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Labels, visceral responses and disruptive business models

22 comments

At dinner the other night a senior executive for a major wine company told me that labels are becoming one of the most important reasons why people make a spontaneous purchase of wine.

I’d always known that labels are important, but this executive stressed their importance even beyond what I’d thought. It’s difficult for me to put myself in the shoes of an uneducated shopper as she browses the wine aisle looking for something special to drink with the pesto pasta and fresh garden peas she’s making tonight. I would already have an idea in my head of what type of wine to drink with it–maybe a sprightly white wine, with good acidity and some sweetness; Gewurztraminer? From there, it would be a matter of selecting a trusted producer, at the right price. I might also be influenced by geographic origin. Alsace? Sure.

But our shopper doesn’t know anything about any of that. Instead, she has to rely on one of our oldest, most primitive forms of human sensibility: vision. What we see is immediate and powerful: it can do only one of three things: repel us, attract us, or leave us indifferent. Label designers know this, and design accordingly.

But this isn’t a posting about labels, it’s about buying wine based on “more visceral responses [of which] aesthetics is key.” Those are the words of a gentleman named Phil Hurst, who is board chairman of a newish company, H.D.D., which is described in this press release as “one of California’s newest and fastest growing wine companies,” with brands including Healdsburg Ranches, Stonegate, VML and Bradford Mountain. (I’ve reviewed all these wines in recent years. The results have been mixed.) What interests me about H.D.D. is their practice of what one of their angel investors, a San Franciscan named Daniel A. Carroll, calls “a truly disruptive wine business model.” Come again? “A Disruptive Business Model focuses on improving products and services in ways that the industry does not expect while designing for an evolving set of consumers in a new market environment,” explains the press release.

That’s a mouthful that I didn’t quite get, so I asked my friend, Mr. Google, about it. Here’s one definition: “The word ‘disruptive’ is bandied about when referring to surprising new entrants into an industry, new players with new technology, and sudden competition coming from unlikely sources.” Here’s another: “A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology.” And a third: “Disruptive business models focus on creating, disintermediating, refining, reengineering or optimizing a product/service, role/function/practice, category, market, sector, or industry. The most successful companies incorporate disruptive thinking into all of their business and management practices to gain distinctive competitive value propositions.”

Okay, I’m beginning to get it. The opposite of a disruptive business is a me-too business, one that uses stale, non-performing old models instead of revolutionary innovations.

Back to H.D.D. What are their disruptive models? One is direct to consumer. The other is that “visceral response” thing. “Decisions are made at point of purchase based on mood or occasion,” the press release says. That’s our pasta-cooking shopper. Perhaps she’ll buy H.D.D.’s Dearly Beloved Forever Red wine because the label’s so cool (especially if she’s a Deadhead).

Well, all right, this all sounds good, until you begin to think about it. What is really new about “a purchase based on mood or occasion”? Gallo understood that 60 years ago. Retailers have been trying to influence the shopper’s mood forever. So I’m not seeing what’s so disruptive about H.D.D., and it was even more surprising to see no mention at all of social media in the press release. I did an (admittedly quick) Google search to see if I could find any mention of H.D.D.’s online practices, and I couldn’t. I would think that a disruptive business hoping to upset apple carts would have social media as part of its practices. However, H.D.D.’s founding partners include Bill Hambrecht (he’s the H.) and Paul Dolan (he’s one of the D.s). Smart guys, industry vets. I’d put my money of them, if I had any.

  1. I would buy that bottle in the photo (Dearly Beloved Forever Red), empty it, drill a 3/4″ hole above the punt and put Christmas lights in it as decoration. Screened labels are excellent for this.

    Otherwise I feel there is usually an inverse ratio of image v. quality in products, meaning the flashier the label the more disappointing the contents.

    Contrast this to the understated labels on Charles Smith’s (Washington) wines. Bare bones labeling with an excellent line of product.

  2. raley roger says:

    Disruptive business model = paradigm shift.

