Taking over an iconic estate can be both exciting and terrifying. When EPI purchased the iconic Brunello di Montalcino producer Biondi Santi in 2017, they asked Giampiero Bertolini to take over as CEO. Giampiero was excited to join the “Champions League” of wine but also had to convince the local community that this outside investment would be good. He delves into how Biondi Santi has been pushing toward creating more value for the brand while maintaining its core essence.  

Detailed Show Notes: 

Biondi Santi’s history

• Family invented Brunello di Montalcino
• Founded in 1888 - Ferruccio Biondi Santi had a vision of quality wine with longevity during a time when people focused on quantity with wine as part of the diet
• Bottled in Bordeaux-shaped glass (a sign of quality) vs. standard Tuscan fiasco
• Tancredi Biondi Santi - one of the top consulting winemakers of the time, was asked to write appellation rules in 1967
• Franco Biondi Santi (“the doctor”) - selected the BBS11 clone in the ‘70s and organized a 100-year vertical tasting (1888-1988) in 1994 with important wine writers that boosted the image of Brunello. One writer gave the 1891 vintage 100 points

La Storica (wine library) - has all vintages since 1888, releases one old Riserva with a current Riserva each year

Path to Iconic Status

• The vision of the family - be good winemakers, high-quality
• In the global market regularly → elevated the Biondi Santi to a different level
• The wine offered to Queen Elizabeth II in 1967 was a favorite of Frank Sinatra’s

EPI acquired Biondi Santi in 2017 and installed Giampiero as CEO; the community was skeptical of French owners for an iconic estate had to convince neighbors by being transparent about what they were doing at the estate

• Before the takeover, prior 20 years, the business was not run well
• Rebuilt global distribution, did not have US distribution
• Re-connected with trade, critics, and consumers/collectors

What they kept the same

• Reinforced market position
• Style of the wines
• What they changed
• New vineyard philosophy (regenerative), replanted vineyards to improve quality, conducted soil studies
• Increased communications and more selective to the right people and thproperht channels
• Managed pricing to reposition the brand to increase demand

Keeping the brand fresh

• want s to be closer to the trade and consumer, spend more time in the market
• Storytelling of what is happening at the estate, not just the history, but today’s actions that protect the future
• La Voce di Biondi Santi - started 3 years ago, selects one word each year that is part of their philosophy (this year is “respect”); creates novel/audiobook based on a keyword (e.g., Joanne Harris, author of Chocolat) and podcasts with winemaker and Giampiero around the keyword

The most effective initiative so far - repositioning the brand by increasing price → gave higher credibility and put the brand up another step, old vintages increasing in price on the secondary market, high demand on Liv-ex (one of few growing while price increasing), one of the top 35 wines in the world on Liv-ex

Growth for Biondi Santi = value growth; volume is complex to grow

Value-driven by increasing distribution globally to rarify the brand further, not just taking price, but increasing value, which is a consequence of many conditions, and not rushing value creation in the market

Biondi Santi is now in 2.0 after 1st five years, and the next step is to increase the quality of its presence in the world and be closer to partners and consumers

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In part 2 with Stevie Kim, Managing Director of Vinitaly, she explains how parent company Veronafiere invested in the various Vinitaly products and allowed her to experiment.  Stevie also dives into her prolific content strategy, including the Italian Wine Podcast, which has over 2M downloads to date and where she sees value in marketing.  

Detailed Show Notes: 

Italian Wine Podcast

• Initially created to develop content for VIA candidates
• Something different every day - up to 9 episodes published / week
• Example shows: Ambassador’s Corner - Italian Wine Ambassadors go deep with their favorite Italian producer; US Market Focus - different perspectives on the US wine market
• Now ~2,000 episodes, they had to switch podcast distributors to Megaphone (Spotify) as most only host up to 500 episodes
• Audience - early on, was ~80% US & English speaking countries (the podcast is in English), and VIA students
• ~6M total downloads with a broader audience than Vinitaly attendees

Funding the Vinitaly complex

• Significant investment by Veronafiere, which is majority-owned by the city of Verona
• Italian Trade Agency subsidizes some events - e.g., pays for transport for judges for 5 Star Wines
• Some ticket sales and sponsorship revenue
• Podcasts funded by Stevie personally

Veronafiere saw value in investing in Vinitaly products

• Wanted to become more international
• Allowed Stevie to experiment with new products and invest in them

Stevie’s team has a large staff of content producers (video, social media)

• Document everything they do
• Create tons of content, of which only ~50% is used
• Stevie believes in being prolific - promotes discovery

Marketing products

• Never advertise on LinkedIn - it is too expensive
• Instagram - sometimes does advertising, conversion doesn’t happen on IG, try to drive to the website to convert, more for attention vs. conversion
• Facebook - most wine producers on FB, more effective and efficient, can get ~$100k subscription revenue from ~$5k ad spend
• Less concerned with “vanity” metrics like views and engagement, more interested in conversions

Looking forward - wants to bring more people to Italy and Vinitaly - it is the best way to convert people to Italian wine

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Having gotten bitten by the wine bug young and with deep wine retail experience, Devon Magee, founder of Offshore Wines, decided to start a small wine importer. Inspired by Kermit Lynch, Offshore focuses on small, artisanal brands making high quality, yet affordable wines. Devon shares how he bootstrapped the company and is finding his way as an importer. 

Detailed Show Notes: 

Background - mostly wine retail, did harvests in France (Vieux Telegraph, Chandon de Brialles in Burgundy - 2012-2014)

• Inspired by Kermit Lynch, he was interested in writing

Offshore Wines Portfolio

• Christian Knott of Chandon de Brialles started a new project, Domaine Dandelion, and asked him to import them
• 2017 - 1st shipment - 4 cases of Domaine Dandelion, 20 cases of Champagne Charles Dufour
• 15-20 producers now
• Goal: find high-quality wines made in an artisanal way from lesser appellations that are “affordable”
• “Affordable” = $30-100 in US retail

Starting an import business

• He did it on his own, with no lawyers
• ~2 months to get a license, ~$1-2k in fees
• Need a licensed warehouse to receive wines (uses CA Wine Transport)
• Self-financed 1st shipment

Cash flow is challenging

• 2-3 months for wines to land in warehouse (from France)
• Restaurants/retailers get 30 days terms
• Payment to wineries varies - most ~60-day terms from shipment, while others want payment upon shipment or 50/50 terms (upfront and on delivery)

Lifestyle is fun, traveling and visiting rural areas

Choosing winery partners - a lot is timing, being at the right place, getting to know communities, and very relationship-based; most wineries are referrals from existing relationships

Offshore differentiation - speaks the winemaker’s language (French, Spanish), worked production, and is building deep personal relationships

• Wineries are exclusive to CA, and only market Offshore works, though they sell to a small distributor in CO
• Focus on small producers precludes needing to be in all 50 states
• Optimal portfolio size ~25 wineries to be able to respond and represent wineries well
• Gets wine out for people to taste them, prefers personal connections over social media
• Shares other aspects of what people are doing (e.g., got and gave away bags of coffee from a producer experimenting w/ carbonic coffee bean ferments, giving away sweatshirts from Domaine Hausherr with an artistic word game on the back)

Devon is the only salesperson now, and he would ideally like 1-2 salespeople

• Other salespeople have opened doors for him to help him

Building small brands

• Many people struggle with name pronunciation
• He tries to share wines, stories, and pictures of brands
• He doesn’t agree with the need for scores and tasting notes; he uses email to share stories, wants to publish a newsletter eventually
• The new style of wine writing can help small brands - e.g., Alice Feiring, Ray Isle’s new book

Advice for others - be able to sell the wines

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Building the app while on sabbatical from Microsoft in 2003, Eric LeVine, CEO and founder of CellarTracker, had been close to a one-person show until recently.  Yet, he’s built one of the most useful productivity tools for wine collectors, an engaged community of geeky wine lovers, and a respectable business that he’s now investing in to grow and take to new heights for the benefit of the CellarTracker community.  Eric’s openness and candor provide an in-depth look at how one of the leading wine platforms was founded, built, and where it’s going next. 

