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DTC, snobs and market segmentation: A personal view

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“Wines delivered to your door” has been the business theme of direct-to-consumer entrepreneurs since as long as I can remember.

I used to be a member of one of these subscription services, back in the early 1980s. I can’t remember the name (I’m sure someone out there will remind me), but they sold German wines that “arrived at your door” on a monthly basis. I didn’t continue, because I eventually reached the point where I preferred shopping for wine myself, in a store, especially if I could taste it or see a recommendation—and that is the point of this post.

There’s now another “delivered to your door” service, Club W, and while I wish them well, I don’t see how they overcome the challenges that led to failure of almost every one of these ventures.

They all promise the ease and convenience of having pre-selected wines that arrive at your door once a month. They all say the wines are “curated” by experts or, in this case, actually produced for Club W “by noteworthy winemakers who develop their ‘juice’ for Club W exclusively.” And they all make claims that they offer lower prices [even with shipping?] than traditional outlets.

That may well be true in Club W’s case. The claim that their “exclusive” winemakers “have great talent but may lack access to capital enough to get their wines made and into the market” certainly rings true. That is a common challenge for winemakers, especially younger ones, who may have access to interesting grapes, and are making interesting wines, but have no realistic way of getting them to far-flung customers.

What are those wines? I went to Club W’s website and tried it out. They ask you to answer a couple of (kind of silly) questions, and then, after you give them an email, Facebook or Twitter account, they “recommend” appropriate wines. For me, they suggested three brands I’ve never heard of: a Wonderful Wine Co. red blend from Paso Robles, a Black Market Cabernet-Petit Verdot blend from Livermore, and Casa de Lila Airén, a white wine from Spain. Beyond these three wines, there are others on the website I could buy. They all have attractive labels, and I wish I could go to a tasting and try them out, because at $13 a bottle, that’s pretty affordable. There’s also a “Curator’s Choice” menu for wines costing $14 and up.

Now, any and all of these might be wonderful wines. Or they might not. The problem is, even thought they’re just $13 a bottle, I don’t want to buy a pig in a poke: A wine I’m not familiar with. Under their “Tastemakers” dropdown menu they have the names and pictures of folks I guess are some of their winemakers: a fine-looking bunch of men and women, young and appealing. There’s also a cool recipes link. That’s all good.

So I have mixed feelings. A lot of thought obviously has gone into Club W. The website is really nice. But I just don’t see how they get around the fact that you can’t taste the wines before you buy, or even see what the critics have said, since they’re club exclusives and have never been professionally reviewed. (I do make an exception for winery wine clubs: people join them because they know and trust those wines, so even if they haven’t had the latest vintage, they possess plenty of prior evidence that they’re much more likely to enjoy the wine than not.)

Finally, although this isn’t Club W’s fault, I hate the way the Wall Street Journal portrayed Club W; their headline reads “Club W Raises $9.5 Million To Appeal to Wine Lovers, Not Snobs.” Can we please get over this “snobs vs. everybody else” nonsense? I mean, does Lettie Teague write for the “Snobs” in the WSJ? I have news for you: All wine writers write for the people who read them; all wineries produce wine for the people who buy them. There are indeed snobs in the world of wine, as there are in other arenas, but they are the exception to the rule, and to toss the word “snob” around so much is really misleading to young people, who may end up thinking that wine isn’t for them because they’re not snobs and don’t like being around snobs.

Instead, why can’t we talk about beginners, amateur wine lovers and experts? The experts aren’t “snobs,” they just have a lot of experience, nor are the beginners “idiots” because they have little experience. Some “beginners” will be “experts” someday; will that make them “snobs”? So really, anyone (writer, blogger, winery, ad agency) who throws around the snob word so insouciantly is just indulging in lazy language that moreover insults a significant number of wine lovers.

And then there are new wine companies targeting everybody: I got this blast email from one of them just this morming: I omit the winery’s name: “We here at ___ have created a wine that will capture thegrowing new generation of social media savvy, adventurous, health consciouswine drinkers as well as the seasoned, more experienced ones.” Talk about something for everyone! Beginners, Millennials, twitterers, greenies and granola munchers, Baby Boomers, old folks, and snobs. Sic semper, market segmentation!


The Empire Strikes Back: Laube Takes on IPOB

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Brother Laube comes out swinging against In Pursuit of Balance, in the Sept. 30 issue of Wine Spectator. (Sorry, no link. The Spectator has one of the best firewalls in the business. No subscribe, no read.) I’d been wondering how long it would take him. After all, Jim is famous for giving high scores to ripe, plush wines that can be high in alcohol—which is exactly what IPOB is against. You might even say that IPOB is the anti-Laube (and anti-Parker) establishment. So Jim had to declare himself sooner or later. He’s a nice, modest man who doesn’t pick fights, but even shy folks fight back, if attacked enough.

