How Bad Is The Wine Biz At Digital? According To This, Really, Really Bad.

66 thoughts on “How Bad Is The Wine Biz At Digital? According To This, Really, Really Bad.”

1. Joe,

   Certainly, the figures don't lie, and they do seem to point to disparity. On the other hand, the quality of those digitally connected consumers needs to be considered.

   For example, if the majority of those consumers drink wines under $10/bottle, what good would digital media do for small wineries that cannot compete in that low-price category.

   An independent (not a wine-insider) study should be done of the number of people who talk about wine online compared with their cash outlay per bottle; then, that stat should be compared with the number of people who discover wines online as opposed to on their feet, and how much they buy (and at what price) in each case.

   I'd also like to know if pouring wine in restaurants and bars or in educational and/or tasting settings are more or less effective at winning consumers than advertising online or engaging in social media "conversations"?

   It's one thing to hype an information medium by its numbers, but it's quite another thing to engage in marketing studies to determine what exactly those numbers mean. And again, I don't think an industry insider should have the privilege of being the sole source of marketing stats. It's not that they aren't to be trusted, but like science, marketing studies should be engaged in without bias toward a potential outcome.

   1. Thomas, the low price thing is a red herring. Trust me, I made the same mistake in my corporate days when I worked for Mars. Turns out that there’s almost no lower limit on a product price point in terms of consumer relationships with that product. A bag of skittles costs a lot less than a bottle of wine, and Snickers is a brand under the mars umbrella that is totally killing it on Facebook to leverage that relationship and engage consumers. The point is that the low price doesn’t negate potential brands relationships. Same is true for customer loyalty or diffusing a potential negative piece of publicity via social media; that’s a very inexpensive way to talk with customers and consumers and a powerful one because if done correctly it has the power to sway their opinions in an organic way. And we need to forget about advertising on social media platforms. No one wants ads on platforms that they use to talk to brands and to one another. No one. It’s like throwing a live python onto the table at a dinner party, and then farting loudly over the main course, and yet we’re surprised when it doesn’t work.

   2. Small wineries cannot effectively do in-store activation and interaction with consumers, nor can they compete with print media budgets of larger wineries. For no or very little cost they CAN interact with consumers and potential customers using social media. The fault of most companies failing to garner consumer growth via this medium is that they have not stopped to answer the most basic question when entering the social media forum – "What do I want to get out of Social Media?" . It is not enough to make 'noise' – Social Media marketing must have a direction i.e. Are you aiming to increase footfall to your property? Do you hope it increases online/direct sales? Are you looking to boost a current promotion? Sure, most wineries want all of those things, but by targeting a specific area, small wineries can achieve much greater success, and create personal interaction with their customers.

      1. Jan – what you said!

2. Joe,

   What you say may or may not be true, but it is anecdotal evidence. The price of candy bears little relationship to the price of wine, and the two products do not make the same social impact. You cannot cross-reference consumer preferences that simply. In any case, I want to meet the average Joe or Jane who regularly spends $25 and more on a bottle of wine. If there are so many of them, Bronco would be in a different market, no?

   If engaging in social media is THE answer and the wine industry is woeful at it, how to explain that during the past decade of the social media explosion the wine industry grew by nearly $10 billion?

   I'm not arguing for or against more digital engagement by the wine industry–that's the industry's problem to face, and I am certain that engagement is necessary, but not necessarily by every winery or in every category.

   Still, I believe that such marketing concerns need to be accomplished through externally independent means, so as to guard against picking numbers that look good and tainting data with bias.

   1. Thomas, I understand the point about confirming data from independent sources. Regarding the price points, there is no rule that says that a consumer has to have a relationship with something only when its price tag is $X. As for social media being a panacea… read the speech again! :)

3. Wow, I thought the wine industry would be doing better, and I look forward to digging into Paul's speech.
   Wait, I have to read it? There's no podcast? ;)

   To Thomas' point, I think that tasting a wine is still paramount when converting to purchase. But we all know that a relationship with the producer usually makes the wine taste better, and increases the odds of someone becoming a long term customer. Digital helps to foster that relationship. Digital networks can also act as matchmakers, not because I got a promotional tweet from a winery, but because that's how I might hear about a restaurant's pairing dinner with that producer's wines, get more information and observations about the restaurant, and the kind of community that the winery is trying to build.

