The question is how we’re going to make our buying decisions (including wine) in the future, when (supposedly) the influence of super-experts will wane in favor of peer recommendations. The conventional wisdom — at least, as expressed by social media advocates and the people who are paid to promote them — is that social media will replace critics in a huge democratization of everything, in which everybody becomes a critic, all the time. The most obvious platform for such a revolution, it is said, is Twitter.
But wait. Is it really? Twitter’s limit (twimit?) is too much democracy too fast. Twitter is as if the ocean were funneled into your kitchen sink, one drop at a time through the faucet, until your entire house is 300 feet underwater. There is no unanimity of opinion (the way there is when a handful of critics raves about a movie). There is no continuity (because what was just expressed is washed away in micro-seconds by what is being said now, and now). There is no time to digest information that arrives in breakneck fashion. Moreover, the information that is incoming does not coincide with the timing of when you need that information in order to make a decision. It is, rather, like not having a hammer when there is a nail you wish to drive in or, conversely, like inconveniently being given a hammer when you neither need nor want one.
It’s for these reasons that I have expressed doubts about the potential of Twitter to transform (twansform?) our consumer culture. But don’t think that the Luddite in me believes that the Internet is incapable of such radical transformation. There is one such technology that shows the potential of driving sales as radically as any social media devotee could ever wish for, and that is Yelp.
What is Yelp? “A web-based community which allows users to share the experiences they’ve had world-wide,” in the words of this slideshow, although “world-wide” exaggerates Yelp’s real focus, which is city-wide (or local). If you’re on a business trip to Duluth and are looking for Thai food, Twitter isn’t likely to help (“the information that is incoming does not necessarily coincide with the timing of when you need that information”) but Yelp can. Yelp can steer you to “businesses within walking distance” no matter where or when you are, which is why Google is in discussions to buy it, according to last Saturday’s New York Times.
Is Yelp “social media”? By the widest definition, certainly. It started in San Francisco as an email recommendation service, so its peer-to-peer nature made it “social” while its email platform made it “media.” Today, of course, Yelp operates out of numerous U.S. cities, and you can browse by 22 categories (nightlife, religious organizations, beauty and spas), of which “wine” is not one; but the search engine lets you find reccos for wine bars, wineries, wine stores, wine clubs and the like, each of them accompanied by user comments that range from snarky to complimentary.
Still, when it comes to wine, there’s one thing Yelp doesn’t yet offer and probably never will, and that’s to give shoppers an overwhelmingly persuasive reason to buy one particular bottle over all the others. Even if Yelp enabled users to sound off on wine, all it would become is another, well, Twitter: a cacophony of dissonant opinion, with Johnny praising that Sauvignon Blanc while Susie accuses it of smelling like cat piss. Then too, Yelp’s revenue stream, which “lets businesses sponsor their search results” thus allowing them “to pay Yelp to display themselves higher on searches,” makes its objectivity suspect, no less so than Zagat’s reccos are similarly suspect (because the restaurant owner’s extended family and employees can say the most glowing things). So there’s no reason for a savvy shopper to believe anything qualitative or subjective on Yelp. He might find directions to that Thai restaurant in Duluth, but it could be the worst meal he ever had.
So what will replace the critics? You’re back in Duluth. You’ve opted out of the Thai restaurant, preferring instead to spring for French (you’re on a per diem from your company). Yelp leads you to Au Contraire, which boasts the town’s best Provençal. You pick up the wine list. It’s indecipherable; you barely recognize the appellations, much less the chateaux. You could ask the sommelier but, this being Duluth, Au Contraire doesn’t have one, just a waitron of doubtful apprehension. Fortunately, there is a solution. You take your iPhone, to which you’ve downloaded wine recommendation apps. (There are several, including the Wine Enthusiast Guide, which has sold 85,000 copies in the last 12 months). Suddenly you feel on surer footing; you no longer have to guess. You have highest of high-tech mobile platforms to make an informed wine-buying decision — where you are, when you need it, from a source you trust. The Death of Print? We can argue about that, but not, obviously, about the death of the critic, who lives on to give advice, with a digital voice over your cell phone.
And as proof I offer wine.com’s #1 wine of the year, Cambria 2006 Julia’s Vineyard Pinot Noir, from the Santa Maria Valley.
Each year for the last 3 years, wine.com, the nation’s largest online wine retailer, publishes its Top 100 wines list, but it’s different from the top wine lists published by most newspapers and magazines, including Wine Enthusiast. Wine.com’s list is “based entirely on customer preferences,” the web site explains. “The ranking reflects the top 1% of wines sold nationally on Wine.com during 2009 based on unit volume.” In other words, in wine.com’s list, the company’s customers vote with their wallets, instead of editors voting their personal preferences.