 

LAUBE

This isn’t to say that Jim is merely defending his own reputation. For there is something fundamentally irrational about IPOB. Jim implies this when he says that IPOB “admittedly [is] unable to collectively arrive at a definition of balance,” which is true enough: Ask around, and you’ll find that the majority of wine critics, sommeliers and merchants believe that the rationale of IPOB is for wines to be under 14% alcohol by volume. But I’ve heard co-founder Raj Parr say, at an IPOB event, that that’s not at all what IPOB is about. So what is it? IPOB’s Manifesto defines “balance” in rather boilerplate language. It doesn’t say anything about alcohol levels, only that alcohol should “coexist” alongside fruit, acidity and structure “in a manner such that should any one aspect overwhelm or be diminished, then the fundamental nature of the wine would be changed.” But there’s something tautological about that statement, not to mention deeply subjective. Which leads back to the question, What is IPOB really about?

Well, publicity, for sure. There’s some real marketing genius at work with IPOB, which in the few short years of its existence has become something of an insurrectionist force rather like, well, another 4-letter acronym group: ISIS. I Googled “In Pursuit of Balance” and came up with 155,000 hits, but that doesn’t even begin to measure the impact IPOB has had in sommelier circles from San Francisco to New York and beyond. IPOB has, in effect, gone viral.

Jim also referenced the “contentious relationship [that] has developed between somms and producers,” and I’m glad he did, for his voice carries weight. His message—to somms—is that if they don’t put certain wines on their lists just because of “a number” (alcohol percent), they do a disservice to their customers, who may prefer those kinds of wines. Somms, of course, are famous for not liking wine magazines and wine reviewers, who are threats to their existence: If all you need is a famous critic’s score, then somms would be out of a job. So joining forces with IPOB is, for a somm, a way of fighting back against a media elite they never much cared for anyway.

Be that as it may, this is not a quarrel among equals. For Wine Spectator’s senior columnist—one of the most powerful wine critics in America, if not the world—to throw down the gantlet to IPOB is a significant gesture. Jim has presented his case cogently and respectfully, and mostly without snark. (Well, “dim somms” wasn’t his invention, it was Helen Turley’s.) I think In Pursuit of Balance must reply to the rather serious charge that it fundamentally doesn’t know what it’s talking about.

READERS: You can comment here, or join the conversation at my Facebook page.


The last word on single-blind, double-blind and open tasting

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I don’t know that I’ve ever fully laid out, in this blog, my views on the three most common forms of wine tasting: single-blind, double-blind and open. So let me do so.

I’ve long argued that no one way of tasting is “right.” Each has its pluses and minuses. If there were one “correct” way we all would have accepted it by now, so the fact that we haven’t suggests there is no one correct way.

Single-blind tasting, in which you know something about the wines (maybe their region, variety and vintage) is useful, in that it’s blind enough to prevent bias, but gives you some context in which to make evaluations. This question of “context” has been woefully underreported by the wine and academic media, in my judgment. Why context matters is difficult to prove to those who think it doesn’t; it’s an almost political point of view. But suffice it to say that context gives the taster at least some parameters within which to base his conclusions. The following metaphor is a little stretched, I’ll admit, but gets the point across. Let’s say a juvenile is on trial in a courtroom for some youthful infraction. The D.A. wants to throw the book at the kid, but the judge permits his parents and teachers to testify. They offer a view of the kid that’s far different from the one the D.A. presented. The judge, after taking all these views into account, adjusts his sentence accordingly. That is “context.”

Double-blind tasting by contrast allows for no context (except, obviously, knowing the color and stillness or bubbliness of the wine, which may be sweet or dry). To extend the above metaphor, the judge allows no “character witnesses.” He simply bases his conclusions on the law/s the defendant is alleged to have broken, and makes his sentence based on prescribed punishments. This is “unfair” in that it fails to take anything into account other than the actual act of lawbreaking; but one can argue (and extreme law-and-order societies do so argue) that it is after all the fairest, most objective and consistent and least emotional approach to jurisprudence.

Open tasting must break with the metaphor and use a different rationale. In open tasting, you know exactly what you’re tasting. The argument in favor of it is that it’s only fair to know all the facts before making a judgment. This is why so many proprietors insist on critics visiting the winery and tasting with the winemaker; they will not send wine to the critic to taste anonymously in some lineup. This approach, too, makes sense if you view it through the lens of another metaphor. Let’s say your child wants to marry someone. You, the parent, feel you should have some say in the matter: your child’s protestations of love for the fiancé are not enough to convince you that this is a marriage that will succeed. So you insist on meeting the lover and knowing more about him or her: About the parents—the financial situation—the prospects for making a living—the person’s moral fiber—his or her commitment to your child. Surely this is not an unreasonable approach for a parent: He wants to experience the lover “openly.”