   I might even find that I know someone whose opinion I respect who is familiar with the wines in question and communicate with them about it, in the clear. I can imagine that it would be fairly powerful if the producer joined that conversation. And in truth, small producers have the advantage here. They have no choice but to be real and be themselves. I think that a representative from a big brand is more challenged to engage the same way, and is specifically why staffing dedicated people to do that task is so important.

   1. VT – *exactly*. Go to the head of the class, bro! Paul’s talk shows strong evidence that wine brands are not taking advantage of that media as much as their own customers want them to, which is a big disconnect.

4. Paul's selling a product. Does his talk offer any proven digital strategies that have increased wine sales for anyone?

   Does McDonald's sell more burgers on Twitter? Do people buy more Dove soap because somebody responds to their tweets? Is there evidence?

   1. http://www.adweek.com/news/advertising-branding/o…

      Nuff' said Blake. And yes, I am selling something, as we all are. What I am selling is that we live in a digital culture and have to market accordingly. Every industry is learning this, we are just the farthest behind.

      1. Paul, if I recall correctly, for a long time there was actually a free version of the Vintank software? Combine that with the fact that brands could start out improving their digital interactions without ever paying you a dime, and I think the “snake oil/consultant” argument holds little water. But I am biased for several reasons (even though I myself make $0.00 on social media consulting, so remuneration isn't one of them). I think the further question is, if we all ignored social channels would the wine world – or NAY business – continue to grow and thrive? That answer has GOT to be No, because a sh*t ton of people use those channels and are influenced by content on them.

         1. There still is and ALWAYS will be a free version of VinTank (which is about to get a MAJOR upgrade in the next two weeks as well). We believe in helping wineries connect with their customers and that social is a major component of that vision. Hence the free version.

   2. Blake, read the entire talk. I think those are the wrong questions. While I would certainly NOT advocate that brands spend time on things that have no return on investment, I do not understand why social media interactions always have to equate to sales directly. We don't insist on this for business activities like answering the phone, responding to customer emails or letters, or similar interactions (which is basically what Twitter is from a brand perspective, for example), so why the hell do we do this for social media channels? I don't return apples to the grocery store because they're not bananas, I don't buy shovels for fixing the sink, and I wouldn't advertise **in a traditional way** on Facebook alone and without it being in context of larger marketing efforts in the hopes that it will translate into easy measured sales bumps, because we've known for a long time things like that do not work. We talk about insisting on context for wine reviews, and yet we're happy to strip context from social media use and treat it like a magazine ad page, which is like taking the shovel to the leaking sink. Maybe a more appropriate measure would be, how are wine brands faring who use social channels effectively, vs. those that are similar brands that do not or ignore it entirely… now *that* is a set of data I'd like to see, because it would show if/how it works in context.

      1. Read the entire 70-page talk? I couldn't even read to the end of your comment.

         1. Well, Blake, not exactly an A for effort there, bro. Seriously, if you're going to blog about media not being thorough, don't add to the problem. You ask a question, then stick around for the entire answer.

            1. I was kidding about your answer, but not about the 70-page speech selling Vintank's services. Because you can't lose sight of the fact that that's what this is.

               Here's the thing about social media, and maybe you'll agree with me. Some wineries do very well with it and it enhances their brand. Very large, corporate wineries with lots of employees and lots of bottles to sell probably need to have a specialist in it because they have that many people anyway, and it's a way to contribute.

               But people like you, Joe, who are very good at social media, they're special. It's a skill, a teachable skill, but a skill nonetheless. You can't just advertise on Craig's List for somebody to come to Mendocino County and tweet about Pinot. Moreover, you can't just tell a winemaker, Hey, you also need to be likable on Facebook. Maybe she will be, and maybe she won't.

               I get my panties in a bunch when people start saying that wineries "must" use social media. And I get serious chafing when the person saying that is selling that exact service.

