
Pure online players - wine.com, Naked Wines => valuable for showing consumers what can be accessed online and the experience of online retail
What needs to change? The Supreme court needs to tell states not to discriminate (2019 case - Tennessee vs. Thomas - can’t discriminate against retailers)
Selling Uruguayan Tannat w/ Christian Wylie, Bodega Garzón
00:54:57
“Ura-what?, Ura-where?” Selling Uruguayan Tannat has many challenges, recognizing both the country and the signature variety not well known globally. However, Christian Wylie, General Manager of Bodega Garzón, and owner Alejandro Bulgheroni have risen to the challenge. So much so that the late, famed wine writer Steven Spurrier once said that “Garzón achieved iconic status in less than a decade.” Hear all about the journey for Garzón and Uruguayan Tannat in general on this episode of XChateau.
Detailed Show Notes:
Christian’s background
Chilean from a British family
Studied agricultural engineering in Chile and enology at UC Davis
He was a hands-on winemaker for a while
An entrepreneur with fresh herbs
Met an Uruguayan woman and got married to her - started the connection with Uruguay
“Survival of the Fittest” likely reason for becoming national grape in Uruguay - hot and humid climate did not do well for other dry climate European varieties, Tannat likely had better yields
The name comes from the tannins, has the most polyphenols (2.3-2.4x more Resveratrol than Cabernet Sauvignon)
Traditional style - big, rustic, tannic, but easier to drink than Madiran; usually overripe fruit, heavy extraction, and lots of oak (heavy toast, American)
Garzón Tannat - more fruity, fresh, vibrant; minimal intervention, some carbonic, cold soak, unlined cement fermentation, large vat French oak
Other varieties: Marselan (lots in China, now an approved Bordeaux variety), Merlot
Key markets for Tannat
Garzón - Uruguay (~40% of premium wine is Garzon), US, Brazil the three top; export to >50 countries (Nordics, Japan, UK, Canada, Netherlands other key markets; Growing markets - China, S Korea, Singapore, Russia, & Mexico)
Uruguay in general - Brazil #1 (mostly low priced, bulk wine)
Garzón portfolio
Estate = entry-level, mostly sold domestically
Reserva = higher tier based on the quality of grapes, <$20 USD
Single Vineyard = areas w/in estate, ~$30 USD
Petite Clos = 1 specific parcel, ~$70 USD
Balasto = top wine, ~$100 USD in the US, ~$200 in Uruguay
Named after the decomposed granite
Blend of the best reds of different parcels
3rd wine from South America sold via La Place de Bordeaux
Marketing Tannat & Garzón
“Taste first, then say what it is”
Started Wines of Uruguay 20 years ago, but wines didn’t sell because no one had heard of it, needed to promote everybody
Consumers - banked heavily on social media - has ~80k followers on Instagram
Created a dynamic website
Trade (e.g. - MS/MW) - “reverse mission” - bring them to Garzón
PR - Glodow Nead - has brought Playboy, Architecture magazine, Robb Report, NY Times
The dynamic loyalty of fine wine buyers w/ Pauline Vicard, ARENI Global
00:54:42
A global think tank, a research and action institute, ARENI Global is dedicated to understanding and sharing knowledge around the world of fine wine. Pauline Vicard, the Co-Founder and Executive Director, shares ARENI’s definition of fine wine and details findings from their research around the fine wine consumer. This includes how millennials are shifting the mindset of all fine wine consumers, how they are loyal to merchants over brands, and the differences between consumers in Hong Kong, mainland China, and Europe. Listen in and get to know the fine wine consumer better!
Detailed Show Notes:
ARENI Global - started as a think tank in 2017, gathering experts within and outside of the wine world, now a research and action institute with 3 steps: 1) understand the world 2) the impacts on the future of fine wine 3) what actions to take
ARENI deliverables
Discussion platforms with peers
Publish whitepapers, reports, articles
Smaller events, panels
Fine wine definition
Objective quality - complexity, length, balance, potential to age
The capacity of fine wine to stop time, bring emotions
Relationship with its maker - the authenticity of expression of the winemaker
Price points - start at 30 euros ex-cellar, to the highest bracket of 450+ euros ex-cellar
The fine wine consumer
ARENI interviews collectors and merchants every year
Want to be treated as unique; curious - really into information; international; demanding; very loyal (not to wines/brand, but to several merchants) - trust is important; price-aware; masculine = getting more feminine (~15-20% today); getting young (now ~49, but getting younger)
Use the internet to review prices and ratings
Younger international / millennials - don’t have a lot of regional differences, often source wines from around the world; choose restaurants based on sommeliers and follow them on Instagram; learn from the internet
Hong Kong - buy to possess, only buy through friends, interested in famous history or personalities, not vineyards and soil
Mainland China - buy to drink, only buy through friends, use the internet to make sure wine exists and isn’t counterfeit
When prices rise for specific wines or regions, those buyers move on to other wines/regions; the brands find new customers in different regions
Fine wine regions
mostly the classics, Bordeaux (70%), Burgundy rising, Italy, and Champagne
California has not impacted much because very little sold internationally, though more via La Place de Bordeaux; taste profile too powerful, Super Tuscans more similar to Bordeaux and better-perceived value
4 types of fine wine consumers - fairly equally distributed between each
Passionate - addicted to knowledge, mentorship important
Status Seekers - buy the label, belong to a group, approved by influencers
Collector Drinkers - buy and sell wines, make money to buy more wine
Affluent - people who are rich and want to drink better wines
Millennial mindset - impacting other groups with their mindset - want to be considered as an individual, demanding, likes sustainability, social media use; the challenge is the affordability of fine wine
People tend to learn about fine wine through family consumption (especially in Europe), work (especially in the US), bought fine wine when it was cheaper years ago, mentorship (often from merchants and sommeliers), interest in food, and travel
XChateau is a podcast about all things wine, from vine to your glass. We tackle the business of wine and keep you up to date with new and exciting developments in the wine industry.
In this episode, Robert Vernick and Peter Yeung interview Tom Lutz, Founder & Creator of Repour Wine Saver, one of the leading new inventions in wine preservation technology. We discuss the technology, how people have learned about it, the differences between Coravin and Repour, and what the future holds.
Other topics covered in this episode include:
Tom is a chemist by trade (worked in biodiesel, aquarium products)
Repour was invented when he had a newborn son and ended up pouring half bottles of wine down the drain.
Technology:
Uses food grade oxygen absorbers
Binds the oxygen, of which the atmosphere has 21%, does not replace it.
Requires air to exchange and remove the oxygen, so the bottle needs to be stored vertically
The capacity of the stopper
Built for 5 pours of one bottle, glass by glass - this would expose the wine to 1,500 ml of air.
The max amount a stopper has to handle is 2,000 ml of air.
Uses recyclable materials. However, many municipal grids have 3”x3” grids that filter out small objects; for large customers, they do take back repours to recycle
Robert and Peter discuss how luxury wines are priced, delving into the core insights from the Pricing Chapter of Peter’s book, Luxury Wine Marketing. They discuss the luxury wine price segments, the types of luxury wine buyers, and how you need everything to be working right to build a luxury wine brand. “You can’t just stick a label on two-buck chuck and price it at $1,000.”
Contains industry best practices for how to sell luxury wines vs. more “commercial” wines
Includes new research on the market size, customer segmentation, and frameworks for marketing luxury wines
Wine pricing segments
The overall wine market has an average price of $7-8/bottle
That makes $20+ sometimes classified as “luxury.”
In LWM, luxury wine is more of a luxury good - where the product is used to differentiate
$50-99 - affordable luxury
$100-199 - everyday wine for the luxury buyer
$200-499 - special occasion luxury
$500-999 - icon wines
$1,000+ - dream wines
Luxury wine consumer segments
The Wine Collector
The Wine Geek - seeks knowledge.
True Luxury Buyer - buys top brands.
Aspirational Buyer - looks up to the True Luxury Buyer.
Brand impact on the price
Dom Perignon is a special occasion wine at $170/bottle vs. if it was $40/bottle.
Price signals an element of quality.
Price makes some people think it’s better quality.
Strategies to launch luxury wines
Build-up - start lower-priced and build-up
Build-down - start higher and build-down
Need a good story and quality to back up pricing
E.g., Penfolds - from Grange to $10-15/bottle wines, Grange provides the halo effect for the cheaper wines as people to associate themselves with the brand
Luxury branding - using price over value as the luxury driver, e.g., Harlan Estate
Luxury wine demand
Sometimes when you increase the price, you increase demand
2 types of demand - consumption and investment demand
Wineries want people to drink, not sell the wines, to keep the secondary market high
Still need to have value - quality and reputation of the wines
Burgundy - driven by wine collectors who want the scarce and rare
Tricks and tips for buying luxury wines
Know what you like and target those types of wines
If you want something special - brand strength is important, a la the gifting culture in China
Follow critics whose palates are similar to yours and track there scores to find values
Check out the best wines from less well-known parts of the world
Winery pricing strategy has 4 major determinants
Quality
Brand strength
Competition
External factors
How do some Napa wines come out of the gate pricing $250+?
Sometimes they leverage the brand strength of the winemaker.
Mostly selling to friends and family.
Sometimes they need to play the long game and sit on wines for a while
Fanning the Flames, Understanding Smoke Taint w/ Dr. Anita Oberholster
00:51:27
With four years of extreme fire season in Northern California, the study and importance of smoke taint is at all-time highs. Leading the charge is Dr. Anita Oberholster of UC Davis, who is collaborating globally to better understand the chemistry of smoke exposure and taint, how to measure it, what to do about it, and how to create new solutions to monitor and manage it. This episode packs everything you’d ever want to know about smoke taint in 50 minutes!
Detailed Show Notes:
Dr. Oberholster is an Extension Specialist in Oenology at UC Davis, which means she interacts more with industry than teaches, lots of applied research
From South Africa, she studied Biochemistry and has a Ph.D. in Wine Chemistry from South Australia
Definitions:
Smoke taint - overpowers the wine, makes it one dimensional, and reduces the quality
Smoke exposure - can have different levels of exposure, no index yet exists to track, but academics are collaborating on it
Smoke exposure is less about proximity, but how fast the smoke gets to you => very fresh, dense smoke = higher risk of smoke taint
Volatile phenols decay in the atmosphere, if it’s more than 24 hours old, there’s less risk
The ultimate goal - have a low-cost sense that detects volatile phenols to determine the smoke risk
Vineyards are most susceptible when there are berries on the vine
There’s no carryover effect from prior year fires
Testing grapes vs. wine - wine tests are more accurate because there are more free volatile phenols vs. bound with sugars
~20-25% of people aren’t sensitive to smoke taint
Testing is expensive and laborious, requires a gas chromatography, mass spectrometer
Crop insurance - covers grower if smoke exposure is above a certain level; it’s heavily subsidized by the government
There’s no correlation between thin and thick-skinned grapes and smoke taint
Alcohol (if >10%), sugar (if >3g/L), and phenolic compounds mask smoke character, and green character enhances the smoke character
Rose - gets ~30% of the volatile phenols vs. red wine but may still show taint relative to the lower concentration of compounds
Carbonic maceration - one of the worst for smoke taint
Sprays to prevent taint - results very variable so far
When there’s wetness/oiliness on berries, then to absorb more smoke taint
Washing fruit - unclear if this has any impact
Most wineries will not take the brand risk to release smoke tainted wine
Best practices for growers and wineries:
Buy crop insurance for growers
Contracts between growers and winery need to be as clear as possible, with a cutoff for smoke taint
Standing Out via AR and Celebrities w/ Ming Alterman, 19 Crimes
00:45:12
Seemingly overnight, 19 Crimes, a division of Treasury Wine Estates, has become a Top 15 brand in the US and has a global impact. Re-imagining what a wine brand could be, 19 Crimes has had many innovations, but found lasting success with augmented reality and celebrity partnerships with Snoop Dogg and Martha Stewart. Ming Alterman, Brand Director for 19 Crimes, gives us the history, best practices, and keys to success for the brand and AR.
If you love the show, please consider supporting us on Patreon.
Detailed Show Notes:
19 Crimes Overview
A Top 15 brand in the US according to Nielsen IRI, ~500k cases sold at $11.50/bottle average
A virtual brand, no winery, no visible winemaker - disrupts what a wine brand can be - “The non-wine drinkers' wine”
Americans often pick up a bottle because of the look and feel - developed the packaging and story to engage the consumer
1st black matte bottle, collectible corks with crimes on them, and augmented reality (AR
Still need a wine that delivers for the price point and consumer first -> the wine quality creates repeat purchase
Average consumer - 35-55 years old, wants to be a part of something and can relate to the story of the 19 Crimes
Snoop Dogg's partnership has brought in 200k new consumers into wine from beer and spirits
Augmented Reality
App has over 5M downloads
Started w/ both AR and virtual reality (VR) to tell the story of the brand
In 2017 - people didn’t want to put on the headset (VR) in-store but were okay downloading the app and AR took off
Created a 3d puppet of the person, animated it, and recorded lines
AR came a few years after the brand launch, was supposed to be a sales tool, but morphed into a consumer thing
Consumer awareness - QR code on bottle to download the app, invested in POS displays and in-store marketing, some screens in aisles
People scanned and download the app while in the aisle
Success factors - instant gratification, people shared it and it went viral, good shareability, great creativity, and simple
Requires ongoing investment in the app - e.g. - built ability to record in-app
Usage goes up during holidays (people like to share it) or the launch of a new SK
Launching AR
Easier now w/ web AR - can just do through camera phone vs needing an app
Regenerative, the Only Sustainable Farming w/ Jason Haas, Tablas Creek Vineyard
00:44:29
Taking over from his father, 2nd generation proprietor of Tablas Creek Vineyard, Jason Haas left a career in technology to dig into the soils of Paso Robles. Spearheading the conversion to Biodynamic farming and now the certification of Regenerative Organic farming, Tablas Creek has pioneered not just the Rhone movement in California, but of Regenerative farming, which looks to take into account the farm’s impact on the soil, community, and region. Jason believes that Regenerative farming is the only truly sustainable way to farm. Listen in to Tablas Creek’s progression from organic to biodynamic to regenerative.
All Rhone varieties, including rarer varietal wines
Own 270 acres, 125 planted to vines
Regenerative farming - similar to biodynamics, but thinks more about the externalities of agriculture
Has commitments to less use of shared resources (e.g. - water, power)
Has an additional focus on the big picture (e.g. - climate change with a metric to increase the carbon content of the soil)
Biodynamics is process-based whereas regenerative farming is results-based
Requires a series of audits - soil health audit, animal welfare certification (that they are treated humanely), farmworker audit (paying fair wages, increasing their skills -> led to weekly roundtable meetings)
Focus on the positive impact on the soil, community, and region
Does not have cow horns or the cycles of the moon like biodynamics
Regenerative is an alternative to biodynamics that is more focused on science vs mystical processes
Benefits of the various farming practices
Conventional - cheapest in the short term
Organic - in the long run, not more expensive than conventional. Organic certification in wine has been mostly for lower-end wines in the $10-15/bottle
Biodynamics -Initially believed it would increase the lifetime of vines and gain in quality from older vines. Discovered that lots grown biodynamically were the best lots right away in blind tastings.
Regenerative farming - Less about the grapes vs biodynamics, more in externalities
Regenerative farming pilot program
6 Regenerative Organic certified wineries at the moment
Got invited to the pilot w/o knowing what “regenerative” was or meant
Can use the “Regenerative Organic” seal on their wines (vs just for the grapes)
Costs of farming
Biodynamic/regenerative - have more hands-on labor vs organic or conventional farming
Less chemical purchases
Cost on a $/ton basis for farming has not increased significantly vs organic (~$3-5,000/ton)
Has not experienced yield reductions, the yield has been more dependent on water (e.g. - 2-2.5 tons per acre in a dry / frost year vs up to 3.5 tons per acre for a wetter year)
Has been able to avoid significant labor issues by maintaining its own vineyard crew (10 FTEs, started w/ own crew in 1996), paying a living wage and good labor conditions have led to good recruitment and retention of crew workers
Crafting a Brand for Millennials w/ Ben Matthews, Terratorium Wines
00:51:11
Combining a passion for wine with a background in marketing to Millennials from Proctor and Gamble, Ben Matthews launched Terratorium Wines. Building a brand for Millennials has led to creating target personas, packaging elements that lead to more transparency, and pricing to create a fine wine entry point. Hear about how Terratorium is creating brand alignment with its Millennial customers.
Want straightforward, more “natural,” less manufactured products - concern for clean ingredients for products that are “in you,” “on you,” or “around you”
Want alignment on brand values, it’s more than just economics
Like transparency for the manufacturing process
Not as price-sensitive as people think they are
Want to support brands you’re proud to tell your friends about, which increases the word of mouth velocity, e.g., Tom’s Shoe’s “Buy 1, Give 1”
Need the right price point (there’s a ceiling for Millennials) - ~$25-low $40s for a single vineyard, craft wine; the market entry point for fine wine
Millennials are now 50% of parents, which is influencing buying practices, sustainability becoming more important
Developed personas for their target consumers - “who is my who?”
Came up with fictitious characters - “Jake” and “Meaghan”
Average older millennial professionals
Creates a brand lens for wine style, packaging, varietal selection, etc...
Terratorium varietals
Try to bring in not quite mainstream varieties
Millennials like learning about things
Packaging - P&G says it’s “the 1st moment of truth” - need to capture the eye
Front label
abstract graphic to visualize tasting notes, colors represent flavors that correlate to tasting icons on the back
Back label
Tasting icons on what the tastes of the wine are
Regional / vineyard information (new) - more hooks to remember the region (e.g. - soil types, climate)
QR code for the website - will be more targeted in the future
The Instagram handle on the back label - try to drive more traffic
In the future - will have ingredients, nutritional information on the website
Winemaking for Millennials
They like lower abv, fresher wines vs. heavier, oaky, more savory beverages
Wine Clubs
likely to remain a viable system w/ Millennials, like regular shipments, discounts, and some form of community
Building awareness through marketing
Active on social media - Instagram, Facebook, YouTube are the main channels for the older Millennials
Partnerships with adjacent categories (e.g., nutritionists, health-conscious proponents)
More in-person events in core markets - create more word of mouth presence, can’t replicate the in-person tasting experience
Podcasts - saw some sales from the Inside Winemaking connection
Boxing for the Environment w/ Jason Haas, Tablas Creek Vineyard
00:34:31
Constantly looking to improve its environmental impact, Jason Haas, Second Generation Proprietor of Tablas Creek Vineyard in Paso Robles, recently released a trial of 3L bag-in-box wines at $95/box. Though this is 15% lower than the normal bottle price, it still represented ~3x the highest boxed wine in the market. However, the potential to lower the total carbon footprint of the wine by 40% led to trialing and a terrific reaction to the 300 box trial, which sold out in 4 hours. Jason explains the rationale, strategy, and process of going bag-in-box and for other alternative packaging.
If you love the show, please consider supporting us on Patreon.
Detailed Show Notes:
The rationale for trying bag-in-box
Did a self-assessment of the winery’s carbon footprint - on the Tablas Creek blog
For the average CA winery, >50% of the carbon footprint is from the glass bottle (including transportation), as glass requires high temperatures to mold and has a heavy impact on shipping and transportation
Tablas Creek moved to a lightweight bottle in ~2010, which saves ~10% of CO2 footprint; heavier bottles are ~10% more
3L bag-in-box reduces packaging carbon footprint by ~84% and ~40% of the total carbon footprint
A wine blogger commented on Jason’s Facebook that Tablas Creek is well-positioned to create change w/ bag-in-box
Previously topped out at ~$35 for 3L, or ~$7.50/bottle
Tablas Creek bag-in-box trial
Bottled 100 cases of Patelin de Tablas Rose, ~300 3L boxes
Got ~60k views on a blog post on boxes in 2 days, lots of positive comments
In mid-Feb 2022, released the boxes to the member email list and sold out in 4 hours
Wines are currently under screw cap, meaning they are similar and don’t need adjustments to be in a bag-in-box
Future bag-in-box efforts
May extend to all 3 Patelin de Tablas bottlings (red, white, rose), which sell for $28/bottle retail, and other wines not meant for long aging
Likely will not sell in distribution - an “uphill battle,” with the price point being too high vs. the existing market
Bag-in-box ties to Tablas Creek’s mission - “to have a positive impact on the way grapes are grown, wine is made, and how wine is packaged and sold”
Box pricing
$28/bottle retail would be $112 for 4 bottles (1 box)
Cost is less for packaging, which was passed along to customers
Priced at $95/3L box, thought it was good to be under $100
Bag-in-box bottling & storage process
Bottling boxes was the biggest challenge at a small scale
Rented a semi-automated filler (would cost ~$10-12k to buy)
Very labor-intensive, took 4 hours for 324 boxes
There’s now a mobile bottling (boxing) line with bag-in-box capabilities based in Sonoma, may rent this for future boxings
Not a lot of reliable data on how wine ages in boxes outside of 6-12 months, will be tasting and testing
Bags in the boxes have higher oxygen transfer rates (“OTR”) than glass bottles
Once opened, the boxes stay fresh for at least several weeks
With the rapidly changing social media landscape, TikTok has started (as of late 2021, early 2022) to arrive as a place for wine lovers. Wine influencer Amanda McCrossin (somm_vivant) has gained momentum in this “wild west” and now has over 100k followers. She shares her journey, best practices, and what makes TikTok special.
Detailed Show Notes:
Former sommelier and wine director at Press Napa Valley, full background on Episode 12
The low and no alcohol wine space is growing rapidly. Enough so that a company specializing in spinning cone technology to reduce alcohol, ConeTech, changed its name to BevZero. Debbie Novograd, CEO, and Kayla Winter, Director of Product Services & Winemaking, discuss the technology, the challenges of producing good no alcohol wine, and the market for low and no alcohol wines.
Don’t forget to support the show on Patreon and get access to our backlog of great episodes and show notes!
Detailed Show Notes:
Alcohol reduction technologies
Reverse Osmosis - pass wine through filters, removes water and alcohol, can only bring down abv by a few % per pass, requires multiple passes to get to 0% (more taken out of the wine)
Spinning Cones - creates thin film vacuum distillation with heat added (37C) to extract alcohol w/o cooking wine, only spends a few seconds in still
BevZero history
Founded in 1991 as ConeTech as a tool in the winemaker’s toolbelt to adjust alcohol to hit a “sweet spot”
Before 2018, >14% abv wines had a higher excise tax, alcohol reduction used to bring wines below 14%
Montepulciano vs. Montepulciano w/ Max de Zarobe, Avignonesi
00:48:45
Sharing a name causes confusion. Trademark and appellation laws are there to protect them. However, it can be harder to resolve when this confusion is within the same country. That’s the challenge Montepulciano (both the town and and the wine Vino Nobile di Montepulciano) faces against its bigger neighbor Montepulciano d’Abruzzo. Max de Zarobe of Avignonesi describes the history, challenges, and steps taken to clarify the names and the wines.
If you’d like to support the show, please sign up on Patreon!
