Do you know what the greatest marketing scheme in the modern history of wine has been?

a. the French Paradox
b. Beaujolais nouveau
c. the 1976 Paris tasting
d. Sideways
e. the cult Cabernet phenomenon

All the above were brilliant, impacting the perception and sale of wine, but the greatest of them all was (b), Beaujolais nouveau. For those of you who live in a cave and don’t know what that is, it’s the first wine of the new vintage, released worldwide on the third Thursday in November amidst great furor and publicity. I almost wrote “traditionally released” because that’s how most writers refer to it, but there’s nothing “traditional” about the November release. According to some published reports, it wasn’t until 1985 that the “commercial phenomenon” of Beaujolais nouveau was invented. By the early 1990s, it was certainly set into place in California. I remember going to Kermit Lynch’s annual Beaujolais nouveau festival, in the parking lot outside his Berkeley store, where in additional to huge quantities of frothy, purple wine they’d serve grilled sausages and baguettes from Acme Bakery, next door.

Beaujolais, the wine, was nothing special prior to Beaujolais nouveau day. In my many older wine books, dating back to pre-Prohibition times, it’s scarcely mentioned. It wasn’t until the late, great Alexis Lichine’s 1979 book, Guide to the Wines and Vineyards of France, that Beaujolais nouveau found its way into a wine book in any great detail, although Lichine preferred to call it Beaujolais primeur. He colorfully describes how, on the night of Nov. 15, “hundreds and hundreds of trucks and trailers [gathered] in the Beaujolais to pick up the wine,” likening the traffic headed into the big cities as “an army convoy.” But he did not write about the worldwide phenomenon of Beaujolais nouveau, because it did not then exist.

Wikipedia suggests that Georges Duboeuf “saw the potential for marketing Beaujolais Nouveau” and says that by the late 1970s its release in France “had become a national event,” spreading to other European countries and the U.S. in the 1980s and to Asia in the 1990s. Whatever its precise origins, Beaujolais nouveau day has  elevated a rather humble wine to an excitement meriting what amounts to a holiday in the world of wine. From Beijing to Lyons and San Francisco, Beaujolais nouveau makes a lot of producers a lot of money.

Can the phenomenon be replicated with other wines? Probably not. But that should never stop clever producers and their marketing agents from trying. You never know, before-hand, what’s going to work with P.R. Nobody could have predicted Pinot Noir’s resurgence prior to Sideways, or the launch of California’s reputation before the Paris tasting. And Sixty Minutes’ episode of the French Paradox was totally unexpected, in its massive impact on consumer attitudes toward [mainly red] wine.

Anyway, this year I’m going to pick up a few bottles of Beaujolais nouveau and bring them to our family’s Thanksgiving dinner. It’s the perfect bridge wine, a little sweet, chilled like a white, fizzy and fruity. And now, I’m off to Monterey, for tomorrow’s Best of the Blue event. I’ll be taking questions on Saturday afternoon; if you want, send in yours at the Monterey Vintners’ Facebook page, and we’ll tweet back my replies!

I’ve been something of a debunker about social marketing advice companies that claim they can help wineries increase sales through the use of social media. Whenever I see such claims, I usually think that the only sales that are going to be increasing are those of the social marketing advice company!

Their claims are often hyperinflated, based on taking advantage of the ignorance and insecurity many winery personnel feel when it comes to social media. They may take a single instance of success, and use it to imply that you, too, can achieve similar results–if only you hire the company. There’s something of the late-night T.V. infomercial about it: get-rich-quick real estate schemes, lose weight instantly, tone and harden those buttocks! Call now, operators are standing by!

I’ve asked, many times on this blog, for concrete evidence that a professional approach to social media (whatever that means) can increase sales. And to tell the truth, nobody’s risen to the challenge. Oh, here and there someone will talk about some anecdote, or they’ll argue, on purely theoretical grounds, that it works. But theory and reality don’t always agree. If they did–well, I better not get into politics!

