Wine Advent Calendar?

I really enjoyed getting to taste a wide variety of wines in this class. I was wondering about how to incorporate wine tasting into my life and how to push myself to continue to try different wines. I found one solution that is very season appropriate - Wine Advent Calendars.

Town and Country magazine put together a list of alcoholic advent calendars, including affordable options from Aldi and Virgin.

Researching the topic online, I was surprised to find that most options for wine advent calendars focused on affordable wine. There were no options for premium wine.

I would guess that this might be because many premium wine producers 1) do not produce 24 SKUS and 2) do not readily produce small advent calendar sized bottles. 

I wonder if there is space for a third party to curate a premium wine advent calendar at a 100 to 200 dollar price point. 

 

Wine in Lebanon

Coming from Lebanon, one area of interest of mine is Lebanese wine. Growing up (well, after the age of 18) local wine was something that I became quite familiar with. I had always thought that local wine was a new concept that was not entirely authentic to Lebanese culture, and only recently did some research about it...

I was surprised to learn that Lebanon is supposed to be one of the world's oldest wine regions, particularly the Bekaa valley (shown below)with a temple dedicated to Baachus, the Roman God of wine, agriculture and fertility.


Chateau Ksara and Kefraya are the two biggest wine houses, producing a variety of wines including Cabernet Sauvignon, Merlot and Rhone varietals. The 'Chateau' in the name is no surprise given Lebanon's close relationship to the French.

Wine tourism was experiencing some increased popularity, especially locally, but given the Bekaa valley's proximity to Syria and danger zones, wine tourism currently doesn't realize it's full potential in Lebanon.

Winning as a wine retailer

The past two weeks was a great education on the business and overall trends of the wine industry. In particular, we had a close up look at the various choices and paths that wine producers could take. While we did not go into as much detail on retail, I have always contemplated opening my own wine retail in the future. When I started drinking wines 14 years ago, there were still not many wine shops in Singapore. Many have since popped up all over the island. Most have come and gone as it is a highly competitive business. If I were to start a wine retail business, I would model it against K&L wines, as I think they have created a nice niche for themselves.

First, K&L wines offers a highly curated consumer experience. It starts with the small store space, just about 2000 square feet, which makes wine browsing a  manageable and enjoyable experience. The staff are highly passionate and knowledgeable about wines. I also trust the wines sold by K&L. I've almost never been disappointed by any wine I bought there. They also have a reliable supply of popular and unique small production wines. This means, however, that K&L needs to manage their relationships with a whole host of wine producers and distributors.

Second, K&L is focusing on a sustainable business. Despite its strong branding, nation-wide repute and growth potential, it has limited its presence to key cities in the West Coast and kept to 3 stores in San Francisco, Hollywood and (thankfully) Redwood City, as well as an online store. They have built a strong business targeting high net-worth consumers in the Bay Area and LA. While it is tempting to expand to the East Coast, there are several incumbent retailers there hat have their own loyal customer base. It would be more astute to bank on their strong reputation and grow their online presence to ship to other states.

Third, K&L offers value-added services such as wine cellaring. This creates complementarity and lock-in as premium customers are more inclined to go through K&L to order low availability premium wines and have K&L directly store the wines in their personal lockers. Customers would also be inclined to fill up the lockers and buy more wines. For those of us thinking it might be a tough business given the pricey real estate, they are likely making great money. Having done some rough calculations, at full capacity, their wine locker business would yield revenues of $20 per sq foot. Assuming storehouse rent in Redwood City to be $5 per sq foot, even after factoring operating costs their gross profit margin could be somewhere between 200 to 250%. 

There’s always room for improvement and K&L could start by revamping their online store. While I find K&L’s website good, it is setup like a translation of their physical store to the online space. They would need to modernize their online platform to be more approachable for newer consumers and actively court the younger millennials in the Bay area.

Wine Tasting for Dummies (Hint: We're All Dummies)

I really enjoyed the visit from our guest speaker/wine blogger, Alder Yarrow. I was expecting someone who has tried thousands of wines and blogs about them on a daily basis to come across as much more...snooty. Instead, he made wine tasting an enjoyable and approachable concept. I particularly liked his and Alyssa's point that wine tasting takes practice because humans generally experience difficulty with verbally expressing the inputs to their olfactory systems. This is why practice is so necessary for refining one's wine palace--we're all kind of wine dummies to begin with. This is especially encouraging for a novice like myself, who really enjoys wine, but often slurps it down without considering whether it smells like cat piss on a gooseberry bush or tar and roses.