Detailed Show Notes:
Max’s background - in shipping, ended up in wine by mistake
Avignonesi background
Originally a noble family from Montepulciano
Based in the SE part of Tuscany, close to Umbria
Best known for Vin Santo
Top 5 producers in the region (~175ha planted; ~100/~1,300ha of Vino Nobile)
Vino Nobile di Montepulciano (“VN”)
From the town of Montepulciano, Tuscany
Historically controlled by Florence
Min 70-80% Sangiovese, trend for all local varietals
Three years to produce
~10M bottles annually
~3x the price of MA
Named “Nobile” due to nobility consuming the wine in history - only two places in Italy were known for noble wine vs. wine for food, Barolo and Montepulciano
Once famed as the best wine in Tuscany - it was imported by Thomas Jefferson to the US (~$250/year)
Montepulciano d’Abruzzo (“MA”)
From the province of Umbria (East Italy)
It uses the Montepulciano grape variety
One year to produce
~120M bottles annually
Other naming confusions resolved by the EU: Champagne/Cava, Tokaji/Tocai, Prosecco/Glera. Internationall, cross border conflicts get good support from their governments
Naming conflict a domestic dispute - VN did not get gov’t support as it is small (Montepulciano has ~18k people/~15k voters; Abruzzo is ~2.2M people/~2M voters)
VN is challenged by the squeeze between Brunello (confusion w/ Montalcino, leads the American market due to investment of Banfi) and MA (shared name)
VN promotion challenges & actions
No one spoke English (even the President and GM of Consorzio do not speak English); Avignonesi has organized local English classes for children
Consorzio tried to get support from politicians but unsuccessful
As of last year, put “Vino di Toscana” on the label - limited impact as many don’t know Abruzzo is a province
Want to highlight “Nobile” vs. full VN name
Issue: can’t use an adjective to name a wine (EU law), “Nobile” is both an adjective and a noun; thus the full VN name was adopted
Alliance Vinum, a band of 6 producers, uses “Nobile” by printing it on the “back” label, which is functionally the front label
From Non-Vintage to Multi-Vintage Collection w/ Jean-Baptiste Lécaillon, Champagne Louis Roederer & Xavier Barlier, MMD
00:38:50
As the climate and resulting fruit quality change, winemakers must adapt to achieve the highest quality. That led the historic (246 years as of 2022) Champagne house of Louis Roederer to create Brut Premier in 1986 to overcome the challenges of underripe vintages, particularly in the 1970s. In 2022, another evolution has occurred, where the fruit is consistently ripe, and the main challenge is to preserve freshness. Thus, the launch of the Collection series, evolving the non-vintage Brut Premier into a multi-vintage wine that represents the best of the base vintage, the house style, and the push for freshness. Jean-Baptiste Lecaillon, EVP and Chef du Cave at Champagne Louis Roederer, and Xavier Barlier, SVP of Marketing and Communications of Maison Marques & Domaines USA (Roederer’s import arm), tell us about this transition, strategy, and its market positioning.
Driven by climate change and a resultant change in farming
Grapes have more expression and flavors; picked earlier and healthier
Need to adapt winemaking and farming to these new grapes
Grapes are picked earlier than 40 years ago, but similar to the late 1880s
The Grower Champagne movement - “a fantastic movement”
The growers survived due to the sales prowess of the Houses and have always had a close relationship between them
Due to climate change, it’s now possible to bottle wine themselves, whereas in the past, blending at scale was necessary due to the significant variation in quality
Terroir is now being revealed, of which both growers and Houses are moving towards
Collection series launch
Brut Premier was created in 1986, after the ’70s which were challenging years, so the non-vintage was created to make consistent, even quality wines
Using non-vintage to correct unripe grapes
With climate change, the challenge is different with ripe grapes; need to give freshness to the wines
Collection focuses on freshness, wants to reach the elite of the multi-vintage category, to be the best blend possible instead of consistency of house style
A modern evolution of Brut Premier, which is in the context of Champagne changing (100 years ago Champagne was sweet, 50 years ago it moved to a drier aperitif wine)
Collection production methods
Perpetual reserve (“PR”) - a new tool to ensure freshness and minerality, as well as the complexity of age
PR started in 2012 with 50% Pinot Noir, 50% Chardonnay, lots specifically selected for their freshness
PR has the new vintage added to it every year, and it becomes more and more complex over time
PR is aged in large tanks (1,000hl) with no oxygen, kept at 12C (underground cellar temp) for prolonged aging
Collection blend includes ~30-35% PR, ~10% reserve wines aged in oak, ~55-60% from the most recent harvest
Brut Premier had 6-10% oak reserve wines, which were the house signature of Roederer; Collection increases this signature
Brut Premier no longer made
Removed to have more consistency in the lineup, Collection is more “Roederer” than Brut Premier
Collection pricing
Product is more expensive to make, so pricing is higher than Brut Premier
Collection is multi-vintage (like Krug Grand Cuvee and Jacquesson), at a higher level than non-vintage
Exploring American Sparkling Wine w/ Michael Cruse, Ultramarine & Cruse Wine Co
00:46:38
Sparkling wine is trending at the moment and no brand best embodies the trend more than cult California sparkling wine producer Ultramarine. Michael Cruse, the founder of Ultramarine and Cruse Wine Co, explains how he developed a passion for sparkling wine that led to his accidental success. He covers how Ultramarine took off, techniques and production practices that have business implications he took from Champagne, pricing, and his view on sales channels.
Detailed Show Notes:
Ultramarine
Started in 2008, 1st real vintage was 2010
Sparkling wine in CA that focuses on coastal single vineyards, high acid, single vintage
Precise production style - not copying Champagne, but taking some techniques and applying them to CA
Harvest ~1,000 cases/year, ~500-750 cases make the cut for release
Limited ability to grow (due to lack of suitable fruit sources), target ~1,200-1,500 case range
Cruse Wine Co
Started in 2013, supposed to be a custom crush facility
Initially not for sparkling wine, an interest in Valdiguie
Later realized his passion was in sparkling wine - does pet nats, more experimental, more oxidative styles
Focus on CA as a whole vs. coastal vineyards of Ultramarine
~7,000 cases/year (2018 was peak ~8,500 cases)
The capital intensity of producing sparkling
Cruse Tradition takes ~40 months to make which means 3 vintages must be paid for before selling any wine (e.g. - fruit, glass ($2+/bottle), etc…) - this limits growth
Ultramarine spends 38-48 months en tirage, found this to be its sweet spot
Sparkling wine equipment
Bought own equipment vs. doing custom crush at Rack & Riddle - partially due to using a bottle that they would not take
Follows many Champagne producers - they may use co-op press, but do own elevage and disgorgement
Uses a gyropalette, which requires some bentonite (riddling aid)
Long term relationship with growers is important -> growing sparkling is different than still wine grapes
Varietal impact on winemaking
Chardonnay - less fruit, more minerality - be more reductive to preserve fruit
Pinot Noir - more fruit, less minerality - be more oxidative to get more minerality
Pricing
Value spaces (~$20-25/bottle), e.g. - Gloria Ferrer, Roederer Estate, Cruse doesn’t have the scale or capital to compete here
Doesn’t think he can sell 10,000 cases @ $70/bottle
Believes he can sell 5-10,000 cases @ $45-55/bottle
Unclear how Champagne price inflation will impact market opportunity for domestic sparkling
Ultramarine secondary pricing - goes for 3x release price; believes it’s only ~30 bottles/year @ $200/bottle, could not sell entire production at that price point
Farming for the Next Generation w/ Jean-Baptiste Lécaillon, Champagne Roederer & Xavier Barlier, MMD
00:25:18
As a 7th generation family-owned and run company, being sustainable means building towards the future for the next generations. That’s the philosophy that has led Champagne Louis Roederer to move towards organic farming with biodynamic and permaculture principles since 2000. With 100% of its historic estate (50% of total vineyard holdings) certified organic, this process has had a significant impact on the quality of the fruit and wines as well as the bottom line. Jean-Baptiste Lecaillon, EVP and Chef du Cave at Champagne Louis Roederer and Xavier Barlier, SVP of Marketing and Communications of Maison Marques & Domaines USA (Roederer’s import arm), tell us about this transition, strategy, and its market positioning.
Beginning in 2000, started moving farming towards organic, including some biodynamic and permaculture philosophies
Organic is just stopping the use of herbicides and pesticides, but that’s it
Biodynamic practices for JBL are less about Rudolph Steiner’s philosophy but more about paying attention to the land and ecosystem, aligned more with the permaculture movement
About adding life back into the soil and building fertility, which comes with decreased use of copper and sulfur that are used in organic farming
We can do this at Roederer because it’s a family-owned business with 7 generations, building for the next generation and the future
Roederer does its own massale selection, own rootstocks, and compost
Impact on growers
Impacts more the future generation of growers, need to educate them
Roederer single-vineyard ferments everything and tastes the growers on their own vineyards
Assigned a Roederer enologist dedicated to grower relations
Organic trends in Champagne
20 years ago - <1%
10 years ago - 2.5%
Last year (2021) - ~8-9%
A result of the new generation coming into viticulture
More expensive to farm organically/biodynamically
More labor-intensive - need to be available 7 days/week
Increased workforce by 15% due to more labor needs
Yield has decreased due to new farming
Up to 30% yield reduction in some years
The 10-year average is ~5-10% reduction in yield
Marketing organics - plays into desires to support the environment
Roederer began organics in 2000 with 6ha -> in 2020, 125ha (50% of estate)
Organically certified vineyards are 100% of the historic estate
Organic vineyards are the Cristal and Vintage wines
The future of Champagne - maybe more of all 7 permitted varieties will play a role, with more of a focus on the genetic material of the vines
Library Release - The Global Cork Market w/ Carlos de Jesus, Amorim Corks
00:55:22
Interview with Carlos de Jesus, Director of Marketing and Communications for Amorim Corks in Portugal, the largest cork company in the world, which celebrated its 150th anniversary in 2020. We discussed the various uses of cork, the differences between corks and other closures, and how the business of cork has evolved over the decades.
This episode originally aired in September of 2020. To access the rest of our library and support the show via Patreon!
Detailed Show Notes:
Amorim - 150-year history, largest cork company in the world, produces 5.5 billion stoppers per year, over 18,000 winery clients globally, most small
Sources cork from 1,000s of property owners, mainly in Portugal and Spain
Uses of cork: wine, footwear, fishing, aerospace, flooring, and sports
Differences between cork and other closures: technical, sustainability, and additional value add
Technical differences
Oxygen transfer rate (OTR) - plastic (lets in too much oxygen), screwcap (lets in too little), cork (“just right”)
Average cork has 800 million cells in it
TCA - “we have defeated TCA” - mitigated to the point where cork is now gaining market share
Consistency of corks - not an issue for technical stoppers (micro agglomerates, twin top), a technology used to help with natural corks
Sustainability - people, planet, profits
CO2 - a single cork can have up to 562 g CO2 sink per stopper
Cork harvesting one of the best paid agricultural jobs, ~€125-135 / day for three months/year
Cork forests are 1 of 36 hot spots for biodiversity in the world
Cork forests help prevent forest fires, regulate water cycles, and trees live 200-250 years
Corks are both compostable and recyclable (e.g., ReCORK America)
Additional value add = the happy sound of a cork popping
Of the 100 most sold brands in the US (data from Nielson), the average price of wine with cork is consistently higher than other closures
Closure market
19.5B closures per year
12.5B closed with cork (~70%)
1.8-1.9B single-use plastic stoppers
The price of cork ranges from €0.04 - 3.00 per cork
Screwcaps (the lowest price), plastic, cork
Cork can now sometimes undercut the price of plastic
Supply and demand for cork
2.2M hectares of cork forests in the Western Mediterranean - lots of trees to supply the current industry
It takes 43 years for a cork tree to supply cork for a wine closure -> new research with micro-irrigation is reducing the first harvest from 25 years to 10-12 years
As the winemaker’s last choice before wines go in the bottle, cork has played an important role in wine ever since bottles could be made with consistent necks. The consistency of corks is another challenge that Diam is tackling. Francois Margot, Director of Sales, North America describes how Diam is creating corks with choices and consistency for aging, oxygen transfer, and initial oxygen release.
Cork was originally used for wine bottles when glass could be made with regular necks, chosen because it’s elastic to close the bottle
Elasticity goes down slowly over time
Regular corks are not consistent, Diam developed them to provide consistency
Consistency with structure and oxygen ingress - granulates corks (granulation spreads contamination everywhere) and then cleaned them (w/ supercritical CO2)
Cleaned to be undetectable by gas chromatography (down to 0.3 nanograms/liter)
Clean more than TCA, but all anisole molecules (150+ compounds)
Can choose the aging potential and amount of O2 ingress for wine needs
Cost of closures
Punch corks - different prices based on looks of closures (no impact on consistency)
Diam - 10-80 cents/cork
Value proposition of Diam
#1 - consistency – both in aging and oxygen transfer
#2 - Not tainting wine – if ~3% of wines are tainted, recover the full value; can detect TCA as low as 1 nanogram/liter, not 1 case of TCA in 20 years
Other producers sort corks
#3 – winemaker choice – able to choose closures based on desired evolution of the wine
Brand value – avoided destruction of brand value from tainted corks
No additional bottling line setup – e.g. – screwcaps require setting up a different bottling line with different components
Diam is not as sensitive to humidity vs. regular corks
Building the ROI – look at claims and returned bottles that will be avoided
Range of Diam products
Range based on aging capacity – 5-30 years
Range of OTRs (oxygen transfer rates) and OIRs (oxygen initial release) – 3 options of OTR and OIR
Oxygen ingress from corks in non-linear – initial oxygen enters wine from cork in the first 6 months (OIR), and then some oxygen passes through cork (OTR)
Wines for long aging may desire higher initial oxygen ingress (OIR), but lower long-term oxygen levels (OTR)
Began differentiating OTR and OIR 3 years ago
2 main patents
Cleaning process – removes 150+ compounds from cork
Re-building process – ensures elasticity of cork, contains 3 ingredients – cork (~95%), binding agents, beeswax/plastic microspheres which fill in holes and prevent moisture in the cork
Can use any thickness of cork, including thinner blocks, buys from the same producers as regular corks
Removes woody part of cork (lignin), which is up to 20-40% of bark, and uses it to burn for electricity; keeps suberin part, which is the elastic part
Burgundy premox issues – Diam has helped but the issue is not just the closure
Diam for sparkling wine
Regular corks are 24mm in diameter, Champagne corks 30-31mm in diameter
“Mytic” brand of Diam corks – same structure as regular Diam corks, but bigger diameter
Diam has ~30% market share for sparkling wine
CIVC doing research into O2 into wine
Coming out with cork for tirage next year to provide options vs crown caps, which give consistent OTR
Reflections on the Journey: 2 years & 100 episodes of XChateau
00:32:59
After two years and over 100 episodes of XChateau, Robert and Peter reflect on how the wine industry has changed, the major themes that have popped up in the show, and some of the lessons they have learned in the process. From the changes to social media, the spectrum of fine wine to everyday wines, and the importance of social issues, XChateau has covered a broad array of critical business topics for the wine industry. Supporters on Patreon get access to the entire library of content and episodes.
Detailed Show Notes:
Social media is changing rapidly
The rise of TikTok (in the last 6 months - late 2021 and early 2022 - for wine)
Platforms are overlapping (e.g., Instagram’s Reels and IGTV)
YouTube is still the place for high production value
More than pictures now, a lot more interactivity and video -> creates a higher barrier of entry for influencers
Wine video improving - more than the historic Gary V, Wine Library YouTube; e.g., WineKing, Andre Mack (Bon Appetit), Konstantin (MW in Germany)
SommTV is paid streaming vs. advertising backed by social media (which can be tricky with alcohol), but SommTV doesn’t have the social element and interaction
CellarTracker is now expanding after over a decade, building on the community, expanding what was one of the first freemium models
XChateau covered a broad spectrum of the wine world
High end - ARENI research on fine wine consumers, wine auctions, wine investing, counterfeits
Everyday wines - 19 Crimes (A/R, celebrities), FitVine (clean, good for you wine trends), Hammeken Cellars (crafting everyday wines)
Wine investment - was hot, unclear future with the macroeconomic environment changing (higher interest rates, inflation, war in Ukraine); Burgundy still doing well currently, primarily due to limited supply
Grocery wine has seen significant shifts - re-opening has moved wine back to restaurants from grocery, will a potential recession increase grocery wine from fine wine retail?
Evolution of the wine critic was a popular series - guests (e.g., William Kelly, Jeb Dunnuck, Esther Mobley) were very candid and open
Social issues were an important topic - diversity, gender equality, climate change
Diversity and inclusion is a potential pathway to bridge the gap in the wine industry from a smaller Gen X cohort
Things like Tablas Creek’s $95 bag-in-a-box wine as a solution for environmental impact
Topics to tackle next:
Global wine markets and trends
Different business models (e.g., co-ops, custom crush facilities)
Understanding the wine buying journey of collectors and wine consumers
Making Fine Wine Transparent, Efficient, & Safe w/ James Miles, Liv-ex
00:50:01
Seeing the opportunity of bringing solutions in the financial markets to fine wine, James Miles, CEO and Co-Founder of Liv-ex, launched the London International Vintners Exchange (“Liv-ex”). Through standard contracts, guaranteed trades, and a plethora of data, Liv-ex is making the fine wine market more transparent, efficient, and safe. Though the Liv-ex 100 and 1000 indices are what it may be best known for, it is an end-to-end trading platform. Listen to James explain it all as well as market trends on this episode of XChateau!
Detailed Show Notes:
Liv-ex background
Founded in 2000
Based on the similarities between wine and stocks, leverages financial solutions for wine
Mission - make the fine wine market more transparent, efficient, and safe
An exchange for wine - London International Vintners Exchange (Liv-ex is the acronym) - an end-to-end solution to buy and sell wine, including price discovery, trading, and logistics to ship wine globally
Customers (merchants) in 42 countries, Liv-ex doesn’t compete and sell to restaurants, hotels, or represent producers
Trading on Liv-ex
An order matching system - customers place buy and sell orders on the platform
Bids are firm, cannot cancel orders - a new concept for wine, which is usually “subject to availability”
Created standard contract for wine trading - includes condition, when to pay, and when it will be delivered
The order book is a queuing system - 1st based on price, 2nd by the time of bid, the book is always open
Wine traded on the platform
2010: £55M traded across 1,000 wines - 97% Bordeaux, top 10 Bordeauxs + DRC = 70%
2022: £100M traded across 15,000 wines - Bordeaux ~35%, Burgundy, ~25-30%, Champagne / Italy ~10%, CA growing; France still ~70-75%
Transactions are growing ~20% per year, but avg price is declining
Merchants
>580 merchants on the platform
2022 - UK ~35%, Europe ~40%, USA - ~15%, Asia ~10%
Fastest growth - USA, Europe, slowest - Asia
Provenance/condition of wines
Joining Liv-ex requires review by the membership committee - look at financials, where wines are bought, etc.
Has data-sharing initiatives with customers
Has special contract for older / rarer wines (takes into account more information)
Liv-ex Data
Liv-ex Fine Wine 100 index - tracks most traded wines, uses production and scarcity weighting vs. just price (multiplies price by # of cases and depreciates this over time; price is mid-point of bid-offer spread or last transaction price)
Liv-ex 1000 - price-weighted, top 100 wines and last 10 physical vintages, breaks down to regional indices
If no price from the platform takes price from customer listings or valuation committee
An active market in ~15,000 wines but tracks ~350k wines
Customers have ~$1.5B of wine actively marketing
Market trends
Burgundy is the big winner; Champagne & Italy did well, especially w/ US tariffs
Top increases: DRC, Roumier, Leflaive, Selosse, Salon, top Italian wines / Barolos
Everything w/ a hint of Leroy doing well (e.g., Arnoux Lachaux has risen 4x having worked for Leroy in the past)
Wine has been doing well so far against macro headwinds (e.g., Brexit, tariffs, Covid, war, inflation), and physical assets are an excellent place to be
Business model
Membership fee - based on features used and amount of data consumed
Trading fee - 2-3% commission on both sides, usually ~5% of total trade (low vs alternatives - wholesaler - 10-20%, auctions - 25-30%, importer/agent - 30%+)
Gaining Perspective on Collaborations w/ Juan Munoz-Oca, Ste Michelle Wine Estates
00:45:10
A lot can be learned through collaborating. Even how to stay calm during a pandemic when your Italian partner is in the thick of it. Calm with the perspective of 26 generations of winemaking and having survived two World Wars. Juan Munoz-Oca, Head Winemaker for Ste Michelle Wine Estates, Washington State's leading wine company, describes what he's learned and the process of collaborating with other luminaries of the wine world, including the Antinori Family, Dr Loosen, and Michel Gassier from the Rhone Valley.
Detailed Show Notes:
Juan's background
In WA with Ste Michelle Wine Estates ("SMWE") for 21 years
Head of winemaking for the entire group
Ste Michelle Wine Estates
Based in WA state - 6 wineries (Chateau Ste Michelle ("CSM"), Columbia Crest, 14 Hands, Spring Valley, Northstar, Col Solare)
OR (Erath), CA (Stag's Leap Wine Cellars, Conn Creek, Patz & Hall)
Built the WA wine region, produces ~⅔ of the wine in the state
The largest producer of Riesling in the world
Collaborations - all w/ Chateau Ste Michelle
Col Solare - Red Mountain, Cabernet, 50/50 JV w/ the Antinori Family (Italy), planted a vineyard in the early 2000s, built a winery in 2006, started in the mid-90s
Eroica - Riesling with Ernie Loosen (Mosel, Germany) started in the 1990s
Tenet - Columbia Valley; Syrah, Grenache, Mourvedre; w/ Michel Gassier & Philippe Cambie (deceased)
What drove the collaborations?
A personal touch and relationship
WA is a young grape-growing region that only started quality winemaking in the late 90s -> wanted to bring attention to the region and gain knowledge
Ex-CEOs important to establishing collaborations - Allen Shoup (founded Longshadows Winery, which has 7 wines and 7 collaborations); Ted Baseler - was part of marketing team when Col Solare was launched and started Eroica with Ernie Loosen
Collaboration process
Winemaking - spring (taste previous vintage, blend, walk the vineyards), late summer (get a feel for the grapes, walk the vineyards), winter (taste wines - e.g., 250-300 lots of Riesling for Eroica)
Renzo (Antinori's head winemaker) comes more often due to SMWE's partnership w/ Antinori on Stag's Leap Wine Cellars
CSM winemaking team does day-to-day work
Sales & Marketing - up to the partners, SMWE salesforce sells the wine, SMWE marketing works with partners and does most of the work
SMWE imports the entire Antinori portfolio, so they have a broader collaboration
Key benefits
Enjoyment of making wine together
Getting a global perspective
Winemaking informs the rest of the portfolio's winemaking (e.g., extended lees aging for Riesling from Ernie Loosen, keeping more leaves in the canopy for Syrah from Michel Gassier)
Collaboration business models
Col Solare - 50/50 JV, including vineyards, winery, & inventory; work together closely on marketing
Eroica - 50/50 for inventory and brand, no other assets; up to 200k cases in a big year; most marketing done by SMWE, less from Loosen
Tenet - Michel Gassier gets a portion of earnings and an annual fee that covers his travel; as small as 300 cases
Have business meetings 2x/year for sales and marketing strategy
Keys to success for collaborations
Have a clearly articulated vision
Keep an open mind to learn from the other
Desired new collaborations
Sparkling wine w/ Nicolas Feuillatte (Champagne)
Argentine wine / Malbec w/ Catena Family - loves their focus on terroir
Quality Driven Co-op w/ Roman Horvath MW, Domäne Wachau
00:35:01
Co-operative wineries, popular throughout Europe, are generally associated with higher volume, lower quality wines. Not at Domäne Wachau, where Winery Director Roman Horvath MW has been leading the quality vision for its family growers to great success. Roman discusses how co-ops work, how they pay their growers to get to zero income, and how managing a co-op is different from other companies.
