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How will the Internet of Things impact the wine business?

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I began hearing about the Internet of Things (IoT) last year. It was hard to wrap my mind around it—what is it, exactly?—and still is. The best I can do is to quote Wikipedia and then see if I can make sense of that. (Hang in there for a moment, because this is eventually going to be about wine.)

The Internet of Things” [says Wikipedia]…”refers to the interconnection of uniquely identifiable embedded computing- like devices within the existing Internet infrastructure. Typically, IoT is expected to offer advanced connectivity of devices, systems, and services that goes beyond machine-to-machine communications and covers a variety of protocols, domains, and applications.The interconnection of these embedded devices (including smart objects) is expected to usher in automation in nearly all fields…”.

As far as geek-speak goes, that’s fairly comprehensible: All things in our world are getting smarter, and increasingly are able to talk to each other. The data gathered by their sensors, meters and other devices can then be analyzed and used in beneficial ways.

For example, Fast Company reports on “Soofas,” smart benches in Boston public parks, whose solar panels can “charge your phone” and, potentially, give people localized information “about…farmers’ markets and…inclement weather.”

Libelium, an IT company, suggests dozens of other uses, including monitoring parking places in crowded cities, detecting “preemptive” fire conditions to alert people in danger zones, remote control of swimming pool conditions and remote monitoring of radiation levels in nuclear power plants. And now we move into wine: Also on Libelium’s list of IoT uses: Wine Quality Enhancing,” for example, “Monitoring soil moisture and trunk diameter in vineyards to control the amount of sugar in grapes and grapevine health.” (I know that viticulturalists have been using sensors for years to give them readings, but this IoT application sounds considerably more sophisticated.)

Nor is it only vineyards that can be IoT-monitored and controlled: Schneider Electric, an IT management firm, which has worked with Cisco on IoT issues, says it’s exploring “new areas and new customers” for business, including “extend[ing] this environment of sensors into the actual wine production plant where grape yields are calculated and the wine fermentation and production processes are automated and controlled.”

People are even designing “smart wine racks” based on IoT technology. The BBC recently reported on “a LED-equipped wine rack [where] every bottle has an RFID [radio-frequency identification] tag…connected to the Internet to let the owner know when a bottle has been removed.” The smart wine rack also can do tricks: “If you want a specific wine for a party, the LEDs in the rack will light up the bottles you asked for.”

I’m sure the owners of vast wine cellars, who long have complained of the complexities of locating a particular bottle, will appreciate that!

Obviously we’re just at the beginning of this technology invading/taking over/assisting our lives; I use multiple verbs because it’s hard to predict just what its impact will be. As a science-fiction buff, I’m both excited by this development, and a little concerned: It’s not out of the question to imagine that life, and living processes, themselves will someday get involved, for we too are “things” in a certain sense of the word. As WhatIs.com, an online encyclopedia, notes, The Internet of Things…is a scenario in which objects, animals or people are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.” I suppose we might eventually have wine reviewing and critiquing done “without requiring human-to-human” interaction. Wouldn’t that be something!

(For more conversation on this post, see my Facebook page!)


Goodbye to the era of the Big Critic

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We entered it as stealthily as we seem to be exiting it: the era of the Big Critic, which began, roughly speaking, around 1980 with the rise of Wine Spectator and its cadre of writers, and then really burst into prominence with the emergence of The Wine Advocate and its owner, Robert M. Parker.

That was 34 years ago—three and a half decades in which America gradually got used to the idea of a handful of (mostly white male) wine critics who were the Promethean equivalent of the faces on Mount Rushmore:

Rushmore

Stupendous, larger-than-life names, known to everybody who cared about wine, legends in their own time, whose opinions could elevate a winery to heavenly heights, or crush it mercilessly.

