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Merchandising

New Age for Wine Sellers

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There’s a drastic strategy shift occurring in wine retailing. No longer are consumers depending solely on sommeliers or glossy wine magazines for information; they now hold the opinions that matter most.

“Consumers are in the driver’s seat,” says Jim Bernau, founder of Oregon’s Willamette Valley Vineyards, and the cars they’re driving are in the fast lane of the social media superhighway.

From cork to click
The wine industry was slow to adapt to the Internet, says Paul Mabray, chief strategy officer of VinTank, a wine business consultancy. In an average year, the industry will spend a mere $3 million on online advertising, he says.

“Only in the last few years has digital become really relevant, and that’s a byproduct of the recession,” Mabray says. “We have brand proliferation that’s exploding and wholesaler consolidation. Retailers have more products to select from. There are all these dynamic forces causing wineries to become more sophisticated” about marketing and selling.

Taking advantage of social media, Adegga.com has become a massive vino-only database. Adegga.com members publish tasting notes — a pleasure once held only by significant wine writers and sommeliers — and thousands of thirsty wine lovers read them at the exact moment they are seeking wine-related input. An Australian plumber can post his notes about a 2005 Bordeaux in Adegga.com and an American member can view them instantly.

“Social media helps break down barriers with wine,” says Adegga.com founder Andre Ribeirinho. Wine is sold through relationships, and online relationships start in social media circles, says Joe Roberts, certified wine educator and operator of Wine Blog Award-winning 1WineDude.com.
“That’s coming to a head with new generations,” Roberts says. “There’s a whole new generation of people who can start buying wine, and they trust a broad spectrum of people.”

Changes in target market and laws
The average wine drinker is getting younger; the new target audience is the millennials. Some four million Americans turn 21 every year, and by last count there were about 71.3 million U.S. millennials.

According to a 2010 Silicon Valley Bank report, millennials have been consistently noted as providing the greatest opportunity for growing the wine business: They are more tuned into wine, find more pleasure in it and show a stronger interest in it than their Boomer parents.

This excites wine retailer Dan Matuszek, president of Brix, a wine and spirits experience in Omaha, Neb. “Traditionally, the younger consumer was not a wine consumer,” the former E&J Gallo executive says. “They got into wine through approachable and fun wine, like Yellow Tail. Now, they’re trading up into better wine. Because of this new generation, the next 10 years will be the most exciting times in the wine industry.”

The way consumers purchase wine is changing, as well. Since the 2005 Supreme Court case (Granholm v. Heald) that disallowed states to prohibit vineyards shipping directly to consumers, several legal and market changes have impacted the way vineyards and retailers do business.

A proposed bill, H.R. 5034, has sought to essentially overturn the decision that ruled states may not discriminate against out-of-state commerce. Furthermore, the Specialty Wine Retailers Association is asking the Supreme Court to hear a case regarding Texas law that allows state wine stores to ship directly to Texans while prohibiting out-of-state wine stores from doing the same.

Amidst these legal battles, distributor consolidation has swallowed the little guy. It’s getting harder to reach wine customers through old-school channels, Bernau says. “It used to be, in American business, products were pushed through the supply chain to the customer. That has completely changed,” he says. “Consumers are …. pulling now. Pushing doesn’t work anymore.

“These big-box retailers are a reflection of that. Costco is one of the largest wine retailers in the country. If you said that 15 years ago, I would have laughed at you.”

Until recently, wine retailing primarily consisted of independent stores — now “it’s moved heavily toward the chains and club stores,” says Peter Mondavi, proprietor of the Charles Krug Napa Valley estate. “It’s good for a certain number of the wines out there, but the wine world is so diverse and so complex. There are so many different brands and varietals, many wines get lost in [big stores]. You’ll see a little resurgence in specialty retail stores, especially when it comes to social media because that’s where a lot of information will get disseminated.”

In-store technology
Ribeirinho also created AVIN, unique codes for each wine similar to ISBN numbers. Consumers can punch in the 13-digit number or scan the bottle’s QR code to read tasting notes or a blogger’s review. More than 7,500 wineries have AVINs, including Cortes de Cima (Portugal), Vinya Ivo (Spain) and Forti del Vento (Italy).

Mondavi says it’s becoming far more convenient to conduct research at the point of sale and that the technology cost is not prohibitive. Even small wineries can take advantage of QR codes, he says.

“You have the code on the bottle, the code on the shelf topper and someone’s smartphone can scan it,” he says. “The barrier of entry from the winery of any size is starting to shrink.”

At some retailers, wine kiosks offer information and actually sell wine. In December 2010, however, the Pennsylvania Liquor Control Board shut down nearly 50 Pronto Wine Kiosks to address mechanical and technological issues. Despite this hiccup, Matuszek believes there’s a place for wine kiosks “in a grocery store where there’s unattended service. In a specialty store like our wine shop, the consumer expects to talk to a human being in a wine aisle.”

In Matuszek’s store, customers can actually sip wine while walking the aisles. “They want to taste before they buy,” he says.

Brix boasts the Enomatic wine serving system, a technology that allows retailers to tap wine from the bottle straight into the glass without oxygenation effects. So when a customer walks into his store, Matuszek or one of his employees not only says “Hi,” they offer her a glass of wine.

“We’re probably a little bit old-school in terms of thinking that labor and people are as important as anything in the wine aisle,” he says. “Wine needs to be romanced. Wine needs to be sold. It needs to be talked about. There is no better way to do that than with a human being.”

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