    Same thing, different term.

  3. Bill: Interesting. Call it “The Stephenson Effect.” The more eye-catching the presentation, the less fine the wine.

  4. I must confess, there are times where I have found “The Stephenson Effect” to be true when purchasing wine. However, the argument is no sound. There are plenty of instances where the branding/labeling of a bottle is attractive (keeping in mind that attraction is subjective), yet the product is also excellent. Boyanci Inspire, Bevan Ontogeny, Orin Swift wines (including The Prisoner although no longer owned by Orin Swift), Ch. Pichon-Longueville, or even Ch. Mouton Rothschild are a few that come to mind. Additionally, there are plenty of instances where the branding/labeling of a bottle is simple and plain, yet the product is terrible. (I won’t name anybody, but I’m sure we’ve all been there are one point or another.)
    It is true that “times, they are a changin.” Those that are set in their ways might miss out on some amazing and exciting wines……good thing there is plenty of good wine to go around!

  5. I’m a dead head and that label would scare me away even if I knew the wine was good:-)

  6. I see no “here” here – no indication that they are doing anything new. Even invoking a “disruptive business model” is stale. Maybe they are hoping to use this language to develop some buzz in the investment community, in hopes of capturing some $$ from soon-to-be Facebook millionaires.

  7. Don’t tell anyone, but the ultimate disruptive brand would be one that offers great quality and distinction consistently for under $10.

  8. @Adam Japko: hahahaha!

  9. I saw this press release and saw the word disruptive and thought, this is a group of guys with no clue…..I don’t buy labels and I buy wine. I do have a friend, however that writes the copy for wine label ads. She recently posted a print ad (a print ad!) on FB. It’s getting harder to buy wine….

  10. As our pasta shopper strolls down that wine section, she is continually attempting to synthesize her private world (lifestyle) with the public marketplace.

    As her eyes dart from one product to another in a sea of noise and semi-familiarity; She continually says to herself, “This is the way it is now. This is the way it is now.” She is lost, but perhaps hopeful.

    She is looking for something to affirm (purchase/talk-about) without shame, but the anxiety of her decision is a burden that she did not seek. She is looking for help without asking for it.

    So she faces a major decision:
    Do I buy a wine that looks like what wine SHOULD look like? (traditional, fancy, subtle)
    or–
    Do I buy a wine that looks like what i WANT wine to look like? (personal, inspirational, heartfelt, emotional)

    And again, she says to herself “This is the way it is now” as she makes her decision.

    ##
    This is the nature of modernity, the best way to win an argument is to never have it. If interesting wine labels sell more wine, then, they sell more wine.

  11. There’s a lot going on in the bulk market which is almost entirely invisible to the consumer and only partly visible to even interested people in the trade. There’s a reason it’s the label, which is one of the most important micro factors of individual purchases, is being stressed by someone very high up in the international bulk market. Be prepared for even more brands on “short runs” of x,000 cases; TTB had to loosen the oversight on certain areas of label requirements because of an ever-increasing backlog. Relief of the keylog will mean even more labels, not less. Talk of coming shortages plays into this, no? Ironically, 2020 will deliver us a very different wine business except for those with access to very special, branded pieces of land.

  12. Greg Morthole says:

    It looks like an attempt to tap into the Latino demographic to me.

  13. The costs associated with the price of wine is a barrier to the QPR of wine. If the costs were only land, labor, fruit and getting that into a bottle, wine would be much cheaper than it is today. But the biggest expenses involved in wine production are actually the price to get that product to market.

    If only HDD was really skipping the big chunk of cost associated with bringing a wine to market they would be doing something innovative. But they can’t right now, they need at least one of the 3-tiers to get placements in stores & restaurants in markets outside of San Francisco and LA. So their wine (brands) are actually going through a couple of tiers in NY State right now.

    On the Disruption term, the Wine Industry is ripe for such. It just hasn’t happened yet. It has to the Music Industry, could wine be next?

