I went on a “go with” yesterday. That is (as I just learned) the jargon for a salesperson who calls on an account and brings “someone else” (like me) with him. In this case, I’m the “famous former wine critic” whom most of the accounts have heard of, and whose ratings might even appear on their shelf talkers; apparently, some of them at least like meeting me—a name they previously knew only in print, only now it’s in the flesh.
What I, and other critics like me, used to do is so mystical and mythical to these guys. Many of their questions are basic: How do you assign a numerical rating? What’s the difference between 89 (death) and 90 (glory)? How exactly do you taste? It’s a reflection of the secrecy of so many famous critics that even hard-core industry veterans don’t understand. I don’t think I, personally, am guilty of obfuscation, since in this blog I’ve explained every detail of how I did everything, over and over, for more than six years. But in all objectivity, I don’t think most other critics have been similarly straightforward, and that’s a shame.
I’ve always said I like the sales and marketing aspect of this business. The sales guys, in particular, fascinated me. These road warriors are out there every day, doing battle with on- or off-premise wine buyers who have heard it all, seen it all, done it all. So in other words, you have two battle-hardened guys, sellers and buyers, meeting on the playing field, and may the best man win.
One of the reasons why I took this job at Jackson Family Wines was, obviously, because it’s a great company, with the greatest portfolio of family-owned wines in California, maybe in all the world, IMHO. It was easy for me, in the comfort of my own home, to review their wines and form impressions of Stonestreet, Cambria, Edmeades, Hartford, Cardinale and all the rest, and know in my mind how good they were.
But the seller-buyer relationship is totally different, as I learned up close and personal yesterday. The sales guy I teamed with, Charlie, and I covered 150 miles of Bay Area freeways going from account to account at upscale wine stores. One thing I learned: you have to be very patient at dealing with traffic and driving long distances if you’re going to do sales! Another thing: each account is different. I mean, in terms of their personalities. One guy will be all business: no small talk here. Another might be just the opposite. One of our calls was a guy who majored in history at U.C. Berkeley. I asked him what his specialty was, and he said Post World War II Italy. Well, I’m a WWII freak, and the book I’m currently reading is a biography of Galleazo Ciano, Italy’s foreign minister during the war, and Mussolini’s son-in-law to boot: Ciano’s diaries (which I have), smuggled out of Italy during the war despite the Gestapo’s attempts to find them, did much to shed light—damaging and embarrassing light—on the Hitler-Mussolini relationship. Anyhow, that led to a long conversation between me and the sales guy that had nothing to do with wine—although we did return to that subject. The point I’m trying to make is that I’ve always valued relationships in this industry, and it’s fascinating to meet such a varied range of people with so many different interests and points of view.
I valued yesterday’s experience. It enriched my life, and helps me more deeply understand this complex thing we call the wine industry—such a multi-faceted thing, so driven by human personality. When I was a critic, I lived in a sort of bubble. I’m not complaining: it was a very pleasant bubble. But a bubble nonetheless. I had the time of my life, but I eventually came to believe that there was more to life, and to me and my career, than being a wine critic. I’m extraordinarily grateful for those years. At the same time, I’m also thoroughly ensconced in, and enjoying, this, my newest adventure.
While we’re on the subject of storytelling (we are, in case you haven’t been reading steveheimoff.com lately), let’s consider the role of personality in a story. “A personality” is what people call a person who isn’t bland or forgettable, but instead someone who impresses himself on others through the sheer force of—well, personality.
Keep in mind the origins of our word “personality”: from the Latin persona, literally, “an actor’s face mask.” While each human being by definition has a “personality” (in the sense of a collection of personal characteristics), I’m more interested in what we mean when we say of someone, “He’s a real personality,” as Jennifer Garner did of Matthew McConaughey, her co-star in Dallas Buyers Club. “He’s a fantastic actor and he’s a real personality and he’s charismatic as hell,” she said in an interview.