How a person tastes wine depends on his reason for doing so. A negociant or a winemaker assembling a final blend may decide to taste double-blind: the sole purpose is to produce the best wine possible. A wine critic may choose to taste single-blind, as I did at Wine Enthusiast (and as I believe many other major critics do). But a wine critic also may choose to taste openly, as I know for a fact some of the world’s most famous English-speaking critics do. They will argue (and who am I to disagree?) that they are perfectly capable of disregarding their knowledge of the wine so that they arrive at an objective conclusion. One can even suggest that open tasting is simply an extreme case of single-blind tasting: After all, if you already know something about what the wine is, then how much “worse” can it be if you know still more?

In the end, we can conclude one thing with certainty: The critic who tastes openly will be a lot more consistent in her reviews that the critic who tastes double-blind. If you value consistency in critics (and the winemakers I know say it’s the single most important thing they look for), then you probably want your critic to taste openly. Finally, I’ll just say that this discussion involves a lot of inside-baseball stuff: All this may be controversial within the critical/winemaking community, but the general public doesn’t give a hoot how their critics taste. They can’t be bothered with the details: All they want to know about is the review and score.


Talking about tasting room staff

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I spoke to a group of people last night—marvelous people, actually, employees of Kendall-Jackson’s Wine Education & Garden Center (I call it the chateau), in Fulton, just outside Santa Rosa. They had invited me up for a periodic dinner they have together.

They asked me about tasting, and here’s part of what I told them: How to taste wine depends on your background and experience. By that I meant that your actual physical and mental impression of the wine is based, not merely on the wine’s objective qualities, but on your mindset. Dr. Timothy Leary used to say that a person’s experience of an acid trip depends on “set and setting.” “Set” is the person’s mental state, a composite of everything he’s ever done, learned, felt and thought. “Setting” is the physical environment around the person doing the trip. Two tripping people might share an identical setting, but obviously they have two different sets: hence, they will have different trips, sometimes drastically different.

So it is with wine. I told them they my entire orientation for 25 years had been toward the consumer. The first obligation of a wine, I said, is to be delicious. Therefore things like “typicity” or alcohol level don’t concern me; they’re irrelevant. Now, someone else—a sommelier, perhaps—might be more concerned with typicity and therefore find fault with a big, fat, juicy, fruity California Pinot Noir for not being “Burgundian” enough, or not being like the Pinot Noirs from Burgundy that he likes, But the sommelier has a far different job than I had, as a critic. The somm has, in other words, a different “set.” We might taste the identical wine (“setting”) and arrive at two entirely different conclusions about it. And that’s okay. We have different jobs; we look for different things in wine; and we experience wine in different ways.

Neither way is better than the other; neither is right or wrong. They just are. Afterwards, a few people came up to say they agreed with what I said about a wine’s obligation to be delicious. I can see why. They work in the tasting room, a very hard job. All day long they encounter people’s reactions to the wines they pour. They’re the first ones to know that most people don’t buy a wine because they think they should, or because somebody gave it a high score, or because its name or region is famous, or because rich people were drinking it 150 years ago, or any of those reasons we can call “set.” No, people buy wines they find delicious. And what better reason could there be to buy wine?

Speaking of the tasting room, the K-J folks invited me up to spend a weekend afternoon working there. I’ve never done that. I have a great deal of respect for tasting room staff. Not only do they have to answer the same questions 400 times a day, all year long (“What’s the blend on that wine?”), they have do so pleasantly, personably, and with a smile. It’s a job that requires patience, a healthy attitude and above all, human social skills: a tasting room staff person has to genuinely like people. They also have to put up with the occasional a-hole who gets drunk or rude, and they have to do so graciously. And yet the tasting room pourer is often the public face of the winery. So I’m looking forward to the day when I work the K-J tasting room, and I will faithfully report on it here.

Have a great weekend!


Is “terroir” a social construct, or an objective fact?

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If the definition of insanity (as Albert Einstein is reputed to have said) is doing the same thing over and over again, and expecting different results, then I must be insane for delving yet again into a discussion about the meaning of terroir—even when I know that such exercises will result in utter futility, as they always do.

Even so! The topic is irresistible to me; like momma’s milk to a thirsty baby, I’m unable to turn my head away when someone makes claims as absolute and contrary to accepted wisdom as those of Valéry Michaux, a French professor whose work was summarized (all too briefly) in the online edition of yesterday’s the drinks business.