But hold on. There’s one big thing wine.com’s list has in common with Wine Enthusiast’s Top 100 Wines list of 2009. Our #1 wine also was the Cambria 2006 Julia’s; our list came out a week before wine.com’s. I can explain why the Cambria was our top wine, since I’m the guy who reviewed it and gave it 93 points. What I can’t do with precision is tell you why the Cambria was wine.com’s #1 wine. But I can make an inference that’s pretty plausible.
It’s this: wine.com cites two reviews from wine magazines for the Cambria. One was mine, which appeared in Feb., 2009 in Wine Enthusiast; the other was a 90-point score from Wine News (which I believe was given by my old friend, Steve Pitcher). Add to that the fact that wine.com is selling the wine for $17.79 — considerably less than the $21 suggested retail price — and you had lots of customers buying it. A 93-point Santa Maria Pinot for under $20? Grab your credit card and start shopping!
So I’d venture to say my review in Wine Enthusiast pushed the Cambria into the stratosphere. Not bad for a paper-based wine magazine published in a time when strident voices are predicting (and possibly hoping for) the “death of print” we’ve heard so much about. If being a potent driver of sales is an indication of a terminal disease, we’re going to have to reconsider what “healthy” means.
I daresay that even if the top 10 blogs, or the top 25 or what have you, all agreed on their #1 wine of the year (which obviously isn’t going to happen), it wouldn’t be enough to cause a #1 wine at wine.com. We’ve all heard anecdotes of a few success stories here and there — Capozzi selling out 1,700 cases of Pinot pre-release purportedly on the strength of pinotblogger’s blog, or Gary V. pushing product through winelibrarytv. But what you’re not hearing are the hundreds or thousands of wines that have gotten good reviews on blogs (and some of them pretty famous blogs) where the net impact on sales was lighter than a gnat’s poop.
What I’m driving at is that the better wine magazines are going to be around for a long time because, frankly, they work. As the recession lifts and the advertising climate improves, the difficulties of the past year or so will increasingly be behind us. Americans still like to read their wine magazines. That doesn’t mean lots of stuff isn’t shifting online. But when it comes to wine reviews that actually sell cases, I don’t think it’s moving to blogs or Twitter. Amazon’s Kindle, maybe, and similar portable reading devices. People may well move away from paper-based to an e-book platform, but I’m predicting that even as/when that happens, the wine magazines they’ll turn to will be the same ones they’ve always turned to, such as Wine Enthusiast. And as the wine.com #1 wine of 2009 makes clear, reviews, including those from Wine Enthusiast, will remain the single biggest driver of sales (yes, even bigger than peer recommendations!).
Hard to believe in just 37 days the first decade of the 21st century will end. Seems like only yesterday we were partying like it was 1999 (wait, it was 1999) and in a panic about the Y2K meltdown. Now here we are on the verge of 2010. In the blink of an eye, a decade has flown by.
It’s been ten years of discontinuity and discombulation for everything in America, and that includes the wine industry. I went back to review some things I wrote for Wine Enthusiast back in 2000, to see what we were thinking and talking about then. The wine market was, of course, robust in 2000, coming off the previous decade of up, up and away. In August of that year I wrote a column that reflected on the historical swings of the Bordeaux market over the preceding, well-documented two centuries. “Switch now from Bordeaux to California, and especially Napa Valley,” I said. “Many of the top wines, particularly Cabernet Sauvignon, have doubled in price since 1990…the price of many, if not most, expensive wines has got to come down, and will…If you don’t believe that the world’s most prestigious wines can suddenly, exuberantly collapse in price, just read ‘The Wines of Bordeaux’ and find out.” That book, by Eddie Penning-Rowsell, traces the sine curves that Bordeaux prices always have described.
The dot-com bust and Sept. 11 dealt blows to the wine industry, but nothing like the staggering knockdown that the Great Recession of 2008-2009 delivered. I still see “suggested retail prices” of $100, $150, $250 for certain Cabernets, but frankly, I don’t believe them. A winery owner can claim to be asking (and getting) triple-digits for his wine but that doesn’t mean he is. So I was right that prices would collapse, but it’s a prediction anybody can make, at any time, because sooner or later, prices always tumble. But that has never stopped certain people from trying to talk prices back up, as for example this article from Investors Chronicle, which argues that “the market for quality wine has enjoyed a rapid turnaround” and cites somebody from something called The Wine Investment Fund as saying that fine wine “has earned it[s] place alongside gold, equities, bonds and other assets in an investment portfolio.” We may forgive The Wine Investment Fund, which is based in London, Bermuda and Hong Kong, for hyperbole, since it’s hardly a disinterested party.