“He’s a real personality” is also how a sports commentator referred to former Packers quarterback Brett Favre.
Clearly something more than just a collection of traits is going on here; people who impress us as “real personalities” have extra qualities that grab our attention and make us remember them—for better or for worse. That, I think, is the key to understanding the remark yesterday by a Tuscan winery owner concerning Chianti’s top-tier classification, Gran Selezione.
“The problem,” said Lorenzo Zonin, “was that Chianti Classico and Chianti Classico Riserva were almost a commodity, wines that didn’t have such a strong personality, so they said we have to find a way to give a value to such products that are outstanding.”
“Strong personality?” Is Mr. Zonin talking about the wine’s organoleptic qualities, or is he talking about the perception of the wine among the critical community and consumers? I confess I don’t know, but this meme of “personality” in wine ties in nicely to the storytelling aspect that has enveloped wine lately. It seems that every winery—and its marketing team—wants consumers to form a personal bond with the wine—as if they have a stake in it. This is the elusive “personality” of the wine that makes it distinct from every other wine.
Does having “a personality” add value to a wine? Why? Is it because the wine really does have objectively valuable extra qualities, or is it because the winery says it does? This is the eternal question.
I asked it six years ago, five years ago, four, three and two years ago, and I’m asking it now. And it’s not just me: That bastion of U.S. capitalism itself, the Wall Street Journal, is asking the same question. Under a five-column headline in last Monday’s Marketplace section, they wondered “What is all that data worth?” (The online version of the article has a slightly different headline.)
The “data” they’re referring to comes from “companies [that] traffic in information and use big-data analytic tools to find ways to generate revenue.” If that sounds familiar, it’s because it’s been the underlying theme of every conversation about the revenue-generating possibilities of using social media.
We know beyond a doubt that the metrics of social media use are huge. Everybody is Facebooking, tweeting, Instagramming, pinning and so on. They’re liking and following and retweeting each other like crazy. For this reason, wine companies feel, with “the fierce urgency of now,” that they have to get onboard, before the train leaves the station. And indeed, as I’ve argued for many years, wineries should board that train. As I’ve suggested to anyone who’s ever asked (and quite a few who haven’t), winery personnel should engage in social media to the extent they feel capable of doing it.
But what I’ve wondered since Day One is what all these metrics, which are easy enough to obtain, mean. Reach, followers, friends, engagement, acquisitions, referrals, hits, unique visitors, bounce rates, click-through rates, conversions and all other ways to track activity—companies, including wineries, are pursuing them with a vengeance. Yet “The problem is that no one really knows what all that information is worth,” says the Wall Street Journal article.
Such data is called an “intangible asset” because, unlike real estate, durable equipment and money in the bank, it has no objective value. This is not to suggest that data is valueless. As the article explains, data has value because “it allows [companies] to tailor their products and marketing to consumer preferences.” For wineries, though, what does this mean? It’s not at all clear that counting your Twitter followers, or measuring your online engagement rate, suggests anything at all in terms of strategy. “The squishy world of intangibles,” writes the Wall Street Journal, means that “Data is worthless if you don’t know how to use it to make money.”
That statement is patently true on its face. But there’s a more fundamental question: What if social media data, in and of itself, is incapable of being used to make money? Even if real-time data gives you some true insight into your (potential) customer’s online behavior, “Information on individual users loses value over time as they move or their tastes change,” making data “a perishable commodity.” Data looks real and solid enough: after all, what can seem more representative of reality than numbers on a page or screen?
But as we all know, statistics can be slippery or, to use the Journal’s word, “squishy.” I used to get in trouble with some of social media’s adherents by asking them how they “knew” that engaging in social media made money. The answer always was a form of “We can’t prove it, but we somehow believe it.” Occasionally, someone would cite a winery that was doing social media bigtime and whose sales were rising. But even if the connection between doing social media and selling cases could be established directly (which it couldn’t), I always wondered if the winery’s success had legs—if it could be replicated over time, because, after all, any winery can have a good quarter, but wind up on the butcher’s block.