Detailed Show Notes:
Roman’s background
He started in wine in his mid-20s
Worked in restaurants, wine internships in Chile & France was a buyer/importer in Austria
Been w/ Domäne Wachau for 17 years
Co-op definition
Produces wine from grapes from grower-members
Every member has a share in the company
Each grower manages its own vineyard
Co-ops in Europe - Spain/France/Italy - >50% of production, Germany ~33%, Austria - ~15-20%
Most co-ops are volume-driven with some exceptions
Most were established in the 1920-1930s to balance the power of small farmers with strong retailers
Since the 1990s, the increase in wine quality worldwide has left many co-ops behind as they are too large and volume-driven
Crucial to separate grower function from management, which needs professional expertise
Domäne Wachau
~400ha (~1,000 acres)
~250 family growers (each family may have multiple owners)
Avg family ~1-2 ha, largest 8-10ha, 3-4ha+ for full-time growers
Small vineyards led to a deep specialization in the site
Growers must follow the co-op’s quality schemes
Precise picking plan for all growers
Up to 70-80 different wines, ~3M bottles/year (~250k cases)
Domäne Wachau vs. other co-ops
Growers can have some of their own production; most co-ops are “all in or all out”
Push for quality - driven by a strong vision, community, and communication with growers
The goal is to increase the salary/income of growers
Co-op management
Very democratic - each grower votes in the General Assembly for the board of directors (8-10)
Each grower has one vote, not weighted by vineyard size
Management driven by the management team
Not profit-driven
Pays growers technically in €/kg of grapes, but with a complex system (e.g., higher payments for terraces, hand work, Riesling vs. Gruner, sustainable/organic farming)
Payment split over the year every other month
Goal: pay as much as possible for grapes to get to $0 profit
Option to leave the co-op, generally on 3-5 year minimum contracts
Anyone can join but have strict quality qualifications
Try to increase wine pricing every year (for quality positioning and inflation)
In small harvests, have the balance sheet to balance payments between years
Navigating La Place w/ Rebekah Wineburg & Diego Garay, Quintessa
00:39:53
Building a global brand takes a lot of effort and investment. Even with the network of >400 negociants on La Place de Bordeaux, wineries have to make significant investments in brand building and press. Rebekah Wineburg, Winemaker, and Diego Garay, Director of Exports for Quintessa in Napa Valley, discuss their journey towards selling in 50 countries in 3 years through the La Place system.
Detailed Show Notes:
Rebekah’s background
She wanted to be a winemaker at 16
Worked in Italy, New Zealand, Australia, and mainly in CA
At Quintessa for 7 years
Diego’s background
Worked on exports for Sena and Almaviva in Chile, who export ~98-99% of production
Director of Export for all Huneeus wines
Quintessa
Estate winery in Rutherford, Napa
160 acres of vineyards and make 1 red wine (Quintessa) - ~8-12k cases/year
Until recently, it mostly sold domestically - ~50% DTC, ~50% US wholesale
La Place de Bordeaux Overview
A marketplace where most Bordeaux wines are traded, often futures
3-tier system - chateaux sell to negociants, who sell to international trade
Criteria to be on La Place - brand pedigree (e.g., high scores) and a well-known brand
Wineries need to build demand for negociants w/o the help of importers, as they are not brand builders
New world wines have only been selling through La Place for the last 15-20 years
Courtiers (brokers that find negociants) - some specialize in new world wines
The goal of exporting - build a world-recognized wine estate
Long-term export goals - ~30-35% of production
Prior to La Place - exported ~1% to Canada, Japan, Mexico
They started selling on La Place in 2019
Negociant reached out to Quintessa looking for new world wines
Quintessa working w/ <10 negociants directly w/o a courtier
Demand growing - negociants asking for more wines, need to start allocating them
Need to do a lot of education for global trade on what makes Quintessa unique (e.g., terroir, place), need to show the history and age-ability of wines
Benefits of La Place
It helps put wines in a global perspective (e.g., Rebekah had to start presentations with CA instead of Rutherford or Napa)
Reach high-end distribution in a short period of time - Quintessa is now in 50 countries in 3 years
Tradeoffs of La Place
Need to invest in brand building
May see discounting due to the non-exclusive system
Logistics - send all wines to Bordeaux, which are then sent on to the rest of the world (more manageable for the winery but may have extra ship lengths)
Loose control of distribution (try to get depletion reports but challenging as clientele list is the most valuable asset of negociants)
Costs of La Place and pricing
Similar to 3-tier in the US
Negociant margins are often lower than in the US due to non-exclusivity
Try to keep pricing in-line w/ US pricing
Has not seen any pushback on price
Marketing with La Place
Set up training sessions through negociants with trade
A lot of media investment (local journalists, local PR firms)
Focused on UK, Japan, S Korea for press
Advice for wineries interested in La Place
Need to know the La Place system
Need to build the brand yourself and make the investment
Need the pedigree and brand for the wines to be successful
Crushing Custom Crush w/ Robert Morris, Grand Cru Custom Crush
00:45:54
Operating your own winery is expensive. The custom crush business model enables small wineries to solve this. Robert Morris, the founder of Grand Cru Custom Crush in Sonoma County, explains the benefits of the custom crush model, how it works, and how Grand Cru has changed the custom crush game.
The Norwegian Wine Consumer w/ Trond Erling Pettersen, Vinmonopolet
00:29:49
While traditionally a beer and spirits market, wine has now risen to equal footing in Norway. As a category manager for Vinmonopolet, the retail wine monopoly of Norway, Trond Erling Pettersen describes the wine culture in Norway, the four categories of wine consumers, and the major trends for wine consumption.
Detailed Show Notes:
Wine in Norway
Wine is now equal to beer and spirits, traditionally was more beer & spirits
Norwegians into food and wine pairing, don’t have the traditions of Continental Europe
Higher taxes on alcohol reduce consumption, but it doesn’t impact wine; taxes are set by abv, so spirits are taxed higher than wine which is higher than beer - pushing consumers to lower alcohol drinks
Alcohol advertising is banned
Consumption is lower than in other Scandinavian countries - Denmark (which does not have a monopoly) - 10L alcohol/person/year, Finland ~9L, Sweden ~7L, Norway ~6L
Big seasonal impacts - more spirits and big reds in winter, whites and rose in summer, but changing with more sparkling and rose year round
Norwegians don’t have a strong restaurant culture, so most wine is bought from monopoly and consumed at home
The monopoly sells 96M liters of wine (10.6M 9L cases) - 53M liters red, 27M liters white, 8M liters sparkling, 5M liters rose
No other retailers of wine, not allowed to buy wine at a restaurant and take it home
Four main customer groups
“Open Minded” - the largest group has a price limit but is willing to spend (KR150-200, ~$15-20), likes to try something new - often recommended by monopoly staff or a journalist
“Assured Customer” - know what they want, educated in wine, clear preferences
“Price Focused” - ~20% of customers; lower priced wines, convenience is essential
“Collectors” - ~10% of customers, very educated in wine and food, willing to pay for quality
Higher end segment is growing
Pandemic got more people into wine
The average price is rising for all segments
Organic, biodynamic, and fair trade are important to some customers
Lightweight bottles, bag-in-box preferred by customers for environmental impact and practical use for bringing to summer cabins and on boats
Bag-in-box popular last 15-20 years, now top categories supply it (e.g. - Chablis, Sancerre, Piedmont Nebbiolo); up to KR500-600/ 3L box ($50-60)
Journalists have a large impact on sales
Bodega Weinert (Argentina) said 30% of sales are to Norway, and wine reviews drive sales
Journalists are important because of no advertising
Collectors may follow international wine journalists, but the majority follow national or local newspaper wine writers
Local journalists use dice as a rating scale (1-6) vs. 100 point system
Monopoly has >32k products to select from, so journalists help with recommendations
Monopoly’s podcast educates on drinks and food, regions and grapes, and answers consumers’ questions (e.g., glassware), but doesn’t mention specific producers or products
Norwegian wine trends - 7 main ones
1) Known and Dear - the classics on the rise
2) Expanding Wine World - emerging wine regions (e.g., UK, Canada, Scandinavia, cool climate regions, etc.)
3) Alternative Packaging - bag-in-box (can be 50-60% of sales for some categories)
4-6) Green and sustainable, authentic/handcrafted, organic/natural, vegan/no sugar/lower alcohol (the no-low alcohol wine trend is also in Norway)
7) Young, Urban Consumer - into natural wines, skin contact whites, juicy red wines, more social eating and drinking, want genuine, handcrafted products (e.g., pet nats)
The Wine Monopoly w/ Trond Erling Pettersen, Vinmonopolet
00:22:27
Celebrating its 100th year in 2022, Vinmonopolet, the retail wine monopoly of Norway, is tasked with reducing overconsumption of alcohol while enabling a growing food and beverage culture in Norway. With over 32,000 selections, covering 95% of the population, and educating customers with podcasts and other programs, Trond Erling Pettersen, category manager, describes how the monopoly serves all segments of its customers and operates in a fair, transparent manner.
~95% of the population lives w/in 30 min drive of a retail store
340 shops
>32,000 different products, >20,000 wines
Basic range - ~1,000 wines, always on display in stores
Ordering range - importers can stock anything, can be ordered from monopoly website or app, and have wines delivered or available for pickup
Stores can select ~25% of shelf space from the ordering range
2021 - 118M liters of alcohol sold, 96M liters of wine (10.6M 9L cases) worth KR27B (~$2.7B) - taxes and profits go back to the government
Monopoly’s purpose
Established due to overdrinking at the turn of the 20th century - it was a source of poverty, hunger, and social issues
Founded in 1922 - 100th birthday in Nov 2022
1919 - ban on spirits
1922 - created monopoly to have the responsible sale of alcohol
Restaurants and bars
Buy directly from importers and producers, do not go through monopoly
Some trends start in restaurants, then customers go to the monopoly to buy
Restaurants have higher-end wines and often cellar wines
Wine sourcing
>600 importers supply monopoly, needs to go through a supplier, no direct purchasing allowed
Ordering range - free access to market, suppliers that list whatever they want
Special selection - high-end, allocated wines purchased for monopoly
Basic range:
It starts by looking at sales figures, trends, customer demands, and holes in the range
Conduct research by meeting with producers and importers
Develop a tender plan (tenders 2x/year) to outline what to purchase for the next year with very detailed specifications (e.g., max price, packaging, region, etc.)
Get samples and conduct a blind tasting panel which is scored
Launched in stores with guaranteed placement for one year
De-mystifying Wine in China w/ Ian Ford & Nichole Mao, Nimbility Asia
00:35:59
As one of the biggest alcohol markets in the world, China is slowly waking up to wine. Ian Ford, Founding Partner, and Nichole Mao, Partner of Nimbility Asia, walk through how the Chinese wine market has changed, what has led to success, and the current wine trends in the country. With significant growth potential, the Chinese market is a critical global wine market to grasp and understand.
Creates GTM strategy and aligns w/ the right partners
Creates research reports for data-driven decision making
Serves China (biggest market), S Korea (#2), Indonesia, India, Australia
Japan & China ~75% of wine shipments into Asia
Chinese wine consumer
Still very early stages for wine, not a daily drink for most people
2019 - 1.3 L wine/capita/year vs 51.9L for Portugal, 12.2L for US
~0.2L wine/capita/year 10-20 years ago - wine was for gifting, banqueting, and hosting, not home consumption
Coastal cities (including Beijing & Shanghai) have young consumers that go to wine bars, bistros, drink at home
The growing trend of home consumption, helped by e-commerce, gifting still exists
Chinese alcohol market
big, dynamic alcohol market - strong food & drink culture, no religious objections, very social culture
The largest beer market in the world, dominated by domestic production
Beer is a daily consumption item
Craft beer is stunted by regulations requiring a large minimum volume
Some craft beers (e.g., Boxing Cat, Great Leap) started as brewpubs
China wine market
50-60M 9L cases imported, expected to double in next 10-15 years
~100-120M 9L cases of domestic wine, hard to measure
Big domestic producers - Great Wall, Changyu, Dynasty
Emerging quality producers - Silver Heights, Grace Vineyard
Success in China
Consumer awareness creates customer pull (e.g., Casillero del Diablo, Penfolds)
Cluttered marketing environment
Unique digital landscape (no Instagram, Facebook, Twitter)
Penfolds Example (pre-tariffs) - Grange provides halo, central to the story (good formula for success), profit driver is 300k cases of Bin 407 & 389 at ~$400-450/9L case, also sold ~800-1,000 cases of Rawson’s Retreat entry-level wine
Lafite Example - Los Vascos (Chile) has higher demand due to Lafite affiliation
Sommeliers and lifestyle KOLs (key opinion leaders) can help
Social media amplification is massive
Popular regions / wines styles
Mass market - more price and style driven, like fruity, easy drinking style around ~100 RMB/bottle (~$15); Chile doing well; Cabernet and Shiraz are recognized varieties
Fine Wine - Burgundy has been the “hot bun” the last two years - pricing rising dramatically, can’t get enough; also helping NZ Pinot Noir
Very diverse market (e.g., natural wine bars in Chengdu)
Building roads for Wine in China w/ Ian Ford & Nichole Mao, Nimbility Asia
00:36:56
Navigating a very fragmented and dynamic Chinese wine market is challenging. Ian Ford, Founding Partner, and Nichole Mao, Partner of Nimbility Asia, help guide wineries to the right pathways for import partners and building demand in China. They also discuss how important domestic Chinese wine production is, the market for US wine in China, and the importance of wine education.
Sam's Club - known for wine sales to the mass market
Leading grocery stores - Jing Dong, Hema
Promoting and selling in China
Chinese social media platforms have integrated e-commerce (e.g., WeChat vs. Whatsapp, Douyin vs. TikTok), so people can immediately click and buy
KOLs get commission or paid upfront to promote, lifestyle influencers are important
Traditional wine media stays w/in the wine trade and doesn't reach the mass market
Need good importer(s) for availability, no longer need to be exclusive
View importers as partners, 1,000s of active importers, e.g., DTC importers (Vine Hu, Wiki Wines), big guys (ASC, Summergate, Torres) have extensive sales teams, operate omnichannel
Wine trials are necessary - tastings at festivals, grocery stores, etc.
Word of mouth is increasing in importance - as large KOLs are now often paid, people relying on smaller KOLs in their network more
Domestic production
Majority consumed in China, exports growing off a small base
Boutique wineries (50-100k bottles) - looking at more exports, most in Ningxia, the premium winegrowing region
Guochao movement ("national wave") - Chinese supporting domestic brands
US wine in China
9th largest by volume, 6th by value
Punitive tariffs hit imports, tariffs are more than tariffs, but a signal by the gov't not to buy the wines becomes a stigma
US wine doesn't have the legacy or prestige of Bordeaux, Burgundy, or Tuscany, but have the prices
Premium US producers are American centric not good at exports (Ridge being an exception)
Import duties
Including import, consumption, and VAT duties and taxes
Three levels:
Free Trade - ~26% - Chile, NZ, Australia (previously); wines ~1x US price
Baseline - ~48.5% - France, Italy; wines ~1.5x US price
Punitive - US, Australia (now); wines ~2x US price
Australia went off a cliff since tariffs - France benefitted the most, then New Zealand and South Africa
Wine Education important for growth
China's #2 largest student registration for WSET
WSET had to stop in 2021 due to a corporate registration issue - almost back up and running
Tradition and Evolution of the UK Wine Market w/ Katy Keating, Lay & Wheeler
00:45:38
Drinking wine since Roman times, the UK market for wine is both mature and competitive. Changes happen slowly, and old traditions remain as the market evolves. Katy Keating, Managing Director of Lay & Wheeler, one of the UK’s oldest wine merchants, gives a deep dive into the UK wine market. She explains the history of wine drinking, its impact on wine purchasing, the up-and-coming wine regions, and the fragmentation of the UK wine retail marketplace.
Founded in 1854, after Berry Bros & Rudd (1698), Justerini & Brooks (1749), Corney & Barrow (1780)
Owned by Wheeler Family until 2009, when sold to Majestic
Never integrated into Majestic, it was a breakeven business doing ~£10-15M/year
Had access to the best wines in the world and a loyal, long-standing customer base
2016 - started turnaround to put L&W back on the map
2019 - L&W sold to a private family, expanded the team, and brought MWs to buying team
Mission - “Connect the right people with the right wines.”
UK Wine Drinking
Very competitive and mature market - drinking wine since Roman times, customers know a lot about wine, buying is very relationship-driven
2nd largest wine importer (20% from France, Italy)
70% of households buy wine regularly
Beer & spirits are also big - pub culture
~50% on-premise, ~50% off-premise
Commercial wines - ~75% by volume, grocery stores mostly
Fine wine - ~25% by volume, ~40% by value, UK is ~33% of £5B fine wine trade
UK drinker drinks wine more mature (the US drinking 2009s & 2010s, UK equivalent is 1990s, early 2000s)
Wine storage is mostly in bonded warehouses
Popular regions / varieties
Old world love - history with Bordeaux
Fine Wine - L&W is 40% Bordeaux and Burgundy
Appetite for Burgundy is “insatiable” - high pricing has driven renewed interest in Bordeaux and some intrigue with Oregon PN
South Africa has been growing last 5-6 years (L&W has seen a 50% CAGR over the previous 5 years)
Champagne growing
Fortified wines - Port is most relevant for traditional settings (including Christmas, which is significant in the UK); Sherry & Madeira are not as popular
Organic/biodynamic not asked about by fine wine consumers
UK trends
Wine for investment
UK wine production - growing overall pie for sparkling, not taking from Champagne (L&W is <0.5% the UK sparkling vs. 10% for Champagne)
UK retail market - very fragmented
No 3-tier system, merchants can buy direct from producers and sell to consumers
Consumers need to go to 5-7 merchants to get everything b/c of exclusivity with producers (fine wine)
Exclusive relationships often occur when a merchant sells to private clients and restaurants
UK wine trading is standard; L&W gets ~25% of revenue from trading
En Primeur/Futures - a big part of L&W business for Bordeaux, Burgundy, & Italy
Low end - very competitive on price, grocery dominates
Online is slow to be adopted, and many still don’t have online ordering
DTC from Europe
Historically, Brits drive to France and buy at the cellar door
In the UK, buying direct online is not a thing
Brexit impact - more paperwork, more delays, hosting tastings and bringing in samples more difficult
Ex-Pats, Tycoons, and Hand Carry - Hong Kong Wine w/ Polly Aylwin-Foster & Ian Ford, Nimbility Asia
00:45:12
Revolutionized by eliminating taxes on wine in 2008, Hong Kong has become a significant wine investment and trading hub for China and Asia in general. Polly Aylwin-Foster and Ian Ford of Nimbility Asia go deep into all aspects of the Hong Kong ("HK") wine market. From the HK wine consumer, the retail landscape, cross border transactions with China, the large "hand carry" market, and the British influence on the wine culture, they provide lots of essential data and detail for HK wine.
Detailed Show Notes:
2008 - all wine duties removed for anything <30% abv, making HK the preferred place to store and trade wine
Indigenous people - wine consumption not part of daily culture
"Tycoons" - wealthy people, drive fine wine consumption, high value of wine purchased
Consumption mostly at restaurants and bars, big eating out culture
Pre-pandemic - 5-star hotels, int’l on trade, & large restaurant groups sold most of the wine
Culture of private kitchens, wine clubs, private room dining - for top wines
HK's more mature wine market
Bordeaux historically, massive Burgundy growth, some iconic American wines
The influence of British wine culture over many decades created HK wine culture (e.g., trading houses, merchants)
Average fine wine consumer more advanced in HK than China (started in 60s vs 90s in China)
HK retail landscape
Supermarkets drive bulk of sales (2 main players - Welcome, Park n Shop; Watsons wine owned by a supermarket) - sell big brands, sub-HK$ 100 (~$7-9/bottle)
Independent wine shops - importers' retail / private client arms, a few independents, British wine merchants, Enoteca (Japan) -fine wine
Online very small, <7%
Auctions influential - attract attention for brands, provides halo effect for in mainland China, mainland buyers participate
Pandemic - local airline encouraged uses miles on products, including wine, 1 importer sold $1M in wine via airline
HK wine market
4.3M 9L cases imported (2021), +10% from 2019, expected to grow 5-6%/year over the next few years
HKTDC figures - 26% officially re-exported (to China, Asia), 74% conveyed out by individuals, in storage, and local consumption
The "hand carry" market
People are allowed to take 2 bottles/person into China w/o paying taxes (~50%)
At HK/Shenzen border - many people would take 2 bottles, drop them off on the other side and go back and take 2 more bottles repeatedly
Impossible to know the scale, but a significant amount of wine goes across the border this way
Wines then put into commercial distribution in China
HK as a trading hub - initial idea of shipping to HK and re-exporting flawed
Add’l logistics costs make it more expensive
Taxes are paid on landed costs, including the add'l shipping costs
Need diff back labels for SE Asia and China (HK doesn't have requirements)
Cross border e-comm into China (TMall, JD.com)
Chinese consumers buy offshore at favorable tax rates
Limitations per year and per transactions
Opens up the availability of products to consumers
HK has a more Western media landscape
Douyin illegal (Chinese TikTok)
Does not have KOL (key opinion leader) industry like China
James Suckling invested a lot in HK, has a wine club, events
The Economics of Sustainability w/ Anna Brittain, Napa Green
00:41:50
As designer and Executive Director of sustainability non-profit Napa Green, Anna Brittain is passionate about taking action on the 7 pillars of sustainability. Spreading the word about how pursuing sustainability can save money is critical. Anna describes how she defines the 7 pillars of sustainability, what makes Napa Green unique, gives concrete examples of how wineries save money with sustainability, and the launch of the symposium Napa Thrives to accelerate the pace of action.
