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O.K. , you have your social media data. Now, what good is it?

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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.


How do you know it’s not just a trend?

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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.


The Wall of Wine, Stories, and Consumer Psychology

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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.

* * *

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.


Having trouble “getting” social media? Welcome to SMOG!

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How could you not trust a Selfie this cute?

Would I lie?

 

 

 


Telling a story about stories

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I speak later today at The Exchange, an organization, sponsored by Nomacorc, that periodically gathers “to improve the marketing of wine by creating a forum for the sharing of ideas related to wine marketing.” The topic of today’s gathering, which is at Bardessono, in Yountville, is “Telling the Story.”

I’ve been amazed the last few months at how this meme of “storytelling” has invaded corporate America—not just the wine industry but everywhere. It’s grabbed the attention of marketing and communications departments and the budgeters who fund them, which means that CEOs and company presidents also are onboard. Never in my professional career has so much attention been paid to this aspect of companies; marketing used to be a sort of minor adjunct to sales, finance and product development. Now, it’s the tail that’s wagging the dog.

We shouldn’t wonder why. Doing business in America is more complicated than ever. The nation is a welter of different, competing points of view, and a company that’s selling things (products or services) has to figure out how to make itself attractive people who are utterly different from each other. But why the sudden popularity of “the story”?

Well, for one thing, it’s not sudden. Companies, through their advertising divisions, have been telling stories for years. They didn’t call them stories; they called them “messages,” but it was the same thing. When Camel cigarettes said, in the 1940s, that most doctors recommend their cigarette—and the ads showed a “doctor” happily puffing away—that told a story. The human brain has a talent for seeing patterns where in reality only scattered bits of data exist. We see a stain on a wall and all of a sudden it’s a witch or Julia Roberts. In the same way, companies today put out creative tidbits of information and hope that we, the recipients, will fill in the blanks by interpreting the story in a way that makes us more likely to be attracted to the product.

Anyhow, that’s as close as I can come to understanding this modern infatuation with “the story.” Here’s some of what I’ll tell the audience at The Exchange:

A good story is always about something. It doesn’t necessarily have to be about a person: for example, I love books that explain plate tectonics. A good story is like a good wine: it has structure, tension, grip, an intriguing beginning and a long, satisfying finish. A good story can indeed have a formula: fiction writers like Steven King and John Grishom have been writing the same formula for years. That’s not to put them down: Shakespeare had a formula well-known to students of English literature. But a formula isn’t enough. One must know how to tell the story, which involves an intuitive sense of drama. (I say “drama” because even comedies are based on the dramatic conflicts between human beings or humans and their environment.) A good story also evokes feelings of compassion and empathy in the readers.

A good story has to be well-written. Many great stories have been mangled by writers who just didn’t know how to write. Sloppy writing, poor grammar and syntax, superfluous words and sentences all can kill a good story. I believe in Thoreau: Simplify, simplify!

If you think about it, every human interaction is a system of mutual story telling. Scientists have long speculated about what makes us “distinctly human,” different from all other animals. Some have said it’s our ability to laugh. Maybe it’s our ability to tell stories, and to listen to the stories of others. On the other hand, one of my Facebook friends once said—in reply to my question of why Gus sniffs lampposts and fire hydrants to much—that those repositories of canine scents are Facebook for dogs—that each scent contains a vast amount of information that only dogs can detect: the gender of a previous visitor, the dog’s age and so on. So maybe dogs, too, tell each other stories, not through the use of words (they can’t speak) but through chemical emissions. We know that ants communicate through chemicals their bodies emit. Maybe the essence of the Universe is that all its infinite parts are constantly telling their stories, from the quantum atoms to the biggest black holes. The Universe is a dazzling babble of stories.


Matt Kramer got it right about bullies who put wine down

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This think piece by Matt Kramer is a little opaque.(I hope you can open the Wine Spectator link.)  I had to read it twice to understand it—and I’m not sure I do even now—but it seems to be a rebuttal to the notion, widespread in America and somewhat anti-intellectual, that expertise is a form of pretentious bull. With specific regard to wine, Matt asserts that “what we [tasters] taste is real,” his J’accuse! to the doubters who, reading things about Rudi Kuriawan, or how even “experts” can be fooled, think that wine expertise is just so much hooey.

If that was Matt’s point, he’s got it right: great numbers of Americans don’t take wine seriously, even if they drink it, and some of them think that those of us who do take wine seriously are somehow illegitimate—less than true, red-blooded Americans. How and why this notion go so widespread is not hard to understand. It’s not that people think any form of expertise is bunk. Baseball fans respect the serious fact-collector who can cite ERAs going back fifty years. Nobody disrespects an epidemiologist who can cite instances of out-of-control diseases going back to the plague. We listen to movie reviewers thoroughly familiar with the genre.

But when it comes to expertise in wine, people tend to raise their eyebrows. I’ve encountered such skeptical behavior my whole career. It’s like when I meet someone and I tell then what I do for a living, their reaction is a mixture of disbelief, amusement and pity. “Really?” They seem to say. “You get paid for that?” If I was getting paid to be a CIA analyst tracking the worldwide movement of terrorists (another form of expertise) I’d get some respect. Even a restaurant reviewer would be seen in some sort of positive light. For that matter, if I was a whiskey expert, I think people would be respectful.