Lest any of this be interpreted to suggest that I don’t think social media has value, or that every winery shouldn’t be exploring it, let me go on the record: If you’re a wine company, you should be doing social media. Period. End of story. What I am saying—or, really, asking—is the same question I’ve posed since 2008: What is all that data worth? If you don’t like the question don’t blame me, blame the Wall Street Journal’s headline writers for coming up with it in the business paper of record.
Back in 1999, a wine writer, Randall Murray, called Sangiovese “the next Merlot,” by which he meant that the red grape native to Tuscany was poised to become one of the leading red wines of California.
Never happened, did it? Actually, by 1999, Sangiovese already had one foot in the grave. Ten years prior, one might have been forgiven for betting on it, but by the approach of the new Millennium, I think most of us knew that Sangiovese was in trouble in California.
Sangiovese in California was, in fact, a trend. Those who invested heavily in it, like Piero Antinori, failed to make good their hopes. Another more recent trend might be Moscato. After an amazing leap to prominence in the previous decade, sales of the wine were off dramatically last year, compared to the previous two years. Will the growers who installed so much Moscato regret their decision in 2020? If they do, it will be because, by then, we’ll know that Moscato was yet another trend.
This is the risk growers face. How do they know what variety has staying power? It’s quite easy to know when something is not a trend. Pinot Noir is not a trend. The wine company that invests in Pinot acreage in prime growing areas can be confident it is making a wise decision. It’s a lot harder to know when something is a trend. Growers exist in a tense world torn always between the realities of the past, the urgency of the present, and the exigencies of an unpredictable future. Granted, if they make a mistake, they can always graft their vines over to another variety. But this still causes them to lose precious years of productive time and money.
The ability to tell the difference between a trend and a real paradigm shift extends beyond the wine industry into all areas of retail. Companies have always hoped to cash in on trends (baby products, skincare, technology and fashion are among the top exemplars in this category). Apple Computer obviously succeeded better than anyone else in tech in trendspotting. In the fast-changing culture of 21st century America, where nothing seems fixed and permanent anymore, you might think CEOs are constantly looking for the next trend. But in what the Wall Street Journal is calling “a broader shift in retail,” more and more companies are showing “a preference for operators over trend spotters,” causing them to seek leaders “whose strength is in the nuts and bolts of retailing rather than flashy merchandising.”
The word “operators” refers to the operational skills of CEOs and their teams: the ability to actually move product, in a nation in which the middle class is uncertain and online shopping threatens traditional retail. Under such circumstances, it may only be natural for company leaders to take more conservative positions than in boom times, when experimenting on trendy new products—flashy merchandise–makes more sense because everyone has more money, and a company can afford a temporary setback. Nowadays, even a temporary setback may be a company’s tomb. Since one can never predict the future, and the success or failure of strategies can be measured only in retrospect, it’s too early to say whether or not this new, back-to-basics approach is not itself a trend.
For the wine industry, the portents are hard to read. A smart wine company cannot assume that what seems popular today will be popular in five years. At the same time, the smart winery can’t bury its head in the sand, ignoring evidence that things are changing. Success is always a matter partly of luck, but also of wise planning and an uncanny sense of what the future will bring; and planning itself involves no small degree of risk. My own advice to wine companies is to resist being seduced by the allures of current trends; what has worked in the past is likely to work in the future. If you’ve been doing something well for a long time, and there’s something glittery on the horizon that makes you worry because some people are all mesmerized by it, take measured steps. Don’t take the glitter for granted: check it out, understand it, be smart in analyzing what is it and where you think it’s going. But don’t make a wholesale leap and change your entire strategy just to ride a trend. If you do, you risk becoming the next Sangiovese.