Detailed Show Notes:

• Eric’s background
  • “Tech geek” to “wine geek”
  • He was at Microsoft from 1992 - 2005; his last project was the “send error report” feature
  • 1999 - took a biking trip to Tuscany and fell in love with wine and started collecting
  • Built a tool to keep track of his cellar, then let a few friends use it, which morphed a personal spreadsheet into a relational database
  • Eric created CellarTracker while on sabbatical from Microsoft in 2003, then in April 2004, launched it publicly and left Microsoft a few months later
• CellarTracker overview
  • Core element - a productivity tool to catalog and manage every aspect of the wine experience (e.g., purchasing, tracking, consuming)
  • Byproduct - “Yelp for wine” - the aggregated wisdom of the community from tasting notes, drinking windows
  • User base
    • 10M unique people visit the site
    • ~750k registered users
    • ~300k active users
  • Wine database
    • 4M wines created
    • 135M bottles in cellars
    • 9.1M tasting notes in the community + 1.3M professional tasting notes
• Features and functions
  • Optical recognition of labels - partners with Vivino
  • Most used features - tasting notes (~10M visitors/year on the website, most people reading or researching the tasting notes; ~9.1M tasting notes growing ~750k / year / ~2k / day)
  • Features collectors use - what wines do they have, when do they want to drink them, what are wines worth (the main premium feature)
  • Wine valuations - partner with Wine Market Journal for appraisals, overlaid with what people are paying for the wines in CellarTracker
  • Drinking windows - updated by users, partnership with review publications to overlay their data for subscribers of their content
  • Surprise & Delight feature - the ability to print a restaurant-style wine list
  • Geekiest feature - can print unique barcodes for your bottles and use a scanner to check them in and out
    • Default mode - creates a unique barcode for each specific bottle
    • For restaurants - uses same code for each wine of a particular size
• Conducted research into the wine collector space
  • ~18M people in the US store wine at home / in a wine fridge
  • ~10% awareness of CellarTracker in the US
  • ~5-10% awareness of CellarTracker globally
• Data analytics
  • They just hired the 1st data scientist several weeks ago (as of Oct 2021)
  • They haven’t done a lot to date
  • User ratings - can track/follow specific authors, most often used for older wines at auction as one of the only sources of data for older wines
    • Richard Bazinet authored research in 2016 of an analysis of community ratings vs. professional publications
    • Never specifically built tools to enhance “influencers” in the system, was anti “gamification” elements to incentivize people to write tasting notes
  • Data accuracy - has a team of 4 (some PT/ some FT) to curate the wine database and look for duplicates, use both automation and humans to have duplicate detection
• Business model
  • “Voluntary Payment” - one of the early “Freemium” business models
    • Established this because the value of CellarTracker is in the active community, and the data it creates makes the platform more robust and valuable
    • Suggested payment based on the size of collection - avg ~$57/year
      • $40/year for <500 bottles
      • $80/year for 500-999 bottles
      • $160/year for 1,000+ bottles
      • The lowest payment is $20, and some pay thousands
    • The majority of revenue comes from this
  • Some ads, but not in the app
  • Affiliate links with Wine-Searcher - the #2 referral source after Google
• Key differentiators of CellarTracker
  • Cellar management - hardcore focus on scalable needs of collectors
  • Good engagement - attracted a set of people who keep coming back
  • Community - an “authoritative” audience - more geeky people that are in the community
  • Focus on privacy, needs of the community, up-time, neutrality (not affiliated with retailers or other businesses)
• The next horizon for CellarTracker
  • Building a team - was only 3 people at the start of 2021, the goal is to be 11 by year-end (data scientists, engineers, UI designer)
  • Upgrade & deepen the existing experience, especially mobile app - they have seen a significant shift to mobile over the last 10 years, 
  • More recommendations and automation of different scenarios
  • Connection to industry/wineries/other parts of the wine ecosystem (no natural interfaces today)
  • Better understand and engage with the 10M people who visit the CellarTracker website - many of whom use it as a research platform
  • Brought on a group of angel investors to reinvest cash flow into the business

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As the only fine wine end-to-end solution in the US, Vinfolio has recently launched its wine investment service, leveraging its deep expertise in the fine wine arena. Don St. Pierre, Executive Chairman, and Adam Lapierre MW, President, tell us about Vinfolio's history, how the marketplace, storage solution, and VinCellar work together, as well as get into their recent foray into wine investment. A must-listen for those intrigued with wine investment and for fine wine lovers in general. 

Detailed Show Notes: 

• Don St. Pierre's background
  • 1996 - founded ASC Fine Wines w/ his father, a wine importer in China 
  • 2010 - sold ASC to Suntory, stayed with the company until 2014
  • 2015 - got connected with Vinfolio and bought 33% of business with a friend
• Adam Lapierre's background
  • Mainly on the supply side (worked at a winery in the Finger Lakes, at an importer)
  • Became an MW in 2013 and moved to the buying side, working for Lidl, a major retailer of wine
  • Joined Vinfolio in 2018, became President in 2020
• Vinfolio's history
  • Started by Steve Backman, a software entrepreneur, and wine collector, in 2004 - he wanted to create a cellar management tool and marketplace to store and sell wine
  • Built VinCellar - cellar management tool, started at a similar time to Cellar Tracker (Eric Levine), the difference is Steve wanted a more end-to-end solution for collectors vs. a more utility tool for Cellar Tracker
  • Built VinFolio - marketplace and warehouse storage business
  • 2009 - Vinfolio went bankrupt in Global Financial Crisis, clients came in and took over the business 
  • Vinfolio is an end-to-end solution for wine collectors - buying, storing, and selling wine, focusing on the niche of fine wine coupled with technology
  • Similar business model to some UK businesses (e.g., Berry Bros & Rudd, Farr Vintners)
  • Most people hear about Vinfolio through retail/e-commerce today, but that may shift as VinCellar is re-built and re-launched
• Vinfolio Marketplace
  • A fixed price auction model
  • Uses proprietary tools that determine recommended market price for collectors to sell at
  • Storage clients use VinCellar to put wines for sale, or others can use the full-service option w/ the cellar acquisition team (every bottle on the marketplace has been inspected with it being rare for wines to be sent back)
  • Wine sourcing
    • Collector Marketplace (⅓ of wine sales) - from individual collectors
    • Producer Marketplace (⅔ of wine sales) - from a global network of merchants (e.g., negociants), direct from producers, and US importers/distributors (~15-20% of sourcing)
    • Try to clearly differentiate between the sourcing types
  • Advantages of the Vinfolio marketplace
    • For Buyers - the breadth of wine at their fingertips, more clarity around the asking price vs. other auctions
    • For Sellers - realized prices often higher than live auctions (except for very rare wines)
• Wine Storage
  • A vital part of the business is to create ready supply for the marketplace
  • It makes VinCellar an essential part of the business
  • Convenience for clients to get delivery
  • A premium service
    • Pricing ~$5/case/month
    • Inventory is cataloged and received at the bottle level
    • Clients can take delivery or sell wines at the bottle level
• Wine Investment Service
  • It started because Vinfolio got unsolicited inquiries around wine as an asset class for investment
  • Retail marketplace helps Vinfolio understand where market demand is
  • Investment customers are mainly new customers vs. traditional clients that are more passionate wine collectors
  • Vinfolio investment process
    • Min investment size = $25,000 - in order to have a diversified portfolio
    • Purchase in original wood cases (OWC) mostly
    • Understand client's interests
    • Focus mainly on blue-chip / investment grade wines, the foundation of every portfolio is Bordeaux
    • "Stock picking" - look at buying opportunities and allocate portfolio across current and mature vintages
    • Put wines in storage - mainly in the UK under bond (as it's easier to sell)
  • Key benefits of Vinfolio wine investment
    • Buying side - acquire below market (charge landed cost (which includes shipping from the UK) + 6% commission, which is usually 10-20% below US retailer pricing)
    • Selling side - uses fixed auction model, 12% commission for the sale (lower than standard commission rates)
  • Storage fees consistent with w/ Vinfolio storage fees
  • Investors get access to special wines, similar to private clients
  • Vinfolio has an informal list of producers with high demand, leveraging experience of the day to day business
  • Uses Vin-dex - Vinfolio proprietary pricing algorithm - provides a daily market price for wines
    • Has 10 years of historical auction data
    • Wine-Searcher pricing - takes in ~5,000 web calls/day
    • Historic Vinfolio sale prices
  • Also a member of Liv-ex
  • The investment service launched a couple of months ago (as of Oct 2021) - ~$0.75M assets under management vs. ~$250M total under in Vinfolio storage
  • Investment differentiators
    • Transparency of process, particularly rationale for wine selections
    • Investment strategy - diversification with multiple cases of wine
    • Experience in the fine wine market
• Big initiatives for Vinfolio
  • VinCellar overhaul - orienting data around investment as well
  • E-commerce platform re-launch - transitioning to a new platform with more refined, personalized user experiences
  • Hiring more quality people to service clients
  • Carrying more inventory to have more wine available

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As the wine investment business leader with $275M of assets under management, Cult Wines has been a pioneer in the space for over a decade.  Born out of a passion for wine, Tom Gearing, CEO and founder of Cult Wines, tries to balance the head and heart elements of investing in wine with actively managed portfolios by CFAs and experiences with some of the top wineries of the world.  Tom shares all the details and great examples of why people should consider investing in wine, the Cult Wine investment process, and where Cult Wines is heading.  