Her position, as I understand it, is that there is no such thing as terroir, if by terroir we mean the chemistry of the soil, the climate or [even] local knowledge.” (By inserting the word “even”, I mean to associate Michaux’s position with that of another professor, the esteemed Emile Peynaud, who holds that the combination of natural terroir—soil and climate—together with the creativity of man elevates the entire wine-forming formula into what he calls “cru.”)

Whether or not you include the grower and winemaker along with climate and soil in your definition of terroir, for Michaux, is irrelevant. For she believes that the end quality of a wine, as well as its critical reception in the marketplace, is due to neither (or not much, anyway), but instead is the result of “the cluster effect,” a term borrowed from economics and sociology that refers to the type of activity that happens when “interconnected businesses working together in a region” collaborate, in a “very focused and strategic approach…to bring partnerships for funding, research and revenue opportunities.” This latter definition, from Forbes, uses Silicon Valley as the prima facie example of how the cluster effect works: small startup companies, rather than taking a “go it alone” approach, instead use a “strength in numbers” strategy to “accelerate…commercialization activities, raise additional capital, and attract new companies.”

Michaux also turns to the Silicon Valley model of the cluster effect in her thinking about wine. She attributes the success of certain wine regions, including Champagne and Rioja, to the same forces of “a strong entrepreneurial culture, direct competition, continuous experimentation, innovation and mutual help and solidarity” that characterize Silicon Valley firms, who engage in mutual-aid activities based on the “rising tide lifts all boats” theory.

Tantazlizing stuff. Since the drinks business abstract was so short (only 249 words), I turned to the Google machine for more information on Michaux, and found this longer coverage at The Australian, which says her theory may “horrify oenologists everywhere,” by throwing into academic doubt the entire collage of “climate [and] chemisty of the soil” as being responsible for the world’s greatest wines. Their greatness has nothing to do with the “myth” of terroir; it is a function solely of “strong governance creating a single territorial brand” [e.g. Champagne, Rioja] welded to “an alchemy between different virtuous circles” [professionals from various occupations] resulting in “the dominance of the best-known wines.”

Let’s break it down by taking Napa Valley as an example of a successful area. Michaux surely is onto something when she suggests that “an alchemy of circles” is at least partly responsible for Napa’s success. These circles surely include the historical figures that settled and elevated Napa, the George Younts, Captain Niebaums and de Pins who helped make Napa Valley a household name.

Another circle would certainly be the wealthy friends of the wealthy Napa owners: they helped spread the word (and the wines) to their own circles in San Francisco, New York, London, thereby giving Napa international cred. Yet another circle consisted of the writers and critics who wrote about Napa Valley, making it famous; and the more they wrote, the more other writers visited Napa Valley, were wined and dined, and further embellished Napa’s halo. (I think of Harry Waugh as a perfect example of the overlapping of several of these circles.) A final circle is the international coterie of winemakers and consultants (Michel Rolland comes to mind) who work in Napa, and whose influence is worldwide and powerful. And then of course there were the critics, Parker especially, who early championed Napa Valley Cabernet in the circles among which they had influence.

Circles within circles within circles. Certainly Napa Valley would not have risen to its present-day esteem without the active cooperation of all these groupings. Where I take issue with Michaux, though, is in her abrupt dismissal of the notion of terroir as the physical properties of the region.She seems to have written her recent paper in response to a 2012 Call for Papers from the Reims Management School, in Reims, France, the topic to address a “provocative” statement contained in a 2011 book, by Roger Dion, that “’Terroir’ is a ‘social fact’, the human construction of a territory both historically and strategically, so as to make better use of its resources than other territories and to respond to the specific expectations of a particular clientele.”

Once again, there’s a lot of meat there: certainly, no wine “territory” can possibly be of any use for the commercialization of wine without “human construction”; for vinifera grapes do not grow by themselves and automatically turn themselves into fine wine. “Strategies” are indeed called for; and strategies require collaboration on the part of all stakeholders, and cost money. And just as certainly, the “particular clientele” that is willing to pay premium money for the wines of Champagne, Rioja or Napa Valley does so with the expectation of buying in, intellectually speaking, to the notion of “quality products” grown in “Grand Crus,” as has been the case since, at least, “the royal families and merchants” did so during the Middle Ages.

Still, this argument, convincing as it is in some respects, fails to account for the fact that most of the world’s wine regions never have achieved the acclaim for terroir as have Champagne, Rioja, Napa Valley and some others (Burgundy, Bordeaux and Germany’s better districts come to mind). What has held back the others? Was it the absence of “interconnected businesses working together” (armed, presumably, with fiendishly manipulative genius)? Or was it that these non-successful regions simply lacked the terroir to produce great wine?

I leave the answers to the conversation. Maybe, instead of futile insanity, we can actually advance the issue a little.


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!)


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