               1. Blake, I know ;-) . I don’t disagree that we should be skeptical, but there are two important caveats here: 1) Vintank sells social media monitoring services, apart from the free version in which they don’t sell it, and 2) my sincere opinion as someone who’s good at social media (OK, apart from Instagram and Pinterest ) is that Paul is right in 99.99% of that speech. So I’m less than 1% skeptical here, which is comfortable enough territory for me to recommend what he’s doing in this case.

   3. Well, Constellation Brands seems to have the numbers to support the premise: http://www.winesandvines.com/template.cfm?section…

5. Joe,

   To VT and to Joe: you talk of small producers and again I say, it may be likely that many of them do not have the product and price that would make social media useful enough–only they would know, and only after they study the issue closely. It remains a fact that the largest wine sales volume in the U.S. is at the low price point.

   The trouble with wine industry people is that we keep talking about the 95% as if they represent the same market as the 5%.

   1. Thomas, it doesn't matter what the price point (Dollar Shave Club for example) just that you understand the medium and its relevance to your consumers.

   2. Thomas – I for one am not talking about them as if they are the same. The concepts can be used in similar ways, however; that's the “VCR” (dating myself here) principal, in that both of them can hit “Play” even if the makes/models/etc. are totally different. In other words, small brands can talk to customers the same way as large brands through these channels, which levels that playing field to some extent.

      1. Amen. There is always ROI (no matter the winery size, price, style) in talking with your customers. We no longer choose where our customers engage us and if we care about them, should go to them to engage where they communicate.

      2. Small and large producers can equally talk to consumers–the question for them to determine is are they talking to customers, and what is it worth to try. You may not want to believe it, but price is at the top of the list of concerns, as is the ratio of cost to do business to profit from sales.

         How do you know whether or not many wineries have already looked into social media and found it wanting or found it promising?

         Again, the industry has added $10 billion in sales alongside the growth of social media and without using the medium To me, that might point to something important.

         1. Thomas – it might. Or it might be half of what it might have been if they were better at engaging on digital channels. Broadly speaking, if we accept Paul's numbers, it does not look as though social channels were tried and abandoned in the aggregate, it looks more as if they just have yet to be really explored.

6. Well… *this* is timely. Apparently Constellation (known here as Consellactus :-) today at WITS 2014 presented evidence of significant ROI from social media activity (following twitter stream of the event at https://twitter.com/search?q=%23WITS2014&src=… ).

   Quoted example from that twitter stream: https://twitter.com/LisaAdamsWalter/status/484053…

   I'd be quite interested to see the summary of that data, particularly given today's discussion here.

   1. Yeah, they're selling the heck out of Arbor Mist using social media!

      1. Not being on social media is like not having a telephone. Not replying to social posts is like not listening to voicemail on Monday morning. It's just how we communicate now.
         Data are very conclusive, social media engagement drives sales, even in the wine business.

         1. T – I’d love to see the data; I believe it, but I’ve yet to see aggregated conclusive examples. The bottom line, as Paul mentions in his talk, is exactly what you describe, which is that properly using social media is especially taking to your customers, which by definition must be good for business.

7. Say what you will about the wine biz, but don't speak ill of Tetris. That game is awesome

   1. Constellation Brands! Let me guess which "high-end" products were Twitterized and sold out ;)

      1. Thomas – why does the price point matter? Seriously, I don't get that. Shouldn't we expect the bigger brands to be doing this well first, given the resources? Seems logical to me.

   2. Gabe – You're right, I f-d that one up for sure :).

      1. Joe:

         Price matters as the dividing line between segments and categories. It's a major factor in targeting the consumer that will respond best to the product.

         If you produce Screaming Eagle it does little good to target a group that wants Yellow Tail.

         1. Thomas, I am asking if price matters specifically with respect to customer/consumer response (of course price matters for targeting potential customers… thought that was a given…).

            1. The point is identifying the market, in which many in wine retail are likely to tell you price is of paramount importance.

               Many digital people deride much of print advertising as unfocused, shooting in all directions. What makes unfocused time and money spent online any better?

               Without an unbiased, independent marketing study–or two, or three–I don't think companies should just dive into any media. I certainly don't think any industry should take the message from a self-interested party at face value.