Detailed Show Notes: 

• Tom’s background
  • founded Cult Wines w/ his brother in university
  • Father was an investment banker with a passion for wine, especially Burgundy
    • Traveled a lot to Burgundy as a child
    • Started an import company - Burgundy Cellar
    • The early 2000s - started Financial Wines - an online price transparency tool, but ran out of funding after the dot com crash
  • 2007-2008 - during Financial Crisis - people looking for alternative investments - Tom realized wine was a safe haven and should be more investable
• Based in the UK
  • Where the Wine trading is very well established
  • The UK has tax free status for wine trading for anyone in the world - can keep wine in a tax free warehouse where you don’t pay taxes (sales tax, VAT) upfront
  • Asian collectors used London to build collections before shipping it
  • Brexit impact - mostly operational (shipping is a lot slower) vs. tax,
• Why invest in wine?
  • Those with a passion for wine - Build a fine wine collection, can drink it, or sell it in the future
  • Those not passionate about wine - wine prices are more consistent and tend to go up in value because the supply goes down over time (people drink it), tends to be insensitive to financial market fluctuations (went up in value in 2009) - suitable for diversification
  • Vs. art/cars/other alternative investments, wine is more attractive:
    • Accessibility - lower barriers to entry - hundreds or thousands of dollars for wine vs. millions for fine art/cars
    • Liquidity - better than other alternative assets
    • Price transparency - more trading publicly and more visibility (though, still not as good as it could be)
  • Wine investment serves as a storage/aging function for the fine wine market with pristine provenance and authenticity
• Cult Wines Overview
  • Not a retailer - acquires wines on behalf of clients
  • Three warehouses - London, Paris, Bordeaux
    • EU changed storage laws in 2016 to hold wines without paying VAT (similar to the UK)
    • Have own warehouse and staff to ensure provenance and authenticity of wines (e.g., caught heat damage on a shipment of Scarecrow wine and made a claim with freight forwarder immediately)
    • Has own photography studio and processes 250 cases/day, and photos are immediately uploaded for inspection
  • Investment process
    • Has a managed portfolio service (min $10k investment)
    • Gather client objectives - risk profile, investment duration (3-5 years, 5-10 years, 10+ years), how wine fits into their entire portfolio
    • Build a personalized, customized portfolio
    • Store wine in physical warehouses (clients own bottles or cases, the physical asset b/c it’s hard to have liquidity for funds where people have fractional ownership of a fund)
    • Get access to investment platform
  • Top-down investment process - actively managed portfolios
    • Cult Wines has a Chief Investment Officer (CIO), and all portfolio managers are Chartered Financial Analysts (CFA)
    • Constantly reviewing the market and making asset allocation decisions
    • E.g., Trump Tariffs on European wine - team thought Bordeaux would go down in price, proposed reducing allocations from 40% -> 30% and re-allocate to Italy, which looked undervalued already and had no tariffs; in 6 months, AUM of Bordeaux went from 40%->36% and Italy 6%->13% and Bordeaux prices went down 2-3% and Italy up 12%
  • Assets Under Management (AUM) - $275M
    • UK/Europe is the biggest
    • Asia next
    • Americas (smallest, but newest)
  • Fees
    • Annual management fee - starts at 2.95%/year (with $10k investment), 2.75% (with $35k investment), 2.5% ($150k investment), 2.25% ($500k investment)
    • Benefits - portfolio allocation, customization of the portfolio, investment platform access, customer support, storage & insurance, trading on the platform (no feeds on trading to align Cult Wines interests with clients)
    • Higher tiers get more experiential benefits - access to producers, client-only events, educational activities, vineyard visits
  • Wine Buying
    • 35% direct from winery/new vintages
    • 65% secondary market - from existing investors, trusted suppliers/brokers, and trading platforms (e.g., Liv-Ex)
  • Wine Selling / Delivery
    • ~20% of wines have been delivered to people, can ship to 45 states, clients pay delivery fees
    • Some clients use Cult wines as a global cellar - e.g., a Japanese collector sent wines to the US when he was going to be there to visit
    • Wine sales channels
      • Cult Wines buys for other clients - for wines they believe will appreciate more
      • Trade team - sells to other wine merchants, brokers, traders, importers
      • Retail/Direct to Consumer - listed on Wine-Searcher and Cult Wines website for sale
  • Team - ~100 people total
    • Infrastructure based in UK (including ~24 tech and product folks)
    • Regional offices - relationship managers, portfolio manager (all CFA level; Hong Kong, Singapore, 2 in London, New York)
    • 8 in North America (3 in Canada, 5 in New York)
  • Company’s Growth
    • 1st 5 years - establishing proof of concept
    • 2nd 5 years:
      • 2014 - acquired competitor, Premier Cru Fine Wine Investments, doubled AUM and business
      • 2016 - opened Hong Kong office
      • 2018 - opened Singapore office
      • 2014-2019 - $7 -> $50Mm in AUM
    • Next 5-year phase (18 months in) - “reborn, evolution”
      • Fine wine investment is limited by market inefficiencies: accessibility, liquidity, price transparency
      • Focused on projects that will improve inefficiencies and that will naturally make the wine investment space grow
• Types of wine for investment
  • Opportunistic trading - capturing inefficiencies in pricing - there may be opportunities to buy in one region and sell in another at a profit
  • Benchmark wines - based on scores (with critics weighted differently by the impact), vintages, the value of an established baseline of wines (e.g., Bordeaux, Burgundy)
  • Finding new opportunities - wines with high quality that have a good chance of increasing in value, e.g., Pierre Gonon St Joseph - was 30-40 euros 3-4 years ago, now $150/bottle
• Auction houses - don’t work with them much
  • Hard to get certainty of provenance
  • A lot more mature/older wines which have already gone up a lot in value
  • Costs are prohibitive (10-20% on a transaction)
  • But the best place to get the highest/best prices (e.g., 1945 DRC from the Drouhin cellar got ~$500k / bottle)
• Next for Cult Wines
  • Launching new platform for managed investment service
  • Bespoke, public blockchain for security, authenticity, and speed of secure transactions
  • Continue to build North American offices (opened Spring 2021) in Canada and New York

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A serial entrepreneur, Anthony Zhang, was pondering alternative investments and fell into wine.  With superior returns to the S&P 500, less volatility, and low correlation with the stock market, wine investment seemed like a perfect category to democratize with technology.  Anthony tells us why people should consider investing in wine, the Vinovest investment process, and how wine investment may impact the wine industry.  All with a mission of lowering the cost and barriers for the average consumer to invest in wine. 