Definition of sustainability for agriculture has 6 pillars, now expanding to 7
1. Water efficiency
2. Energy efficiency
3. Waste prevention and green purchasing
4. Integrated pest management and biodiversity
5. Social equity, diversity, and inclusion
6. Climate action and regenerative agriculture
7. Communications and engagement
Napa Green
1 of 4 programs nationwide that have sustainability certification for vineyards and wineries
Addresses all parts of sustainability vs. 1 issue (most programs are only environmental; e.g., organic only for vineyards and not using synthetic pesticides)
~15 programs globally that address sustainability holistically
Boots on the ground for direct support achieve more action
90 wineries, 15k acres in the program
Policy vs. boots on the ground give very different perspectives
Certification requires >120 standards for wineries and >100 for vineyards
Economics of sustainability
Myth: sustainability will cost a lot of money -> it can actually help save money
Money-saving examples:
Variable frequency drives for energy efficiency, 1-3 year payback
Turn down the water heater temp when you don’t need it super hot - save thousands on water and energy bills
Chateau Montelena - used Tooley Technologies for real-time data on water needs on an underperforming vineyard, saved $0.5-1M in improving the vineyard w/in a few years; phased out wooden boxes for wine to branded cardboard, reducing shipments from 5 to 2 (less space and weight), cut materials cost 50%, cut emissions, reduced wine breakage
~50% of members have solar, but people don’t notice when inverters go down and don’t fix it until they see a high electric bill, it could save tens of thousands through monitoring and maintenance
Cakebread - focused on reducing waste, bought Big Belly solar trash compactors reducing trash pickups, saved ~$30k in first 3 years
Areas of opportunity: vineyards - develop a custom carbon farm plan (e.g., cover crop, compost, biodiversity, etc.), lays out how much carbon can be stored; compost is a big bang for the buck for carbon and water storage and nutrients; winery - water usage, including energy to transport, heat, and treat water, new regulations around wastewater also need consideration
~30-50% of emissions from packaging and distribution
Best practice: think systematically, from vineyards to winery to getting wine to consumers; members often think of one-off projects vs. looking at the entire landscape
Marketing sustainability
Hosts ambassador training to get people talking about it
Potentially $1-3/bottle premium for organic/sustainable wines
Wineries are often willing to pay a premium to buy sustainably grown grapes
Napa Thrives - symposium w/ Martin Reyes MW
Goal is to accelerate the pace of sustainability and climate action
Keeping a Family Business Family Owned w/ Aly Wente, Wente Vineyards
00:33:52
Family-owned businesses are notoriously hard to keep family-owned over multiple generations. Wente Vineyards in Livermore Valley, California, has managed to keep it going for 5 generations. Partially through having fewer children, but also through structures put in place to keep the family connected and business family-owned, Aly Wente, VP of Marketing & Customer Experience, describes how they’ve focused on connection and fun to keep the family business together for generations to come.
Detailed Show Notes:
Wente Vineyards was founded in 1833 by Aly’s Great Great Grandfather, CH Wente
Grandfather worked in Napa for Charles Krug
Livermore was similar to Napa in grape growing back then
Wente is ~800k cases in total
Brands include Wente Vineyards (~600-700k cases), Murrieta’s Well, Hayes Ranch, Angels Ink, and Ravel & Stitch
Has small lot wines only available in tasting rooms
Each generation has left its legacy
2nd generation - brought Chardonnay to California (1908, 1912) with the Wente Clone
3rd generation - bought a property in Arroyo Seco and pioneered it as a region for grape growing
4th generation - helped write the AVAs for Arroyo Seco, San Francisco Bay, and Livermore Valley; spearheaded experiences business, including concerts and golf course
5th generation - still starting out but focused on sustainability, company culture, and innovation
Family ownership has been intact through 5 generations
Partially due to the limited number of children
CH had 7 children, including 3 sons, only 2 interested in winery
Of 2 sons - Ernst & Herman (Gen 2), only 1 had children (1 - Carl)
Carl (Gen 3) had 3 kids (Gen 4)
Gen 4 has 6 kids (Gen 5)
Gen 6 will have many more people in the family
Benefits of being family owned
Not subject to shareholders, the family has complete control
Multi-generational relationships w/ other family-owned businesses can be helpful (e.g., Southern Glazers is family owned)
Large corporations may not have built the golf course or fine dining restaurant
Structures to pass on ownership to future generations
Annual “family council”
Prepares next generations for ownership and if they want to work in the company
Meet once a year
Topics include business topics to align on, educational topics (e.g., tax law), and even individual’s visions for the business
As more family works together, prioritizing more fun and bonding
Attendance starts as children, though not babies
Have policies in place for members who want to leave the company or sell shares, but no one has used them to date
The goal is to remain family owned
Wente Vision changing
Old - to be one of the most respected family wineries in the world
Changing to be more about employees
Family vs. external management
The current CEO is 2nd CEO to be non-family
External people can help balance family and business interests and inter-generational interests
Wente doesn’t create roles for family members
If a family member wants a role, they still interview others for it and choose the best candidate, though the family member has a slight advantage
3 keys to maintaining and evolving a family-owned business
1) transparency - bringing family members in at a young age
2) respect - need to treat each other with respect
3) fun - need to have fun while working in wine and with family
Casting Long Shadows over Columbia Valley w/ Gilles Nicault, Longshadows
00:31:29
After spending two decades promoting the wines of Washington State, Allen Shoup founded Longshadows, a collective of partnerships leveraging internationally renowned winemaking talent to express the best of the Columbia Valley. Director of Winemaking, Gilles Nicault, describes how the partnerships work from both a business and winemaking perspective; what he’s learned from making wines with the likes of Michel Rolland to Randy Dunn; and how Washington State’s wine profile has been elevated from this concept.
He was CEO of Ste Michelle Wine Estates (“SMWE”) for 20 years
His mentor was Robert Mondavi, who founded Opus One, a collaboration between the old and new world
At SMWE, Allen started collaborations with Eroica (Dr. Loosen) and Col Solari (Antinori)
Wanted to build partnerships for Longshadows - showcase the Columbia Valley, which is east of the Cascade Mountains and has very dry terroir (~6 inches of rain/year), enabling great diversity of grapes to be grown (Bordeaux, Rhone, Italian, Spanish varieties)
The name “Long Shadows” refers to renowned winemakers casting long shadows over the Columbia Valley
Partnerships
Poet’s Leap, a Riesling w/ Armin Diel (Schollsgut Diel in Nahe, Germany)
Saggi, a Super Tuscan (Sangiovese, Cabernet Sauvignon, Syrah blend) w/ Ambrogio & Giovanni Folonari (Tuscany)
Pedestal, a Merlot w/ Michel Rolland (Pomerol)
Pirouette, a Bordeaux style blend w/ Agustin Huneeus, Sr and Phillipe Melka (Napa)
Feather, a Cabernet Sauvignon w/ Randy Dunn (Napa)
Sequel, a Syrah w/ John Duval (Barossa Valley, Australia)
Gilles crafts his own Cab / Syrah blend with 30 months in French oak
All partnerships were established when Longshadows was founded in 2003 except Folonari, which came in 2004
All are true partnerships - each partner owns 25% of their labels, which are separate companies. They are not consultants and are not paid any other fees
Longshadows does the sales & marketing for the wines
Working relationships w/ partners vary
John Duval can be there during harvest (Southern Hemisphere)
Partners did not give any recipes for wines but pitched in and developed styles together
Fruit sourced from across Columbia Valley and its 15 sub-AVAs through acreage contracts
Source both old vines and can work with growers to plant specific clones (e.g., German clones for Poet’s Leap Riesling vineyards)
Volume of wines set by Allen Shoup and Dane Narbaitz (current President and Allen’s son-in-law), choose quality over quantity
Wines that don’t make the main wines go into 2nd label Nine Hats
Each winemaker is so different. Gilles learned there are many ways to make wines
E.g., Randy Dunn wants the jacks of the fruit in the wine, whereas Michel Rolland wants all of them out
Winemakers are interested in what each other does but do not work together
Each winemaker has their own allocation of vineyards and blocks for their wines
Selling Longshadows
The wine club “Key Club” is a big part of sales
2 tasting rooms - at the winery (Walla Walla) and in Woodinville (near Seattle)
Some distribution in the US and a few international markets
Longshadows was honored to be selected 4x to be served at the White House
The future - partners are getting older, and many are on the verge of retirement. Gilles to carry the flame forward with lessons he’s learned from them
Investing in Experiences w/ Aly Wente, Wente Vineyards
00:30:08
From weddings to concerts to a golf course, Wente Vineyards has a whole portfolio of experiences to share the Wente brand with consumers. Aly Wente, VP of Marketing & Customer Experiences, shares how Wente thinks about managing the portfolio of experiences and how they embed wine and the Wente brand into everything they do. From becoming more of a data company to refactoring their tasting rooms and driving people to the wine club, driving deeper connections with their customers is core to the ROI of experiences at Wente.
Detailed Show Notes:
Wente Experiences overview
Championship golf course designed by Greg Norman
Tasting room with food & wine experiences
Concerts, including a tribute band series
Rent space for weddings and corporate events
Experiences are viewed as a connected portfolio
Everything should feel cohesive and true to the brand
Hospitality team overseas golf grill, tasting room, and booking events
Embody wine in every experience - concerts -> wine & music events; 5-star restaurant -> tasting lounge
Look at ROI across experiences to see which to invest more in with limited resources
Refactored tasting rooms, had two with different feels (one older, traditional, one more modern and food driven where the wine was more lost), into a single “tasting lounge” focused on wine with wine & food experiences
Recently upgraded tech to become more of a data company
Use CRM to take notes on customers
Track demographics and target some events to specific groups
Key metrics used for ROI
Customer surveys
Event ticket sales and difficulty in selling tickets
Social media engagement
Contextual ROI when at events
Wine sales at events - Wente makes money on wine, not ticket sales
Better understanding customer journeys and how they impact:
New vs. existing customers
Repeat visitation
Club membership
LTV of customers
The primary goal of the tasting room and events is to engage customers and create relationships vs. being the most significant profit driver for the brand
The team needs to be resourced to dig into the data and track it
Weddings
Get a rental fee for property (high margin)
Require min # of cases of wine purchased, and most people buy more
Pre-2020 - did >60 weddings/year, full-service incl wedding planning and catering - was not the most profitable business
Today - leaner experience - rent out the property with resources for planning
Primary priority - Flow into the wine club
The “pinnacle” of ROI for experiences
Club members often spend more than club shipments
Food & wine experiences convert the highest to the club - the more attention people get, the more likely they will join the club
~6-8% of visitors become club members
Provide incentives for staff for club signups (~$30-50/signup + club prizes for top performers)
Now have a “club booth” at experiences with customer incentives (e.g., 30% off 1st shipment if they sign up at the event)
Secondary priority - Getting everyone’s emails that attend events
Believes digital experiences will always be around now
During the pandemic, Wente was 1st to have Amazon Alexa and Google Home virtual wine tastings, buying wine at the grocery store
“Wine is an emotional sale, not a rational one.” according to Katherine Cole, Communications Director of Vin Agency, making storytelling and the immersive nature of web design critical for DTC wine sales, according to Katherine and Jon Krauss, Creative Director of Vin Agency. They explain how website design can improve brand messaging and create more DTC sales by making websites discoverable, drawing the consumer in, and making it easy to purchase once the thirst is built.
Detailed Show Notes:
Jon’s background - founded Vin in 2009
Katherine’s background - “recovering wine journalist,” has written 5 books, was a wine journalist for the Oregonian Newspaper, hosts The Four Top podcast
Vin is a creative agency and brand consultancy for wineries
The core focus is custom website design
Winery focus gives Vin deep expertise in the space
Search Engine Optimization (“SEO”) - how people find a website
Has technical elements - e.g., meta descriptions, site maps - Vin uses WordPress that has plug-ins to make this easier
Has communication elements - using SEO keywords (e.g., Sonoma Coast Pinot Noir) and being strategic around where the terms appear (e.g., in headlines, the size of the words, where they appear on the page)
E.g., Hibou - re-launched their website Sept 2021, pageviews went up >400%, new site visitors up >200% (shows SEO working), and average session duration up >140% (showing the storytelling is working)
Wine is more of an emotional purchase, less rationale, so more immersive website experiences are powerful
E.g., Casino Mile Ranch - didn’t have solid website engagement and wasn’t getting their story across; after the website re-launch, customers have kept coming back to the site
E-commerce design is critical for wine websites
E.g., Seavey Vineyards - their e-commerce was awkward and difficult to navigate (they use WineDirect); Vin re-designed it using WordPress, and it now drills into products to see different formats (e.g., magnums, etc.) and vintages leading to +80% increase in large format sales
The ability to customize checkout flow depends on the e-comm vendor (Commerce 7 and Offset/Figure are Vin’s favorites for this, Offset particularly for allocated wineries)
New technologies, e.g., chat boxes and texting, can improve performance but depends on the type of winery
E.g., Silt sales rocketed up when they launched a new website in conjunction with text messaging which linked to the site
Visitation/hospitality best practices
Immersing visitors to the feeling of being at the winery
Having photography without people in it helps people imagine that they are in it
Website costs
It can range from $5-100k depending on the size of the winery and the scope of the website, and the normal range is ~$12-30k
Some sites can be built over time
Better to start with a wine-focused developer, people who try non-wine template sites often come to Vin because their e-commerce doesn’t work properly
Highest ROI areas
Eliminate dead ends on the site for the path to purchase
Create a call to action at the bottom of each page
Website trends for wineries
Some language cues being used with consumer psychology in mind, e.g., “discover” vs. “home page”
Scroll animation
Drone videos and videos in more creative ways
“Photography will never go out of style” some luxury wineries use immersive art photography
The Relevance of Wine Competitions w/ Doug Frost, MW, MS
00:44:30
What is the relevance of having 100s of gold medal wines and the competitions that hand them out? According to Doug Frost, MW, MS, it references back to the 19th century, when people were trying to describe what was happening in their wine regions. Doug describes the history, value, drawbacks, and key success factors of wine competitions. He delves into their changing influence in the era of the wine critic and the modern era of the sommelier. He contrasts this with the Wine Pinnacle Awards, now in its second incarnation in Singapore.
Detailed Show Notes:
Doug’s background
Master of Wine and Master Sommelier for more than 25 years
Restaurant background, has worked in retail, distribution, and now owns a winery (Echolands Winery)
Wine competition history
Started in the 19th century - attempts to describe what’s happening in a winegrowing region, e.g., 1855 Classification of Bordeaux
The 1950s-1960s - started to grow, especially in regions outside of Bordeaux and Burgundy, which had classifications to prove wines were high quality
E.g., 1976 - “Judgment of Paris” tasting where CA wines beat French wines
The 1980s-1990s - competitions grew to find out the best of the areas w/o classifications, mainly “new world” such as the US and Australia
Competition examples
Sonoma County Fair - focused on Sonoma
Decanter World Wine Awards - covers the world, dependent on wineries submitting wines, ranks the best of the wines submitted
Value of competitions - tells you about wines you haven’t heard about yet
Drawbacks of competitions
Wineries w/ proven track records often don’t submit - more downside than upside
They usually charge for submissions
Keys to a successful competition
The quality of judges is key
Know the purpose of the competition (e.g., examining a specific region, grape variety, etc.)
Control the style of wines w/in categories, and make sure a particular style does not dominate every flight - e.g., Jefferson Cup controls the # of wines from a region
Competitions vs. wine critics/magazines
Competitions - no expectation that top brands submit
Top magazines - top brands must show up
Competitions are still relevant in Australia; in the US, competitions gave way to individual critics, which may now be giving way to others (e.g., crowdsourced scores)
Still in the era of the sommelier
Somms talk to each other (vs. retailers)
Somms influence each other (Pinnacle tries to embody the same idea)
Somms actually sell wine (vs. critics)
Wine Pinnacle Awards
Co-created by Jeannie Cho Lee MW
International in scope - dozens of judges from all over the world, each region has equal weighting
Judges mostly MSs, MWs, and senior wine writers
Each judge was asked to nominate stand-out wines from a specific region and vintage that stood out in their tastings over the past few years (e.g., best Bordeaux from 2010)
Target audience - collectors and more experienced consumers
Trying to not bring up the same wineries every year by highlighting different vintages, including overlooked ones
Hosts an award ceremony each year where tickets are sold, does not charge for submissions
Scaling Wine Storage w/ Jeff Anthony and Jeff Smith, Vino Vault
00:36:33
The wine storage landscape has never been as dynamic as it is today. Primarily due to Vino Vault and its goal of “making wine collecting more enjoyable.” With six facilities today and the goal of getting to 40-50, Jeff Anthony, President & CEO, and Jeff Smith, Chief Wine Officer, describe how scale allows them to offer more products and services to customers. From a soon-to-be-launched marketplace to auction advisory, Vino Vault is taking wine storage to another level.
Detailed Show Notes:
Jeff Anthony (President & CEO) - wine enthusiast for 30 years, storage expert for 35 years (Iron Mountain)
Jeff Smith (Chief Wine Officer) - helped father catalog his wine collection and turned it into a business - Carte du Vin Wine Cellar Management and wine storage business that sold to Vino Vault
Vino Vault offerings
1st and foremost, a storage company
Consulting for in-home cellars
Logistics for wine moving
Soon to launch a marketplace for storage customers to buy and sell wine
Auction advisory (Jeff Smith’s role)
7 locations - 3 in LA, Dallas, Houston, NYC, Denver
Storage best practices - temp control, humidity control, security, racking
Wine Owners - proprietary software for full-service customers, can manage collection and schedule delivery
2 types of customers - private locker (~50%) and full service (~50%)
NYC is all full service, trying to get more people on full service
Supply chain and inflation have not impacted business as higher-end customers feel it less
Vino Vault differentiation - national reach, in 6 markets today, will be in 10 by early 2023
Scale benefits - can offer more products & services, can spread expertise and technology across a bigger business
M&A - goal is 40-50 locations, 80% North America, 20% Western Europe (UK), ~8-10 acquisitions / year
Storage market size - ~215-230 Facilities
NA (US + Canada) - ~135-140 independent storage facilities
W Europe - ~30-40
Rest of the World - ~50
Auction services - 20 years dealing with all auction houses
Handle all the logistics
Advisory services are free to customers with no obligation
Get paid a finder’s fee from auction houses
Marketplace
Focused on the ~80% of wine to sell that is up to ~$100-125/bottle (vs. ~20% that is rare and collectible and should go to auction)
The benefit is speed to market, and transactions can happen immediately vs. ~4 months for auctions
Commissions are dramatically lower than auctions
Data insights - anecdotally seeing a move away from high-end Napa Cabs and Sine Qua Non
Wine tastings and events - host some at some facilities, building event space in the flagship LA store (The Wine Hotel)
Storage is a sticky business vs. online wine retail which is transient
Library Release - Putting Trust in Data w/ Russ Mann, WineBid
00:53:51
Library Release - Originally released as episode 26 on Nov 11th, 2020
With a 25-year history, WineBid is the oldest and largest online wine auction site. The original re-commerce platform, Russ tells us about the auction process from the buyer and seller perspective and all the data they collect and display for the wines. This includes innovations such as a 360-degree bottle shot, price history charts, and new functionality like their customized shipping feature. He spills the beans on a few tips and tricks to get the best deals on WineBid!
Detailed Show Notes:
WineBid - 25 years old, based in Seattle with operations in Napa, the oldest and largest wine auction site
Weekly auctions - open at 7:15 pm PST on Sundays, close at 7 pm PST the next Sunday
All items open at the same time
Pro’s get 1st 5-10 minutes to view and place bids
What doesn’t sell rolls into the following week
Now introducing some wines mid-week, with most wines going in one week
Set good reserves upfront
For Sellers of wine
Consignors are mostly private individuals
Most sales are for $10,000-$1M+, ideally $100+ average bottle value
Sellers send their list and get an estimate
WineBid does the appraisal and after agreeing with the consignor, ships wine to the Napa warehouse
Wines are inspected, authenticated, and photographed
Once sold, sellers get a check or electronic wire transfer
As part of an estimate, for larger cellars, WineBid will help catalog and pre-inspect on-site
Reasons people sell wines
As in many businesses, the 3 D’s - divorce, debt, and death
People also have their tastes change and swap out what’s in their cellars
They move and want to downsize their cellar
Spouse/partners - may force sales before they can buy more
Consignment vs. cash buyout for wine sellers - generally make more money consigning and capture more upside, but takes more time and can get paid sooner, at a discount, with immediate cash buyout
Business model
Seller commissions - at most auction houses, 5-25%, the larger the consignment, the lower the premium
Buyer’s premiums - generally 15-25%, 17% at WineBid vs ~20-25% for live auctions
Enhancing the Enjoyment of Wine Collecting w/ Elton Potts, Vine Vault
00:47:52
Catching the wine bug from the nudge of a physical trainer, Elton Potts, Founder & Managing Partner of Vine Vault, has built a business focused on enhancing the enjoyment of wine and wine collecting. From full-service wine storage to refrigerated shipping to hosting wine events, Vine Vault has grown rapidly and serves six markets in the US.
Detailed Show Notes:
Elton’s background
A 27-year career in finance & ops ran a global storage and logistics business
A physical trainer said beer would undo the impacts of training and to substitute it with red wine
Frustrated with storage and delivery options that existed, he started Vine Vault
Vine Vault
1st two facilities launched in Q4 of 2015
70% annual revenue growth, doubled in 2021
Six markets (Napa, LA, Austin, Atlanta, Miami, Philadelphia), >50 team members (incl ~12 sommeliers)
>75% of wine stored in a full-service storage program
Mission: to enhance the enjoyment of wine and wine collecting (beyond storage)
Selling Celebrity w/ Albert Hammond Jr. of Jetway & The Strokes
00:38:10
Being the lead guitarist of the band, The Strokes, and with a celebrity roster of investors including Joaquin Phoenix, Owen Wilson, and Nick Hoult, one might believe that Albert Hammond Jr.’s new wine seltzer, Jetway, should have an easy path to take off. However, creating a product from ideation to quality in a can, starting a new business and raising money, and getting that wine seltzer into stores, restaurants, and people’s hands was more like launching a new band for Albert. It takes a lot of effort, and there are a lot of unknowns as to what might help it stick. Albert tells the story of the first year of Jetway and how celebrity has helped but is far from enough to make the product successful.