I thought the most helpful tip Alder gave was using aroma cards or the AromaApp to practice identifying aromas and flavors when tasting wine. Doing so will likely make the process of identifying wine tasting notes less nebulous and will also help build out one's tasting note lexicon. Having the AromaApp handy would have been particularly helpful when Alder shared a Willamette Valley Pinot Noir with the class. He described it as having notes of vanilla, blueberry, and mocha. I described it as smelling like a muffin. I think we were basically picking up on the same things, yet he sounded like a sommelier, and I sounded like an unrefined ogre. I am going to download the AromaApp as soon as I finish this blog post.

Another piece of Alder's session that I found enlightening was his insistence upon finding wine critics whose tastes and perceptions align most closely with my own. I had previously assumed that all wine critics were i) roughly in agreement with their assessment of various wines' tasting notes and ii) right. It was interesting to learn just how individualized taste is (especially in light of the studies we read that show that most people have a really difficult time even discerning whether two wines are the same or different!). Thus, I really liked the idea that some wine critics share a similar palate and perceive tastes and smells the way I do, and those are the wine critics whose advice I may benefit from the most.

Lastly, what really resonated with me from Friday's session was the following concept: We like what we like, and at the end of the day, who really cares what the wine critics have to say?

Cheers!

Fake Lafite in China

It is well known that the sale of counterfeit wine is a rampant problem in China. A Forbes article estimates that 50% of wines retailing for $35 or more in China are bogus. Empty bottles from brands like Lafite “fetch up to $1,000 a piece on the black market, which are ultimately re-corked and re-sold to unknowing buyers.” These bottles are often filled with Chilean wine, which incurs almost 0% import tax (vs. up to 50% for most wines), or wine from local Chinese vineyards. One of the only ways of avoiding counterfeit wines is to purchase “ex-cellar,” i.e., sourced directly from the cellars of producers like Chateau Lafite Rothschild. Otherwise, auction houses selling these wines cannot guarantee the provenance of the bottles.

I find the coverage about counterfeit wines interesting, particularly in the context of Lafite’s strategy to produce wine in China. On an obvious level, the retailing of fake wine is brand damaging. A person who spends up to tens of thousands of dollars on a wine that turns out to be fake may be unlikely to do so again. Even worse, a person who spends this sum on fake wine and does not realize the counterfeit may have a lasting negative impression of the brand’s quality.

While the sale of counterfeit wine is clearly a huge problem for wine collectors, I wonder whether the risks to the brand are slightly overblown. Firstly, major producers would generally never capture the upside of these massive price tags – since most wine is sold en primeur, they do not capture the value from wine sales on the secondary market. While one could argue that counterfeit wine is brand damaging in the same way as a fake Louis Vuitton might be, I don’t believe these are analogous. The purchaser of a Louis Vuitton, for the most part, can find out whether they are buying a real or a fake. The purchaser of a 1959 Chateau Margaux cannot (unless purchased ex cellar). The second article describes a collector who opened three of such bottles at a dinner party before he found one that he thought was genuine. He remarks, “What can you do? Enjoying old wines means taking risks.” This ability to take such expensive risks - whether the wine is no longer good or was never real in the first place – is an extreme luxury that enhances the status of the collector. I wonder whether the prevalence of fake wines actually increases the allure of the real thing.

I question whether the play to provide more accessible, Chinese grown wine has more brand damaging implications for Lafite. Unlike Lafite’s other markets (e.g., Chile, Argentina), wine from their Chinese vineyards is being produced for Chinese consumption. Particularly for a set of consumers that tend to spend money while traveling and place a premium on “old world” provenance, I suspect that prevalence and accessibility will dilute the exclusivity that makes Lafite a luxury brand. Perhaps Lafite should spend less effort worrying about counterfeit wine and more revisiting their strategy to prevent brand dilution.

Source: https://www.forbes.com/sites/pamelaambler/2017/07/27/china-is-facing-an-epidemic-of-counterfeit-and-contraband-wine/#2dbb4e995843

https://www.forbes.com/sites/jeanniecholee/2016/06/04/how-to-avoid-fake-wines-at-auction/#c7f91cb5113a

Growth of Chinese Wine Industry

When I heard about Chinese wine a few years ago, the first question is “are they making wine?”. Knowing about Chinese drinking culture and their love for traditional spirits, China doesn’t seem to be right place for wine. However, discussion on China wine market in the class, and a bit of research on the market astonished me. China is the 2^nd largest country owning vineyard behind Spain, and 8^th largest wine making country.  Just like other manufacturing industries, Chinese wine industries are growing fast based on huge consumption based and capital investment.