Detailed Show Notes: 

• Anthony’s background
  • He grew up around the world, childhood in Beijing and Hong Kong
  • Went to USC for college and founded EnvoyNow, a food delivery service for college campuses with investment from Mark Cuban and Peter Thiel
  • Was considering alternative investments and was attracted to wine over others (e.g., art, cars)
• Wine investing challenges
  • Hard to get access to the wines
  • Fees for auctions, shipping, and storage
• Investment thesis - fine wine has outperformed the S&P 500 over the last 20 years, has half the volatility, and has a low correlation with the stock market (i.e., is a good hedge); wine also has a decreasing supply over time, which enables appreciation over time
• Vinovest investment process
  • Choose how much to invest, how long to invest in (e.g., 5 vs. 20 years), and your risk appetite (e.g., blue-chip wines like 1st growths or Grand Cru Burgundy or “emerging markets” like newer winemakers, ownership changes, etc.…) => this helps determine which wines to invest in
  • Invest in whole bottles or cases, not fractional bottles or fractions of a portfolio
  • Acquire, store, and insure wines
  • Vinovest can help sell wines as well
  • Fees - all-inclusive 2.85% / year asset management fee
    • Access/procurement of wines
    • Shipping and wine storage
    • Insurance
  • Average bottle price ~$200-600/bottle
  • Acquire wines below retail by buying direct from negociants or wineries
  • Currently managing ~$50M (as of Sept 2021)
  • Can take physical delivery of wines - but often stored in Europe, so can arrange for batch delivery with others to reduce shipping costs (from hundreds of dollars to <$100 for shipping)
• Valuing wine and liquidity
  • Vinovest plugs into major wine exchanges (e.g., Liv-ex, Wine Owners, Cavex, Berry Bros, Bordeaux Index) to gather real-time sales data
  • Selling wine - only invest in whole bottles and cases, so there are more places to sell to, including retailers and restaurants. Most deals are done offline 
  • Good liquidity for 5-15-year-old wines
  • Need at least a 5 year time horizon to realize returns
• Investable wines
  • Need scarcity (not available widely), track record of improving with age, and brand equity (a sought after, globally recognized brand)
  • Regional mix - ~25-35% Bordeaux, #2 = Burgundy, #3 = Italy (Super Tuscans, Barolo), small amounts of select producers in California, Chile, Germany; vintage Champagne having a resurgence (e.g. - 1996, 2002 vintages)
  • Algorithm for determining wines backtested back to the 1980s
• Fake/counterfeit wines
  • Provenance/fraud are the most significant risk for newcomers => Vinovest’s insurance company inspects and authenticates the wines
  • Vinovest only buys in-bond so can track the previous owners
• Key players in the wine investment space
  • Mainly in Asia and Europe
  • Private Banks have wine funds, UK (Vin-X, Wine-ex, Cult Wines)
  • Vinovest differentiation - more technology-driven, collect more data and aggregate it to create automated investment strategies
  • To address wine funds that fail - each investor owns their wines with an audit trail that shows the wine is theirs 
• Wine investment impact on the wine industry
  • Wine prices may increase as more players enter the investment market
  • Climate change is  increasing prices through lower yields
  • It won’t impact commercial wines (e.g., $10-20 bottles), but fine wines
  • Auction houses - the modern investor isn’t okay with paying 20-25% premiums
• Regulation
  • US - wine is classified as a collectible, like art or rare coins, and is subject to capital gains tax when sold (self-reported)
  • Int’l - some countries, like the UK, France, and parts of Asia, wine is classified as a “wasting asset” with an expiration date (often 50 years) and is capital gains tax-free
• Next for Vinovest - want to continue to educate consumers on the benefits of wine investing, intends to create a low entry point to make wine investing more accessible

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With droughts, floods, hail, wildfires, and more challenging how wine is made, Familia Torres and Jackson Family Wines are leading the way to tackle climate change in the wine industry by founding the International Wineries for Climate Action.  Founded in 2019, the group already has 22 members and continues to expand its reach and impact.  Listen in as Josep Maria Ribas Portella, Climate Change Director for Familia Torres, and Julien Gervreau, VP Sustainability at Jackson Family Wines, tell us about the impacts of climate change, how to measure GHG in the wine industry, and ways wineries are working to improve their emissions.  A mission-critical effort for the entire wine industry, listen in to learn more! 

Detailed Show Notes: 

• Josep’s & Familia Torres’ background
  • Climate Change Director, an energy engineer, has been with Familia Torres for five years
  • Torres - 150-year history, 5th generation running the company
  • Climate change dept reports directly to Miguel Torres (CEO), who got passionate about the subject after watching An Inconvenient Truth with Al Gore
• Julien & Jackson Family Wines’ (“JFW”) background
  • VP Sustainability at JFW
  • JFW is a large, family-owned company, best known for Kendall Jackson and La Crema
  • In the 2nd generation, the company is very passionate about climate change
  • 2008 - Torres and JFW came together on climate change and the need to measure greenhouse gas (“GHG”) emissions
• International Wineries for Climate Action (IWCA)
  • Founded by Torres and JFW in 2019
  • ~2010 - Miguel Torres tried to start something similar in Spain, but it didn’t work out
  • Deciding to partner w/ JFW and make it international led to the successful launch of the IWCA
  • IWCA tries to standardize emissions measurement and communications
  • The wine industry is not a significant contributor to climate change, but agriculture is an emerging area of opportunity, and wine can represent agriculture more broadly
  • IWCA is 1st agriculture group to join the UN’s “Race to Zero” initiative
• Impact of climate change on the wine industry
  • The impacts are being felt globally (Torres)
  • Advanced ripening of grapes (leading to higher alcohols)
  • More extreme weather - prolonged droughts in Spain, flooding, late hail, hydric stress (leading to worse wildfires), late-season heat spikes
• Measuring GHG emissions - Scope 1-3 definition
  • Scope 1 - direct emissions - e.g., fuel burnt in winery vehicles, gas used in boilers, CO2 usage
  • Scope 2 - indirect emissions from purchase of electricity
  • Scope 3 - indirect emissions from purchased goods and services - e.g., packaging, logistics, waste disposal of bottles, etc.…
  • Scope 1&2 are ~20-25% of GHG emissions, Scope 3 - 75-80%
• GHG impact of a bottle of wine
  • Use World Resource Institute’s GHG Protocol and ISO14064 inventory management process
  • For IWCA members (as of Oct 2021) - the average bottle of wine has a 1.61 CO2e/L of GHG emissions
  • Range - 0.75 - ~10 => larger wineries tend to be lower, smaller wineries tend to be higher
• GHG reduction measures
  • Shipping is ~15% of carbon footprint for Torres => using railroad when possible, ship in bulk (for every 1 bulk shipper sent, it replaces 4 containers, saving 3 shipments)
  • Electricity - many wineries installing onsite renewable energy, primarily solar
    • Harvest is 2.5 months/year but uses ~50% of electric consumption
  • Packaging - ~25% of total GHG footprint
    • Glass is ~20% of the total GHG footprint
    • JFW - reduced  the weight of bottles for KJ and La Crema - saved ~3-4% of total GHG emissions and saved money
    • Reduce weight bottles have more recycled content in the glass, reduce emissions of glass making process (e.g., Furnace of the Future), bloggers starting to weigh bottles before tasting
    • Torres - bottles down to 400g, can’t go much lower, or bottles will break on the bottling line or with consumers
    • Potential future of re-utilizing bottles
  • Regenerative farming - could potentially lead to carbon sequestration in the soil, science still in progress
• IWCA Mission & Purpose
  • Decarbonize the wine industry as fast as possible
  • 3 membership classes - Gold, Silver, Applicant (committed to joining)
  • Requirements
    • Commit to Net Zero by 2050 with intermediate reductions by 2030 (all)
    • Submit baseline GHG emissions inventory, verified by 3rd party audit (all)
    • Min 20% onsite renewable energy (Gold)
    • Constant reductions year over year (Gold)
  • Do not recognize purchase of external offsets in reductions
  • Target membership
    • Goal - 20 wineries by Nov 2021
    • Oct 2021 - 22 wineries
    • Miguel Torres long-term target - 100 wineries
  • Fees - a sliding scale by volume
    • Flat fee - €4,000 / year
    • Variable fee - €0.01 / case produced / year, cap of 600,000 cases
    • Max fee = €10,000 / year
    • Measurement & verification paid by wineries themselves
• Released a GHG calculator to enable wineries to catalog emissions data on their own
• Smaller wineries join (there are members as small as a few thousand cases) to participate in something bigger and to amplify their voice
• Upcoming for the IWCA
  • Oct 21st - 1st Member Report launch - includes all GHG inventories from all members, which will be made public
  • The website will be overhauled
  • Friends of IWCA category to be launched
  • The initial stage of working groups launching

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Instituted in a different time, post Prohibition, the 3-Tier system of alcohol distribution and sales in the US creates inefficiencies in matching inventory with demand.  Tom Wark, Executive Director of the National Association of Wine Retailers (“NAWR”), founder of Wark Communications, and writer of Fermentation -  the Daily Wine Blog educates us on the history, key issues, and challenges of navigating the 3-Tier system for wine consumers to get the wines they want.  The NAWR is on a mission to modernize the regulatory landscape for alcohol and bring choice to consumers. Listen in to Tom’s decades of war stories on wine regulation! 