I was on the panel of a wine event last week, and one of my fellow panelists was from one of the nation’s biggest Big Box grocery retailers. I asked him, “Will the infamous Wall of Wine be always with us?” and he answered, “Yes. Retail is here to stay.”
Indeed it is, as a basic function of human interaction: I buy something wholesale and sell it to you retail, for a profit. But as experience shows us, retail changes its external face constantly; and the Big Box, with its Wall of Wine, will not be with us forever—at least, in the form we know it.
The reason things are changing is simple to understand: Millennials.
“Online retailers have a huge edge with Millennials,” according to this 2013 study which took the example of a popular woman’s athletic tank top to illustrate Millennials’ disinclination to buy things in stores. “’I logged on, I found my Under Armour top, I pressed a button and got it 4 days later,’” a representative of the company that sponsored the study air-quoted a hypothetical Millennial on her satisfaction with the online experience. He added, “The younger respondents got, the less physical experience mattered” to them.
Contrast that with the number-one reason Baby Boomers cite for their preference to shop in traditional bricks-and-mortar stores: “instant ownership,” with 79% of them in the study citing that “as the most appealing attribute of any retailer, online or off.” This is why, according to the study, even though Amazon is the world’s biggest online retailer, its earnings in 2012 were only 13% of what Walmart cleared.
Baby Boomers may not have a problem with supermarkets, but it’s clear their children and grandchildren do. But Big Box heavyweights like Safeway aren’t about to roll over and go away. Instead, the study predicts, stores will “integrate the digital with the physical,” acquiring “online characteristics.” Such as? “Expect to see a place to pick up the stuff you bought online,” in a “retail locker” concept of retailing. Imagine buying a couple bottles of wine online from any site, and then—instead of waiting for days for it to be delivered to your house (and you might not even be home when it comes)—it will go straight to the “retail locker,” where it will not only be waiting for you, but will be presented to you “by people who like people,” not the often surly floor staff of supermarkets.
That sounds like a pleasant experience. What are the implications for the Wall of Wine? Not good. If inventory is purchased just-in-time, stores will have no reason to buy thousands of bottles they don’t even know they’ll be able to sell. The Wall of Wine will vanish, for the simple reason it will have outlived its usefulness.
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And then there was the tasting I went to on Sunday at a local wine shop. It was of various coastal California Pinot Noirs. One of them (Porter-Bass 2012) started out smelling very funky, a phenomenon everyone who remarked on the wine noticed. (The funkiness, whatever the cause, blew off after a while.) I didn’t particularly care for it. Our host, however, liked it quite a bit, and explained, in some detail, the winery’s biodynamic approach to grapegrowing. Her preference for this wine was apparent to the guests, most of whom were amateurs with only little knowledge of wine. After she was finished speaking, one of the guests, who had noted the funkiness with what I thought was a critical attitude, said, “I thought it was too funky, until I heard your story. Now, I love it.”
Well, the top of my little head exploded at that. You know that we’ve been talking about “stories” quite a bit here at steveheimoff.com. Stories are the new black of marketing: the latest, hottest trend in the industry. Until my experience at that tasting, I had not perhaps appreciated the power of a good story, told by a trusted authority figure, to completely change the thinking of someone else. And not just to change their thinking: to actually change the way something smells and tastes to them!
I am in awe. Have to think more about this one. The host’s story didn’t work on me, but I’m not your typical wine consumer. Are average wine drinkers so unsure of their own perceptions that a testimonial from an expert can redirect them? Or does a good story, told passionately by a believer, somehow open up the mind of a skeptic so that he can perceive reality on a higher plane? If the latter is true, then what about a good story told passionately by someone who doesn’t even believe it, but is telling it only in order to sell a wine?
I don’t know the answers. There may be none. There may be different answers for different people. But I think all of us had better bone up on our story-telling abilities.
Nobody asked, but here’s my two cents on “top Golden State vintners [express] concern about the future of the $23.1 billion industry, especially among the discerning millennial market.”