Detailed Show Notes
Albert’s background
Lead guitarist of The Strokes
Dad was into French Bordeaux, and Albert really liked the aromas of wine
Jetway’s founding - the idea came from drinking Aperol Spritzes in Italy and thinking it should be canned and modernized
Jetway product
Ultra-premium wine seltzer, positioned as a new category w/in a category between wine and seltzer
Wine base with yerba mate and yuzu/ginger/lemon peel (white) or white peach/orange peel (rosé)
Dry with no added sugar
Can’s art is trying to be nostalgic and new
Price point
DTC - $131 / 24 cans (~$5.45/can, incl shipping)
In-store - $14.99 / 4 pack
Product launch
Similar to launching a new band
In 200+ stores
Available at Disneyland on draft and the San Diego Zoo, both did well
The goal was to sell 10,000 cases in the first year
Most people buying are not friends and family
Raising money
He pitched to friends for feedback, and some wanted to invest
Investors include Joaquin Phoenix and Rooney Mara, Nick Hoult, and Owen Wilson
Leveraging celebrity
It helps to get in the door for restaurants and stores, but a good product is required to bring people back
Social media is a “double-edged sword” - it only hits fans of the band, which is not the entire market for the product
He had Jetway on the road when The Strokes opened for the Red Hot Chili Peppers and a broad audience enjoyed it
Most of the investors don’t have social media, but mostly have helped provide feedback on product design
Celebrity alcohol brands are growing, partially to diversify business interests and following the success of George Clooney’s tequila brand
Library Release - Wine Preservation: Tom Lutz, Repour
00:25:05
In this episode, Robert Vernick and Peter Yeung interview Tom Lutz, Founder & Creator of Repour Wine Savor, one of the leading new inventions in wine preservation technology. We discuss the technology, how people have learned about it, the differences between Coravin and Repour, and what the future holds.
Other topics covered in this episode include:
Tom is a chemist by trade (he worked in biodiesel and aquarium products)
Repour was invented when he had a newborn son and ended up pouring half bottles of wine down the drain
Technology:
It uses food-grade oxygen absorbers
Binds the oxygen, of which the atmosphere has 21%, does not replace it
It requires air to exchange and remove the oxygen, so the bottle needs to be stored vertically
The capacity of the stopper
Built for 5 pours of one bottle, glass by glass - this would expose the wine to 1,500 ml of air
The max amount a stopper has to handle is 2,000 ml of air
Uses recyclable materials. However, many municipal grids have 3”x3” grids that filter out small objects; for large customers, they do take back repours to recycle
A future target price point is $1/stopper or lower
Trade: 4x72-pack (288 stoppers) - starts at $0.83 / stopper
Customers
Started with on-premise (restaurants)
With COVID - moved more consumers
Wineries - have been using them for virtual tastings and wine club gifts, also several doing custom branding
Coravin vs. Repour - both work; Coravin is better for tasting and cellaring wine; Repour is for enjoying wine like you usually would and saving it
Marketing
Mostly word of mouth
After 1 year of testing the science, started with a local somm group that did a blind tasting and Repour worked great
TEXSOM - gave out samples and many conversations have come back to that event
Duration of effectiveness - weeks or months; Repour has tested out to 6-7 months
The future - potentially replaceable inserts, sparkling wine, and the possibly showing how much oxygen absorbing capacity is left
If you loved this episode, we would love for you to subscribe, rate, and review it on iTunes or wherever you get your podcasts. Until next time, cheers!
Shattering Glass Ceilings w/ Jen & Zach Pelka, Une Femme
01:01:34
In less than three years, Jen & Zach Pelka, the sister and brother co-founders of Une Femme, have taken what was supposed to be an in-house wine brand for their Champagne Bars The Riddler to the fastest-growing sparkling wine in the US. Leveraging data from The Riddler sales with a mission of promoting women and enabling the shattering of glass ceilings, Jen & Zach have taken a CPG approach to rocket Une Femme to become a national player.
Detailed Show Notes:
Une Femme launch
Initially designed as an in-house brand for The Riddler
Data from The Riddler, from 2 bars, 150-200 wines sold by the glass, 70% women, difficult to find affordable, approachable sparkling rosés by the glass led to Une Femme design
Launched Feb 2020 - a bad time for on-premise, Covid closures forced more national distribution
Wine portfolio
The Betty - sparkling white, named after Betty White, no dosage, 80% PN / 20% CH
The Callie - sparkling rosé from California, 1st wine to take off
$32 retail
Product
Work directly w/ wineries and winemakers, capital-light model
Mostly Central Coast, CA
Made in 3 locations w/ a Type 2 winery license
Made w/ Charmat method (tank) - faster, less expensive, more scalable, spends 1-3 months in tank
Motto - “World-class women-made wines that give back to female-centered charities”
Each wine partnered w/ charities, which gets a lot of press
The Callie - Breast Cancer Research Fund
The Betty - Dress for Success
Limited Edition Wines (Piquettes) - Tree Sisters
Batonnage Forum (for more detail, see XChateau Ep 40)
Assesses donations every quarter for contribution amount; can’t tie a specific $ amount to a bottle due to alcohol compliance
Fastest growing sparkling wine brand in the US
2020 - 1,500 cases
2021 - 5,400 cases
2022E - ~100,000 cases
2023E - >200,000 cases
Aspiration - 400-500k case brand to become a “call brand” for sparkling wine, where customers ask for it by name
Diversity at scale is mostly restricted by access to capital (Une Femme just able to raise $10M Series A)
Packaging
Multiple formats - 750ml, 187ml, 250ml cans
Small formats launched to take advantage of events, charities where small bottles (w/ straws) / cans will be photographed/seen vs. drinking from a glass
250ml cans driven by Delta - lighter, more scalable, sustainable
Price - will be ~$24.99 from major retail partners as the product scales
Targeting premiumization categories ($20-40 range) and growing the sparkling category
Promotion
Brand partners - Marriott (by the glass in high-end hotels - Ritz Carlton, St Regis, JW Marriott), Delta
Most successful promotion - Hall of Femme awards program celebrated 365 women who have shattered a glass ceiling. Sent them a crate of wine with stunt glass and a hammer to shatter it. Based on the brand name “Une Femme,” meaning it only takes 1 woman to shatter a glass ceiling
Has done social media, paid advertising, email marketing, & just started text marketing
Does a lot of events and donations to lots of charities
Word of mouth from friends in the industry (e.g., wine shop owners, sommeliers)
Branded credit card - to be part of customers' lives, introducing similar, women-focused, women-owned brands (e.g., Milk Bar), capitalizing on the movement of women supporting women, esp with their wallets
Brand ambassador program - run through a 3rd party as a way to have affiliate marketing for influencers
Highest ROI marketing - things that lead to partnerships w/ large national players, e.g., trade shows
Creating a Destination in Texas w/ Eva Horton, Flat Creek Winery
00:43:02
With a California-like atmosphere, Texas wine country enjoys a strong local following. Eva Horton, the owner of Flat Creek Estate, shares how they are creating more than a Texas winery but a destination. With multiple venues, including a full-service restaurant and a disc golf course, Flat Creek is getting visitors to come back and enjoy the estate and wines.
Detailed Show Notes:
The goal is to be a destination, a real estate development play, not just a Texas winery
3 hrs from Dallas & Houston, 1 hr from San Antonio, 45 min from Austin
#3 state in US for # of wineries
Visitors to TX wine country
The majority from Texas come for a weekend
As Austin becomes more of a definition, it gets more visitors
Looks California like
Flat Creek overview
In Hill Country, elevated, grows mostly Italian varietals
80 acres, ~26 planted, ~18 producing currently
Produced ~4,500-6,000 cases, capacity for ~10,000
Three venues on the property - tasting room, restaurant, pavilion
The consulting winemaker from CA - Jean Holfinger
Wine pricing - ~$30 whites, ~$40-50 reds, premium to other TX wineries
Estate destinations
Tasting room - outdoor areas, fire pits, barrel tastings
Ellera - full-service restaurant, only Flat Creek wines and alcohol
Pavilion - live music, different food
18-hole disc golf course, PGA qualified
Walking trails - like a winery in a park
Average spend
$25 for a tasting of 5 wines
Can range from ~$50-60 to hundreds for higher-end dinners at Ellera
# of visitors - typical weekend - ~400-500/day, special events ~1,000
Sales channels
95% sold on site
5% online
Not in distribution yet, but a goal for 2023
Hospitality sales & wine clubs
~75% of visitors buy wine
Loyalty club - get benefits when you buy 12 bottles each year
“Being part of a destination/club”
Developing unique members-only benefits to drive membership - e.g., food & wine pairings, creating a VIP room (like a cigar lounge) for higher tier members
~40-50% of visitors join the loyalty club
Capturing non-customer emails - using cards to capture emails, ~50% uptake
~20-30% of customers repeat purchases, using personalized communications to target customers
Focused on the 20% of the wine market doing things differently, Byron Hoffman and Tyson Caly, co-CEOs of Offset, are focused on enabling “Brand Differentiated Commerce.” At the intersection of design and technology for wine, Offset has significant experience operating allocated offerings of wine. These unique event-based sales methods, which limit how much customers can buy, create new challenges and best practices, unlike other sales channels.
Detailed Show Notes:
Byron & Tyson met while collaborating on Last Bottle, combining e-commerce and design
Offset - the intersection of design and technology for wine
Focused on the 20% of the industry doing things differently
Most clients in Napa & Sonoma, major ones include Kosta Browne, Aubert, Larkmead, Raen, Bedrock, DuMOL
DTC business models - open cart / online store, clubs, subscriptions, allocations
Allocated offerings (“allocations”) definition - the event-based, controlled release of wine
Geared around exclusivity
Offering types - first come, first serve; guaranteed; order request
Allocation types - individual, group-based, wish only
Use wish requests to prevent underselling
Differences in doing allocations vs. other models
A significant effort to decide who gets what, limiting what people can buy
Timing of sales important - need to consider things like shipping windows
Checkout experience language is important
Best practices
“Brand Differentiated Commerce” - how the brand is integrated w/ commerce can be different for every winery
Simplify and align customer experience w/ the brand
Full allocation button - can simplify the purchase
The design flow of customer experience (e.g., initial email, graphics at the beginning of offering) is important
Invest in website design - many wineries think a lot about packaging and forget about their website or don’t want to appear to be selling wine, but still need a clear call to action
Too much automation is not always better
Examples of the intersection of design and commerce
Kosta Browne re-designed how to explain wish requests on their website, reducing phone calls and emails coming in
Text messaging & magic links (auto-login) enable 20 seconds to purchase, ~98% of texts get read w/in 3 minutes, partners w/ Slick Text
Costs of allocated models
Similar to e-commerce costs, Offset pricing is a transaction based w/ no monthly fee
Can have cost efficiencies if wines sell out (e.g., team labor used for other things when not selling, shipping process condensed)
Hybrid approaches
E.g., Larkmead has a tasting room, club, & allocations
E.g., Kermit Lynch has clubs, open cart, and behind-the-scenes allocations
Benefit - providing choices for people w/ different sales models, e.g., clubs for people who want convenience, allocations for VIPs to enable access to special wines
Cons - a lot more setup
People want to customize wine club shipments, which is similar technology to allocations and has now been enabled
Allocated offering research w/ professors from Kellogg & Peter - creating the data to get more insight and reduce guesswork for the industry
Building an entire ecosystem in the desert requires water at its core. With a 3,000-ha property that includes 2,000ha of vineyards, a winery, and a town to support it, Raimat, part of the Cordorniu Group, has been at the forefront of sustainability, particularly with water efficiency. Joan Esteve, General Manager, explains how >€5M of investment has substantially reduced water usage and made the property more sustainable, which in his mind, is leaving it a better place for future generations.
Detailed Show Notes:
Raimat overview
Purchased in 1914, it was a desert 150km west of Barcelona
Continental climate, no Mediterranean influence
Close to the Pyrenees, water from snow melt
~3,000 ha (~7,400 acres) property
~2,000 acres of vineyards, ~40% (Pinot Noir, Chardonnay) goes to Cordorniu, rest for Raimat’s still wines (~12M bottles/year)
Had to build a town to support farming
Winery and town designed by a disciple of Gaudi
100% organic, many sustainability certifications
Tons of biodiversity - e.g., releasing Turons (i.e., wild ferrets) to control the rabbit population
Sustainability definition - “leaving a better world than how we found it”
Founder of Wineries for Climate Protection in Spain - requires 5% average annual water and energy savings
Water efficiency projects:
Built ~€4M water pipe to replace the channel that supplies Raimat water
1m diameter with natural pressure
Originally a > 50-year payback project
Saves 15% water (no evaporation, losses), ~2,700 MWh/year of energy / equivalent to ~1,400 tons CO2/year
Irrigation optimization
Developed by Cordorniu Research Institute
Dynamically applies water based on differences in soil, grape variety, desired wine style, and vine age
Saves ~10% of water
Spun off company Agropixel to consult other wineries on precision viticulture
Partial Root Drying
It uses two irrigation lines and rotates irrigation every 15-20 days
It makes the vine believe it’s under water stress when it’s not
~40% water savings, slightly lower yields, better quality
Conducting on ~300ha
~20-25% more expensive (mostly additional irrigation line)
Total vineyard water savings of ~30%
Cellar water optimization
Measured water consumption in different parts of the winery
Fixed leaks
Use tools to reduce usage (e.g., hot water vs. cold for cleaning, nozzles for hoses, UV light to disinfect tanks)
Total water efficiency investments ~€5.1M (~€4M pipe, ~€1M vineyards, ~€100k cellar)
Future efficiency - believes Raimat may need to use more water to offset the impacts of global warming
Water from the Pyrenees is not at risk as the region primarily produces corn and alfalfa, which use significantly more water than grapes (~800mm water/year vs. ~150mm for grapes)
ROI challenging for sustainability investments
Owners (now majority owned by The Carlyle Group) usually require < 3-Year payback on investments
Water pipe investment made by the family as a legacy for future generations
Quality was the main rationale behind water efficiency investments
Advice for the industry
It’s good business to be efficient
Agriculture is slow, needs longer payback hurdles, and can use quality improvements to justify the investment
The quality impact is significant; small amounts of compounds can impact the entire production
Sheep, Ducks, Chickens, & More w/ Dan Fishman, Donum Estate
00:42:38
Known for its world-class art collection and Pinot Noirs, Donum Estate is also serious about sustainability, investing heavily in integrated pest management and biodiversity. Dan Fishman, the winemaker, discusses the benefits and tradeoffs of moving to organic and regenerative farming with an IPM framework. From sheep, ducks, and chickens to mealybug destroyers, it’s creating a diverse ecosystem that is improving the soil, vines, and wines for Donum.
Detailed Show Notes:
Dan’s background - Donum winemaker since 2012, took over farming in 2019
Donum
Founded in 2001 in Carneros to create the ultimate Pinot Noir
Added Russian River Valley and Sonoma Coast vineyards
CCOF (organic) and pursuing ROC regenerative certification
Integrated pest management (“IPM”) is a critical 1st step for sustainability; it changes philosophy from exploiting resources to maximize cash crops (conventional) to looking at the system holistically and thinking about the entire ecosystem (IPM)
Not about eliminating pests but managing them and creating resilience in the ecosystem
Examples of IPM
Sheep for weeding in winter - less tractor passes & fuel use, brings compost back to the vineyard, uses contract grazer w/ 500 sheep/herd, need sheep out before bud break, or they will eat green shoots
Compost teas (biologically active sprays) - when used on the canopy, introduce microbes that compete w/ others like mildew
Chickens & ducks eat ground insects
Committed to organics in 2019
Stopped using herbicides, which kill weeds but also other fungi in soil; stopping created living soils, insect life returned right away
Without synthetic nitrogen, we need to get the nitrogen cycle back (e.g., sheep compost helps)
Benefits of IPM
Reduced vigor reduced the need to crop thin and hedge, which was done before to get to target yields, therefore no reduction in overall crop yields
Improved grape chemistry - 7-8 years ago harvested at 25+ Brix to get phenolic ripeness with 3.7-3.8 pH and 4-5 g/L TA; 2022 - 23-23.5 Brix, 3.5 pH, 5.6-6+ g/L TA -> less work needed in winery
Can ferment with native yeasts (not killed by sprays)
Increased vineyard lifespan - vines can live 50-60 years vs. 25-30 typically in Sonoma for Pinot Noir
Reduced cost of synthetic fertilizers
Costs of IPM
Some upfront investment, e.g., Clemens weed knife for under-vine weed management instead of spraying Roundup
More monitoring of vineyard, e.g., people monitoring for mealy bugs, which are then treated with an organic essential oil
Estimates ~5-7% more expensive vs. conventional farming
The highest impact process was getting rid of herbicides
Other elements used
Root Applied Sciences - monitoring stations that check for mildew spores reduce organic sprays by 20%, kill less yeast in the vineyard
VineView aerial mapping to identify potential problems
Water probes to monitor vine stress to determine irrigation needs
Biodiversity
Cover crops, every 6th row is a native wildflower encouraging native insects
Bats, Bottles, and Baking Soda: Battling Climate Change w/ Marie-Catherine Dufour, Bordeaux Wine Council
00:34:18
With a goal of 46% carbon reduction by 2030 and 6,000 companies to wrangle, Marie-Catherine Dufour, Technical Director of the Bordeaux Wine Council, has a big job to undertake. With an action plan that covers five key climate change strategies, Bordeaux can become carbon neutral by 2050. Some of those strategies include promoting bats to combat grape moths, reducing the weight of bottles, and capturing CO2 from fermentation to make baking soda.
Detailed Show Notes:
Marie-Catherine’s background - daughter of winegrowers in Bordeaux, studied agronomy
Mission as Technical Director of Bordeaux Wine Council - think of innovation needs for the sector to be more competitive
Defines sustainability as the linkage between environmental, social, and economic issues
Climate has a direct impact on the environment, but it also impacts the health and well-being of people
Bordeaux Climate Action
2007 - 1st carbon assessment
2019 - 3rd assessment - reduced GHG emissions by 39% from 2007
Developed Carbon Strategy for Bordeaux w/ science-based targets
The goal of 46% GHG reduction by 2030
Five key strategies
Glass and packaging (28% of GHG emissions) - reduce bottle weight by 10%
Winemaking practices (22% of GHG emissions) - do less in the vineyard to minimize oil and pesticide usage, balancing environmental goals and yield
Freight - fewer planes, more boats (30% of emissions from planes from only 4% of volume); fewer trucks, more trains (the primary port is now Le Havre in the north, and would like to ship from Bordeaux in the future)
Energy efficiency - underground cellars, natural light, gravity flow
Carbon sequestration - when they can’t reduce any more; increase area w/ covered grass (+32% of the area), plant trees and hedges (150 km hedges planted / year); can lead to carbon neutrality by 2050
Action plan for each strategy developed
A collective regional strategy helps when working with suppliers to have more influence
ROI is difficult to define
European impact of climate change is 1% of GDP w/ 2 heat waves in 2022, production reduced by 20% of normal
Cost of climate change in 2022 estimated at ~$24k/ha (~$10k/acre)
E.g., electric tractors are 30% more expensive but use less fuel; one solution is to amortize the cost over a more extended period
High-end wineries can do more
Reducing bottle weights - the idea of luxury will change and consumers will no longer accept heavy bottles as luxury due to climate impact
E.g., Chateau Montrose produces baking soda from CO2 emitted during fermentation, a type of sequestration; need to develop uses (e.g., sales to food companies) for it
Chateau Brown uses cardboard w/ nice printing over wood now; NY merchants prefer it
Chateau Lagrange has solar panels on the cellar that cannot be seen by visitors and produces 50% of electric needs
Driving action
Requires communication with members (6,000 companies)
Hosts an annual event for environmental issues
Do webinars and offers collective tools to promote action
Has an annual budget of €2M (€1M for scientific studies - e.g., for bats eating grape moths and reducing larvae by 40%; €1M for collective action)
Recommendation for wineries - start w/ carbon assessment, as every company is different, then develop a winery-specific plan and leverage tools available on the Bordeaux Wine Council website
Sustainability is just good business practice, according to Drew Bledsoe, former New England Patriots Quarterback and now founder and proprietor of Bledsoe Wine Estates, comprising three wineries in Washington and Oregon. Josh McDaniels, CEO, and Drew discuss their biodiversity initiatives in detail, as well as their people and packaging efforts, as part of their sustainability ethos. From improving quality to increasing customer loyalty, they believe taking a long-term view on sustainability proves it is a good investment.
Detailed Show Notes:
Drew’s background - grew up in Walla Walla, WA; NFL quarterback for 14 years; started Doubleback winery and now has 3
Josh’s background - also grew up in Walla Walla, worked at Leonetti for 10+ years, and worked with Paul Hobbs in Argentina
Sustainability is critical for wine because of the long-term, generational nature of the wine business
Biodiversity initiatives
Built wildflower perimeter around vineyards - harbors beneficial insects, reducing mite infestations that happened when spring vetch growth dies
Working w/ The Bee Girl Organization in OR to study amount and species of bees for regeneration farming
Designed specific cover crop seed mix to attract more bees, improve Nitrogen in soil, have longer taproots to improve soil oxygen, and maintain water in the soil
Moving to dry farming through the cover crop, no-till, and drought-resistant rootstocks
Easier to make investments in estate vineyards vs. contracted ones
Benefits
The main goal is to increase wine quality
Builds emotional connection with consumers - more about customer loyalty/retention vs. new customer acquisition
Reduced spray expenses
Reduced water costs
Consumers expect luxury wine to be environmentally responsible
An early leader of people sustainability - focused on vineyard crew five years ago w/ higher pay, year-round employment, and full benefits, leading to benefits of not having to rehire and retrain crew
Other sustainability initiatives
Consolidating shipping across the country
Installing solar panels at the winery
Conscious of Doubleback bottle weight
Reducing packaging
Family Wine - currently bottled in 1L bottles that were meant for reuse, but issues around sanitization for reuse; now considered bag-in-a-box a la Tablas Creek
Looking at sources products, including glass, closer to home vs. glass was from China previously
Sustainability for the wine industry - with a long-term view, sustainability is a good investment and good business practice
Accessing the Creativity of Diversity w/ Maryam Ahmed, Maryam + Company
00:49:29
Sustainability is as much about people as it is about the land. That’s how Maryam Ahmed, founder of Maryam + Company and the Diversity in Wine Leadership Forum, connects Diversity, Equity, & Inclusion (“DEI”) to sustainability. Maryam shares how DEI creates access and relevance to new customers and markets for wine and how “doing the work” creates significant ROI for businesses.
