Monday, October 29, 2007

Buying Wine Online - Part 2

I've previously examined some of the reasons why I believe people buy wine (see my earlier 'Buying Wine Online' - Part 1) or actually selling, as in this particular case. I also touched on the fact that it is a very small percentage of what I think is a huge market potential for selling wines online now that some of the laws have opened up to customer direct shipping. The market is there, the need is there, but companies have not adapted some basic principles of direct marketing and/or familiar with a consumer direct approach. In addition, there are a lot of new players (wineries) that just do not have the experience in selling direct and have yet to put the resources in place to properly handle this new approach. Aside from a few consummate marketers, the majority of the sites selling wine have a "give it a rating, a picture/description, throw it online and it will sell" attitude that falls way short of what savvy buyers are looking for.

I'd like to present a few ideas of how companies or wineries could do a much better job for the potential customers and sell a lot more wine in the process:

1) Price/value. This is so obvious, but still so overlooked. There is absolutely no incentive whatsoever for me to buy a wine online, pay the extra shipping, and wait for it to arrive, if I am not saving at LEAST $1 or $2 per bottle on a case. Especially in the states that allow grocers to carry wines, mainstream labels are almost always cheaper than you can find anywhere online. It is very hard to compete in the mass markets for these wines. Here's a concept - do the homework and price wines in order to sell at volume and show the savings to the consumer. Yes, it may be below what "retail" should be, but it just plain has to make fiscal sense and be clearly spelled out to the buyer. Offer single bottle or mixed case pricing that is a true value.

2) Reasons to try a wine. One of my biggest pet-peeves is just a long linear list of wines with a rating and a brief description of the wines I may or may not be familiar with. Like I will just magically want to spend $20 - $30 to try something new because Spectator or Parker gave it a 91 rating. Mmmmmm, not so much. Spend time giving the wine a story (personalize it), talk to the customer for what types of flavors/tastes they might encounter (in lay person form), present occasions where it might go well (perfect pre/post-meal quaffing, mixed parties, holidays), give food recommendations (perfect with...), compare it to other types of wines they might like (if you like bold fruity merlots...), and present user reviews from others that liked the wine (even if manufactured a bit).

3) Shipping costs. I can, without a doubt, assure you that this is one of online customers least favorite things to encounter. I ran a catalog business for 10 years, and after trying numerous offers to entice customers, the #1 overwhelming winner in comparison tests was 'Free Shipping'. Even when the "% Off" offer was actually saving them MORE money, they chose free shipping. Arrange your pricing and back-end shipping so that you can ease this burden to the consumer. Give options that allow the consumer to upgrade shipping if needed, but in general, make it a non-issue.

4) Wine & Food pairings. Let's face it, most of the wine bought is usually going to end up around some sort of food or occasion. The vast majority of sites totally drop the ball, miss the boat, are lazy, or whatever, in taking this approach. If I run across a wine that intrigues me (i.e. you've done a good job in perking my interests up (see #2 above)), you can seal the deal much quicker if you include what this wine would be ideally paired with, food-wise. I guarantee that if I am planning a big party or dinner and looking for that "perfect pairing", and I run across a wine that meets my food criteria, I am far more likely to give it a try.

5) Wine bundles/packages. People like easy decisions. When you can bundle things as a package that is perceived as a great value, you get their attention. You can also offer various things to appeal to a variety of occasions or tastes. Bundle things by a party occasion, a food occasion, seasonal option, varietals, countries/regions, 'sampler' packages, price, etc. The options are numerous and people just like things that have been well thought out for them.

6) Educate. I know this might come as a shock, but not everyone knows what a Bordeaux blend, Rhone style, Meritage, or Sauternes is. Most probably do not know that Pinot Noir is Burgundy's grape or that Burgundy even makes white wine! The reality is, 90% of the potential market stays with the mainstream varietals - Chardonnay, Cabernet, Merlot, Pinot Noir (only because of the movie Sideways), and Shiraz (pfoooey, Yellowtail) - without venturing to some of the lesser known great wines (and values). There are very easy ways to educate (without confusing) the customer that there are some great wines to try outside their comfort zone. People in general want to learn about wines they're buying/trying, and with the vast amount of info online that is available for this, I am amazed more do not do a better job informing customers more.

7) Customer service. This could be an entire subject on its own. But what I can tell you is that if you cannot be immediately responsive to customer needs, you will not be a player very long in the business. This cannot be an 'OK' area for businesses, it has to be exceptional. Customers are getting more and more demanding and will not tolerate poor customer service at any level. I am blown away how many times I can still not get a real person on the phone when I have a simple question during my purchase. One of the most underutilized features in this industry is the "Live Online Help" option available to companies they can employ. Let's face it, almost more than any other industry, the wine market is challenging (at best) in its presentation. People need a lot of help and are just not readily getting it.