I asked, also in a 2000 column, the following question: “Have you noticed that wine is getting sweeter and softer?” Apparently, I had, although 2000 was a little before I remember actually becoming convinced that California wine had a real problem, namely lack of acidity and excessive residual sugar. Later that year I wrote a little story about Jess Jackson stepping down as Board Chairman of Kendall-Jackson, and quoted him as saying, “I’m seventy. I’m retiring.” Some retirement! But along less happy lines, at the end of 2000 I reported on the news that Robert Mondavi Winery had “extended its reach to a fourth continent, Australia,” with its announcement of a joint venture with Rosemont. In retrospect we can see that this really was an early warning sign of the winery’s impending demise, caused by the hubris of exalted ambitions. RMW’s actual death dragged on for another four years, but finally occurred in December, 2004, when the company was sold to Constellation.
Several conclusions can be drawn. Wine prices are down now, but unless this is the End of History they will rise again, pace Penning-Rowsell, although it could take a while for the high end to recover; there were eras when Bordeaux took decades to come back. Softness and sugariness remain stubborn problems in California wine, but there’s evidence that that trend-line has peaked, thankfully (although it’s a Dracula that threatens always to rise again from the grave). Jess Jackson happily remains with us, at the helm of a great wine company. And the unhappy experience of Robert Mondavi should be a warning sign to ambitious empire builders. What are its lessons? Be careful what you wish for because you might get it. The Devil’s in the details. The bigger they are, the harder they fall. Dot your i’s and cross your t’s. The fundamentals still apply as time goes by.
And speaking of the second decade of the 21st century
The world will have heard by now that Gary Vaynerchuk has won Wine Enthusiast’s “Innovator of the Year” Wine Star Award for WineLibrary TV. I am personally thrilled by the prospect of finally meeting Gary when we all gather, in black tie, at next year’s gala ceremony, at the New York Public Library’s 42nd Street branch. I feel like I know Gary from his comments on my blog, and he is obviously a force to be reckoned with as we head into the two thousand and teens. Congratulations to Gary and to all the Wine Star Award winners!
I talked with Brill, Crushpad’s president and CEO, last Friday.
SH: How did the deal come about?
MB: We have a couple Twitter employees who are customers of ours. They contacted us about making some barrels for employees, as a team building exercise. They also at the same time were trying to hook up with Room to Read, their favorite corporate charity. Over the course of 45 minutes, we all came up with the idea of why don’t we create a wine, sell it, and the profits will go to Room to Read.
What is the significance of this, beyond raising money for charity? I mean, Crushpad getting involved in social media. You’re already calling it “social winemaking.”
Great question. We’re all about getting people involved in the winemaking process and co-creating a product with the customer. So this is an extreme exaggeration of what we normally do. Instead of 5 or 10 people involved in the process, we’ll have hopefully tens of thousands [buying the wine]. And all this is being tweeted as we go along. It’s a way to expose winemaking to many thousands of people who could not ordinarily afford it or be involved in it.
Tell me about the wines. Varieties? Sources? Price? Production?
Pinot Noir and Chardonnay. The grapes are from different vineyards — Santa Lucia Highlands, Santa Rita Hills, Russian River, Sonoma Coast, all the stuff we normally deal with. The price is $20.
I read that only $5 of that will go to Room to Read, with $15 going back to production costs. That seems high.
Well, if you look at our hard materials costs and labor, we’re not making any money on this. And we’re eating shipping costs. We’re probably losing money. People making wine from the same vineyards [charge] $40 or $50.
Why is the brand is called Fledgling?
That was Twitter. Biz Stone [Twitter’s co-founder] came up with that. They like things that are bird-related.
What is case production?
Between 1,000 and 10,000.
Can you be more specific?
No. Twitter is concerned about not wanting to commit to specific dollar amounts to give to Room to Read, so they don’t want to set specific expectations, even though we have internal targets. I think Twitter’s taking a huge risk on this. Some people have been snarky on the blogs [such as] “Twitter should figure out its business model.”
Is this a one-time thing? Will production and variety type increase?