That’s from Tuesday’s Santa Rosa Press Democrat, which reported on “a UC Davis survey of 26 senior executives” in the state, and found that “Everyone was a little bit worried.” Those execs included Joseph Gallo, from you know who, Jay Wright (Constellation) and my own boss, several levels up, Rick Tigner.
Seems the chief worry is “the intrusion into the wine category of spirits and craft beers,” according to the guy who conducted the survey, the well-known emeritus of Davis’s Graduate School of Management, Robert Smiley (who I had the pleasure of interviewing numerous times during my magazine days).
What do the execs base their impressions on? One of them said more “people are starting out with craft beers and then as dinner goes they switch over to wine.” I suppose this does “rob” the industry of that extra glass of sold wine. I like to start the evening out with a cold IPA, especially when the weather is warm, but that doesn’t stop me from consuming my share of wine. Still, I can see that if the theoretical consumer used to drink three glasses of wine at night, and is now drinking just two, with a bottle of beer making up the difference, that represents a 33% decrease in consumption.
Another exec wrote that he and his wife “have been having more cocktails than we’ve ever had in the past…”. That too, the exec speculated, “is maybe taking a little bit of the wine-by-the-glass business away.”
Then there’s the liquor store owner who said,“Ten years ago we were about 70 percent wine. Now we are down in the 60s.” Even with increased wine sales in the U.S., the execs are troubled by this nibbling away at the margins.
I have several reactions. One is that, after following this industry for more than 30 years, I’ve seen multiple times when winery execs were afraid that the sky was falling. It never did. Here in California, we’re coming off several boom production years (despite the drought) and quality has never been higher. Profits seem to be up everywhere at well-run companies, the mood is optimistic among employees, and with all the bashing California wine gets from certain quarters, it remains the best seller in America. Prices continue to rise, and where wineries are holding the line, they’re feeling pressure to increase—if only slightly—the cost of cases. That wouldn’t be happening if wineries felt truly threatened.
It is true that beer and spirits consumption is on the rise, but my feeling is that we’re becoming more of an alcohol-drinking country, so a rising tide lifts all boats. It’s also true, as I’ve insisted for years, that wine is fundamentally different from beer and spirits. Wine signifies aspiration. Beer never did; it signified only getting drunk. Neither did spirits signify anything, except a quick buzz at the end of the work day. Now, that is changing, because the craft beer and spirits producers have stolen from wine the concepts of lifestyle and aspiration that have always fueled wine. It is now possible to drink (as I do) great craft beer and spirits and appreciate them, not only for alcoholic punch, but for complexity, deliciousness and even (dare I say it?) intellectual interest. But I still believe aspiration goes along more with wine than any other drink. And America is an aspirational country.
What then for the wine industry? It can’t become complacent. It has to continue to appeal to its existing consumers, and not alienate them, as it learns how to reach out to younger Millennials. The messages and the products therefore must be extremely well-thought out and crafted with precision. But successful wine companies know how to do that. Believe me, they’re working overtime figuring this stuff out. If I were a betting man, which I’m not, I’d put my chips on the wine industry. Spirits seem to come and go in America; their fundamental problem is that they’re simply too strong for millions of people to drink on a regular basis, throughout the meal, for the rest of their lives. Beer always stays popular, but it’s craft beer that’s got all the excitement now, and craft breweries are small; they do not, I think, represent a threat to the wine industry in the long run, although some stores are giving them increased shelf space.
Wine, by contrast, has staying power. There’s a reason it’s been top beverage in the western world all these centuries, and is now becoming top beverage in the developing world, too. Human nature doesn’t change; wine is more consonant with human nature’s aspirational elements than either beer or spirits. It’s the Goldilocks of alcoholic beverages: not too strong, not too weak, just right. Am I an admitted booster? You bet. But that doesn’t make me wrong.