Detailed Show Notes:
Maryam’s background - worked in Finger Lakes, distribution in NYC, moved to Walla Walla, then Napa, was on Somm TV show Sparklers
Maryam + Company - educational program & strategic initiatives for food & wine companies, further sustainability and diversity
Works w/ associations, portfolios, or specific wine businesses & non-profits
All clients have a demonstrated commitment to DEI
Help broaden their network and provides accountability consulting
Helps with conference and panel development, changing from panels on diversity to core topics with diversity integrated into it
Field Blends - wine travel program to regions that don’t always get the spotlight (e.g. - 2022 in Walla Walla, WA); for both professionals and consumers; scholarships for diverse candidates; brings regional orgs to support programs; provides regions with diverse travelers and new customers to region
Wine Writers Symposium - helped make the event virtual during Covid, broaden the audience from 30 to 300 people, and more diverse writers received jobs from it
Working w/ diverse influencers w/ trend towards micro-influencers (<10k IG followers) w/ ROI on sales and new market conversion
Clif Family - advised to let micro-influencers tell them what they wanted to do vs. the brand directing
DEI benefits
Creativity from multiple perspectives in the organization
Problem-solving with new ideas
Enables access and relevance to a broader customer base and new markets
Diversity in Wine Leadership Forum (“DIWLF”)
Created in 2020, cofounded w/ Elaine Chukan Brown
Getting the many initiatives for diversity in wine to collaborate instead of compete
~20 organizations participating
Orgs primarily focused on creating access, elevation, education, & inclusion; all ties back to sustainability
Do the Work Series - educated >150 professionals
Wine Unify - creates access and elevation through education (WSET scholarships)
Lift Collective - has an entrepreneurship program
280 Project & Industry Sessions - creates immersive education from a black and brown lens
Sustainability needs to be not just for the land, but also the people, making DEI critical
DEI “B” - belonging also important, working in supportive spaces
Doing the work is both personal and professional; common barriers for people:
People don’t want to be wrong / embarrassed -> advise them to “fail forward”
Don’t want to make other people feel uncomfortable -> discomfort is part of doing the work
Maintaining Ex-Chateau Quality w/ Denis Houles and Erik Portanger, 1275 Collections
00:49:55
Having experienced the difference in taste from wines sourced ex-chateau versus the secondary market, Denis Houles, CEO of 1275 Collections, is on a mission to create a new wine asset class of pristine conditions wines. Denis and Erik Portanger, Head of Strategy at 1275 Collections, tell us about the industry-wide issues around provenance, particularly with transportation and storage, and how 1275 leverages technology and direct chateaux relationships to build a solution to keep the wines as if they never left the chateaux.
Detailed Show Notes:
Denis’ background
He grew up in the south of France, fell in love with wine in Bordeaux
Believes in working in what you’re passionate about and founded Claret Club in 2003 - a private members club centered around wine, having chefs crafts food around the wine instead of vice versa
Erik’s background
A financial journalist for the Wall Street Journal in London was about to also write about personal passions, which was wine
He went to 1st Claret Club even in 2003 with Chateau Palmer and had his 1st wine epiphany
1275 Collections Overview
Fully documented, fully transparent way of collecting pristine wine from chateaux
Based in the freeport of Geneva - wines held in bond, no sales taxes until removed
Purchase directly from chateaux or negociant, sometimes get back vintages
“Internet of Bottles” - NFC chips with credit card grade security, for provenance and monitoring of temperature and humidity, pairs with a mobile app
Data per bottle and case, only tracked while in 1275’s control
Provenance: issues with storage and transportation
Provenance is more than just not being fake, but also how many hands the wine has passed through and storage conditions
Fine wine often moved between warehouses in trucks - often unrefrigerated
LVMH launched its own traceability platform called Aura
Octavian Vaults in the UK - requests for photos of bottles has increased ~30% each year for the last few years, highlighting the growing consumer awareness of strong provenance
Historically, the premium is meager - ~2-3% because most wines are bought and sold by traders
Premium increasing over time - auctions and library wines sold from chateaux selling for higher premiums
Traceability solutions
Pure tracking
Comprehensive - tracking and monitoring (temperature, humidity)
eProvenance is a B2B solution for wineries and importers
1275 Collections believes a fully traceable stock of wines will come
1275 believes wine damage from storage/handling is a more significant issue than counterfeit wines
Wine Storage
There is minimal research on the impacts of storage
The more researched area is the impact of transportation - road transportation is worse than cargo ships
Lack of transparency and accountability in the industry
Key things to track - temperature, temperature fluctuations (change pressure in the bottle), humidity, circulation of air (to prevent mold), lack of contaminants (free of bad smells) - mostly TCA
1275 Business Model
End-to-end solution for people who want a great wine collection, direct from estates with technology to have full traceability
Collections start at €25,000
2% annual management fee (includes sourcing, transportation, insurance, and storage)
For €100,000+ - a one-off advisory fee of €4,000 and lower management fees (1.4-1.8%)
The Payback of Energy Efficiency w/ David Duncan, Silver Oak
00:29:51
As a lifelong hunter, David Duncan, CEO & Proprietor of Silver Oak in Napa Valley, has a keen appreciation for nature. This has driven David and Silver Oak to pursue many sustainability investments, including being the 1st existing winery and new build winery to be LEED Platinum certified and be at the forefront of energy efficiency for the last 20 years. From solar panels to using waste heat to get water up to sanitization temperatures, David dives into the details of Silver Oak’s sustainability efforts and how they think about them in terms of long-term return on investment.
Detailed Show Notes:
Silver Oak’s background - founded in 1972
Two wineries - Oakville (Napa) and Alexander Valley (Sonoma)
~100k cases/year
~700 acres of vineyards, ~75% estate owned fruit
Four wine brands total, and Oak Cooperage in Missouri
Sustainability efforts began in the vineyards in the late 90s, and early 2000s
Oakville winery
2006 dumpster fire burnt the winery down
Wanted to do the right thing in re-building (2008)
Installed solar panels and became 1st LEED Platinum winery (existing building)
They looked at LED lighting, but it was 3x as expensive at the time
Alexander Valley winery
Built in 2014, 1st LEED Platinum winery (new build)
A “living building,” which is mostly energy and water use
Uses ~1 gallon of water per gallon of wine vs. ~7 gallons of water as the industry average
Generates 105% of annual electric usage
All LED lighting, which is now more cost-effective
Ammonia chiller for glycol cooling to keep tanks cool - was old-school technology in the 30s and 40s; new technology is very efficient
Sanitation water uses solar power to heat to 105F, then waste heat from the cooling system adds 10-15F; the rest of the heating uses electricity
It has a 3-4 month peak season (harvest) where electric usage is higher and sometimes pulls from the electric grid; it has a small battery system but not a large one
Used recycled materials, which reduced painting needs
Working towards LEED certification for other wineries
Vineyards - moving towards electric tractors, but haven’t bought one yet
Cooperage - burns scrap wood to bend barrels instead of natural gas
ROI for sustainability
2.5-year payback for Alexander Valley solar system - highest of all investments
It looks at the “life cost of building” to calculate ROI, a long-term evaluation - the long-term view matches the long-term production cycle (5 years to produce Silver Oak)
No set target IRR cutoff, but ~5-year payback is the approximate cutoff
Looks at the impact on employees, which they call “The Whole Bunch” like a bunch of grapes, and assesses the safety of workers
Highest payback investments - solar panels and water use to treat barrels using recycled water
Sustainability also improves quality - e.g., minimizing water use in vineyards
Barriers to making sustainability investments are often due to 1 chance a year to make changes; Silver Oak does small trials on 1-2 acres to evaluate
Shares learnings w/ the industry - gives many tours of winery and vineyards, interviews, seminars and conferences, works w/ UC Davis
Also improving packaging
Moving towards a lighter glass
They used to send empty bottles to Canada to decorate and then ship them back to CA to fill. For the 1st time in 25 years, Silver Oak Napa Valley will have a paper label to avoid this environmental impact
Becoming a Sustainability Brand w/ Joseph Brinkley, Bonterra Organic Estates
00:42:03
Now known as Bonterra Organic Estates, Bonterra has long been associated with organics. But, they have pushed well beyond that with sustainability processes and certifications such as Climate Neutral, True Zero Waste, and now focusing on Regenerative Organics. Joseph Brinkley, Director of Regenerative Farming, describes the history and communication processes that have led Bonterra to become a leader in the sustainability space in consumers' minds.
Detailed Show Notes:
Joseph's background - started in biodynamic farms, became a vineyard manager, joined Bonterra in 2013, a role now as a spokesperson for education and advocacy of farming and sustainable practices
Bonterra Overview
Founded in 1968 as Fetzer Vineyards in Mendocino County
Waste Prevention through Competitions and Chocolate w/ Katie Jackson, Jackson Family Wines
00:37:40
Jackson Family Wines is at the forefront of many sustainability efforts as one of the world’s largest wine companies, with >40 wineries. Though they have made significant efforts in renewable energy, climate change, and social impact; they have also done a lot with waste prevention and green purchasing. Katie Jackson, a 2nd generation family member, leads these efforts to become more sustainable and describes some of the major programs they’ve undertaken.
Detailed Show Notes:
Intro from Anna Brittain of Napa Green
Only 30% of glass is recycled, and 30-50% of emissions are from packaging and distribution
Katie’s background - 2nd generation, worked in multiple departments but joined the sustainability team in 2011 after it was founded in 2008
JFW background
Founded in 1982 as Kendall Jackson
Invested in high-quality vineyards across the state
Founded Cambria (1986) and Stonestreet (1989), now >40 wineries (mostly CA, 3 Oregon, Chile, South Africa, France, Italy, & 2 in Australia)
Broad sustainability programs with four current focus areas:
Social impact, including DEI - has an internal team called “idea alliance” to develop new ways to improve diversity
Carbon/climate change - most difficult goals - 50% reduction by 2030, climate positive by 2050
Farming/regenerative farming
Water management
2015 - publicly released a comprehensive plan w/ 11 different focus areas, including Zero Waste and getting more growers to be sustainable
Sustainability investments and ROI
Invested $18.5M since 2015
Biggest spend in renewable energy (primarily solar - powers ~30% of winemaking needs, installing a new wind turbine which will generate ~5% of needs)
Generated $19.5M in savings and gov’t grants
Lightweighting of glass has saved $1M/year in glass and ~$500k/year in transportation
Solar initially had a 6-year payback
No set corporate threshold for sustainability investment ROI
Sustainability team
Two full-time staff
~80 people in 9 working groups volunteer ~3-4 hrs/month to work on sustainability initiatives
Green purchasing - developed preferred purchasing plan, looking at more environmentally friendly materials
E.g., the sales team is looking at biodegradable POS neckers made w/ seeds
Waste prevention - critical for climate change goals, focused more on wineries currently
Achieved <2% to landfill at wineries; the rest recycled and composted
Mostly organic materials (e.g., composting)
Sister company - Whole Vine - turns waste into nutrient-dense Chardonnay marc that is used for chocolate bars
Have not yet gotten certified Zero Waste due to cost, instead investing in other areas
Water conservation - since 2008, reduced water intensity/bottle by 43%
Created the “Water Wise Winery Award” competition to conserve water (2016)
Recycled water in cooling towers
Installed rainwater capture systems, 1st at Carneros Winery - 60% of water usage from system
Spreading sustainability practices
The sustainability team helps spread the word
Annual Winegrowing Summit also shares best practices in production
Consumers showing interest and support for sustainable certifications
Luxury brands benefit from higher margins for investment
State of the Wine Collector w/ Charlie Fu, Los Angeles
00:31:44
With a lot of economic uncertainty in early 2023, the fine and luxury wine space has remained relatively robust. Charlie Fu, an LA-based lawyer, wine collector, Wine Berserkers moderator, and caviar purveyor, gives us his thoughts on the state of the wine-collecting market. From Dry January, how they find new wines, navigating price increases, and Berserker Day, Charlie provides a good overview of wine collecting from his group's point of view.
Detailed Show Notes:
Charlie's background - LA-based collector, lawyer, caviar purveyor, and @clayfu.wine on Instagram
He has a few thousand bottles of wine in his collection
Wine collecting group
~5-6 people meet for dinners in downtown LA
Total group ~20-25 collectors
Mostly early 30s-mid-40s, mostly male
Focused on Burgundy, Rhone, & Champagne
Dry January has become more common
Finding new wines
Recommendations from people in the industry, friends (including from IG), other collectors
Someone they know personally and trust
More guarded response when it's retailers recommending
Wine pricing
Seeing secondary marketing pricing dip at the top end
Retail release pricing keeps going up
Secondary premium key to keeping collectors buying a "relatively good deal"
He believes incremental price changes are less shocking than large shifts
People want to know why the price is escalating; communications are critical to significant price changes
There are thresholds when people stop buying - relative value, secondary pricing, and personal decisions on value
"Everyone's always looking for alternatives to Burgundy"
e.g., Willamette Valley Pinot and Chard are seen as "Burgundian"
e.g., Walter Scott as a white Burgundy substitute
Where people buy wine
Retailers w/ an existing relationship where they offer reasonable pricing
Brokers & auctions for the secondary market
Domestic wineries mainly bought direct, "as long as it makes sense"
Wine.com gets a reasonable allocation of high-end wine, but not flash sale or other sale sites
Mailing list/allocation systems
People don't like forced purchase quarterly - e.g., the wine club model
They prefer the optionality of offering systems
Too much choice in an offer gets challenging - w/ no US vineyard hierarchy (vs. Burgundy), it's hard to distinguish between the wines
Collecting groups has not shown interest in wine investment
Wine Berserkers
Site upgrade in Aug 2022 took some time to get used to
Berserker Day - 2023 was the biggest ever
Now two days, Preview day for "Grand Cru" subscribers
Tips for wineries:
Be active before Berserkers Day (e.g., Goodfellow Winery from Willamette Valley was very active and did well on Berserker Day)
150+ listings need to have a good offer and stand out with a good description and potentially catchy one
Collecting trends
Natural wines have had their phase
More small production wineries, often connected to more famous ones, e.g., sons/daughters of prominent winemaking families
Library Release - Dissecting the Price of Luxury Wines
00:34:41
This Library Release was selected in conjunction with the next episode discussing pricing and was initially released on December 2nd, 2020.
Robert and Peter discuss how luxury wines are priced, delving into the core insights from the Pricing Chapter of Peter’s book, Luxury Wine Marketing. They discuss the luxury wine price segments, the types of luxury wine buyers, and how you need everything to be working right to build a luxury wine brand. “You can’t just stick a label on two-buck-chuck and price it at $1,000.”
It contains industry best practices for how to sell luxury wines vs. more “commercial” wines
Includes new research on the market size, customer segmentation, and frameworks for marketing luxury wines
Wine pricing segments
The overall wine market has an average price of $7-8/bottle
That makes $20+ sometimes classified as “luxury”
In LWM, luxury wine is more of a luxury good - where the product is used to differentiate
$50-99 - affordable luxury
$100-199 - everyday wine for the luxury buyer
$200-499 - special occasion luxury
$500-999 - icon wines
$1,000+ - dream wines
Luxury wine consumer segments
The Wine Collector
The Wine Geek - seeks knowledge
True Luxury Buyer - buys top brands
Aspirational Buyer - looks up to the True Luxury Buyer
Brand impact on price
Dom Perignon is a special occasion wine at $170/bottle vs. if it was $40/bottle
Price signals an element of quality
Price makes some people think it’s better quality
Strategies to launch luxury wines
Build Up - start lower priced and build up
Build down - start higher and build down
Need a good story and quality to back up pricing
E.g., Penfolds - from Grange to $10-15/bottle wines, Grange provides the halo effect for the cheaper wines as people associate themselves with the brand
Luxury branding - using price over value as the luxury driver, e.g., Harlan Estate
Luxury wine demand
Sometimes when you increase the price, you increase the demand
Two types of demand - consumption and investment demand
Wineries want people to drink, not sell the wines, to keep the secondary market high
Still need to have value - quality and reputation of the wines
Burgundy - driven by wine collectors who want the scarce and rare
Tricks and tips for buying luxury wines
Know what you like and target those types of wines
If you want something special - brand strength is essential, a la the gifting culture in China
Follow critics whose palates are similar to yours and track their scores to find values
Check out the best wines from less well-known parts of the world
Winery pricing strategy has four major determinants
Quality
Brand strength
Competition
External factors
How do some Napa wines come out of the gate pricing $250+?
Sometimes they leverage the brand strength of the winemaker
Primarily selling to friends and family
Sometimes they need to play the long game and sit on wines for a while
There’s a lot of data hidden in a price…and a lot to consider by wineries when they set the price. During the Nov 2022 wine2wine conference in Verona, Italy, host Peter Yeung presented the five factors that price communicates for fine wine. Building off his research for Luxury Wine Marketing, Peter dives into the various messages embedded in a winery’s decision to set price.
Vs. commercial or mass market wines which are more substitutable
For fine wine, the brand value is more than just the wine
It has different consumers than commercial wines
Different sales channels (e.g., specialty wine stores, higher-end restaurants, direct-to-consumer)
The fine wine consumer
For mass-market wines - more women, lower price points
For fine wine - older and male; however, more women buying fine wines
Fine wine pricing drivers
Costs more to produce (land, labor, packaging)
Higher willingness to pay from consumers
Higher brand value makes the wines less substitutable - e.g., entry-level Champagne is ~$50/btl high-quality traditional method sparkling from the US can be ~$25/btl
What price communicates (for fine wine) - i.e., what a winery is communicating to consumers / the market with their price
Value proposition to consumers - the offering a winery is giving their customers
Expected quality - higher prices tend to be correlated with higher scores, including in the Luxury Wine Database of prices vs. Wine Spectator scores
Brand reputation - getting a 100-point score can often make a wine trade for $300/btl; however, the many wines priced above that do so based on their brand value
Relative quality - showing how a wine stacks w/in a winery’s portfolio or against other peer wines; the most expensive wine implies its the best
Consumer willingness to pay - e.g., Liber Pater made an “original Bordeaux” wine from own-rooted vines, 500 bottles w/ the 2015 vintage, and ran a Dutch auction to set the price, a record 30,000 euros/btl
Price is more than one number; there are:
Suggested Retail Price (set by winery)
Average selling price (retail, restaurants)
Secondary market
Secondary market price from trading through merchants (e.g., on Liv-Ex) or via auctions
It gives wineries a sense of consumers’ willingness to pay
Often small volume - not enough trading for true price discovery
Library Release - The Hardest Wine Exam in the World w/ Mark de Vere, MW
00:43:21
The hardest wine exam in the world, an elite community of >400 wine professionals, and learning how to engage with wine more. All those elements describe the Institute of Masters of Wine and the Master of Wine (“MW”) exam. MW Mark DeVere tells us how becoming an MW landed him a full-time job in Napa to all the rigors required to pass the MW exam. This a must-listen episode for those considering applying for the MW program or those who love learning about challenging wine exams.
Currently, 418 Masters of Wine, >490 have passed the exam over time
It started in 1953 in London as London was the most globally focused wine trading hub in the world
~20 people sat the exam in 1953, with 6 passing; it was only open in the UK at that time
The purpose was to measure who was a master of the overall wine trade
1st non-UK residents were Australians and Americans who went to the UK to work and sit the exams
Now a global institution - MWs in 30 countries, exams offered around the world (London, California, Australia), head office is still in London
The mission of the IMW - is to promote excellence, interaction, and learning in the global wine trade
Interaction through tastings and the MW symposium (held every 4 years)
Excellence and learning through setting the MW exam
Not an educational organization like the WSET
IMW vs. Court of Master Sommeliers (“CMS”)
MS has a more laddered program (i.e., more levels before the master level)
MW has no practical service element
MS exam is oral, MW is all written
The MW Study Program
Goal: to help orient people to understand what the end goal is - to gain the depth and breadth of the challenge of the MW exam
Need to know every step of the wine business, from the vineyard to wine landing on the table
There are time limits for getting through the program now, ~5 years, with the goal of not getting people stuck in it
3 Stages
Stage 1 - 1st orientation to the program, has the Stage 1 assessment - proving you can understand the issues, 12 wines blind, 1 set of theory essays
Stage 2 - preparation for the MW exam, which is 3 x 2.25-hour blind tasting exams with 12 wines each, 5 x timed theory exams
Stage 3 - research paper, developing something new for the world of wine
Pass Rate of the MW exam
Used to say ~10% of people that sat the exam
Hard to calculate a rate due to people who sit multiple times and can pass certain portions of the exam
IMW is actively trying to increase the pass rate by making it more challenging to get in and sit the exam
~15-20% of people who enter the program actually complete it; ~75-100 are admitted to the program each year, and ~10-20 people become MWs each year
The value of the program, if you don’t complete is learning how to understand the issues around wine better, engaging with wine differently, and building communication skills
More people are applying for the MW program, and it’s becoming a more global program
The IMW and diversity
The exam is entirely blind, making it unable to discriminate via grading
Conduct outreach to all parts of the world to generate a diverse pool of candidates
~150 female MWs today
Being an MW
The title does carry some weight within the wine world
It got Mark a permanent job at Mondavi after being hired for only a seasonal position
Join a community of MWs, where giving back to the wine world is one of the core tenets
Library Release - The Benefits of a WSET Wine Education w/ Peter Marks, MW of the Napa Valley Wine Academy
00:35:45
Educating students about wine is more about the “psychic paycheck” than the monetary one for Peter Marks, MW, partner and Vice President of the Napa Valley Wine Academy (“NVWA”), the leading provider of Wine & Spirit Education Trust (“WSET”) courses globally. Peter tells us about the different levels of the WSET (from Level 1 to Diploma), the full costs of wine education, and the benefits. He also discusses the innovations happening with online learning, including sending wine kits out with their courses and best practices for virtual seminars.
Detailed Show Notes:
Being in wine education is more about the “psychic paycheck” - getting feedback from your customers and students
Napa Valley Wine Academy
Founded in 2011, offering WSETbprograms
Now the largest WSET provider in the world
An Approved Program Provider (“APP”) for WSET - it’s like a franchise; NVWA buys materials, study packs, and exams from WSET; grading is done by WSET in London
65% of business in WSET, 35% in other wine programs
Develop proprietary courses - e.g., Wine 101, Wine 201, Napa Valley Wine Expert, Oregon Wine Expert, and the Business of Wine (with Tim Hanni, MW)
WSET
4 levels, 1 through 4 (4 is called the Diploma)
Levels 3 & 4 provide more understanding of the subjects
The diploma includes the business of wine and is a precursor for the Master of Wine program
Geared towards all aspects of the wine industry, very broad view vs. other programs (e.g., Court of Master Sommeliers is focused on restaurants/service, and Society of Wine Educators is focused on education)
Wine industry (or “trade”) participation in courses
Level 1 - ~90% consumer, 10% trade
Level 2 - ~75% consumer, 25% trade
Level 3 - ~40% consumer, 60% trade
Level 4 - ~10% consumer, 90% trade
More consumers are coming into the program
The benefits of a wine education, the 3 C’s of the WSET
Credential - showing your accomplishment
Confidence - knowing the facts about wine, speaking with confidence
Culture - participating in the culture of wine...the pay may be low, but being a part of the friendship and social aspects of the wine industry
~100,000 WSET students/year - now the “go to” wine education organization - it covers the entire industry and is global
Recent changes to the program - giving students what they want
Launched a Sake program
Split spirits from Wine for the Diploma
Introducing Beer soon
Virtual classes
Has always been an option - was called “self-study” and had to go in person to take exams
Exams for L1 and L2 are now offered online; L3 and Diploma cannot be because they include tastings
NVWA launched wine kits (wine samples re-bottled into small vials) for virtual classes - do virtual tastings with them; the wines are disguised to be blind
Had to learn how to better engage students online - using breakout rooms, polls/quizzes, reducing seminar times to 1-2 hours, best practice is to engage with students every 3-5 minutes
Do live webinars that are recorded
Pricing is the same as in-person, but no travel costs
The cost of wine education
Course fees, wine (for Diploma ~200-220 wines are recommended to know; wine can cost $500-2,000 for samples), travel
Wine kits are included in course costs
Scholarships - NVWA has several partners for scholarships
Wine Unify for L1-3
Wine Access
The Roots Fund
John Hart (former NBA star) - for the BIPOC community
The return on wine education
Constellation Brands paid bonuses for employees who passed WSET qualifications and also offered tuition reimbursement
Playful Concept, Serious Wines w/ Kyle MacLachlan, Pursued by Bear
00:39:21
Being a celebrity helps and hinders the launch and selling elements of a wine venture. Kyle MacLachlan, an actor with a broad base of work from Twin Peaks to Sex & the City to The Flintstones, details his journey of starting Pursued by Bear (“PBB”) in Walla Walla, Washington and how he thinks about imbuing his personal brand with the wine brand. From getting approval for the brand name from Steve Martin to designing his newly launched tasting room, Kyle weaves his stories around how branding has worked for PBB.