But wine? Something about it still weirds people out. This is related to what Matt calls “a bullying anti-intellectualism with a long history in America.” It’s the same kind of anti-intellectualsm that still manifests itself as a suspicion of science in this country. When I was a little boy, people called Adlai Stevenson, who ran for President twice as a Democrat (and lost to Eisenhower) “an egghead,” a disparaging word for someone who was educated and tended to think in complex, analytical ways, rather than with emotional gut reactions.

Why should wine, of all foods and beverages, be consigned to the egghead bin of history? It’s not really clear to me, except that, as an historian of wine, I understand its centrality to Western civilization and culture. Our greatest minds didn’t necessarily drink wine (and with most of them, we don’t know if they did or didn’t, for history didn’t record it. Did Aristotle drink wine? Did Thomas Aquinas? Did Shakespeare, Pascal, Gutenburg?) But there is something about wine that is unlike beer or spirits. I can’t pinpoint it, except to say it is a thinking person’s alcoholic beverage. It’s a drink that smart men and women enjoy. I’m not dissing beer and spirits drinkers;; I happen to like both myself. I’m suggesting that wine somehow appeals to a very high level of consciousness in our brains. It awakens something cerebral and thoughtful, but not everybody enjoys being thoughtful. For some people, thoughtfulness is a distraction, or worse, an indulgence in something they don’t even believe in. These are the sorts of people Matt writes about: “skeptics of sensory value, who fancy themselves penetrating thinkers,” when they’re really not.

The history of Prohibitionism in this country is rife with such figures. Whenever they rise up and have power, our country takes a step backwards in its inevitable progress toward the future. So next time you’re enjoying a nice glass of wine, smile at yourself inwardly, and know that you’re helping our country become a better place, for in a very real sense—in carrying the wine flag high—you are.


Further thoughts on appellations

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One of the hardest parts of being a wine writer in California is explaining the differences between appellations. It’s hard because, in many cases, the differences aren’t all that stark.

The way I look at appellations is through the lens of history. As the late, great Alexis Lichine wrote (in his Encyclopedia of Wines & Spirits, the single most informative book I read when I was coming up in the field), “Fine wines always bear the stamp of the place where the grapes were grown and…the more restricted the place, the better the wine.” The French had inordinate respect for, and understanding of, the qualities that terroir imposed on their wines, so, for example, Saint-Julien, Saint-Estephe, Margaux and Pauillac were deemed different enough from each other to warrant their own appellations. And “the system reaches its logical conclusion in Burgundy…”.

It’s only natural that the founders of the modern California wine industry wanted a similar system of appellational control. They’d been egged on for years by the likes of Frank Schoonmaker, so, with the cooperation of the Federal government, our own American Viticultural Area program went into place, in the early 1980s.

Once an official appellation has been declared, people start looking for the things that make it distinct. The only problem is that “distinctiveness” is irrelevant to the government’s declaration of an AVA. They care about other things—especially political unity—but government bureaucrats had no intention of actually tasting wines to see if they were “typical” for their appellation. So they left that sticky wicket alone.

Well, here we are, more than 40 years later, and writers, critics, sommeliers and others still try to figure out how AVAs are different from each other. The situation here in the U.S. isn’t made easier by the relative ease with which appellations are approved. I think everybody realizes that Oakville (for instance) is not really a single terroir, but at least three: east, west and the flatlands in the middle. So if you’re looking for an “Oakville” character, good luck finding it, especially if you’re trying to distinguish it from, say, the Rutherford Bench, or the east side of St. Helena or even Coombsville, and you’re tasting blind. For one thing, we grow our grapes riper than the French ever did, and there’s general consensus that ripeness trumps terroir, making everything taste more alike than not. (This is not an argument for unnatural underripeness!) For another thing, contemporary winemaking techniques tend to be similar to each other, for a variety of reasons. Thus telling the difference between AVAs isn’t as easy as it was for the French 100 years ago.

I’m running into this because we’re planning an event down in L.A. for early December, and as part of that I’m trying to pinpoint exactly how the Santa Maria Valley puts its terroir fingerprint on its wines, especially Pinot Noir. Having tasted hundreds of SMV Pinot Noirs over the course of my career, I think there is a distinct fingerprint; I feel it in my bones, experience it in my taste memory, and can make a case. But the case ultimately is not provable, for the simple reason that we’re not talking about a “right” or “wrong” answer (2 + 2 = 5 is a wrong answer, anywhere and everywhere; “Santa Maria Valley Pinot Noir is silkier than Santa Rita Hills Pinot Noir” is an assertion of belief, and is not fundamentally true in all cases).

Therefore, we can only make generalizations about appellations. Of course, the more wines we taste, and the more we study the details of climate and soils, the more we can point to the distinguishing features of an appellation. But when you factor in the human part of winemaking—clonal selection, vineyard trellising, harvesting decisions, fermentation routines, oak regimens, the whole nine yards—things get considerably more complicated.

A perfect world would be one in which external reality mirrored what’s in your mind (and vice versa). But, of course, the curse, tragedy and glory of being human is that external reality has a way of turning out to be not the way we thought or hoped, leaving us forced to reconcile the two, which isn’t always easy. I’m sure there’s a Santa Maria Valley terroir to Pinot Noir, just as I’m sure there’s an Anderson Valley, a Green Valley, a Carneros and an Edna Valley quality. I’ve spent my career trying to find those qualities and write about them. But I’ve always been aware that the exception, far from proving the rule, merely makes the rule obstinately hard to discern.


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