But then I was reading the N.Y. Times on Tuesday and saw this article describing how a social marketing advice company called BzzAgent is apparently succeeding in boosting sales of Black Box, the Constellation-owned 3 liter wine to which I’ve given plenty of Best Buy reccos (and even the occasional and highly valued Editor’s Choice) over the years in Wine Enthusiast. (I’ve also panned their wines. At the equivalent of $6.25 for a regular bottle, it’s not likely they’re all going to be good.)

Black Box/Constellation hired BzzAgent (clever name, with hints of “buzz” and busy bees) to jack up sales, after the company concluded that it did not want to do traditional advertising, for a number of reasons. So I guess this is a form of guerrilla marketing: the article tells how a BzzAgent representative, who seems to have been hanging out at a supermarket, accosted a stranger who was about to buy another brand of boxed wine and warned her, “Don’t do it!” Instead, the agent told the woman to buy Black Box. The Times story implies that she did.

Never mind that there are all sorts of bizarre inconsistencies to this version of events. Did the BzzAgent person (who is described as “an unemployed lawyer”) just happen to be in the supermarket wine aisle when this event transpired, or was she trolling there? If the latter, did the supermarket management know that a weirdo lady was lurking in the wine aisle, approaching innocent strangers and interfering with their shopping? If I had been the shopper, I would have told the lady to stop bothering me. When strangers stop you in public and start talking at you, the general instinct is to assume they’re crazy or panhandling, and move on.

Still, I’ll take the Times story at its word. It tells also how the BzzAgent lady hosts “blind tasting parties” for her friends at her home and serves them Black Box. When those friends see how good the wine is, they buy it, or so the article suggests.

Supermarket encounters and blind tasting parties are not, of course, social media, but they are birds of the same color: they all bypass the traditional marketing and P.R. approaches in favor of what might be called consumer-to-consumer communication. The supermarket approach is one on one; the blind tasting party approach might be one on twenty; and a Tweet might be one on a hundred thousand: but the principle is the same.

I checked out BzzAgent’s website. By this morning they already had a lead link to the N.Y. Times article, a good sign that their people have a fast reaction time. There are also a lot of interesting articles, including one on how not to waste time online (which is something I think a lot of people and companies do). Number 4 is “Mix it up. Dull content is like Spam.”

That is so true. The biggest mistake most wineries make online is to establish a website, put some stuff up, and then let it molder for months if not years. I routinely get tasting samples in the mail for which the accompanying information is inadequate. So I’ll go to the website for info, only to find that the vintage hasn’t been updated for two years! That would be a scandal in the Heimoff household. When I missed a post last month due to my hangover, I heard from some angry readers. I almost expected mobs with pitchforks to hunt me down here in Oakland. So, yes, “dull content is like Spam.” In fact, it’s worse than Spam. With Spam (I don’t mean the meat, I mean junk email), you expect nothing, which is why most of us set up spam filters to weed it out. But when you deliberately go to a website expecting something new and useful, only to find a bunch of old, boring stuff, it’s an insult. You actually feel resentment to the company for being lazy and uncaring and unprofessional. Not good.

So in the case of Black Box, I’d have to say they’re being pretty smart about it. I’m not clever enough to say whether or not traditional advertising would or wouldn’t work for them. But if they can get buzz going at house parties, in the supermarket and online, more power to them. Just keep those unemployed lawyers away from me!

That sigh of relief you hear issuing out of California is from grapegrowers, who are happy that 2011 looks like it’s going to be a short crop.

By all accounts, shatter and frosts last Spring and wet weather this Fall that will cause cutters and sorters to throw away rotted grapes and bunches, will keep yields well below those of 2010, which was a big harvest, the third largest of the previous ten years. The growers are relieved, because a low crop means tighter grape and bulk wine supplies, which will help firm up the price of finished wine, already under severe pressure because of the recession.