Detailed Show Notes: 

• Tom’s background
  • He grew up in Northern California and got interested in wine at an early age
  • He got a Masters in History
  • Worked in wine PR, then started his firm - Wark Communications
  • Started Fermentation -  the Daily Wine Blog, in 2004 - wrote a lot about regulation, was pro-DTC (direct-to-consumer)
  • Approached by the board of National Association of Wine Retailers (“NAWR”) to be Executive Director (2008)
• NAWR
  • Members all independent fine wine retailers (e.g., K&L, Zachy’s, Grapes, the Wine Company)
  • >100 members nationwide
  • Estimate ~500 retailers actively doing e-commerce and interstate shipping
  • ~400,000 alcohol licenses nationally
• Wine Retail Space
  • Grocery stores, convenience stores, drug stores, big-box retailers - mostly <$15/bottle, ~75% of wine sold
  • Small independent retailers => focus of NAWR
  • Multi-state retailers (e.g., Total Wine, BevMo)
  • DTC from wineries
• Key issues for fine wine retailers
  • Primary - want to serve customers where they are
    • Amazon could get into the wine space w/ Whole Foods alcohol licenses and ship to anyone locally -> The only way for independent retailers to compete is to do interstate shipping
    • 16 states currently allow interstate shipping
    • Wine.com has retail licenses in many states to ship to most states
  • Secondary issue - procurement of inventory
    • Retailers must buy from in-state wholesalers who have a limited selection
    • Retailers desire to purchase directly from importers or wineries no matter where they are to broaden their selection
• NAWR mission - to modernize the regulatory landscape for alcohol
  • Most regulations  were written in the 1930s-1950s
  • Alcohol is more regulated than tobacco
    • E.g., if a brewery wants to sell direct to consumer, it needs to sell to a wholesaler and then repurchase it to sell to the consumer
    • Franchise laws - binds producer to a wholesaler for life, even if the wholesaler is no longer supporting the brand
  • Advocate litigation for change - e.g., states that allow their own retailers to ship to other states but don’t allow out-of-state retailers to ship in, believes that violates the dormant commerce clause of the Constitution
  • Lobbying, education of retailers, cultivation of allies (very few - consumers and media; most against - distributors, non-online retailers (believe it will create more competition), wineries (indifferent), importers (were not active supporters))
• The 3-Tier system in the US
  • 1930’s - post-prohibition (1933) - each state had to regulate alcohol, and each did it a bit differently
  • Two main concerns - prevent tied house laws and organized crime
    • Tied house - producers controlled retailers => got bars to do sketchy things and promote high alcohol consumption
  • 3-tiers - producer, wholesaler, retailer
  • Retailers must buy from wholesalers
  • Stopping tied house - wineries can’t own retailers
  • Historically - lots of wholesalers competing to represent producers
  • Today - 10,000+ wineries, fewer wholesalers -> wholesalers act as gatekeepers, not required to bring producers in and shut out small producers who aren’t worth the time and effort to represent them
  • CA producers and importers can sell direct to retailers/restaurants
  • Wholesalers are very powerful - contribute meaningfully ($10M+/year) to state political campaigns, 10x more than wineries and retailers combined
  • Each state has different 3-tier regulation, creates an enormous compliance burden
    • IL - wineries can sell directly to retailers only if they produce <25k cases/year and must sell <5k cases/year w/in the state
    • CA/WA - all direct sales from producers to retailers/restaurants
• E-commerce
  • ~10-12% of wine retail today, includes Drizly, Instacart, & grocery delivery
  • Shipping far smaller than delivery
  • To be successful, retailers need to engage consumers digitally - cultivate an email list, create an experience for customers
  • Challenges
    • Getting wine to consumers (illegal to ship to many states)
    • Hard to make time to do outreach to legislators, regulators while running a small business
    • Restaurants become retailers during the Covid pandemic
  • The 1980s & 1990s - number of wineries exploded, they needed to sell directly to consumers since distributors wouldn’t represent them, became legal a precedent with the 2005 Supreme Court Granholm case - which specified if states allowed in-state wineries to ship to consumers, it must allow out-of-state wineries to ship into the state
• Taxes
  • If states allow retailers to ship in, retailers are required to remit local sales taxes and have a permit
  • Software systems set up for wineries also can cover retailers (e.g., ShipCompliant, Avalara), makes compliance easier
• Pure online players - wine.com, Naked Wines => valuable for showing consumers what can be accessed online and the experience of online retail
• What needs to change?  The Supreme court needs to tell states not to discriminate (2019 case - Tennessee vs. Thomas - can’t discriminate against retailers)

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Accidentally filling the big shoes of Michael Broadbent and Steven Spurrier, Jane Anson, wine critic, author of Inside Bordeaux, founder of janeanson.com, and former Bordeaux correspondent for Decanter for nearly 20 years, is one of the world’s foremost experts on the wines, history, and region of Bordeaux.  Having lived in Bordeaux since 2003, Jane shares her deep insights into how Bordeaux became as famous as it is, how the systems of La Place de Bordeaux and En Primeur work, and the complex terroir of the region.  She gives us insight into the content of janeanson.com and how it will be a unique look into Bordeaux, focus on the drinkability of the wines, and many of the unique features to be released. 

Detailed Show Notes: 