8) Personalization. This one hits home with me the most as I really enjoy going to the local wine shop, browsing, looking at labels, seeing what's new, talking to the owner, getting recommendations, finding hidden treasures, etc. The online market can never duplicate this experience, but they could sure try better. If someone could really step up, spend the money and try to create a 'virtual' store of sorts, I think they'd be on to something. If at the very least, do the little things to personalize the experience more - remember the visitor, past purchases, ask for input, live help, give shopping options, tips, wine & food pairing, post latest deals, etc.

9) Offer exclusives. Companies should work more closely with wineries/distributors in offering some more exclusive labels that customers cannot get anywhere else. There are a lot of great wines that end up only going to wine club members or only available at the wineries. People like have access to things that no one else has, price becomes much less of a concern in these instances.

That about summarizes it and gets a lot off my chest. I realize this talks to industry more than consumers, but it affects consumers directly. This can assist in voicing their opinions and help put expectations more in line.

Until the next sip...swirl ya' later!


Friday, October 26, 2007

Buying Wine Online - Part 1

So, I recently read that approximately only 1% - 2% of all wine sales come from online sources, with heading the pack at ~ $34 mil in sales. Also, California accounts for a whopping 46% of all online wine sales. Interestingly enough, high-end wines (i.e. greater than $20) accounted for 93% of all sales...WOW!

Although these may seem to be somewhat a significant numbers, it occurred to me that something is askew with this market. Then I began to explore my own online buying patterns and quickly discerned that I rarely, if ever, buy wine online. And, have little interest to change this or do so anytime soon. Hmmmm........

Now, I consider myself fairly schooled about my wines (just enough to be dangerous) why am I not buying online? Is the general lay public more likely to purchase wine online and my little knowledge about the market actually keeps me going to the local wine shop instead? What are the main reasons someone would even prefer to purchase wine online over the local market or wine shop? What are people buying in the first place? The data out there for this is scarce at best, and only presents some estimations of why people buy wine online.

Here's my theory in (random) top-10 form:

1) Availability. Often times, people cannot find certain wines in their area and can easily plug a brand in to a search engine and quickly access multiple places to purchase a hard-to-find wine. They are willing to pay the extra sometimes for the sheer availability of a brand.
2) Value. People that know what they want, compared prices, and how much they are willing to pay for a certain brand, can often find deals online that justify the extra shipping expense. A pure money decision for prudent shoppers.
3) Convenience. Certain people just do not have time to spend at the local wine shop or staring at the wall of wines trying to decide which one they'll like. They're willing to 'roll the dice' a bit for the convenience of point and click shopping and trust the basic rating system to carry them through. Plus, a lot of times you have more information about the wines than at the local grocer or market.
4) Referrals. Either they got directly referred to a wine or online store from someone who has had a good experience, and trust the source for making the leap to purchase online. Enough of the fear factor has been removed to get them to act.
5) Wine Clubs. I personally believe this is a very strong source of a lot of wine sales online. It provides convenience, variety, value and trust altogether that these wines have been chosen for a good reason. However, this is not always the case and can lead to suspect wines ending up your way...uhem...unknowingly.
6) Wine Auctions. My personal favorite, but not for weak at heart (or market dabblers). You really have to know your stuff here and be willing to do your research as well. Not to mention, sometimes deep pockets. However, you can pick up some great deals if you REALLY know what you are looking for.
7) Food & Wine pairing sites. Several sites that do a decent job of food and wine pairing will often suggest specific wine(s) to go with the recommendation or recipes described, and then have the ability to purchase that wine directly. (I actually like this...more on this later)
8) The strict ratings buyer. These are buyers that hold ratings (or they're favorite critic) to a premium, and whatever is rated at 'x' or above is gospel.
9) The Wine Spectator (WS) effect. This usually comes about when WS comes out with its Top 100 list and people rush to buy the latest and greatest value or rated wine from this list so they can claim, "You know, this one was 24 in the WS Top 100...blah, blah, blah..."
10) The Lucky 20-something states. You're lucky enough to be in one of the U.S. states where you can legally ship wine. This opens up more avenues to buy directly from wineries or sites. I think at last count, it was in and around 26, but I am never sure about this as it changes often.