Another reason for the short crop is because California growers understandably have been reluctant to plant new vineyards over the last several years. A comparison of acreage for the leading varieties from 2008 to 2010 confirms this. Cabernet Sauvignon was up by only 1.4%, Chardonnay by a measly 1.3%. Pinot Noir soared 10%, but that’s misleading, as there wasn’t much to begin with, so the double-digit increase came on top of a much smaller base. All the other major varieties grew by less than 2%, except for Zinfandel, which actually decreased by a percentage point.

You can appreciate this slowdown of plantings since the recession began by looking at Chardonnay over time. It increased by at least 1,000 acres a year every year in California since 2002.  But if you go back to 1994, the increase was at least 2,000 acres each year, and in some years–1997 through 2000–as much as 9,000 acres of Chardonnay came online annually. Compare that to a mere increase of 272 acres of Chardonnay in 2010, and you can see dramatically how much growers are loathe to invest in the heavy cost of developing new vineyards.

So the growers are relieved, but that doesn’t mean they don’t remain under heavy pressure to keep prices down. The American consumer is showing no inclination to pay more for a bottle of wine in 2012 than she did in 2009 or 2010 or 2011. We all know anecdotally that the majors–the Gallos, Constellations, Broncos, Wine Groups, etc.–are engaged in a constant battle to keep their market share, which would be impossible if they allowed prices to go up by even a fraction. Once again, the objective numbers testify to this fact. The average price per ton of crushed wine (red and white) in California typically rose in a steady climb from 1988 (when it was $297) to 2009 (when it was $612). Last year, it fell to $574, a 6.6% drop, the biggest since 2001, another recession year and one that was battered by the events of Sept. 11. Given the economic realities out there, I don’t think anyone doubts that the average crush price in 2011 (which we won’t know until Spring, 2012) will again be down, perhaps by double digits.

Of course, predicting market conditions always is risky. This article from last week’s San Francisco Chronicle reports on a Rabobank analysis suggesting that the low 2010 crop “should allow growers to improve profitability.” However, it hedged its bets by adding a qualifier: the twin effects of the recession and increased competition mean wineries “are unable to pass rising input costs on to consumers, which results in margin pressure.” It’s a classic market dilemma, in which supply and demand are in exquisite tension, and each winery will have to come up with its own strategy to tilt the balance toward profitability. And as we all know, your stategy is only as good as your strategists. These perilous times are testing the mettle of every marketing and sales manager out there, from the littlest family wineries to the biggest wine companies in America.

As a guy with more than a little interest in the marketing side of the wine biz, I’ve always been fascinated by how an unknown winery becomes famous–how a famous winery stays famous–and how, and whether, a winery that’s lost its glitter can regain it.

The best way for an unknown winery to get famous is for wildfire to strike. That’s the metaphor Heidi Barrett once used in explaining to me Screaming Eagle’s vault to stardom. It just kind of happened, a combination of word of mouth, good reviews and mysterious luck. That’s very rare, of course, so lately I’ve seen wineries using all sorts of tricks to become known: donating a portion to charity, appealing to mommies, unusual packaging, hiring celebrity consultants, ownership by some washed up athlete or rock star, etc. etc. blah blah. (Not saying that a winery that donates to charity is necessarily doing so to get famous. But it can’t hurt.) However, no matter what the approach, it’s very hard to go from nowhere to the top. I’d say one in a thousand new brands can do it.

How a famous winery stays famous may be the easiest question to answer. It’s simple: continue to out-do yourself in quality. No tricks, no shortcuts, no smoke and mirrors. Shafer and Williams Selyem (to name a few) stay on top year after year, because they take nothing for granted, and spare no expense. On the other hand, a brand like Gary Farrell (sadly) seems to be content to drift along on past laurels. It may work for a while, but not forever. Only long enough for people to catch on.