We’ll see how it works. We’ve never made anything on this scale. This is an order of magnitude larger than our Vayniac Cab [which Crushpad made for Gary Vaynerchuk].
Crushpad has a Twitter account with 63,425 followers. Has that resulted in any additional business, or is it mainly a P.R. device?
It’s the latter. Social media and Twitter are fine for brand building, relationship development, getting your name out there, but it’s a horrible mechanism for generating revenue.
Could that change with a killer app?
Well, there are challenges with Twitter in that there‘s no structure. Personally I believe Twitter for business will only be successful when there’s structure built into it, whether by Twitter or a third party. A tweet is just an event. How do I take advantage of it? So my perspective is, Twitter is great for updating people, but not great now for selling.
Has the recession affected Crushpad’s business?
It’s put a crimp in, especially in the first half of this year. Most of our clients are pretty affluent, but the uncertainty about the economy earlier this year pushed people back. But there’s more optimism now. We saw a big jump this harvest.
That brings up another point. You speak of “democratizing” wine, yet doesn’t the Crushpad model actually only apply to wealthy individuals?
It’s a process. Ten years ago, you needed tens of millions to make wine. Then custom crush facilities brought it down to $100,000. We brought it down to $10,000.
I think a lot of the Room to Read piece gets lost [in media coverage]. It’s a great story. Twitter doesn’t get any P.R. value from this; they have nothing but risk associated with this project. It’s about all of us helping Room to Read, which in turn helps kids.
Ever since last Fall, every wine writer has written about how hard high-end wines have been hit by the recession. I have, for sure. The latest is the Santa Rosa Press-Democrat’s Kevin McCallum, who wrote this piece entitled “Makers of high-end wines caught in ‘dead zone’.” It does a good, and scary, job of describing “the demise” of Flanagan Family Winery, whose owner sank his heart into the project, only to see the recession come along and kill the ultrapremium tier he hoped to conquer.
Kevin gets to the point when he writes “Some think the reversal will be short-lived; others say something has fundamentally changed in the wine business.” This is, of course, the 64 dollar question, and I won’t attempt to answer it because I don’t have a crystal ball. But it is worth speculating about the second premise of Kevin’s statement, namely that “something has fundamentally changed in the wine business.”
Has it? Or are we all just prone to making cataclysmic prognostications of gloom and doom, when, actually, things don’t ever change that suddenly or radically? Well, to begin with, some things do change that suddenly. Sept. 11 changed almost everything in America. I think historians will refer to pre- and post-Sept. 11 for a long time (and possibly to pre- and post-fourth quarter of 2008 as another epoch-shattering event). And it is, of course, to the fourth quarter of 2008 and the massive recession that the question has to be addressed concerning the wine industry: Has the deck been fundamentally reshuffled, or just temporarily? How long will expensive wine suffer?
One obvious place to look for the answer is personal income. Americans have lost literally trillions of dollars over the past year or so. That’s spending money, folks. And that loss means that tons and tons of stuff is not going to be bought by consumers, including wine. We know this, so the followup question is, will Americans recover the money they lost? If they do, then sales of expensive wine will recover. If they don’t, then it won’t. It’s that simple.
Even if you assume that the recovery is upon us, and employment goes back up, and salaries stabilize if not actually rise, there’s still a big problem: peoples’ retirement incomes — their 401Ks and IRAs — have been demolished. Let’s say someone was making $75,000 a year before the recession and had $750,000 in a retirement account. That person didn’t mind spending $15 or $20 for a bottle of wine, because while she didn’t exactly feel rich, the retirement account was reassuring.
But assume now that the value of her IRA has fallen to $350,000. Assume she still has her $75,000 a year job and is reasonably secure in keeping it. Will she still spring for a $20 bottle? I don’t think so. If she’s like many folks I know, her reasoning is, “Gosh, I’ve really lost a lot of money. I have to rebuild my nest egg. And my employer has been talking about us contributing more toward healthcare premiums, as well as higher co-pays and prescription drug costs. So, while I’m not ready to give up wine, instead of spending $20, I’m going to start looking in the under-$10 category.” She does, and you know what? She finds that there are lots inexpensive wines that are as good and satisfying as what she used to buy. She becomes a permanent under-$10 buyer. (Along these lines, I recently gave a high score to an $11 wine. The winemaker called to tell me that it was really a $40 bottle from a winery that couldn’t sell it at that price, so he bought it, retailed it for $11, and still made a tidy profit. There are innumerable instances of this happening every day.)