For thirty-four years this lopsided culture presided. It changed the face of the wine industry, especially in California but even in France, and its influence shaped the evolution of everything from winemaking style to marketing and even the kinds of foods we eat. That this handful of Big Critics was anointed to almost holy status was not their own fault, or their plan, and perhaps not even their desire: uneasy lies the head that wears the crown, which is why the description you heard most often of the personality of the Big Critics was “humble,” as if people were surprised they weren’t the height of arrogance. The Big Critics were aware of the incongruity of themselves being accorded all this power, and seemed almost embarrassed by it.

So, it was not their own fault. Whose, then? Maybe “fault” is the wrong word; there was nothing wrong with this crazy new system, it just happened. Like Athena springing full-blown from the head of Zeus,

 

Athena

the Big Critic was forged into being by the Zeitgeist of a Boomer nation suddenly all grown up and responsible for itself. America found herself in thrall to this handful of super-beings, half-man, half-deity–big fish in a small pond, perhaps, but no less awesome for that.

And yet there always seemed something “faulty” about it, didn’t there? One heard, from the recesses of the wine community, sounds of concern that “it’s come to this,” that such a handful of men could cause entire segments of the business to sway or topple. It was heard in whispers, over drinks at the bar: “I can’t believe the influence he has,” although nobody seemed truly to mind too much because, after all, almost everyone stood to gain from the phenomenon: producers, for whom a high score would be a bonanza; merchants, who needed no longer to form their own judgments but could simply shelf-talk someone else’s; other critics, who could gaze up at Rushmore and fantasize “There might be I, someday…”…

We will look back at these 34 years someday as a sort of fever-haze we went through, a national delirium. Someday, someone will ask her grandfather, “Is it really true your generation wouldn’t buy a wine unless a Big Critic told you to?” and Grandpa will smile ruefully and admit that, Yes, that’s the way it was, but you have to understand the times, the context…We were a young wine-drinking country, we needed help and guidance, we didn’t realize at the time how slavish the whole thing was, and besides, everybody else was doing it, we were all in it together, how could we have known it was only a fever-dream?

Why do I say the 34 years is over? Well, maybe it’s not. It could turn out to be 36 years, or 41 years, but by 2025 I can’t see the Big Critic thing remaining in any form, except memory, or perhaps in the mind of someone who fancies himself a Big Critic but isn’t really. The death knell came, of course, with the rise of the Internet and social media, which formed the basis for what is called “citizen journalism,” a lofty-sounding phrase that means, simply, that anybody can write anything and launch it into the universe, forever, with a keystroke. This is “publishing,” of a sort; it is words on a page (or screen), read by people who are interested in such things. And, occasionally, it does rise to the rigorous standards according to which modern journalism has been practiced for 100 years.

But the very universality of the Internet has proven to be the undoing of the era of the Big Critic. It’s not an either-or situation—I mean, we can have 1,000 citizen journalist wine bloggers co-existing with an aging cadre of Big Critics for a certain amount of time. But it’s an unwieldy tension; it can’t go on for much longer, because it’s inherently unbalanced: 5 or 6 Big Critics on one side of the seesaw, 1,000 and counting citizen journalists on the other side, there is no longer equilibrium, the center cannot hold. Somebody wins in such an unequal contest. The Big Critics lose, or fall off the seesaw; the citizen journalists are the victors.

And that changes everything. America changed when the populace that was not originally given the right to vote by the Founders—women, slaves, non-landowners, 18 year olds—eventually obtained that right. That tectonic shift in the weight of the voting population radically impacted the course of our country’s history: we became more “democratic” (with a small “d”), a nation in which—in theory—everyone’s voice was counted as equal. (Whether it really worked that way or not is another story…)

I for one will not regret the passing of the torch. The era of the Big Critic was fun, it was interesting, I personally benefited from it, but everything must pass. Life marches on and stops for nothing. “Eras” happen more frequently these days than they used to, and they last for a shorter time, too. The Paleozoic Era lasted for hundreds of millions of years; the Victorian Era for 64 years; we now measure eras in months (the current time has been referred to as the Era of the Selfie). It may be that future eras will be measured in microseconds.