Even though, there are diverse views on the future of Chinese wine industry, there are some facts important to notice; new vineyard development by government supports, continuous inflow of foreign wine experts, and strategic alliance between global wineries and local makers.

This movement of Chinese wine industry is exactly similar to other successful Chinese manufacturing industries such as electronics, industrial equipment, and automotive. This is a proven success formula of Chinese business, and that’s why I am more interested in the future of Chinese wine industry.

Within short history of wine making, some of local winery such as ‘Grace Vineyard’ is writing a success story. A vineyard located in Shanxi is getting recognized by global wine professionals and institutions. By focusing on quality with France wine experts, sophisticating wine bottles and label, and broadening marketing channel by support of government, Grace Vineyard is growing into international beyond local market.

Even considering some negative effects on wine market – anti-corruption rule, drinking culture and behaviors – local demand is growing more than 12% CAGR.

Chinese growth strategy, growing success story, and strong demand. That’s why I expect growth of Chinese wine industry in near future.

More than Gabriel: How Gabriel-Glas can connect with today's wine drinkers

In our first class, I asked Tempe about how she can connect with consumers who aren't familiar with Rene Gabriel. The power of that name only exists for older, higher class, more refined wine consumers -- a very small portion of Gabriel-Glas's target market, and an even smaller portion of the broader population. I wanted to offer my own assessment and recommendations to help Tempe. To start, who is the customer? Excluding the refined, older, wealthy consumer for whom the Gabriel brand holds meaning, there are two major paths to becoming a Gabriel-Glas (GG) consumer: 1. Be in the upper quartile of income (for domestic US population) 2. Be engaged and put Gabriel-Glas on your wedding registry There's a fundamental truth that I need to establish upfront: truly middle-class families (median US household income = $55k) cannot afford to spend $29 per stem or $174 for a set of six. That's fine, we just need to own who the market is. For the first sub-market, the persona I build for this customer is a 28-38 year old urban dweller who enjoys indulging in a good meal and a solid wine. She or he frequents restaurants with friends or a partner, but also hosts the occasional dinner party or wine and cheese night. Her or his days are spent building a career, and evenings often start with a glass of wine to wind down. There are two potential paths to reaching this consumer: upper-mid market home stores (e.g., Crate & Barrel, West Elm), and restaurants. I think the second path is the most exciting, and would recommend GG explore retailing through urban higher end restaurants and wine bars (entrees ~$20-30). GG could offer the stems at a wholesaler price point to these restaurants, which would use them for dinner service and benefit from the refined image that the wine glasses represent. The wine list would include a note to "inquire for purchase of our Gabriel-Glas stems." Because the experience of using a Gabriel-Glas is so delightful, I think many patrons would be interested in purchasing stems at the restaurant and simply adding it to their bill at the end of the night. I've seen this model pursued successfully by restaurants like Porsena in New York (www.porsena.com). Porsena lists cookbooks and high end ingredients as well as lotions at the bottom of their menu. They pull it off seamlessly because the entire restaurant is so refined and classy that selling items seems like a special favor they are offering to patrons. I also think there's space to partner with digital wine retailers who focus on educating customers. GG should consider a partnership with places like The Perfect Sip or Winc. For the second market (engaged people who may not be able to afford wine glasses on their own), Gabriel-Glas would be a strong fit for any registry. Because GG does not offer volume discounts, the $29 per stem price point is perfect for wedding guests who might not be able to afford a more expensive gift. The trick is standing out from other wine glasses on the registry. On the push marketing side, GG could try to cut a deal for preferential sorting when a customer is selecting stems. On the pull marketing side, GG should reach out to wedding websites (e.g., The Knot) and Instagram handles to be featured on their sites. If there's only one outreach that GG does, I recommend Instagram influencers (e.g., think lifestyle handles and more targeted audiences, like Bachelor contestants -- only the classy ones though! -- or home decorators) and wedding handles; because this is such a visual product, the stems will stand out for their beauty and elegance. Additionally, I think video marketing would be strong for GG. GG should explore creating visually full but verbally subtle (probably word free)30-second videos for placement on Facebook or Youtube, and measure conversions off of those videos. And in general, I think Gabriel-Glas should redo their website to be more visually strong, and update the content to focus on messages that resonate with today's wine drinker. The website looks stale, and the commentary almost exclusively from sommeliers and wine critics misses the point of people drinking wine because it brings them together. When I look at the website, I think these glasses are for an older, stuffier wine drinker -- not for me. The visuals and messages should resonate more with young people, and should take advantage of the visual appeal of the glass. Instead of posing the stems with the black box, the landing page should be a video of a relatively youthful hand swirling wine in the glass, or an image of a table set with bread and olive oil with the wine glasses glimmering around the table. GG needs to take advantage of their website as a way to connect with customers. I hope this helps!