So there you have it. Next time I will talk about why I believe the system is missing the boat with online wine sales and provide a few ideas of how to better capitalize on the huge market potential in years to come.

Until the next sip...swirl ya' later!


Thursday, October 25, 2007

Response to question on aging wines

I recently had to respond to a question from our forum re: "where to start in looking at wines capable of aging 10-30 years for a special family tradition occasion for the last current sibling/family member standing...?" At first, I thought this a fairly straightforward question, but as I began to explore the possibilities, I quickly realized there was a lot more to it.

My initial response was as follows:

Very interesting question and predicament. The quick answer to the question is, yes, aging is very feasible for this time period and not uncommon to accommodate with current wines on the market.

There are two major factors in deciding which wine to choose - 1) The vintage rating and 2) The winery/estate producer. The next big question to consider is where it will be stored protectively over this period of time.

The other suggestion would be to maybe look at purchasing 6-12 bottles that can be 'tested' along the way and track its progress in aging. When the 'last man standing' is left to finish off the lot, he can finish in tribute to those that had tasted with him along the way.

1) The vintage. If you are looking for something that can stand the test of time, you'll need to go with a red that has a very high overall vintage rating. Off the top of my head, you should look at the following: France - Bordeaux 2000 for sure, possibly '03 or the recent banner '05 vintage, Burgundy 2005. Italy - Piedmont 2000 or Super Tuscan (Tuscany) 2001. All of these have shown to be age-worthy and 10-30 years is no problem. Once you narrow down the region/wine of choice, look at the rating for those particular vintages for each one before deciding.

2) The winery/producer. For this grand occasion, I would recommend staying with "First Growths" or Premiere Cru estates that have a track record of producing banner wines in banner years worthy of long-term aging. For Bordeaux, that would be the 5 following Chateaus: Lafite-Rothschild, Margaux, Haut Brion, Latour, and Mouton-Rothschild. However, there are several others that are equally revered such as - Palmer, Petrus, Le Pin, Lynch-Bages, Chevel-blanc, just to name a few. For Burgundy (if you like Pinot Noir), again stay with the Grand Cru (highest in Burgundy) estates. There are so many to choose, but personally, I'd stay with either a Cotes de Nuits or Cotes de Beaune areas. More specifically, Vosne-Romanee (Conti) or Gevrey-Chambertin. Someone with specific Burgundy experience may be better to help you here. For Italy, stay with the super-Tuscans (i.e. blends) with names like Antinori, Sassacaia, Gaja or a few others from the Bolgheri area.

You can find many other opinions on this and welcome to do so. Some may even wonder why I left out some CA wines, but for this occasion, I feel you need to stay with tradition, and France or Italy will keep you in that.

The bigger concern is where you plan to store this. I would immediately recommend finding a reputable storage facility in your area that you know will be around for a while and/or at least have the ability to move the wines properly. Do not think that someone's dark closet is "ok" for this.

Also, if you do decide to go this route, I'd recommend going with an online auction site that can give you a seal of authenticity with your purchase. I use and to find some good deals if you're patient.

Personally, if price were no concern, I'd go with the following:

6 bottles of 2000 Chateau Latour (100 rating) at ~ $1500 per bottle. Taste one every 5 years or so on a special occasion leaving one for the final tasting.

If I really had to do it myself, I'd go with a case (12) of a second growth that got a really high rating that is drinking well now through the next 20 or so years. For instance, a case of 2000 Chateau l'Angelus (rated 97), would run you about $2500 (or $200/bottle) and you could have a lot of fun with it over the next 20 years together leaving one or two for the last man.

Fun question and exercise...thanks for the inquiry and let me know what you end up with.

There are several opinions on this subject and I have definitely gone the more conservative route in trying to give this gentleman good basic advice with mainstream results. The reality is, proportionately there really are only a few wines that fall in to the category of long-term aging. And, as mentioned, I did not go with any CA wines mainly because of the occasion, more than the aging quality of CA wine. I do believe there are some CA wines that fall in to this category, but they are few and far between as well. Opus One and Harlan come to mind...

I think the important point to take from this exercise is that the single most important element in making this decision is the vintage where the quality (and harmony) of the fruit, the tannins, sugar, acid and ability to blend freely are at the discretion of the winemaker. Even the great names struggle to make an age-worthy wine in 'off-vintages'.

We will be publishing a world vintage quick reference chart on our site when we launch Phase II in early Nov. 2007. Keep an eye for this and I'll be writing a piece on 'last 10 year vintages' specifically when this debuts.

Until the next sip...swirl ya' later!

James M.
Chief Wino