Detailed Show Notes:
Kyle’s background - an actor, including Cooper from Twin Peaks, Sex & the City, Desperate Housewives, How I Met Your Mother, and one of his favorites is The Flintstones
He just wrapped filming of Fallout for Amazon, based on the video game
He grew up in Eastern Washington, always been a wine drinker over beer & spirits
Met Ann Colgin & Doug Shafer in Napa and wanted to start a Napa brand in the late 1990s, but it was too expensive
His wife pointed him to WA wine, met Eric Dunham looking for a WA Syrah for his wedding, and partnered in 2005 to launch Pursued by Bear
PBB
~3,000 cases, 5 wines
PBB Cab Sauv (launched ‘05; ~500 cases) - was Cab, Syrah, Merlot blend, now Bordeaux blend
Baby Bear Syrah (launched ‘08, ~300 cases)
Rose (launched ‘15)
Bear Cub (launched ‘16, ~1,000 cases) - an entry-level red blend
Twin Bear - “prestige wine,” 100% Cabernet
Winery name
He wanted it to speak to his ‘day job’ of acting and bring it back to the theater, a Shakespeare reference
Refers to a stage direction in Winter’s Tale - “Exit, pursued by a bear”
Steve Martin approved of the name, which solidified it
Kyle’s role at PBB
Took over 100% ownership of the brand in 2016
Very involved in the business, hands-on with operations (e.g., copywriting for labels) and parts of winemaking (e.g., blending trials)
Dan Wampfler winemaker since 2008
Leveraging celebrity
Has helped bring attention to wine (e.g., using personal social media), but most fans aren’t wine people
Gotten more press than otherwise
Some product placement (has been in the background of Desperate Housewives and How I Met Your Mother - like an “easter egg”)
Tries to be an ambassador for WA State wines
Made short videos during the pandemic - “Beary Tales”
It is a hindrance at times as people think wines aren’t good
Hollywood connections have not helped much - many aren’t big wine drinkers or collectors
Customer acquisition
Most effective has been 1:1 hand selling
Opening a tasting room in Walla Walla - April 2023
Zoom tastings were effective at selling wine during the pandemic
He wants people to feel they are on a journey w/ Kyle around PBB
Tasting room
Designed to be comfortable - cork floors, oak tables, big bronze bear
Located in Walla Walla downtown - a wine-tasting destination, mostly from WA, ID, OR, and Canada
Very little acting memorabilia - a Twin Peaks bobblehead & mug
Spring Release 2023 - will have 3 musicians playing music, walking around town
Likes surprise and delight elements, has had discussions w/ an AR company about embedding elements, but hasn’t figured it out yet
Library Release - Selection and Differentiation in Grocery Wine w/ Curtis Mann MW, Albertson’s
00:34:44
Grocery stores are one of the biggest sales channels for wine. Curtis Mann, Group Vice President of Alcohol of the Albertson’s Companies, gives us the inside scoop on buying trends, how to sell into Albertson’s, and the rise of the use of digital. Learn about the dynamics of the grocery wine market and what makes Albertson’s “locally great, nationally strong.”
Detailed Show Notes:
Grocery as part of the wine market
Multi-outlet wine market ~$12-13B / year
Total wine market ~$60-70B / year (multi-outlet ~20% of the total market)
Albertson's Companies' wine overview
~25 different grocery brands, ~2,000 stores
Wine is a key element of business - it drives sales and customer loyalty, some customers come to stores because of the wine selection
Some stores have up to 3,000 wine SKUs
Stores with more premium selections are correlated with location (high socio-economic demographics) vs. grocery store brand
The focus is more on the “premium” price segment ($9+ based on IRI)
Top brands - Barefoot, Kendall Jackson, up-and-coming brands - Butterl Josh, but wine is very diversified, big brands are still a small part of the market
Premiumization helping imports, including New Zealand Sauvignon Blanc
Wine buying trends
Consumers are called to authenticity - they want to know what’s in their wine, the appellation, sustainability, and organic
Convenience - cans, seltzer, ready to drink
Premiumization - $10-20/bottle, $30-50/bottle, up to $100/bottle (e.g., high-end Bordeaux, Napa Cabernet) ranges all doing well, some categories accelerating with potential out-of-stocks
Wine customer demographics
Gen X & Baby Boomers - still buying a lot (more in bulk and volume), but less than before
Millennials are the new customers - buying more, less loyal to wine vs. other drinks, and have less expendable income; their preferences are different from Gen X and Baby Boomers
To meet the changing demographics, Curtis looks forward 3-5 years to develop his shelf set/selections of wine
Promotions/discounting
Limited brand loyalty in wine, customers often default to price
Promotions are very important
Need to work between price and product to optimize sales and not over-rely on price
Wine selection
What does it mean to customers? Each wine must have a purpose vs. the other ~1,500 SKUs on the shelf
Tagline - ‘locally great, nationally strong’; try to give local stores more voice (e.g., Portland stores have more Willamette Valley Pinot Noirs)
Digital Transformation of Online Grocery & Wine w/ Jessica Kogan, Vintage Wine Estates
00:50:22
Fueled by the pandemic, grocery stores have made significant investments in selling digitally, with wine being an essential growth category for online sales. With estimates of ~$6B in wine sold through online grocery by 2025, Jessica Kogan, Chief Growth & Experience Officer of Vintage Wine Estates, gets into the trends, key success factors, and the opportunity that online grocery represents.
Detailed Show Note:
Vintage Wine Estates (Ticker: VWE)
11th largest wine holding company in the US
12 wineries, a couple of digitally native businesses, 12-15 lifestyle brands
Heavy focus on DTC
Online grocery trends
By 2025 - 22% of Americans will buy groceries online (i.e., anything not in-store and digitally enabled)
Alcohol is the fastest growing segment for online grocery - by 2025 - $5.97B in wine online from <$1B in 2018 vs. $7.97B DTC from wineries in 2025
Target saw 4x amount of alcohol when bought online vs. in-store purchases in 2021, most of which was wine
Digital grocery brings up basket size and provides more flexibility for consumers (e.g., curbside pickup; Target provides lots of flexibility)
~50% digital is pickup, ~50% delivery today
Post-pandemic trends
Wine DTC is seeing slower growth, but online grocery is continuing to grow
Covid led to increased investment by grocery in online
Grocery has goals of going beyond grocery into becoming a “lifestyle” store, e.g., leaning into wellness
Why consumers enjoy buying wine online
Feel overwhelmed by the selection of in-store
Like learning about the background and story of brands
Often use phones in-store to learn more about brands
Gen Z - born digitally, love stories & authenticity, committed to wellness - makes wine compete w/ RTD cocktails and hard seltzers
Consumers are more open to taking risks on new brands online
Selling into grocery stores
Believes in-store demo events are powerful
Making the story accessible and easy (e.g., QR codes on labels) key
Selling in online grocery
Uses Salsify (a “PIM” - product information manager) to publish info to grocery stores, allows producers to control data shown to consumers
94-95% of searches for wine are by varietal (or basic descriptors like red/white), not by brand
Digital algorithms - can’t buy ads due to Tied House Laws, but can influence algorithms w/ customer reviews or customers saving products
Using metadata to show up as recommended product vs. search displays helpful
Being in the “above the fold” carousel of products where consumers don’t need to scroll down is vital for sales, as big as being on the end-cap in-store
Tips for brands for online grocery
Have a website w/ e-commerce - helps understand the whole process
Go w/ distributors to stores w/ digital info for products
Future trends for online grocery
Virtual tastings will continue
More information on wellness and wine
Women to play an essential role in connecting w/ customers since most grocery buyers are women
Expanding your Impressions and Senses w/ Hoby Wedler, Tasting in the Dark
00:38:23
Trained in chemistry and born blind, Hoby Wedler, an entrepreneur and sensory expert, has trained his palate to pick up aromas and nuances in wine more acutely than most. Hoby describes how he does "Tasting in the Dark," which helps wineries connect with buyers and his thoughts on accessibility in the wine industry.
Detailed Show Notes:
Hoby's background
Born blind, studied history and chemistry (Ph.D.)
Francis Ford Coppola asked him to design a blindfolded wine experience, which became "Tasting in the Dark"
Went into food & beverage, consulting on product development, comparative set tastings, and aligning wines with wine critics' palates
Tasting in the Dark structure
Try to make people feel comfortable under blindfold
Use eye masks to change attention away from sight
Prime the aromatic vocabulary w/ samples of aromas found in wines
Create memories through a truly blind tasting
Most impactful for trade teams, distributors, buyers, and for higher-end wines w/ 3-tier distribution
E.g., Coppola did tasting for Safeway Group (grocery w/ wine stewards) and saw a significant increase in sales at Safeways for 5+ years afterward
Reasons people buy wine
Like the label
Read about the wine
Like the story, particularly for premium wines ($20+)
Most consumers don't know what they're looking for
Blind tasting helps imprint a story with the wine in people
2018 - Thomas Keller used Tasting in the Dark to train front-of-house staff to enable them to describe food and drinks better
Aligning w/critics' palates
Mostly aligned on aromatics and mouthfeel, abv levels
Wineries can adjust when to send certain wines to critics
Sometimes helps wineries w/ blending
Wine & accessibility
Chapoutier is classic example w/ braille labels
Accessible websites important
QR Codes put in the same place can help bring people to accessible websites
This can lead to unexpected benefits; e.g., wheelchair ramps were found to be useful to many more than those in wheelchairs
State of the Wine Collector w/ John Jackson, Dallas
00:36:37
Checking in on how collectors are weathering current economic conditions, John Jackson (IG: attorneysomm; YouTube: attorneysomm) provides insight into the Dallas, Texas wine market. From their wine clubs to how collectors learn about new wines and buy them, John delivers deep insight into the Dallas market as of May 2023. John also details some of his journey on social media with Instagram and YouTube.
Detailed Show Notes:
John’s background
Attorneysomm on Instagram (27k followers) and YouTube (7,000+ subscribers)
Dallas based collector, lawyer, WSET Diploma
Cellar is ~2,000 bottles
Dallas Wine Clubs
Like a country club for wine lovers
Each club has ~100-125 members
Annual dues (~$1,500-2,500/year) and must meet a minimum wine spend through the club’s retail
Includes a wine locker (48 bottles), hosts winemaker and distributor tastings, sells wines through distributors and brokers wine collections
Driven by TX wine laws - restaurants w/ full bars are not allowed to do corkage
Graileys - more focused on celebrities and athletes now
Roots and Water - John is a member, currently 2 locations
55 Seventy - opened 1-2 years ago
Collector demographics are becoming more female over time from heavily male
Dry January is relevant, but interest in wine is increasing
Regional buying focus
Top 4 regions - Bordeaux, Champagne, Napa, Burgundy
In John’s collection - he buys the most Champagne, but California is #1 in the cellar (due to large prior buying), with Bordeaux and Rhone next
Spain and Italy are relevant but smaller
Pichon Lalande is popular in Dallas - more expensive in Dallas than in other markets
Introductions to new wineries
Primarily through club distributor tastings & winemaker visits
Visits to wine regions (collectors go ~2-3x/year)
Social media
Wine pricing
Increases have made people more selective w/ purchasing; some have paused and drinking down cellar, waiting for pricing to come down
Some prices are double what they were before, especially Burgundy
Auction house reached out soliciting wine to sell, claiming the market is at all-time highs
Price increases in bad vintages (e.g., 2017 & 2020 Napa) are negative buying signals
Wine buying
From club - ~33%, mostly at distributor tastings
Online sources - ~33%, for older bottles, back vintages (e.g., Benchmark wine); collectors drinking mostly ‘90s Bordeaux and earlier
Winery direct - ~33%, for domestic wines, mostly mailing list/allocation systems, don’t like clubs b/c no control over what they receive; John was in ~15-16 mailing lists, now ~4-5); people culling their lists
“Cellar Defenders” - wines to drink that protect wines in the cellar; e.g., Willamette Valley, Rioja (Lopez de Heredia), Châteauneuf du Pape (Pegau)
Harder to get older wines than before (e.g., Champagne, Napa)
Social media
Instagram - spends less time engaging and more preparing content; posts more high-end wines
YouTube - active wine community, tends to be more value-focused, took a long time to reach critical mass (1st 3 months - 100 subscribers; +6 months to 1,000; 15 more months to 7,000); people want to know what wines to buy (e.g., Top 10 wines under $50)
Influencers now need to be more proactive in finding opportunities vs. being actively approached during the pandemic
Library Release - Getting Inside Bordeaux w/ Jane Anson, janeanson.com
00:57:21
Accidentally filling the big shoes of Michael Broadbent and Steven Spurrier, Jane Anson, wine critic, author of Inside Bordeaux, founder of janeanson.com, and former Bordeaux correspondent for Decanter for nearly 20 years, is one of the world's foremost experts on the wines, history, and region of Bordeaux. Having lived in Bordeaux since 2003, Jane shares her deep insights into how Bordeaux became as famous as it is, how the systems of La Place de Bordeaux and En Primeur work, and the complex terroir of the region. She gives us insight into the content of janeanson.com and how it will be a unique look into Bordeaux, focusing on the drinkability of the wines and many of the unique features to be released.
Detailed Show Notes:
Bordeaux Overview
A port city far enough inland to be a safe port
12th century - duchy of the English crown, wines were sold in the London market
The system of chateaux, merchants, and negociants was built for export
Terroir is very complex (which may be why it's not talked about much), e.g., of the 61 wines in the 1855 Medoc classification, all of them are on 2 specific gravel terraces (#3 & 4) of the 6 terraces of the Medoc
Mostly clay underneath with gravel on top
Lots of micro terroirs
St Emilion - has pure limestone, clay, and gravel
Issues that have hurt Bordeaux
Every vintage is not great, though Bordelais often say that
Frustrate people based on the prices they ask (e.g., 2009/2010 vintages - many people who bought lost money)
Advantages of La Place de Bordeaux
Business to business, sell to merchants that sell to consumers
Virtual marketplace - enables access to 10,000 clients globally
Includes chateaux, brokers, and negociants
Sells wine into every level of the food chain - has specialists for on-trade, off-trade, hotels, corner shops, supermarkets, etc.
It doesn't build your brand but makes sure it gets everywhere
Good at giving the illusion of scarcity
Can use La Place for specific markets - La Place has expertise in the Asian markets (e.g., China, Vietnam, Japan)
Disadvantages of La Place de Bordeaux
Creates a very competitive environment - low-end wines compete with each other
It protects Bordeaux well, and merchants need to buy in bad years to get allocations in good years
No direct contact with consumers for wineries
Less effective for small guys that aren't established brands
Non-Bordeaux wines selling on La Place
Gone from nothing to 60 wines 5 years ago to 90 wines in 2021
Provides access to global markets - shows wines next to the great wines of Bordeaux
Opus One - the 2nd non-Bordeaux wine on La Place (after Almaviva), has sold wines since 2004 and opened an office in Bordeaux.
Barriers to joining La Place - need enough volume to get everywhere, need to do your own brand-building work, and meet customers
The increase in overseas wines has hurt smaller Bordeaux estates -> negociants have limited budgets and drop them
En Primeur
From the early 1980s, Parker injected excitement into the En Primeur system
People used to make money, but now they are often better off waiting until wines are in bottle with certain exceptions (e.g., tiny production Pomerols)
No longer has the same sense of urgency
Tranche system - release a small amount of wine at one price, then release more later at higher prices
non-Bordeaux wines price more consistently than Bordeaux wines
Latour dropping out of en primeur, they wanted to store wines and release them when best for consumers
Chateau Palmer - sells 50% en primeur, 50% 10 years later
The Rise & Fall of Bordeaux w/ William Kelley, The Wine Advocate
00:27:17
Deputy Editor of The Wine Advocate, William Kelley, who recently took over reviewing Bordeaux, as well as Burgundy and Champagne, amongst others, and former guest on E62 (Evolution of the Wine Critic) and E68 (Burgundy), takes a deep dive into the current state of Bordeaux in this two-part episode. First, William tackles the history of Bordeaux and how it achieved greatness as one of the top wine regions globally to its recent decline relative to Burgundy.
Detailed Show Notes:
Bordeaux was William’s 1st love of wine, part of its charm being its everywhere and always accessible relative to Burgundy’s scarcity
The Rise of Bordeaux
France’s most successful “commercial” wine - Bordeaux is a trading port city on the Atlantic, commerce is key to its identity
Wine was mostly an export product vs Burgundy was drank mostly by nobility, was also harder to travel
Robert Parker was a big supporter of Bordeaux vs. Burgundy, which was less of a focus
Bordeaux’s downfall
Lost commercial influence over the past 20 years
Conversation of wine has been around “terroir” and the Burgundian model
Aggressive pricing (particularly of 2010 en primeur campaign) also drove away many traditional customers - many wines still not worth what they were sold for en primeur from the 2009 and 2010 vintage campaigns
Worries that 2022 may have a similar fate
Bordeaux strategies
Some are trying to replicate Bordeaux scarcity (produce less Grand Vin, more 2nd / 3rd wines) - the region/producer may be too big for this strategy to work
Trying to copy other successful wine region styles (e.g., Napa, Super Tuscans; Int’l Sauvignon Blancs for whites)
William believes the best path is to keep what’s unique about the region but improve quality to make wines more approachable (e.g., more precise block harvesting, canopy management, etc.)
There’s an overreliance on vintage for Bordeaux; many great wines are made in lesser vintages
Winemaking trends
Since the 1982 vintage, new prosperity led chateaux to invest in new wineries, the focus was in the cellar
Recently, the push has been for vineyard improvements, promoting soil health and rooting systems, canopy management, and rootstocks and clones, though these take generations to implement
Sales focus
Salespeople in Bordeaux are not winemakers vs. Burgundy, where they are vignerons
Critics often taste at negociants, not at wineries
William was one of the 1st critics to walk the 1st growth vineyards in decades
La Place de Bordeaux
Suitable for big chateaux w/ pre-existing reputations, not small ones
Petite chateaux - struggling and hard to survive
M&A - can increase top chateaux production, especially of 2nd wines, where they can often get 2-3x the price of former wines
The Business of Bordeaux w/ William Kelley, The Wine Advocate
00:24:07
Continuing our two-part episode, William Kelley, Deputy Editor of The Wine Advocate, expounds on the evolution of the business elements of Bordeaux. From La Place de Bordeaux to wine critics' score compression, Williams shares his view on how these institutions are changing and evolving their place in Bordeaux and how that impacts big and small chateaux.
Detailed Show Notes:
La Place de Bordeaux
Latour's leaving the en primeur system, but not La Place, did not have a meaningful impact, outside of when the wine is delivered, and did not tempt anyone else to leave en primeur or La Place
Focused on the Top ~50-150 Bordeaux wines
Now represents several non-Bordeaux wines, giving a bit more glamor for negociants to sell
More consolidation is happening in the negociant space
Negociants now do not have the time nor capital to care about "petite" chateaux
Several business models emerging, including high margin or high turnover with less inventory kept
Not a great way to build durable customers (e.g., may sell in Korea one year and Costco in Wisconsin the next)
Petite chateaux - need to differentiate and find direct distribution to be successful
Implications of health trends, consumers drinking less
Coming from a long career in technology, Kia Behnia, Founder of Neotempo Wines, was galvanized by the 2017 Napa fires to create a more sustainable path. This started in the vineyard, where he’s utilizing technology and leveraging real-time data to improve quality and decrease cost. Kia maps opportunities he sees in weeding, irrigation, mildew prevention, & automated crop evaluation as part of the foundation of a new “Smart Farm.” Beyond the vineyard, Kia has redesigned what sustainable packaging means for wine for Neotempo to address the most significant shortfalls of the industry today.
Detailed Show Notes:
Neotempo overview
Replanted vineyard (Kiatra), sold fruit, and now starting a winery
2017 Napa fires - nearly lost property, vineyards acted as a fire break, became the catalyst to focus on sustainability leveraging tech and innovation
Creating a brand for modern times, responsible and sustainable
Launching Fall 2023 w/ Kiatra Cab Sauv, ~$250/btl
We will roll out less expensive wines in the future
Tech in the vineyard
Can help solve the labor shortage (cost of labor in Napa up 38% in last two years)
Large opportunities - weeding, irrigation, mildew prevention, automated crop evaluation
The use of data in the vineyard is low; data is available but not integrated
Vineyard Tech examples:
1) VineView - scans the vineyard to monitor vigor
2) Phytech - monitors soil temps for irrigation; installed 30 sensors across 4 acres / 4,000 vines; measure the stress level of vines to inform watering vs. scheduled watering
Used 25% less water
Able to do pre-watering for upcoming heat stress events (in a morning of high heat, 3-hour events) -> only lost 5% of the crop in 2022 vs. much more at other vineyards
Gets real-time data at 3ft and 1ft under the soil and at canopy level
Extending to misters in 2023 to control temp and hydration more
3) Crop Evaluations - establish the health of the vineyard at individual vine level
Mapped and graded each vine 0-6 (0=blank, 1=rootstock only, 2=dead vine…6=healthy vine)
Graded during the 7 stages of the growing cycle, including 1 week before harvest -> helps determine the replanting schedule
It also uses grape samples and lab analysis (phenolics) as inputs
Exported all data into the analytics platform to do more reporting and analysis
No vineyard farming platform yet, mainly just products and features
ROI of vineyard tech - only invests in positive NPV projects
The cost of farming went slightly up
Believes innovation will reduce labor requirements
Will create new capabilities - e.g., disease prevention
Challenges to moving forward
Lack of entrepreneurship culture in farming
Lack of funding
Lack of openness of farmers to adopt new technologies
Neotempo packaging - building architecture for sustainable 750ml wine bottle
Designed own lightweight, high-end bottle (550g, 40% lighter than alternatives, 100% recycled glass)
Temp-controlled styrofoam alternative, no plastic - every component recyclable or compostable
In a valley of ever-increasing prices, Malek Amrani of The Vice, is trying to bring value and discovery to Napa. Producing 18 varietals from 16 sub-regions, The Vice showcases the full spectrum of Napa Valley at $29 a bottle. Malek is “going against the grain” in many ways - focusing on value, discovery, and underserved markets to build The Vice brand for the long run.