• Jane’s background
  • Living in Bordeaux since 2003, she thought she’d only be there for 1-2 years
  • Journalist background
  • Decanter’s Bordeaux correspondent for nearly 20 years, wrote a weekly column since 2014, the sole Bordeaux wine critic since the 2016 vintage
  • She took a tasting aptitude class at the enology school in Bordeaux
  • She chose Bordeaux because it’s still a big city (lived in London before), 2 hours from the Spanish border, 2 hours from Paris
• Janeanson.com
  • Can be accessed by inside-bordeaux.com or janeanson.com
  • Saw a gap in the market for a website specializing in Bordeaux vs. ~4-5 for Burgundy
  • Value proposition
    • No outside investment, no advertising
    • Focus on drinkability
    • Covers all wines that sell through La Place de Bordeaux (including the ~90 wines that are not Bordeaux wines)
    • Regular verticals, en primeur, in bottle reports
    • Two weeks of trips during the year
      • One week - for high-end collectors
      • One week - “free” aimed at young sommeliers, people that want to work in the wine trade to showcase the dynamic side of Bordeaux
  • Launch specials
    • a translation of memoirs of a WWII soldier in Bordeaux
    • Vertical of tiny producer LaFleur Saint-Jean - lies in between Lafleur, Lafleur Petrus, and Petrus in Pomerol only sells direct, sells out immediately, had never done a vertical before
  • 1% for the Planet - 1% of revenue goes towards environmental charities
• Bordeaux’s rise and fall
  • Key advantages
    • A port city, far enough inland to be a safe port
    • 12th century - duchy of the English crown, wines were sold in the London market
    • The system of chateaux, merchants, negociants was built for export
    • Terroir is very complex (which may be why it’s not talked about much), e.g., of the 61 wines in the 1855 Medoc classification, all of them are on two specific gravel terraces (#3 & 4) of the six terraces of the Medoc
      • Mostly clay underneath with gravel on top
      • Lots of micro terroirs
      • St Emilion - has pure limestone, clay, and gravel
  • Issues that have hurt Bordeaux
    • Every vintage is not great, though Bordelais often say that
    • Frustrate people based on the prices they ask (e.g., 2009/2010 vintages - many people who bought lost money)
• La Place de Bordeaux
  • Business to business, sell to merchants that sell to consumers
  • Virtual marketplace - enables access to 10,000 clients globally
  • Includes chateaux, brokers, and negociants
  • Sells wine into every level of the food chain - has specialists for on-trade, off-trade, hotels, corner shops, supermarkets, etc.…
  • It doesn’t build your brand but makes sure it gets everywhere
  • Good at giving the illusion of scarcity
  • Can use La Place for specific markets - La Place has expertise in the Asian markets (e.g., China, Vietnam, Japan)
  • Very rare to have exclusivity for negociants
  • Downsides of La Place
    • Creates a very competitive environment - low-end wines compete with each other
    • Protects Bordeaux well; merchants need to buy in bad years to get allocations in good years
    • No direct contact with consumers for wineries
    • Less effective for small guys that aren’t established brands
  • Non-Bordeaux wines selling on La Place
    • Gone from nothing to 60 wines five years ago to 90 wines in 2021
    • Provides access to global markets - shows wines next to the great wines of Bordeaux
    • Opus One - the 2nd non-Bordeaux wine on La Place (after Almaviva), sold wines since 2004, opened an office in Bordeaux
      • Forced negociants to share client lists (created more transparency)
    • 1st Champagne just joined - Clos des Goisses (Philipponnat) - only 600 bottles of 1996 late release
    • No Burgundy producers (not enough volume, no need for it, and the rivalry between Burgundy and Bordeaux)
    • Barriers to joining La Place - need enough volume to get everywhere, need to do your own brand-building work, and meeting customers
    • An increase in overseas wines has hurt smaller Bordeaux estates -> negociants have limited budgets and drop them
• Marketing Bordeaux - unlikely to be another 1855 like classification, St Emilion’s classification every ten years is constantly litigated, some marketing organizations: 
  • Pomerol Seduction - 8-10 Pomerol estates that band together
  • Bordeaux Oxygen - young producers, targeting younger audiences, no longer active
• En Primeur
  • Due to export focus, Bordeaux always had samples shipped off overseas
  • From the early 1980s, Parker injected excitement into En Primeur system
  • People used to make money, and now they are often better off waiting until wines are in bottle with certain exceptions (e.g., tiny production Pomerols)
  • No longer has the same sense of urgency
  • Tranche system - release a small amount of wine at one price, then release more later at higher prices
  • E.g., 2010 1st growths came out at €600/bottle (these people made money), final tranche at €1,200/bottle (these people lost money) -> destroyed interest in en primeur in the Chinese market
  • non-Bordeaux wines price more consistently than Bordeaux wines
  • Latour dropping out of en primeur
    • Said they wanted to store wines and release them when best for consumers
    • Still sold to negociants / La Place
    • Don’t1980’s know if this has worked better or not
  • Chateau Palmer - sells 50% en primeur, 50% ten years later

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Library Release: Originally aired as Episode 5 in June of 2020.  

In one of our original episodes, Robert and Peter discuss how competitive the wine market is, how wine scores used to differentiate wines from each other, but do that less today, and the use of wine scores has evolved over time.  This episode provides another data point for the conversation around the evolution of the wine critic, as discussed in episodes 61 - 64.  

Detailed Show Notes: 

• Wine scores were the traditional method of differentiating a wine brand
• The wine landscape is getting more competitive and crowded, 
  • # of wine brands (as of 2019): 
    • >1,000 in Napa valley
    • ~4,000 in California
    • ~10,000 in the US
    • ~300,000 globally
• In Luxury Wine Marketing, Peter did an analysis of 100 point scores in Robert Parker’s The Wine Advocate: 
  • 1995 - 14 100 pointers
  • 2005 - 33
  • 2015 - 116
  • In 20 years, there were 8x more 100 point scores, making them less remarkable than in the past
  • However, the same percentage of wines (0.4%) got 100 points in 2015 as in 1995, as 8x more wines were reviewed by The Wine Advocate
• How wineries use critic scores
  • In the past - wineries leveraged the followers of wine critics, gaining new customers
    • 20+ years ago, thousands of buyers would flock to wineries with a 100 point score; today, that number is in the hundreds
  • Today - wineries use scores to promote and market their wines - they are used as a validation of quality, not necessarily dependant on a specific wine critic
• Spinouts of wine critics
  • Many critics have gone independent - Jeb Dunnuck (guest of Episode 64), Antonio Galloni (Vinous), James Suckling, Jeannie Cho Lee, Jancis Robinson - making the field more crowded than ever
  • It has become harder to follow a single critic than in the past
• Wineries need to build their brands
  • E.g., Philippe Guigal once said, “we don’t do marketing” - and is able to do that because Guigal has already built their brand in the trade with over 20 Robert Parker 100 point scores -> this type of marketing may not be as effective today
  • Brands need to have wine quality as a baseline and more than scores to sell effectively
• Critics leveraging scores to promote themselves - some critics may give higher scores to be the top score that is used to promote the wine by retailers and wineries, increasing consumers awareness of their own brand and media channel
• Crowdsourced scores (e.g., CellarTracker, Delectable, Vivino)
  • Scores are a snapshot in time and will change over time
  • It gives the ability to follow individuals and learn their palate
  • Not yet influencing the wine trade (as of early 2020)
  • It helps bring another touchpoint of brand awareness to wineries
  • Wine Berserkers - has had an impact on wine sales, at least a few dozen signups for mailing lists of wineries Peter has worked at
• Lessons for wine brands: 
  • Need to build the brand, having high wine quality and high scores are the baseline
  • Figure out the marketing channels that work for your brand and double down on them
  • The cost of customer acquisition is going up with the fracturing of wine criticism and the rise of crowdsourced wine scores

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As the wine reviewer for Burgundy for The Wine Advocate and a small producer of Burgundy himself, William Kelley has a deep and insightful perspective on Burgundy.  We discuss how Burgundy became “without substitute” and why “all roads lead to Burgundy,” the rapid escalation of both vineyard and wine prices, and how what was once very contracting landholdings are now consolidating again.  History, economics, geology, and terroir all come together in this episode of XChateau! 

Detailed Show Notes: 

• Listen to the beginning of Episode 62 for background information on William
• Burgundy as vignerons vs Bordelais châteaux
  • William believes this is an illusion - historically, Burgundy vineyards were owned by the nobility and the church
  • Today - LVMH, AXA, and rich, wealthy people own many of the domaines and vineyards
  • Bordeaux outside the Cru Classe are much more modest in nature
  • The French land reforms of 1792 (during the French Revolution) broke up large tracts of land -> led to a “morcellation of parcels”
    • Led to emphasis on each small parcel of land and its impact
    • Created the ability to see the human element of winemaking (two people making the wine from the same vineyard) and the human impact on terroir
  • Metayage system - born in Beaujolais, a form of “sharecropping” where people take half the fruit in exchange for farming the land, popular in Burgundy where people own small parcels of land and often don’t live there
  • High death/inheritance taxes, which are assessed based on the value of the land lead to more vineyard sales and end up with more consolidation of land holdings, particularly into businesses that don’t have to pay death taxes
• Burgundy as the top global winegrowing region
  • The wines are good/high quality
  • They pair well with a lot of food and are very versatile (vs. the Medoc)
  • Are a social signifier - wine collectors can “one-up” others by mastering the complexities of Burgundy more than Bordeaux or any other region
  • Grand Cru vineyards are tiny and limited - sends the prices skyrocketing (e.g., Domaine d’Auvenay Aligote now sells for $2,500 / bottle)
  • Bordeaux mismanaged the emerging market of China with the 2010 en primeur pricing, similar to what Hennessy and Cognac did in China, destroying the market
• Value of Burgundy land
  • High prices partially driven by tax write-offs for any losses, owners get the wine lifestyle “for free”
  • Believes land prices and wine prices will continue to escalate
  • Disconnection between land and wine prices
  • In the 17th century, there used to be a saying that the value of a vineyard should equal 3 years of production - this is way different today
  • E.g., a famous Chablis producer’s Les Clos magnum sells at €80 from the domaine, but $2,000 in the US -> lots of other people making money on the wine outside of the winery
  • “No end in sight” to price increases for Burgundy, wine is still a relatively inexpensive luxury good (vs. cars, watches, etc.…)
• Climate change
  • Not as bad as some people think, bad weather events also occurred in the 19th century
  • Today there are more viticultural techniques to combat climate change (e.g., canopy management, etc..)
  • Price increases also more than offset the volume decreases
• The Micro-negociant
  • Purchasing fruit is expensive - ~€3-5,000 per barrel for village wines, €550-600 for Chiroubles 
  • If some negociants get the attention of investors, they can acquire land and become domaines
  • More expensive to produce negociant wine vs. domaine wine
  • Growers in Burgundy take the yield risk (the classic arrangement is negociants buy the fruit by the barrel)
  • A seller’s market - need good relationships with growers, hard for outsiders to get good fruit 
  • Negociants have the ability to make lower appellations/vineyards more popular - e.g., Arnoud Ente Meursault La Seve du Clos is a lesser site, but Ente has elevated it
• Domaine vs. Maison
  • Consumers still put a lot of stock by it, but boundaries are blurring
  • E.g., PYCM - started as negociant, rolled in family vineyards, but don’t state “Domaine” anywhere, the idea being that all wines are worthy of the brand
  • Price should be driven by quality, not hierarchy (e.g., some Aligote more expensive than Grand Cru Puligny)
  • Brand expansions can’t be diluted because of the vineyard hierarchy - the Grand Crus are still high quality and drive brand reputation
• The Future of Burgundy
  • Viticulture - would like to see every site in Burgundy farmed like a Grand Cru.  William wants to break glass ceilings in every appellation
  • Winemaking - people extracting less and less, flirting with natural wine movement, lighter, softer styles of red Burgundy more popular, longer elevage is getting more fashionable (and is rooted in history - used to do 2-3 years elevage because it was the only way to clarify the wine)
  • Price escalation impacts on other wine regions - “there is no substitute (for Burgundy),” people will look further afield, but “all roads lead to Burgundy”
  • Insular nature of Burgundy changing - the new generation of owners are from New York, Macau, Shanghai, and Hong Kong
  • Advice to the new generation of producers - taste the great wines of the world, including older benchmark wines
  • Changing leadership of domaines - though marketed as a good thing, there’s a lot of pressure for the next generation of a famous domain, and that tends towards being more conservative and listening to consultants vs. trying something new
  • M&A - “everyone wants to buy as much land as they can”; don’t see a lot of people wanting to go global, there’s still ample price escalation in Burgundy