If the Big Critic is gone (or going) then of course we are now entering the era of the Small Critic. When anyone can be a critic then everyone can be a critic: the ultimate democratization of wine criticism results in claims like this:

New app can turn even the most clueless of wine drinkers into an instant connoisseur.

From clueless to connoisseur in an instant. Welcome to the Internet! Whether this is a good thing or a bad thing, I don’t know. But it does seem to be related to everything else in the world that’s falling apart.


Concerning those controversial .wine domains

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I’ve been watching developments for the last few months concerning these new .wine and .vin Internet domain names. Not closely, just sort of casually. I knew there was some controversy about them, but I wanted to keep an open mind, and besides, who has the time nowadays to research every complicated issue of social, economic or technological policy?

So it was that yesterday’s big article (by my old friend Chris Rauber) in the San Francisco Business Times really grabbed my attention.

“Noted wine regions, including Napa and Sonoma, protest new .wine Internet domain names,” the headline screamed. In addition to the Napa Valley Vintners and Sonoma County Vintners, those opposed to the proposed domain names include the Paso Robles Wine Country Alliance, the Santa Barbara County Vintners’ Association and—in other states—the Willamette Valley Wineries Association, the Walla Walla Wine Alliance, and even the Long Island Wine Council.

Pretty impressive lineup. These are power players. I know the California regional associations quite well from my many years of rubbing elbows with them; with the power of their member wineries behind them, they possess clout. And they’ve been joined in their opposition by some powerful Congressional representatives: Mike Thompson (one of the senior Democrats in the House) and Anna Eshoo.

I can’t remember a time when so many regional associations joined forces publicly in opposition (or in support of, for that matter) a pending issue. So I figured I ought to look a little more deeply into what’s going on.

At first blush it makes sense to carve out .wine and/or .vin domain names. We all know the Internet is running out of domains and has been for years.

This is why ICANN, the corporation in charge of domain names, added additional ones to the more familiar .com, .org, .gov, .edu and .net—because “the internet—or .com at least—is running out of space. So many names on .com are taken that people and businesses have to struggle to find a suitable one.”

Enter .wine and .vin.

Two years ago, ICANN, in response to the problem, announced it would accept applications for additional domain names. It got nearly 2,000, many of them contested. ICANN decided to auction off the non-trademarked domain names to the highest bidders; the first auction was a year ago, and brought in over $9 million, through the sale of such domains as .club, .college and .luxury.

So what’s the problem with .wine and/or .vin? After all, even the U.S. government approves of the auction plan, which, after all, is an expression of classic free market principles. Last March, an agency of the Commerce Department declared that “ICANN is uniquely positioned…to develop the transition plan” toward a new set of domain names. Although the department urged ICANN “to convene global stakeholders to develop a proposal” for the transition—an encouragement to compromise and conciliation—the wine associations aren’t buying it.

Rauber writes: They “contend that ICANN’s plan includes ‘non-existent to grossly insufficient safeguards from illegitimate companies’ hijacking their names, histories and legacies. They claim ‘unscrupulous’ bidders could grab web names such as napavalley.wine or wallawalla.wine and in effect hold them hostage.” A spokesman for the Napa Valley Vintners told Rauber, “[H]is organization fears the proposal would ‘provide a new playground for nefarious actors to poach the place names of famous wine regions around the world.’”

These are serious and legitimate concerns. Nobody wants to see a situation wherein some for-profit wine company buys the rights to, say, “napacabernet.wine”, thus misrepresenting itself and its association with venerable Napa Valley. Napa “has had our name ripped off” before, the Napa Vintners spokesman said (most of us remember when and by whom that was!) and isn’t about to let it happen again.