Detailed Show Notes:
“The Vice” named after Malek’s main vice of wine
Focused on value and discovery of Napa Valley
Production
27k cases total
~65% house tier, ~30% single vineyard tier (~20 wines/year), ~5% ultra-premium
#1 SKU is House Napa Cab - ~11k cases
They make 18 varietals, from 14-16 sub-regions w/in Napa, a little bit of Russian River Pinot and Chardonnay
Sources both fruit and bulk wine
Cost mitigation measures
Secure better pricing through pre-paying for grapes
Being proactive - purchasing fruit from southern Napa vineyards in 2020 that weren’t impacted by fires, talked to 12-15 glass distributors to mitigate the 200-300% price increases
Focused on the wholesale channel (~80% of sales)
Spends ~75% of the time outside Napa working markets
In 2020, traveled every month except April working w/ retailers -> 100% success rate, added 400 retailers in NYC
FL/TX buy more single vineyard wines; NY/NE - very House tier driven, CA/CO - good mix
FL - a red wine state (driven by Boomers), NY - big in orange wine, nearly outsold House Cab in spring 2023
Customer demographics
Equal split - Baby Boomers, Gen X, Millennials / GenZ
Orange wine (~3,500 cases) - 75% Millennials / GenZ, ~25% Gen X
Single vineyard Cabs - ~85% Baby Boomers & Gen X, Millennials focused on lower price points
Appellations important primarily to Boomers who grew up with Napa becoming famous, Gen X sees Napa as a symbol of status, Millennials/GenZ appellation less critical, more price-driven
Believes Napa will remain important, driven by tourism - 4M visitors/year
Orange vs. Rosé
Swapped production of rosé wine for orange wine
Believes rosé hit the ceiling in 2019 - rose a more social drink, also very vintage driven with closeouts on prior vintages damaging brands
Spirits vs. wine marketing
Spirits has lots of product innovation, e.g., many flavors of vodka -> led to The Vice producing many different varietals and Napa sub-regions
Spirits spend millions on advertising -> likely would not work for wine; better for the brand to be built account by account w/ gatekeepers
Consumer awareness of The Vice
2020/2021 - spent heavily on Google, FB/IG ads, had to shift when Sept 2021 privacy laws changed
Awareness from a lot of referrals and through retail placements
Some social media, in-person visits, and press/media - ratings are still important
Thinks about pairing w/ the senses - e.g., vision (most important), hearing, smell (linked to memory and emotion) - instrumental hip hop, sex toys for a bachelorette party
Works under targeted regions - e.g., Staten Island and the Bronx retailers
Likes to go against the grain - be more value-oriented vs. higher end
Restaurants, Wine, and Hospitalians w/ Richard Hanauer, Lettuce Entertain You
00:55:50
As the wine director and partner of the Lettuce Entertain You restaurant group, Richard Hanauer oversees ~100 restaurants' wine programs. Seeing beverage sales grow from single digits to ~20% of sales, Richard discusses the role beverage plays in restaurants, sommeliers, the elements of good wine programs, and his newest wine country themed concept, Oakville Grill & Cellar.
Detailed Show Notes:
Lettuce Entertain You ("LEY")
~100 restaurants in Chicago/IL, CA, NV, FL, TX, VA, DC
Partitions of different culinary groups
Beverage impact on sales - can be 0% - 50% of sales
Fine dining and wine sales used to have a positive correlation
LEY - Wine was single digit of sales, now high teens-20% over the last 20 years
The volume of sales driven through by the glass ("BTG") programs (e.g., RPM Seafood sells 4-5x Pinot Grigio vs. Sancerre, which is 2x the price)
Wine program drives return visits vs. initial visits - people come back for the person who recommended the bottle
Definition of a good wine program
Used to be verticals of great traditional producers
Now, more about how the wine program fits into the restaurant (e.g., Piedmont wines w/ Piedmont food)
Need good stemware; not great stemware
Wines at the right temperature and match the menu
Role of the Sommelier
Operations - wine binning/storage, ordering, tasting, building wine menus
When not involved in wine, they should be "hospitalians," helping with everything else
Best somms build relationships with wineries (get access to unique wines) and guests (getting them into the right bottle, not the most expensive -> brings customers back)
Average fine dining ratios - 24 tables, 1 somm per 12 tables
Somm turnover
Pre-Covid - average tenure 18 months
Re-training takes 6-12 months
LEY - tries to retain employees, treats them well w/ 401k, benefits, opportunities to grow career w/in LEY
Restaurant pricing
Rent is the most significant expense -> increases COGS for everything, including wine
Food/cocktail ingredients are blended together, but wine is not, making pricing a more significant issue
Goal - keep COGS down while holding price (sometimes achieved through relationship w/ wineries)
Try to get less available wines - have less price transparency
Markups lower on higher-end wines - standard markups would make the wines unsellable
Oakville Grill & Cellar - opened April 2023
CA wine area themed restaurant
Napa inspiration - "Never pretentious, never formal…very comfortable, pleasurable, elevated service & quality of food, rarely decor"
The entire wine program is from CA
Cellar Door - tasting studio w/in Oakville Grill
6 person suite
Partners w/ different winery every month
Re-creates the winery tasting list down to vintage and wine pricing
Classifying and Clarifying German Wine w/ Theresa Olkus & Steffen Christmann, VDP
00:58:27
Having existed through the glory and the doldrums of German wine, the VDP, the association of top wine growers in Germany, has set out to re-establish German wine as one of the finest in the world. With 20 years under its belt, the Grosses Gewachs (“GG”) system has elevated the status of dry German wines in a short time. Theresa Olkus, Managing Director, and Steffen Christmann, President, discuss the history, goals, and role of the VDP and how the GG classification is bringing quality back to dry German wine.
Detailed Show Notes:
Verband Deutscher Prädikats- und Qualitätsweingüter (“VDP”)
“P” standards for quality, those looking to produce top wines from top vineyards
The goal is to bring the global recognition of German wines back to when the wines were considered some of the best in the world
201 members (2023), up from 160 members (1990)
10 regional associations
VDP history
Started end of 19th century
A movement to counter the industrial winemaking trend
Created quality requirements (e.g. - estate bottling, wine was sold in auction by the barrel and bottled elsewhere; no additions except sulfur, sugar was added before)
Post WWI/WWII - cheap, sweet wines became popular
German Wine Law of 1971 - created quality classification based on must weights, varietal agnostic, leading to consumer confusion
The late 70s/early 80s - German wine quality sank (yields too high), and the law created consumer label confusion, leading to VDP revamp, focus on vineyard sites
Joining the VDP
1990-2023 - 130 new members, 1-2 new members/year
Must fulfill criteria, blind tasting, vineyard, and cellar inspection
You can’t apply or buy a membership; a region must invite a winery
Benefits for VDP members
Knowledge sharing
Leveraging the VDP brand (eagle logo) - an international sign of quality
VDP events and marketing
Exporting expertise - 27% of VDP wines exported
Leaving the VDP
1-2 members/year leave
Most coached to leave
Mostly leave post generational change - don’t want to follow VDP rules, quality not at the top level
Dry German wines
Traditional style before 1900
Germans drink as much dry as anywhere else in the world, and the reputation for sweet wines is an international perspective
Historically - 2-3% potential abv difference between entry-level and best wines. Today, due to climate change, the sugar levels are the same; only the yields and quality of site create differences
~60-70% of VDP members don’t make sweet wines, Mosel/Nahe most make sweet, Rheinghau ~20-30% do sweet
Grosses Gewächs (“GG”)
2002 - implemented in all regions, started w/ Rheingau 1994/5, Pfalz 1996
Created positive brand for dry German wines - increase in the average price of GG wines - 2002 - €16, 2023 - €40 (range from €25-150+)
German market response was positive, creating pride in German wines
UK pushback - writers thought dry German wines were too sour and lacked quality; last to adopt the new style, only in the last 5 years
Scandinavia - a hot spot for German wine
Elements for GG success - wineries can only make 1 GG wine from 1 Grosses Lage site; wines have gotten better
Significant markets for GG - used to be Northern Europe, Asia (China, S Korea, Thailand, Singapore)
Africa/India/S America - not strong for German wines
More than Riesling - Pinot Noir, Pinot Blanc, Silvaner
The next priorities for VDP
Renewing German Wine Law, potentially moving VDP classification into law
Promoting Diversity & Personality w/ María del Yerro and Enrique Valero, Grandes Pagos de España
00:43:31
With the aim of safeguarding the wines of personality from special vineyards (or “pagos”) from across Spain, the Grandes Pagos de España is a private group of wineries on the forefront of Spanish wine. President María del Yerro, of Alonso del Yerro, and VP Enrique Valero, CEO of Abadía Retuerta, discuss the history, objectives, how to join, and their new Terroir Workshop Series.
Detailed Show Notes:
María’s background - was a translator, husband took over family winery in Rioja, 2002 - bought a 56ha vineyard and started Alonso del Yerro
Enrique’s background - worked at Diageo and Gonzales Byass, became CEO of Abadía Retuerta
Grandes Pagos de España (“GPE”) history
2000 - 5 wineries established Grand Pagos de Castilla
2003 - included other wineries from Spain and renamed to GPE
35 wineries, all single vineyards
Pago is defined like “terroir”, a vineyard with different characteristics
Common Goal: produce exceptional wines that reflect unique terroir
Inspired by VDP and French concept of Grand Cru, but adapted to Spanish context
Goals & Objectives of GPE
Promote and safeguard “diversity and personality” of wines
Foster research and innovation
Conduct educational and promotional activities
Criteria for joining
Most wineries apply to be a member
Criteria - single vineyard, 100% estate fruit, min 5 years of internationally recognized quality, must pass internal tasting committee that assesses the personality of the vineyard
Most vineyards ~50-75ha
Some wineries may produce wines that are not Grand Pagos
Member benefits and requirements
Fees based on quota system by # of bottles produced (3 levels - <40k, 40-150k, >150k bottles), no winery is >500k bottles
Networking w/ other wineries; e.g. - winemakers meet 2x / year to share learnings
Making New Friends Every Day w/ Fabyola Soares, Pernod Ricard
00:36:30
As the #2 global wines & spirits company, Pernod Ricard seriously emphasizes promoting its brands globally. One method of doing this is its global network of Brand Ambassadors (“BA”). Fabyola Soares, Global Senior Wine Education Manager at Martell Mumm Perrier-Jouët, describes her team of 30 Brand Ambassadors, their mission, their role, and what traits make them great.
Detailed Show Notes:
Fabyola's background - studied to be a sommelier in Brazil, joined Pernod Ricard in 2013 as 1st Champagne Ambassador in Brazil, now oversees global education program and Champagne & Provence Brand Ambassadors (“BA”)
Pernod Ricard (“PR”) is #2 worldwide in wines & spirits, >200 premium brands (e.g., Absolut Vodka, GH Mumm, Perrier-Jouët)
Pernod Ricard has a range of Brand Ambassador programs
Programs overseen by brand owner
The oldest program is for Jameson Irish Whisky, founded in 1991 with 80 BAs in 15 markets worldwide
BA programs don’t span multiple categories but could represent similar ones, e.g., 2 Champagne houses
The scope varies by market - e.g., Hong Kong BA represents Champagnes and Provence, France - different BAs for each house, US - 1 Sr BA for Champagne
Champagne & Provence Brand Ambassador program
30 BAs, 15 international markets
Brand Ambassador roles
Targets trade and passionate consumers
Mission - “to win hearts and minds”
Engage in brand education, trade activation, business development, interact with media/journalists, organize cellar master visits, and teach wine certification programs
Collaborates with marketing and commercial teams
Don’t sell wine - commercial teams (Private Client Directors, Prestige Sales Teams) responsible for sales across the portfolio
Career paths - can be promoted to senior BA or join global market and strategy team (7 former BAs work there)
Rare wine offers - mostly sold via auctions (e.g., 1874 Perrier-Jouët sold at Christie’s in 2021 for a record £42,875) or private client directors
Key Brand Ambassador traits
Need to be credible and respected by experts - focus on formal wine training, launched WSET in-house and developed Champagne Specialist Course with the Wine Scholar Guild
Must embody house essence and be an effective spokesperson
4 key characteristics PR recruits for - passion for wine, strong communications skills, adaptability/resilience, and spontaneous charisma
Must be able to personalize interactions and customize messaging to meet customers’ interests
Prior relationships are a plus, depending on the level being recruited for
Building relationships
PR founder often said, “Make a new friend every day” - key for BAs
Commercial teams will make introductions to local customers
Connect with as many people as possible, often surprised by who brings in new business opportunities
Benefits of relationships with BAs - e.g., invitations to curated events and experiences such as the Belle Époque Society by Perrier-Jouët
Social media is more important in some markets (e.g., Brazil) than others
PR also has Lifestyle Ambassadors (part of the Marketing team) who have social media as a KPI
One Unique History, One Terroir, One Wine w/ Enrique Tirado, Don Melchor
00:29:06
As the first iconic wine of Chile, Don Melchor has paved a path for many others to follow. Enrique Tirado, CEO and Technical Director, explains the vision behind Don Melchor, how it became an instant icon of Chile, and how it stays on top of its game.
Detailed Show Notes:
Enrique’s background - studied agronomy and enology, joined Don Melchor in 1993, became winemaker in 1997, in 2011, Don Melchor Winery was created and became CEO
Don Melchor overview:
One specific vineyard in Puente Alto on the north bank of the Maipo River at the foot of the Andes Mountains
1st vintage - 1987
127ha, 151 parcels
Mainly Cabernet Sauvignon
Uses ~60-70% of the vineyard for Don Melchor wine
~12-15k cases of 1 wine produced each year
“One unique history, one terroir, one wine” is the ethos behind Don Melchor
The remainder of the fruit goes to other wines in the Concho y Toro portfolio (e.g., Marquis de Casa Concha)
Becoming an iconic Chilean wine
It was 1st to create an “icon” wine in Chile
It was the most expensive Chilean wine on initial release
1988, 2nd vintage, was in the Top 100 of Wine Spectator - the only Chilean wine and a big deal at the time which established Don Melchor’s status
A string of critical praise - WS Top 100 9x, 3x in the Top 10, 100 points from James Suckling, Best of the Best from Robb Report
Export 90% of the wine to 70 countries; main markets include the US, Brazil, China
Becoming iconic today
It is easier for other Chilean wines as Chile’s reputation is more established
The country’s image is critical and requires collaboration with other producers
Consistency of quality is critical for both winemaking and the commercial side
Add value to the wine world - e.g., come from a unique place, have a unique expression and personality
May create a 2nd wine in the future
Staying on top
Requires a singular focus on quality and consistency
Need to focus on communication and optimizing the best routes to market
Wine critics are still important, and they make consumer communication faster
Customized routes to market by country (e.g., US, Brazil) and have offices in different countries
Mapping Flavor Profiles for Wine w/ Katerina Axelsson, Tastry
00:58:52
Frustrated by a lack of understanding of consumer taste preferences and a lack of data-driven decision-making about winemaking, Katerina Axelsson, CEO and Co-Founder of Tastry, built an AI and chemical analysis system to solve this. With custom-built algorithms that take chemical analysis and develop flavor profiles and a database of consumer taste preferences that map to the US’s 248M adults, Tastry is paving a new, innovative way to use data to make and market wine.
Detailed Show Notes:
Tastry was founded around 6 years ago, but 1st 4 were more of an R&D project, officially launched Dec 2021
The wine industry is trying to anticipate what consumers want
New wines have an 85% failure rate in the 1st year
People describing flavors in wine doesn’t correlate with if they like it
Tastry uses AI and Machine Learning with chemical analysis to break down a wine’s flavor
2 databases - wine’s flavor profile and consumer taste preferences that are matched together
Wine database
Analyze 10,000’s of wines/year
Chemical analysis is done in-house on standardized equipment but with proprietary software
The Top 2,000 wines based on IRI annually are analyzed to build a baseline data set as wineries’ samples are proprietary
Consumer taste database
Did double-blind tasting panels, asking consumers if they both liked or did not like wines; the negative preference is important for the flavor profile building
Consumers also asked analog questions that became the Recommended by Tastry quiz
Use algorithms to relate data and predict preferences for the rest of the population (248M taste profiles)
Can now predict individual consumer taste profiles if they take the Tasty quiz with 93% accuracy in how they would rate the wine
Palates are very unique; the largest cohort is only 13 people
Demographics don’t show a lot of differences in taste preferences
Customers - work with >100 wineries, 22 of 25 largest wineries
Winemaker use cases
Computational Blending - uses simulation to match profiles from different blends and adjustments; winemakers set parameters on what they are trying to achieve
Winery had to switch from barrels to adjustments to 5x production and used blending to get a similar profile
Navigating smoke taint (3k tons, $10M worth of fruit) - came back with a recipe that solved the issue
Maintaining year-over-year consistency
Winery marketing use cases
Recommended by Tastry plug-in for wine clubs
Look more at finished wines and at competitive sets and overlap of consumer preferences
Retailer use cases
Recommender helps get more niche brands discovered
There is more traction for e-retailers now; pilots with big box retailers
Dec 2023 - Tastrt will announce a scalable way to access a broad # of wines
Strong ROI - 44-215x, benefits mainly cost savings, increased revenue
Business model - Vertical SaaS with consumption-based model
Subscription to dashboard
Lab analysis of samples provides ~$3,000 worth of analysis for a $370 list price
Compublend - per simulation charge
Access to competitive data sets from the Top 2,000 wines
Pricing is the same for winemakers, marketing, and retailers
Raised ~$10M in funding from individuals, early stage VC’s, and strategic investors (wine, AI, retail)
Library Release - Telling Stories w/ Jason Wise, SOMM TV
00:56:26
From an outsider's perspective, Jason Wise, director of the SOMM movies and founder of SOMM TV, has been able to find stories in the world of wine that interest a broad audience. To control more of the content pipeline and how the shows are distributed, Jason founded SOMM TV. Using "Somm" as more of a curator, SOMM TV has wine at its core and covers food, travel, and other alcohol, making it appealing to a broad (and younger) audience. Learn more about the business of wine films in this episode of XChateau!
Detailed Show Notes:
SOMM movie (2012) - Genesis of the movie
Made when he was fresh out of film school (where he didn't focus on documentaries)
Met Brian McClintic, who asked him to watch their tasting practice
Jason found the practice similar to a sporting event
Met Ian Cauble and found his determination to become a Master Sommelier
The success of the film
The obsessive personalities made the film
Builds to an actual event (the MS exam)
The wine industry was ready for something like the movie
Not a "wine film," a different way of looking at wine
Introduced a new group of people who can tell you what to drink (vs magazines)
Documentaries became popular with Netflix
Not made by wine people, the outsider perspective made it enjoyable for outsiders
Media business model
Movies usually have a distributor
Theaters are a big marketing arena for wine
iTunes - make a % of revenue
Netflix - pays the distributor a fixed fee; if put on the 1st page, it can reach millions of people. It often pays based on what it costs to make. They can own rights outright or rent the film
Amazon - get paid 6+ months after it's up, get a tiny cut of incremental revenue
YouTube - don't make any money on
Created SommTV to control more steps in the business model - more control of content pipeline, partnerships, and a place to premiere new films (e.g., SOMM 4)
Before Covid - events were a big part of the business
Media platforms
Hulu - Jason's favorite, takes the biggest swings in content
Stars - has the best movies
Netflix - very careful; content is very similar to each other; often licenses something then makes their version if it works (e.g., Uncorked is a similar series to Somm)
Cost of making films
Big range - SOMM 2 ~$100k vs ~$850k for another wine film made by someone else
Documentaries - can be millions, when there's real music, at least $500k
Do not pay people to be in the film
SommTV business model
Employees on salary, which is unusual in film
90% original content
It started with originals and, now, trying to license other content
Focused on wine, food, and alcohol; food is going to be a big part
It started the streaming service because it's an underserved audience, and wanted to super-serve them
Content pipeline - they would ideally love to have new content every day
Hundreds of thousands of subscribers (as of Jan 2022) - believes the potential audience is in the millions
"Somm" is defined by Jason as someone who curates - wine at the center, but food, travel, etc…surrounding it
Pricing - $6/month, $50/year
Lower cost doesn't necessarily mean more subscribers
Technology - a mix of own-developed and 3rd party apps; the goal is to bring the technology in-house
SommTV subscribers
Younger, usually 24-37 years old (~70%), middle class
Screenings/events - more varied audience
52% male, 48% female - women growing fast
Key markets - US largest by far, UK, Brazil, Nordic countries (not allowed in Iran or China)
Making Wine Accessible w/ Podcasts, Amanda McCrossin & AJ Resnik, Wine Access
00:55:09
As the podcast space matures, it becomes a more meaningful channel to market wines to consumers and create new experiences. 3rd time guest Amanda McCrossin, Host of the Wine Access Unfiltered Podcast, and AJ Resnick, CMO of Wine Access, explain their rationale and experiences in launching and building the podcast and associated wine club. From celebrities crying on the show to creating a 360 experience with their wine club and podcast audio and video, the Unfiltered Podcast continues to build traction, make wine more accessible, and build Wine Access into a loved wine brand.
Detailed Show Notes:
Wine Access background
Launched in the late ’90s, it hosted wine retail websites and described wines
2004 - offered wines on their platform
Curate wines (team includes an MS), tell the story behind every wine, excellent customer service, and technology (powers wine clubs like Michelin Guide, Sunset, Decanter, and Williams Sonoma)
Goal - to be a loved wine brand
Wine Access Unfiltered podcast
Launched in 2020
A wine podcast w/ conversations around wine w/ wine, but not about wine
Released every other week, 45 min - 1 hour show length
They have done podcast ad buys and have seen success
Format - Season 1 - talk about wine stories, mostly with celebrities
Season 2 - off more value add, more thematic (e.g., wine regions), added a wine club to drink the wines w/ the show (full 360 experience)
Has IG (>10,000 followers) and YouTube (>300 subscribers) channels
Listener base
They assumed it would be the same as Wine Access customers
They found it to skew younger and less wine-savvy, but very curious
Another way to connect with members
Traction
>100,000 cumulative downloads
Past episode performance increases with new listeners
Holds people’s attention for an extended period of time
Most podcasts fizzle out after five episodes
Getting celebrities on the show
“Do you want to drink wine with us?” worked during the pandemic
They did a lot of cold calling, worked with a few producers
More prominent celebrities didn’t always have the best performance
Bert Kreischer’s episode was very successful; he cried on the show and then mentioned it and FaceTimed Amanda while on 2 Bears, 1 Cave podcast
Wine Club
Four wines for four episodes, sent every other month, curated by Amanda
10% off all Wine Access purchases
Includes shipping, can add wines w/ free shipping to shipment
Some wines exclusive to the wine club
Q3 2023 - Unfiltered Wine Club had more new members than any other club that Wine Access runs
ROI
The wine club helps cover the cost
The goal is more brand awareness
Retention through connecting w/ members in a different way
Content creation (audio, video) that can be reused
Podcasting
Spotify is bringing new energy to the space with a better listening experience (went from 15% -> 30% of Unfiltered listeners)
YouTube has a podcast section
Repurpose clips for social media is a best practice
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