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Breaking into the US market for alcohol has always been hard.  Archaic rules such as the 3-tier system and differing regulations by state make it a complex web of rules and regulations to be in compliance.  The increasing consolidation of the distributor channel has made it even harder for smaller players to enter.  MHW's goal is to make that simpler, giving producers the ability to enter the market and take control of their own destiny.  They provide outsourced importation, distribution, and back-office / compliance services so their clients can grow and execute their sales & marketing plan.  Listen in as Gabe Barkley, CEO of MHW, gives us a rundown of how they do this and how it compares to traditional importation and distribution.  

Detailed Show Notes: 

• MHW background
  • Leader in import, distribution, and back-office services for wine, spirits, and beer (beverage alcohol)
  • Founded in 1934
  • Objective: enable rapid growth of new producers and importers for the US and EU markets
  • Plays mostly in the import and distribution tier of the 3-tier system in the US (3 tiers = producer, distributor, retailer; import being in-between producer and distributor)
  • Has wholesale licenses in 4 markets - NY, NJ, CA, & FL
• Gabe’s background
  • Passion for wine started when he lived in Rome in college
  • Worked in wine retail after college
  • Left wine for consulting (Accenture, Deloitte)
  • Helped Kevin Sidders launch Vinconnect (listen to E51 for details)
  • Partnered w/ PE Fund post business school to partner w/ MHW (4 years ago)
• MHW Core Services
  • Provides the “pipes” for selling into the US and EU, does not buy and sell the wines like a traditional importer/distributor
  • Main Services: 
    • Certificate of Label Approval (“COLA”) - winery or client’s name on back label “imported by” not MHW
    • Register brands for sale in each market
    • Tax reporting
    • Compliance requirements
    • Logistics - pay taxes, customs clearance, duties, warehousing
    • Fulfillment of orders to wholesalers or retailers in wholesale markets
    • Invoice retailers and collect payment
  • Not a single boxed service, tailor services for each market
• Clients
  • Theme: they want to invest in growth in the US & EU markets
  • They cover wine, beer, and spirits
    • 4 years ago - 40% spirits, 40% wine, 20% beer
    • 2021 - 50% spirits, 45% wine, 5% beer
  • Serves both domestic and international clients
    • Domestic - outsource compliance and logistics for <50% of a full-time employee
    • Work with more family wineries
  • Early days - main clients were new entrants into the market and more spirits
  • Today - shifted more to wine and larger producers - want to make sure sales & marketing investment are spent how they want it spent
  • Examples: 
    • Armand de Brignac (“Ace of Spades”)
    • Carolina Wine Brands
    • Jean-Louis Chave
    • Hypothetical - winery targeting NY market entry - MHW helps bring the product over, the owner comes and open accounts, MHW takes orders and fulfills accounts
    • Hypothetical - the winery has an opportunity with a large national retailer to be in 30 states - MHW brings product over and delivers to wholesalers or direct to retailer in some states
• Technology ecosystem
  • Internal ERP to deliver solutions to clients
  • Transparency is important - client reporting dashboard that updates every 2 hours
  • Order placement tool
  • Other communications and self-service tools
• Business Model
  • Per case fee with a minimum monthly fee
  • Breakeven happens ~350 cases/month or more
  • Passes on direct costs of being in the market (e.g., warehousing/storage fees)
• MHW Size
  • Sold through platform 150M cases since mid-1995
  • Helping 10,000s of products come to market
  • 150 employees, rapidly hiring
  • Global vision - opened EU office in 2018 - no 3-tier system, but complex tax ecosystem they help clients with
  • Market size - started in a niche, but growing due to increased distributor consolidation (making it hard for wineries to break into the market), cutting out the complexity of the 3-tier system while still controlling your own destiny, providing more cost-effective solutions
  • Competitors - some more tech-focused, a self-serve model; some more focused on 1 vertical (e.g., spirits or wine), MHW differentiates with a high touch service
• MHW vs traditional importer / distributor
  • 3 ways to enter the market
    • Do it yourself - build out back-office to support it
    • Traditional importer/distributor - lose control of how wine is sold, but get paid upfront and importer sells the wine, lose transparency into who’s buying the wine
    • MHW - strategic partner to import and fulfill the way the winery wants it to happen
  • E-commerce increase enables clients to have another opportunity to get traction in the US market
• Upcoming for MHW
  • Develop more value-added tech solutions
  • Acquired BevStrat in 2019 - provides on the ground sales support for clients

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As part of the importer series, Yi Xin Ong, Managing Partner of KOT Selections in Singapore, provides an international perspective. From Singapore’s 2-3,000 active importers for the small island to the impact of international media, Yi Xin describes how KOT navigates the importing, distributing, and retailing of its portfolio of winegrowers.  

Detailed Show Notes: 

Background

• Founded KOT in 2011 - they couldn’t get the wines they were buying in Singapore, three partners
• Work w/ 57 winegrowers, mainly in Europe, 6 in the US

Singapore wine market (~6M population, ~20% Muslim - don’t drink)

• No 3-tier system, no gov’t monopoly
• It is a pretty open market, like the UK
• Many players are vertically integrated - import, distribute, retail - with lots of captive distributors and retailers
• Very low barriers to entry - founded KOT in 2 months for S$200 to get licensing and paperwork
• Horizontally spread - ~2-3,000 active importers (in 2011, ~700 importers, mainly focused on Australia/NZ with either big brands or high-scoring wines)
• Two casinos / integrated resorts provided the spark for other wines (e.g., Marina Bay Sands opened in 2011)
• Generally, 1-1.5 generations behind the UK and US wine markets

Took inspiration from other importers - Kermit Lynch (CA), Louis / Dressner (NY), Yapp Brothers (UK Rhone Specialists) - importing wines others were not

• Yapp - focused on winegrowers
• Dressner - spent a lot of wine visiting growers, good storytelling
• Kermit Lynch - newsletters (1970s) were key to storytelling for the wine growers
• Storytelling is critical to standing out in a crowded market

Sourcing strategy - most wineries they bought from personally (90%) were not represented in Singapore