You’d think that ICANN and other legal entities could address the concerns of those opposed by building in rights and protections for stakeholders, and that’s exactly what ICANN has proposed to do. They’ve created a “Legal Rights Objections (LRO)” mechanism by which disputes can be resolved when someone objects to “a third party’s application for a new TLD [top-level domain].” Negotiation is more or less normal operating procedure in our era of contention and litigiousness, but the wine region associations remain unconvinced, and certainly they have a point when they fear they’ll be forced to spend a whole lot of money, either on lawyers or on buying back the rights to names they want.

This is a sticky one, and I have to admit I’m not sure which side I come down on. What do you think? Should .wine and .vin be up for sale to the highest bidder?


From the front lines in China: The end of the three-tiered system?

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China never developed the complex infrastructure for the distribution of alcoholic beverages that the U.S. has in the three-tiered system, and it might never, because e-commerce is becoming the distribution method of choice.

That’s according to an article in the Taiwan-based China Times, which says that e-commerce is preventing the emergence of “leading brokers or end retailers,” as they’ve arisen in this country. This is also having an impact on the price of wine in China: “the popularity of e-commerce firms have [sic] shrunk the profits of wine companies,” with “most” of them seeing huge revenue falls.

No one should be surprised. “The golden age of wine e-commerce is coming” to China, according to a Chinese businessman who co-founded one of the country’s biggest such firms.

One big wine e-commerce firm, Wangliu—said to be “China’s priciest”—is venturing beyond mere sales; “The fledgling company is also looking to engage wine connoisseurs offline, opening experience stores and private clubs in major cities across China.” It’s as if Southern Wine & Spirits was opening winetasting “experience” venues in New York, San Francisco and L.A.

China does have a handful of private distributors “who are looking to source wines, beers and spirits from suppliers,” and that segment traditionally has sold wine to on-premise and off-premise accounts, as the three-tiered system does here. But “there are not many big wine distributors,” like Southern, in China, with online or e-commerce wine distribution websites instead filling the void. This would seem to make distributing wines from smaller wineries—the kind that have trouble getting picked up by big distributors in America—easier in China, although the challenge for small wineries is the same there as here: for Chinese consumers, “brand name remain[s] today the leading factor that influence[s] purchasing choices…due to the great complexity…that make[s] wine difficult to understand.” The winery that can work the e-commerce market successfully, and also help the e-commerce company to intelligently explain its wine, should reap the benefits of success in China.


Wednesday wraparound: Boredom, urban wineries, and medals, medals, medals

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Once upon a time, people bought the wines they liked and had trusted over many years, because they knew they would not be disappointed.

It may have been a Gallo Hearty Burgundy, or a Sancerre or Pouilly-Fumé, a Chianti or Mateus or Wente Grey Riesling. The wines could always be found on the local supermarket shelf, and the price didn’t break the bank.

That was then; nowadays, we have “the paradox of choice. Overstimulated by so many options,” writes Joyce Goldstein, in Inside the California Food Revolution, “we have become accustomed to constant change and instant boredom.”

Granted, Joyce is talking about how and where we eat—the amazing proliferation of types of cuisine we have at our disposal. But the same could be said about wine. And this is making life very difficult for the small family winemaker.

I was hanging out yesterday with a guy who owns his own wine brand, but he’s not likely to in the future. Business is not good, and he, himself, doesn’t know what to do about it. He can’t afford a staff, which means he has to do it all: vineyard contracting, winemaking, sales, marketing (such as it is) and all the rest. This is obviously too much for one person, so the end of the road is near.

It’s a sad story, especially since I’ve known this guy and know what a terrific winemaker he is. But his plight is the direct result of Joyce’s observation about our food proclivities: We’re accustomed to constant change, and we grow quickly bored. Under those circumstances, someone might have bought my friend’s wine and enjoyed it. But that person will be reluctant to become a loyal customer because of this constant search for the new and different.

I don’t know what the answer is. There may not be one. Not every problem has a solution. And it’s not enough to warn a young person not to get into the wine business, because when you’re young, you’re starry-eyed and ambitious, and you can’t believe that all your dreams might not come true. They might not—but usually, people don’t realize that until they’re in the forties.