Which brings us to the final challenge: How can a winery that’s lost its glitter ever regain it? Is it even possible? Here, we venture into the realm of metaphysics. The short answer is that it’s next to impossible. I can think of very few brands that were up, then down, then went back up again. Davis Bynum may be trying to resurrect itself, in its Tom Klein era, after a long period of obscurity following its glory days. We’ll see how Bill Foley’s properties–Chalk Hill, Sebastiani, Firestone–fare, and the answer will provide insight into Foley’s real motive: whether he’s interested in boosting quality, or just stringing these brands along while he can. (As far as I’m concerned, the jury’s still out.) There are a number of interesting properties that were never famous to begin with, but were well-regarded, and who haven’t exactly slipped, but just never really shined. Turnbull Wine Cellars is one: they’ve been in a twlight zone for years, neither culty nor roadkill. I keep waiting for them to make a move.

I was thinking about all this yesterday due to an article, “Sometimes a brand isn’t worth saving. Here’s how to tell,” that appeared in the interesting daily business blog, Fast Company. Although it’s not about wine companies, but more about consumer goods brands like Dove, K-Y Jelly and Sierra Mist, its conclusions are applicable to wineries as well. The author asks five questions whose answers provide hints to a company’s viability.

1. Can its value proposition be redefined? For a winery, this means making the product relevant to the greatest number of people possible. If a winery already is doing this, all it has to do is remain relevant (cf. my remark above about continuing to out-do quality.) Relevance in wine these days means either affordability or a high price-quality ratio (e.g., Williams Selyem Pinot Noirs are not particularly affordable, but they give huge quality and pleasure for the price, so people are willing to pay it). But unfortunately, from where I sit, most wineries seem unable to define their value proposition. They don’t know what they stand for. There’s a lot of whistling past the graveyard.

2. Is the category growing, or does it demonstrate growth potential? The author used the example of K-Y Jelly, which started as a surgical lubricant, then hit the big time when manufacturer Johnson & Johnson realized people were using it for a sexual lubricant. Sex being a “growing category,” J&J hitched their wagon to an ascending star. What wine categories are growing? There’s that silly Moscato thing, but unless you were already onto it, it’s too late now. What’s growing is what’s always grown: Chardonnay and Cabernet Sauvignon (in California). Only they have to be affordable. That’s still where the action is. Pinot Noir is growing, but there’s no such thing as affordable, good Pinot Noir–a contradiction in terms. I wouldn’t enter this Pinot Noir market unless I knew I could get 100 points from Heimoff.

3. Is it [the brand] on trend? Hummer is so off trend, it’s not even funny. So is fur, although it’s trying to make a comeback. Luxury brands in general seem off trend–not in tune with today’s penchant for value and modesty.  “Natural” is on trend, but I don’t think “natural” is enough to sell a wine. There may be enough consumers into “natural” for Sierra Mist, or some natural form of cosmetic, to make it, but there aren’t enough wine consumers who will buy on a “natural” basis alone. What’s “trendy” in wine is wine itself: drinking it, serving it at dinner parties. So overall, wine is a good business to get into. But the winery needs a solid plan.

4. Is its revenue sizable? This means that a brand that’s doing well should attempt to do even better, using its revenues as leverage. Gallo does this better than anyone. They have the smartest product development team in the business; if there’s an unmet niche out there, they’ll fill it–and if someone beats them to it, they’ll do it better, for less money. Of course, regular wineries can’t do that. But what a regular winery can do is make their product so vital to the consumer that the consumer believes he or she can’t do without it. Two Buck Chuck did that. It’s doable and replicable for other wineries–I don’t mean retailing a bottle for $2, but finding something special and being the first one out there to do it.

5. Is it [the product] strategically useful for developing the company’s competencies? This is a lot harder for a wine company to accomplish than for, say, Procter & Gamble, which moved into health and beauty products based on Oil of Olay’s succcess. But what a winery can do is identify its most successful product, then figure out a way to spin something else off from it. Robert Mondavi famously did this with Mondavi Woodbridge. Before you say that was a failure, let me remind you that Woodbridge was not a failure: the collapse of RMW was due to going public, which in turn drove the Board to make many other mistakes, chiefly an unsupportable expansion. Woodbridge was actually a success. I don’t think it caused product confusion with the parent winery. So piggybacking on a proven commodity can be a good tactic, provided it’s done right.