Wine vs. Beer: The drink of the elite vs. the drink of the masses?

Devin made a comment in our second week about beer seeming more accessible than wine, and had the important insight that this was about more than price point. I strongly agree. From a brand perspective, beer does feel more accessible. I want to unpack that a bit in the context of the wine industry's future. I'm struggling with the question, "would it be more advantageous for wine to be seen as elite or accessible?" The case for elite: the best products come with feelings attached. In the case of wine, elitism allows wine to mark special occasions -- an anniversary celebration, a promotion, a successful end to a hard project, a reunion amongst dear friends. Elitism allows 21-year-olds to feel grown up as they make their first wine purchase -- it allows us to try on what it means to be "refined" or "professional" or "mature." There's deeper meaning to wine because of its status in our minds, and that meaning transfers to us so that we can gain status in our own minds by consuming it. The quest for these feelings -- specialness, celebration, status -- drives many wine sales. The case for accessible: however, these ideas are social constructs, and like all social constructs, they are interpreted differently by different micro-societies. As someone with a lot of social and cultural capital, it's easy for me to embrace the feelings and status that wine gives to me. For people who don't share my privilege, wine may seem exclusionary and not for them to try. Many in this population could afford to buy lower end bottles, but choose not to because they think of wine as a rich person's drink, or as a mark of pretention. This thoughts could be explicit, or just implicit and passed parent to child across recent generations. So there's tension here: would increasing the accessibility of wine's brand image detract from the desirable feelings its consumption imparts? My perspective: I don't think so, not in a way that can't be recovered from. I think lower end wine will be seen as lower class, and that middle class consumption could move to higher price points to compensate. I think higher priced wine will remain entrenched as "luxury." Furthermore, I think it's important for this evolution to happen. There's a glut of supply, and while demand has been rising, at some point this will level out if we don't overcome the "class wall" and establish wine as something that can be enjoyed by all. I would be very interested to hear others' opinions too!

Beyond the glass: The power of the brand [Or, Why I'm Taking This Class]

I remember seeing the course listing for the quarter-long version of this class last year and thinking, "No way, I would have to rank this way too highly, it's one of those 'fad' classes where we just drink wine." Then, two threads of my world intersected in powerful ways: I needed to find an internship, and I visited Paris for the first time. All of last year, I spun in circles around the idea of marketing, knowing that I was customer-focused at my core. I started making lists of where I would want to work, and ended up with a list that included Bonobos, Away, Harry's, Warby Parker, LOLA, AllBirds, Glossier, MM LaFleur, and more. I couldn't articulate the core theme of my interests until I found articles explaining vertically integrated, direct-to-consumer, digitally native brands (see Andy Dunn's explanation here: https://medium.com/@dunn/digitally-native-vertical-brands-b26a26f2cf83). Suddenly I understood what so many others had already realized: a brand is more than just a label on a blouse or something you cultivate for yourself at work. Brands, when direct to consumer and vertically integrated, and perhaps especially when digitally native, are a powerful way to bring human empathy and commerce together. Brands turn a product into a personality, a company into a trusted friend. Brands are what elevate a product beyond its specs into something that people love. Okay, let's not forget Paris. In the heat of the internship search, I skipped class for a week in May (my girlfriend's parents were paying for our lodging, it was too good a chance to pass up!) to spend a week in Paris. My girlfriend, her brother, and his fiance spent a day in Eperney in Champagne, where I visited Moet -- one of if not the dominant champagne brand -- and Castellane, a much lesser known, more limited distribution vineyard. The whole group preferred Castellane's champagne to the famous Moet pours, yet any consumer would buy Moet over Castellane based on brand alone. I got to thinking about the power of how you position a product like champagne or wine in the consumer's head. Even comparing the two tours and welcome facilities -- Moet's shiny white marble tasting room and tour guides with crisp skirt suits and red lipstick made Castellane look like a barnyard establishment. I peppered our Castellane guide with questions about production, marketing, distribution, regulation and more (we were the only ones on the tour, unlike at Moet where we walked around with 20 other people). I realized the intricacies of champagne production, and the many different steps in the process where advantage could be won through right strategy. I became fascinated with this industry and the many levers that can be pulled within it. These two threads combined to help me realize the excitement of branding within the wine industry. I signed up for this class because I want to follow that interest while studying the challenges and opportunities that arise from the complexities of this industry.