* * *

Our little, homegrown East Bay Vintners Alliance is preparing for their annual fiesta. This year it’s August 2, down at Jack London Square. This is the Oakland version of “the urban wine experience,” a keen piece of marketing wines made in our nation’s increasingly popular, hip cities. For whatever reason, the phenomenon (if that’s what it is) is getting widespread press. For instance, there’s an article in the latest issue of “Via,” the AAA magazine, called “Wineries go to town,” that includes several of the East Bay’s locals: Donkey & Goat and Rosenblum, as well as wineries in San Francisco (Bluxome Street) and Portland (Enso).

I’ll be at the August 2 event and hope to see you there!

* * *

Not to knock my friends who organize and judge at the California State Fair’s wine contest, but a headline like “Thousands of medals awarded in State Fair wine completion” doesn’t exactly gain my respect. According to the local ABC affiliate, “There were 2,829 wine entries in this year’s competition. A panel of judges awarded 2,068 medals to competitors.” That’s a lot of medals: nearly half of all the wines won one. Bragging rights are, of course, the payoff for winning a medal—but something about this kind of inflated result makes me think of Garrison Keilor’s witticism about the kids of Lake Wobegon: “and all the children are above average.”

Have a good day!


Another study on social media’s failure to live up to expectations

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The headline on yesterday’s Wall Street Journal article on social media says social media has “fail[ed] to live up to early marketing hype.” True enough, but the situation is even graver than that innocuous header implies. Readers will encounter a litany of social media ills so extensive that the article reads more like the autopsy report of a particularly horrendous car crash than a dry little analysis on the front page of the “Marketplace” section.

Here are the sad bullet points:

–       “Social media are not the powerful and persuasive marketing force many companies hoped they would be,” says Gallup, whose report on this topic the Journal got an advance copy of.

–       More than three-fifths (62%) of consumers Gallup polled say social media has “no influence at all” on what they buy. Ouch.

–       Gallup: “Consumers are highly adept at tuning out brand-related Facebook and Twitter content.” (What, you thought you were the only one who manages to ignore them? So does everyone else!)

–       Then there’s Nielsen, which reports that “global consumers trusted ads on television, print, billboards and movie trailers more than social-media ads.” Considering the skepticism with which consumers see all forms of advertising, this means the level of trust in social media ads is less than zero.

–       Brand advertising on Facebook is increasingly unsuccessful. “Brands reached [only] 6.5% of their fans with Facebook posts in March [2014], down from 16%” a year earlier.

–       Small companies, including family-owned wineries, are frustrated with the results of Facebook ads. “[T]he return is really disappointing,” one restaurateur said. “Unless you spend to boost a post, you only reach 300 to 400 people.”

–       The dislike social media users have of anything that smells like advertising or marketing has reached new heights and seems irreversible. More than 90% of social users say they use social media simply “to connect with friends and family.”

–       As for piling up fans, “friends,” “followers” and the like, which has been the Holy Grail for companies, “Researchers [now] say many fans are fake, or automated.” One researcher found it cost him 42 cents to buy 700 retweets.

Statistics and anecdotes like these won’t be enough to seal social media’s coffin permanently, nor should we be overly quick to criticize social media for what it cannot do. As an ardent social media user myself, I’d hate to be without it: it has changed my life, and for the better.

But there can no longer be any doubt that social media (as I wrote six, five, four, three and two years ago, and again last year) is not, and cannot be, the alpha and omega of brand marketing strategies. That’s not what social was created for; it’s not what social users want; and the only reason why anyone continues to believe in the marketing value of social media is because a cadre of social media consultants insists (still!) that it works to sell stuff.

If I was a winery, would I be doing social media? You betcha. But I’d be careful to avoid any hint of puffy-fluffy PR, which turns people off. To sell wine, you need to do it the old-fashioned way: shoe leather, personal relationships and—yes!—scores, which still count.


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