               1. Thomas,
                  While I may not be unbiased as it relates to social media (which I still use the most comprehensive factual #'s in the world about social wine stats), over 1/2 of my speech has nothing to do with my bias. It addresses digital, the state of the wine industry, and more.

                  As it relates to the difference between digital and print advertising is that with digital, you can actually measure the results mathematically and accurately. If you took the time to read the speech you might actually have a very different perspective.

                  1. Paul,

                     To be clear: I am not accusing you of anything. I am pointing out that a true marketing study aimed at answering real questions for developing targeted promotions is probably best produced by a disinterested entity outside the industry.

                     To your other point: Measuring the results mathematically and accurately is a fine and lofty goal, but only if the questions asked are relevant to the business and/or industry involved. While the numbers may tell a story on their surface, it's the quality of that story that matters.

                     The Internet has been measured (outside the wine industry) to still stand as a minor player in retail sales; still, I have no doubt that it will grow. Those who would grow with it, however, ought to pinpoint which end of their market is the target for Internet growth rather than just throw resources at it and hope it all sorts out. If they have no target on the Internet, then they should not waste their resources on it until they do.

                     Frankly, I can't see how the cost of a bottle of decent wine pairs well with the present devaluation of both the US economy and its labor force, but that's a separate can of worms.

               2. Thomas – I'll let Paul handle the self-interested bit. Regarding the rest, we are in violent agreement.

   3. Agreed, Tetris rules…maybe Pong would have been more appropriate ;)

8. In these early days of digital media, perhaps wineries should aspire to Tetris-level participation. If you can remember 1989, it was Tetris that made the Game Boy. As much technological promise as the system offered it took the right application (Tetris) to spark a revolution. I realize you are presenting a different metaphor, but I can assure you we'll get to Mortal Kombat interaction in a couple of years when people start showing up in tasting rooms wearing Oculus Rift headsets.

   1. @SDependahl – You need to YouTube those Oculus Rift headsets, or the didn't happen! :)

9. I couldn't agree more with this article. I'm the guy trying to get into the industry and this is exactly what I'm good at. Its a hard sell and its even harder when you're trying to relocate.

   For the jobs that have been posted, the requirements are way off base, X years of 'luxury' wine experience, with X degree with X years of marketing, X years in Javascript, X years managing 10+ staff. Some are pretty ridiculous. If you know digital, marketing anything in digital can be very similar. Its about telling stories, connecting with the consumer and enhancing their experience.

   1. Matt, I wish that I could say that all surprises me :-(

   2. you forgot the most important part… it pays $12/hr!

   3. yah, yah, you can tell any story. but if you don't know much about wine, its chemistry, food n wine, aging, acid, sugar, taste senses, etc. etc., your story won't generate annuity customers. Retailers generate those regulars, wineries have a harder time doing it, digital media does what?

      If you wanna get into the industry, go do merchandising at 5 a.m. 5 days a week for Gallo or Kendall Jackson. do that for $25K a year, for 2 years, then sell digital wisdom. tweet.

      And to master joe, 44% of people looking at digital media is way different than saying that 44% buyers attention is via digital.

      1. Donn, I'm having trouble understanding your comment. Are you saying that wineries are bad at telling their stories, especially on digital media? If so, I agree…

10. Great post – and certainly timely as we are about to embark on another big harvest hear in California – which means lots and lots of wine that will need to be sold 9-24 months out. Combine this with record harvests the past two years and there are plenty of sales challenges that lie ahead.

    To me, the biggest issue here is the ambivalence on the part of companies to respond to customers in digital form. I'm not perfect, but I try to stay 'current' on if my wines are being discussed in social media, and I make it a point to respond back to these comments in as prompt a manner as possible – whether the comments are positive or negative. To not comment and engage is like not picking up a call from a potential client 'just because' or not answering a request for pricing or an order from a potential client.

    And I agree – this is not about price point and should not be made out to be that way. Social media should be about interaction – and the 'cost' of interacting on social media is so darned small compared to other medias that there really is no excuse for not using it – even for sub $10 wines.

    The fact that there are not more 'VP's of Digital Content of Social Media' doesn't really surprise me in this biz at all – companies in general don't see the 'value' in this position. But that's okay – that's where companies like Paul;s and 'consultants' can really shine. Heck, if there can be well-respected 'flying winemaker consultants' why can't there be consultants in this area as well? There should be . ..

