Winning Wines

Supported by Greenhaven Road Capital, finding value off the beaten path.

After the story of Barefoot Wine, and a history of looking at difficult businesses like movies, and restaurants, it seemed appropriate to think about selling wine. Wine-making pays in profits and prestige and as such will attract extra competition. It’s a market mechanism on steroids. To succeed, someone needs to be excellent rather than simply above average. There are no Bemidji plumbers here.

Before we start we should note that selling wine means a lot of things. Some vineyards only sell fruit, some wineries only have events, some are large and some are small. We’ll focus on only one part of winning the wine game: the marketing.

What matters for marketing is ease.

That might mean an easy decision (Thinking Fast, heuristics). It might mean signaling and reducing cognitive dissonance. ‘Easy decisions’ does not mean simple. It means easy for the individual in that moment.

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As Michael Houlihan and Bonnie Harvey of Barefoot noted, wines in the eighties were “Saturday night wine(s) where the men would sit around and talk about things like mid-notes. But it turned out the majority of wine buyers were a thirty-seven-year-old mom with two-and-a-half kids pushing a cart down the supermarket aisle and she wanted a Tuesday night wine.”

Barefoot was one company that made wine buying less whining. They made it easy, partially through their brand.

Mark Ritson said that the best brands have a DNA. Remove the copy, logo, trademark, etc and excellent branding still makes clear what company is being displayed. (see image)

That’s not the case for wine.

Instead, wines need to win the label.

For the back label, wineries will do well to include information about food pairing, taste, and history of the vineyard. These make it easy for a host to plan a party. One study put it this way:

“For the overall sample of wine consumers, information on the history of a winery including a unique production method and the quality statement had the largest positive impact, followed by elaborate taste information and food pairing advice.”

That’s kind of interesting. It’s not how the wine hits the stomach but how the label hits the brain.

Another study noted that retail consumers prefer wines with simple labels. Rather than metaphorical, consumers wanted the literal. An award helped too. Gold medal winners had an inelastic demand.

For Millenials (and presumably others), the label mattered a lot. In a blind taste test, Millenials preferred the taste of ‘boomer wines‘, 3:2. When the labels were revealed the preferences reversed. This blind taste test shows home important branding, labels, and marketing is for consumer goods from Domino’s Pizza to Coca-Cola.

Branding is the context and everything has a context. Wine, Clay Shannon of Shannon Ridge Wines, said that all they’re selling is fermented grape juice. It’s a commodity. Unless that is, a bottle is differentiated on price, quality, or story.

It was episode 282 when Gary Vaynerchuck spoke with Shannon and the duo took calls from people within the wine industry. Without a doubt, Gary’s advice was on marketing the wine. To the callers, Gary said to focus on the big and the small. The big was creating content and sharing things on social media. The small was knocking door-to-door to make as many sale calls as necessary.

Clay said that he’s noticed, “consumers want to be closer to the grower these days,” and Gary added, “it’s all storytelling isn’t it?”

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Winning wines are easy choices. Depending on the consumer (target market) needs (job-to-be-done), wine-makers can tell their story (differentiate). With some luck, they’ll succeed.

One proxy for wine is the bar. Companies like RXBar, Larabar, etc. differentiated, went DTC, and used new marketing. Their labels were unique, their ingredients novel, and their story was powerful. That could work for wine. We’ll let Gary, as he often does, have the final word:

“All my ‘som’ friends want to shit on Australian Shiraz because it’s over-extracted and guess what, if you want to be a scientist they’re not wrong. My thing is, if I’m hanging out with my buddies and I’m watching WrestleMania I wanna have a cabernet that was fucking aged in bourbon barrels.”

Thanks for reading.