Multiply our hypothetical consumer by millions of people and you have a permanent shift in American wine-buying habits. The only thing that could change this would be psychology: people are conditioned to think that if something costs more, it’s better, and nowhere is this more true than with wine. It’s a fundamental part of human nature to associate price with quality, however mistaken this is. Here’s where the Millennials and Gen Y come in. In ten years, when they’re at the peak of their purchasing power, will they revert to the old “if it costs more, it’s better” way of thinking, or will they — the smartest generation of wine consumers in history — recognize that cost and quality aren’t always related? Again, I don’t know, but I suspect they may be bamboozle-proof. If so, then we really, truly are witnessing the death of high-end wine.
Disclosure: Gary Vaynerchuk is a nominee for Wine Enthusiast’s “Innovator of the Year” Wine Star Award. I hope he wins. If he does, I look forward to meeting him next Jan. 25 at our awards ceremony in New York.
If he is “a new media pioneer, showing how things can and will be done,” which is how Jancis Robinson described him in yesterday’s Pour blog in the New York Times, I wish him luck. I will be retired and living off fond memories when Gary takes over the world. So it’s not as if I feel threatened by his rise, or anointment, as the case may be.
I had lunch today (yesterday as you read this) with a Californian who was recently on Gary’s Wine Library TV show, and he told me that Gary told him he’s getting bored with WLTV, desperately longs to be as famous as Parker and is thinking of moving beyond wine into other areas. The winemaker added that he was a bit put off by Gary’s obvious ambition, but went along with it anyway. Hey, a chance to be on Gary’s hit show is not to be missed! The man moves product (although not nearly as much as a good review in Wine Enthusiast). I told the winemaker that I can understand the desire to be famous, but when it’s so obvious, it’s unseemly. (I have a problem with Gavin Newsom for the same reason.) Maybe it’s because I was raised in a different generation, where naked ambition was not flaunted, but hidden behind a veil of propriety. Perhaps my generation was hypocritical. I like to think it was tasteful.
A few weeks ago I blogged “Move over Perez Hilton, here comes Gary V.” in which I inferred, and implied, that Gary — now a certified celebrity himself — was moving closer to becoming a chronicler of other celebrities, a sort of Ryan Seacrest (who makes, what? $20 million a year). There’s a lot of cash to be earned, and Wine Library TV is probably too small a platform to really make the bigtime.
I found the most interesting part of Asimov’s Pour blog when he reported that Jancis “grimaced” at Gary’s wine descriptions when she tasted with him, which perhaps provides some insight into what she thought of his wine knowledge and understanding. Nonetheless, here Jancis is, overcoming her horror to praise him as the coming thing.
My problem with Gary, Wine Enthusiast’s nomination notwithstanding, is that he seems to be a pure product of our celebrity culture. Although he’s not particularly young and, as I understand it, losing his hairline (who am I to talk?), he could be the host of an MTV entertainment show, which is what I alluded to in my blog. His personality is perfectly suited to television and the video Internet: raucous, irreverent, hyper, funny, quick-witted, a little coarse, able to take a punch and come back with a stronger one. He’s not hard on the eyes. Think Seacrest, Craig Ferguson or even Conan O’Brien. These are celebrities who are famous because it pleases us to watch them, not because of anything they “know” or have to teach us. Gary V. is the Conan O’Brien of wine media these days.
“His persona is as much about marketing as it is about wine,” Asimov wrote, insightfully. Gary’s marketing blitz — so naked, so lustful — worries me a great deal, but I also admire it. Anybody who can come so far, so fast, basically on his own merits, has got to be deemed a great success, in the way we define success, American-style, as entrepreneurial skill, and a corresponding penchant for making money — in Gary’s case, a lot.
What causes me worry is the implication Gary’s meteoric rise has for the future of wine writing. In Jancis’s description — “showing how things can and will be done” — the operative word is can. Things can happen the way Gary has made them happen because our media culture increasingly is about entertainment, not content; about sizzle, not steak; about eccentricity, amusement, shock, bread and circuses. The media culture is endlessly manipulatable by those who understand how it works. That’s wino-tainment, folks! Just because something can be done doesn’t mean it should be done. But for me to complain about that is tinkling into the wind, meaningless, and it just blows back on me.
As a lover of fine wine writing and education, I really hope the high-end version of our craft doesn’t go away. I don’t think it will. I suspect Gary will go on to an amazing career in which wine is only tangential. I also suspect that fine wine writing will always attract people who get into it, not because they expect to earn a lot, but because of their passion, and the way wine writing lets you live a wine lifestyle without lots of money.