    Cheers!

    1. Well stated, Larry.

    2. Larry:

       OK, it shouldn't be about price alone, and I have tried to place that issue in the context of targeting a market.

       The attitude that social media is there and so you must deal with it is fine, as far as it goes as an attitude. Seems to me that what a business gets from the engagement is the important thing for the health of the business.

       So tell me form your perspective: what is the business purpose of that interaction? What is the purpose if that interaction is directed at no group in particular but rather aimed at a set of statistical numbers?

       Oh, and because social media interaction is cheap, it brings up that old saying: you get what you pay for…

       1. Of course, someone from the company should be available to answer direct inquiries, and all that.

       2. The business purpose of the interaction has a lot to do with the context of the original post or message. Is this a review by a blogger? In that case, it would be to engage that blogger and their audience, thank them for the review, and add to or discuss the review in as objective terms as possible. Is this a post on a wine bulletin board such as Wine Berserkers? Same thing – engage and answer questions / add color commentary. Is this a review of one of my wines on CellarTracker? Same kind of response. Is this someone posting a picture of one of my wines on Facebook and tagging me? Same thing . . .

          There are lots of different avenues for communication, and, to me, this has as much to do with 'old school marketing' and 'touch points' as anything else. I have plenty of winemakers who refuse to acknowledge the existence of bloggers, for instance – these winemakers don't 'get the point' and feel that they are just going to have to give away free wine without 'anything in return' . . .

          Is it possible to 'monetize' all social media interactions? Of course not – just as it is not possible to put a number on how much business comes in from 'stellar' vs 'crappy' customer service.

          Cheers.

11. This was indeed a subject of much contention in a recent DTC job of mine as I was trying REALLY hard to get ownership to understand the value of social media, even if they couldn't make an immediate correlation. The bottom line, and the point I was trying to make back then, is this… many wineries today, especially those of higher end brands/locations, have a customer base that they have been communicating with for years that has been quite advantageous. They understand the customer's needs and expectations and they speak the same language. Unfortunately, as is a rule in life, these customers eventually go away, whether it be a result of an economic shift, or, more to the point, literally die off. In this case, I'm speaking of the baby-boomer generation… the current backbone of the DTC market here in Northern California.

    Since this market has already passed its apex and is slowly sliding down towards its nadir, how are you addressing how to communicate with the next big market that is coming down the road? If millennials are all communicating via their phones and you're still sending faxes, how are you positioning yourself for success 3, 5, 10 years down the road? More to the point, how is NOT being a pioneer in utilizing social media in the wine industry going to help you down the line. Sure, you can sit there and be the old farmer from 80 years ago who says that "my horse and buggy work just fine for me, thank you" while the neighbor is dusting off his new tractor and gaining a competitive advantage, or you can be that neighbor.

    As a VP of Marketing recently told me, there's a huge shift in marketing across the country that everyone in every industry must come to grips with. Historically, the biggest word in marketing was "free"… today, it's "me" (and not just the Al Franklin "me", but the universal "me"… there, I just dated myself). So the question becomes "how are you making today's consumer feel as though you understand THEIR needs and desires and how are you reaching out to them in a fashion that they can relate"?

    Call it narcissism, call it vanity, hold your breath and refuse to even look at these "know-nothing-know-it-all 20-something hipsters", but do it at your peril, because, like it or not, they ARE the next biggest generation of alcohol consumers and if we, as the wine industry, don't do a better job of addressing how to communicate with them, the spirits and beer producers (and their HUUUUUUUUGE distribution and marketing budgets) are more than willing to step in and be the cool thing they order at restaurants (see Sandy Block from Legal Sea Foods and his recent summary of ordering trends at their locations) and serve at parties.

    1. Brian, great points, particularly about spirits and beer (coffee is in there, too) being competitors now for the wine Biz.

12. In don;t think anyone–including me–has said that social media should be ignored.

    If I may try one more time: before blowing a great amount of time and/or money, social media avenues should be explored for their potential. You don't do that by just jumping in because it's there and a lot of people are using it. You do that by establishing a targeted consumer and by finding out not only where that consumer is, but how much of that consumers cash is available to your business.