However, as the author says, “As it turns out, not all brands are worth reinventing.” There are an awful lot of wine brands in California alone that don’t seem to have what it takes to stand the test of time. I wish them well–but I believe in five years we’ll see dozens of brands, extant today, that will be non-existing in the year 2016, and deserve to be.

Tuesday’s Wine Market Council presentation at New York’s Museum of Modern Art took place early in the morning following a night in which most of us got very little sleep. The WMC, working with The Nielsen Company, collects a vast amount of dry-as-dust data, from a multitude of sources, and then looks for patterns that make sense of all these shifting demographic and behavioral trends. The average person would fall asleep within three minutes of the Powerpoint show (and I saw several attendees who did), but for those of us hardcore industry geeks, it’s absolutely fascinating.

The WMC found that people who shop at supermarkets and superstores buy an average of $41 per visit (my number are approximate, as there was no complete handout of the slideshow, so I’m going by memory). But if they add a bottle of wine to the cart, the average purchase amount rises to about $74. This is why every store in the country, from mom-and-pop markets to Costco, wants to sell wine. However, the average price of that bottle of wine is $14, which leaves the extra $19 unaccounted for. I wonder what it goes to? The trimmings for a fancy home-cooked dinner? Flowers? Candles? Higher quality food?

The WMC people (and by the way, Wine Enthusiast helps underwrite the company) also pointed out that, while most of today’s marketing and PR energy seems geared toward Millennials, the fastest growing segment of the population actually continues to be Baby Boomers and seniors. But who is marketing to seniors, the man from Nielsen, Danny Brager, asked. Good question. Companies are marketing Depends, cholesterol meds and Medicare supplementals to seniors, but you never see ad campaigns for wine directed at them. And yet the white-haired crowd still drinks a lot of wine. Seniors would be a good target for wineries small and large (although I could envision a marketing or PR maven arguing, “But we don’t want to be perceived as a wine for old people”). Many wineries are pursuing Millennials and Xers with such gimmicks as animal labels, loud colors, vehicles, crazy designs and pun-like names, but seniors don’t care about that and may in fact be turned off by them. Seniors care about price and quality and they want to feel that the producer thought about them. So, wine marketing managers, don’t write off senior citizens.

This relates to the survery’s most fascinating finding. According to WMC and Nielsen:

WINE       BEER

I like well-known brands:                              1             34

I like to explore new brands:                       42              5

In other words, beer drinkers stick with their tried-and-true favorites (Bud Lite, Coors, whatever) and rarely venture outside their comfort zone. Wine drinkers by contrast are 8 times more likely to be adventurous and try something new.

Why? The WMC guys didn’t know, but we can hazard some guesses. It’s because:

1. wine is inherently more interesting than beer.
2. wine changes with each vintage and people know that whereas beer always tastes the same.
3. wine drinkers listen more to gatekeepers, such as critics, than do beer drinkers.
4. wine is so much better with food than beer.
5. there are so many more wine brands than beer brands to choose from.
6. most importantly, wine drinkers are more adventurous than beer drinkers because we’re risk takers, curious, liberal, open to improving ourselves and our lives, smarter (but don’t think we know everything), and more hopeful than beer drinkers, who, for all their charms, are (let’s face it) happiest with a kegger and an ample supply of beer nuts.

Anyway, that’s what I think! It’s great to be back in (relatively) warm Northern California.

Corrections: Michael Mondavi did not attend the recent Wine Star Awards, as I reported. The correct name of the President and CEO of Southern Wine & Spirits is Harvey Chaplin.