  14. What shines in the eye of the consumer is not only quantifiable through purchasing patterns, but can be tracked in real-time.
    Wine Business Monthly had an article last year about Tobii eye-tracking glasses that record both sight pattern and focus duration.
    http://www.winebusiness.com/wbm/?go=getArticle&dataId=88147
    Wouldn’t you like to try one of these out, and see what happens when you are faced with navigating a brand new wine shop?
    Cheers.

  15. CS Miller, I don’t think wine can be downloaded yet!

  16. Dennis Tsiorbas says:

    “it’s about buying (an article) wine based on “more visceral responses [of which] aesthetics is key.” By the photograph you have provided today, I’d say you got the idea. At least I can look at it. Certainly that label will fit the Halloween profile, which does sell wines by the label.

  17. Hey Steve,
    Love the comments one and all, good or bad, questioning or supportive. You’ve got to be prepared to hear it when you put yourself out there publicly like we have.
    Regards the disruptive description we use for our company, yep, it’s business jargon, but we do feel it describes what we do. From our channels of distribution (consumer, restaurants, online and retailers) to our packaging (check out VML or The County Fair)to our wines (Shiraz/Vionger blends?), to our farming practices, we are trying to do things differntly and have some fun doing it.
    We’re also not just trying to go around the three tier system we’re trying to work with distributors differently, and more effeciently, to ultimately provide the very best wines at the very best value to our customers.
    Regards technology we love Yelp and Facebook but we’re no Google. Look at all the words written about our company just hours after our press release hit the air waves, things are definitely changing in our very traditional industry.
    Regards our wines, people have to judge them for themselves. We’re very proud of every bottle we produce, as Paul Dolan says, “we’re true to our values of quality, from our larger production wines to our smaller handcrafted tasting room only wines.”
    At the end of the day we feel very fortunate to be doing what we’re doing and we invite you stop by some time soon to check it out for yourself.

    All the best,
    Phil Hurst
    H.D.D.

  18. doug wilder says:

    When I encounter a new producer that is putting wine into a heavy bottle with a deep punt, my first reaction is to ask myself if the wine will deliver up to the level of the package. Far too often, it doesn’t. This is especially an issue in Napa Valley where the notion of heavier = better probably translates to more splurging among tasting room visitors. Conversely, there are labels like Joseph Swan, Corison, Heitz, Kathryn Kennedy, Togni and Williams Selyem that have classic wine package concepts in “reasonable” glass. One new producer that does it well is Alysian, whose bottles are a little heavier but with a well conceived feel. The wines are excellent as well. Maybe by coincidence, Bill Hambrecht is involved in that project with Gary Farrell.

  19. If I can offer two contrasting examples and show my bias, take a look at a bottle of Juslyn Spring Mountain Cabernet. The bottle is actually thinner and lighter with a more understated label than your typical $20 Napa Cab, but is absolutely delicious and runs about $110. On the other hand is Orin Swift’s Mannequin white wine which has one of the fattest bottles (ala Turley) I have ever seen and likely would not fit in any traditional wine rack. In addition, the label on the Orin is extremely creepy with no text and only a collection of sepia mannequin torsos. I haven’t had the Orin Swift, but I know it wouldn’t hold a candle to the Juslyn regardless of packaging.

  20. Chris h. says:

    I was teased by the “disruptive” talk myself and clicked on the article to read it. I found nothing disruptive either. Maybe it was just the tease to get us to read the release? And if so, good idea. But to me it was a bit of a “there is no there there” experience.

  21. CSMiller says:

    Steve,

    All I can say about downloading wine is USPS, USPS!! A bit of gov’t competition will surely change shipping costs on wine to consumers.

  22. Bill Smart says:

    Interesting stuff from @CSMiller. I’d suggest that (if and when) the “grapes are freed” – see Tom Wark, then we might have a very different wine industry landscape. Until that time, you have just a few key players in the marketplace controlling how, where and when wines are sold.

    If you don’t know Free the Grapes, you should.

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