    We baby-boomers were good for wineries because we read magazines and also because as a mass generation, we had the cash necessary to sustain a wine industry and even help grow it.

    Maybe the wine industry stumbled on us, maybe not, but the "Wild West" nature of social media certainly appears to me to require analysis that goes beyond just volume (the massive number of people chattering on social media) and into quality (which of them are worth time and money, and how much).

    The fickle nature of 140-character attention spans does not seem to me like the foundation of a long-standing, loyal consumer block. A winery could be chasing its market all over continually newly introduced apps. A marketing study needs to be done professionally and needs to be tested.

    Incidentally, I wish someone could design a study that is close to definitive regarding how much wine sales wine blogging initiates.

13. The wine industry could learn some lessons from the craft brewers, their distributors, bars, and bottle shops that stock their products on how to market in the digital age. The beer industry is just so much better at it than wine, and a lot of that has been born out of the fact that many craft brewing startups have zero marketing budget but still need to find a way to get their message out.

    1. Paul – good point, and it’d be tough to deny the explosion of growth that craft beer has enjoyed lately.

    2. Paul:

       The beer industry has always been better at PR than the wine industry, and wine seems never to have learned that lesson.

       Can't say as I know why that has been and remains the case, but I assume it has something to do with self-image.

14. I just finished reading the speech. It's really quite interesting. To me, this was less about traditional "marketing", and instead more about using social media to create really great public relations. One image that stuck with me is that social media interactions are sort of like telephone calls in public–if you hear someone talking about your company on a cell-phone to someone else, it's probably not great PR to walk over and try to sell them something directly, even if they're inclined to buy something from you already. I know if someone tried that with me, I'd be polite at first, and then slowly back away, and then probably change my address to Nunavut. Another thing that struck me as interesting was the sort of the "Wine Club Member of the Month" mentioned closer to the end. That seems like quite an incentive to visit a winery's website frequently, and not just for ordering, which probably would happen sooner or later. Thanks for the good read!

    1. Thanks, mg. But you got it all wrong, that talk was only a long advert for Vintank and therefore can’t contain any real helpful information… ;-)

       1. True. I may have missed that when translating it from Australian to Canadian, so I could tell what it's all aboot, eh? Also, happy Independence Day!

15. Hi Joe.
    What so many wineries don't understand, is that wine is inherently social anyway. Wine brands know this. That's why they facilitate Winemaker Dinners, Ride-alongs, trade tastings, and winery tours. They know that a positive impression of a Wine Brand (lubricated with some delicious alcohol) can often end in lots of sales.

    EX: 25 minutes spend by Jean Louis Chave with a small group of customers visiting Mauves have resulted in over $30,000 in sales of Chave wines to just the members of that trip.

    Brands need to see the value in the online equivalent of that experience. Maybe that means more than just Social Media and Email. Maybe it also means including video and photography as well.

    *thanks for turning me on to Mabray's speech.

    -Austin Beeman

    1. Thanks, Austin. To be fair, and to your point, we can’t officially consume wine socially online, of course. But the wine biz largely has the skills required to overcome that if they’d leverage their incredible ability to share their stories with customers when they’re face to face. Cheers!

16. Joe

    You should consider taking a sabbatical and work for either a distributor or retailer to add to your understanding of how wine moves from a winery thru the channels to consumer and recycle bin.

    I believe in what you and Paul advocate, it is just not that simple. If working distribution or retail is not viable because you live in PA then go buy a few containers of wine and get your feet wet that way.

    Cheers

    1. Ron, appreciate what you're saying, but what makes you think we view this as simple? If it were simple, the wine biz would already be good at it. Acceptance and knowledge of the gaps are the first steps…

       1. if the gaps are real and lead to increased sales then you are right – I have yet to read a real success story that evolved because of social media – I am an advocate of all things social – it would be great to start to see some success stories.

          Have you seen the back of the business card cartoon about wine brands being like grains of sand on the beach and whoever figures out how to be different or unique becomes the billionaire — Cheers

          1. Ron – ha! No, I've not seen that, sounds excellent though.

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