Do you ever wonder about the real meaning of certain terms on wine labels? Well, so do a lot of other people, which is why the  Federal government is opening up a real can of worms with its announcement that the agency in charge of wine label wording, the Tax and Trade Bureau (TTB), is launching hearings designed to reconsider the definition of such terms as “estate,” “estate bottled,” Proprietor grown,” “Vintner grown,” “Vineyard,” “Single vineyard,” “Old Vine,” “Reserve,” “Barrel Select” and a host of others.

(You can read the Notice of Proposed Rulemaking here. Scroll down to Notice No. 109, which will give you a PDF.)

Big news, and about time. For too long, wineries have had too much leeway in their creative employment of such words, which are confusing and can mislead consumers into coming to conclusions about the wines that aren’t true.

Take the term “estate bottled.” Up until now, a wine can be called “estate bottled” only if (a) it is labeled with an appellation of origin, and (b) the bottling winery is located in the labeled viticultural area, grew all of the grapes used to make the wine on land owned or controlled by the winery within the boundaries of the labeled viticultural area; and crushed the grapes (there are some additional restrictions).

That’s reasonable enough, right? Here’s where things get murky. For years, TTB has (in their words) “allowed the term ‘Estate grown’ to be used as a synonym for ‘Estate bottled,’” meaning use of the former would have to conform to the same conditions that govern use of the latter. But “some industry members” now are requesting TTB to let them use “Estate grown” even if “Estate bottled” conditions haven’t been met, since, they argue, “Estate grown” says nothing about bottling conditions.

That may sound reasonable, too, except that you have to wander further into the thicket to understand just how radical this proposed change is. For it all centers around the definition of “estate.”

The problem, in TTB”s words, is that “the regulations do not address or define the word ‘Estate’ or ‘Estates’…”. In other words, the word “Estate/s” means nothing…nada…zilch…and never has. So even though the word seems to convey some sort of authenticity or quality or prestige sourcing, it doesn’t. It’s about as useful as the words “New!” and “Improved!” on a box of soap flakes (and using it so loosely erodes the confidence the consumer has in wines that really are estate grown). Therefore, if “estate/s” is meaningless, and “estate grown” is divorced from its connection to “estate bottled,” then “estate grown” is meaningless. And down the slippery slope we go.

TTB is asking the public to weigh in on these things. On their website, they present a list of fuzzy label terms, and then they ask:
“1. Which terms currently used in wine labeling and advertising should TTB consider defining, if any, and what should those definitions be?
2. Why or why not should TTB consider defining such terms?”

I’ll take a crack at some of them.

“Reserve” and “Private Reserve.” These are routinely and wantonly abused because they have no meaning whatsoever. A wine cannot be a “reserve” unless there’s a “regular” but in case after case, you find there is no regular. So change the law. Make it mandatory that “reserve” is a small percentage of the winery’s regular bottling of that wine.

“Barrel Select.” A true barrel selection means you took a portion of your best barrels, as determined by tasting, and bottled them separately. Unfortunately, most wines labeled “barrel select” don’t seem to have undergone this sorting out process. Change the law to make “barrel select” mean what it says. (The term “barrel select reserve,” which quite a few wineries use, therefore would be an oxymoron.)

“Old Vines.” Consumers think this is some kind of guarantee, both of age and of quality, but it’s not. It doesn’t mean anything. Change the law to make “old vine/s” mean vines that are at least 25 years old; and then make it so that the labeled wine has to contain at least 90% of grapes from those vines.

“Old Clone.” Nobody knows what this means, either, because it doesn’t mean anything. There are no “old clones,” properly speaking. There are “old selections,” but just because a vine is “old selection” is meaningless from a quality point of view. Therefore, change the law. If a winery says it’s “old clone,” make them spell out just what clone or selection they’re talking about, and make them prove that the vines the wine is made from, or at least 90% of them, indeed are comprised of that selection.

The following terms also are meaningless, but we don’t want the hand of government to get too heavy, do we, so I’d leave them alone: “Proprietors Blend,” “Select Harvest,” “Bottle Aged.”