• Informal rule - 5 visits to winegrowers between the three partners before they import
• Broad portfolios - easier to serve clients and fulfill their needs
• Focused portfolios - clearer story and differentiation
• Optimal portfolio size - ~50-70 to give each winegrower ~1 week/year of focus

KOT differentiation

• Market knowledge
• Links to trade, client base
• Trust of the people (have only signed one contract, mainly handshake deals, exclusive relationships) -> been burnt occasionally with generational change

Build brands in Singapore - a very organic approach

• Get the right people to taste them - professionals, and influencers / Key Opinion Leaders (“KOL”)
• Host tastings every year, even for highly allocated wines (e.g., Pierre Gonon)
• KOLs can drive demand

Int’l media have a strong influence - English is the primary language

• More important than local media
• Only the top few have an impact - The Wine Advocate (Robert Parker), Jancis Robinson (less emphasis on scores, more on editorial content)
• Robert Parker had a big impact on the local market; a Singaporean bought the company
• 100-point scores can drive sales spikes

Consumer data/reviews can start trends, increasingly important

• Vivino, Wine-Searcher, CellarTracker, Instagram

75% wholesale, 25% direct-to-consumer sales (mainly e-commerce)

• Private clients saw KOT through the pandemic
• Trade is vital for tourist demand

Singaporean wine trends

• New regions increasing, Japanese and Chinese wines
• Value increasing - ~$20-30 retail, ~$5-10 FOB
• The low/no alcohol trend is not a thing yet
• Rose has never been a trend

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Jeff Andrews was such a crypto fan that he built 4 crypto mining rigs in his family’s winery lab.  A mini-meltdown of one of the rigs didn’t diminish his enthusiasm, making it a no-brainer for Trothe, the new winery based on the best blocks of the 1,300 acres of the Andrews Family Vineyards in the Horse Heaven Hills in Washington State, to accept crypto right out of the gate. Jeff and winemaker Ray McKee talk about their passion for crypto, the process for accepting it as payment for wine, and the benefits for customers and the winery of using crypto in this episode of XChateau.

Detailed Show Notes: 

• Jeff’s background
  • 4th generation farmer in Horse Heaven Hills, Washington
  • 1st winegrapes planted in 1980
  • A lawyer by training
  • Family farms 1,300 acres of vineyards (Andrew Family Vineyards)
  • Exclusive source of grapes for Trothe Wines
• Ray’s background
  • 2nd generation winemaker in Washington
  • 29 vintages in Washington in 2021, 1 in Australia
  • Was the red winemaker for Chateau Ste Michelle for 10 years
• Trothe
  • uses the best blocks of grapes from Andrew Family Vineyards
  • Trying to make the best wine possible
• Crypto enthusiasts (both Jeff and Ray)
  • ~2016-2017 - started investing a bit in crypto
  • Built 4 mining rigs in the winery lab to mine Ethereum
  • 1 mine had a mini-meltdown, which ended the experiment
• Benefits of crypto for customers
  • Security of transaction - more secure than credit cards
  • Authenticity/provenance for ownership of the wine - creates a secure record of wine ownership with the future potential to link each bottle to an NFT
  • Trothe bottles have unique identifiers and custom made holograms on them - have the potential to link to an NFT in the future
• Benefits of crypto for the winery
  • “Get more crypto”
  • Connect w/ customers with similar interests
  • Trothe can see where the wines are going in the world w/ crypto
  • Some marketing benefits - positive feedback on social and via email
• The crypto transaction process
  • Uses Coinbase Commerce
  • Puts an upper and lower bound on transactions to deal with crypto pricing fluctuations
  • Currently on Vinespring e-commerce - does not yet integrate w/ crypto
  • Customer needs to email / call the winery to request a crypto transaction, and then the winery sends an invoice via Coinbase Commerce
  • The transaction constitutes a sale of crypto from wine buyer to the winery and a purchase of crypto by the winery for tax purposes
• Crypto sales - none yet, wine has only been released for 1 month
• Other wineries accepting crypto - Mondavi Sisters’ Dark Matter and Aloft Wines

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Growing up in a small town of ~700 people made Valentina Abbona, 6th generation vintner and Export and Marketing Manager for her family’s winery, Marchesi di Barolo, want to explore the world.  Stints in the US, India, and China ultimately led her back to the family business and managing wine exports.  Valentina talks about the history of Barolo exports, including becoming “The King of wine, wine of Kings,” how she approaches new markets, and the differences between markets around the world.  Explore the world through the lens of Barolo in this episode of XChateau! 

Detailed Show Notes: 

• Marchesi di Barolo background
  • Founded by the last Marquis di Barolo Carlo Tancredi Falletti and French Noblewoman Giulia Colbert di Maulevrier
  • Thomas Jefferson noted that the juice from the Barolo area had potential (which was not the same as the current dry wine)
  • The Marchesa Giulia built the cellars based on the potential of the Nebbiolo grape underground in the 1800s to create a still wine
  • Marchesi di Barolo, and subsequently Barolo, became the “King of wine, wine of Kings”
  • Abbona family bought the estate in 1929 (Valentina’s great grandfather)
• Valentina’s background
  • She grew up in the town of Barolo (~700 people)
  • Traveled and explored the world before coming back to the wine industry
  • After 1 year in China with a consulting company, she missed the winery and wine industry and came back to work with the family
• Barolo export history
  • Barolo was part of the Kingdom of Savoy - the King of Savoy in Turin requested wine from Marchesa Giulia, who sent 325 barrels to the King’s Court - 1 for every day of the year except the 40 days of Lent
  • Traveled to royal courts around Europe
  • There is correspondence from the 1930s showing the wine went as far as Kabul and Java
• Exportation of wine
  • 55% of wine exported, 45% sold in Italy
  • Very proud that Italy is the largest market for the wine
    • The entire portfolio is sold in Italy
  • Export to >60 countries
    • A selection of wines are sold to various markets
  • Top export markets - US, Germany, Norway, Denmark
    • The US has more “geeky” wine knowledge
  • Asia is an emerging market - India (a historical market for Marchesi), China, Thailand, Japan
  • High growth was seen in Southeast Asia (Thailand, Singapore, Hong Kong, Vietnam) - especially for the different single-vineyard wines (which is a similar trend for Barolo in general)
  • The general trend for demand shifting to higher-end, single-vineyard bottlings vs. general Barolo (even in markets like Germany that historically bought more “classic” wines at the low - medium price points)
• Expanding to new markets
  • Strategy based on the size of the market and knowledge of the wine consumer
  • E.g., Uzbekistan is a new market - “easy” as buyer contacted Marchesi 
  • Bigger markets, which have more diverse consumer bases - often need more education and background knowledge before market launch
  • Italy tends to do things solo vs. as a group, though the local Consorzio is starting to promote the territory more
• Strategy for larger markets
  • Canada - each province has a different partner, particularly with the nuances of the local government monopolies
  • US - one importer with local distributors for the different states; need to have a lot of regional meetings with people in each area
  • Italy has >100 agents for different markets
• Trade Fairs (e.g., VinItaly, Vinexpo, Prowein)
  • Give an opportunity to change people’s opinions
  • Can have a view of what’s happening globally in 1 day
  • “Vital for our business”
  • VinItaly is different because of its Italy focus - also a place to bring the wineries of the country together and connect
• India
  • Sold mainly through hotels
  • Every region has its own dynamics and own taxes
  • Average knowledge of sommeliers is very high
• China
  • They had no exposure to wine on a daily basis when Valentina lived there (2011)
  • Living there helped her understand consumer choices and preferences but did not lead to contacts for market entry
  • Discovered wine clubs, where there are people with great knowledge of wine
  • Barolo/Barbaresco wines are more challenging to the Chinese palate as they don’t have fruit/sweetness that Chinese palates like
• In-person vs. technology for selling wine
  • Visiting in person is key to building and establishing relationships
  • Technology can help maintain them 
  • Tool to help importers ell wine
    • “Have to have a glass of wine in hand” - makes the experience as concrete as possible
    • Sometimes brings soil samples, maps (“very useful”), video, and pictures - allow people to imagine being there and have more conversations
  • For business meetings - video calls work well
  • Preference for a combination of in-person and virtual tools
• Wine Allocations - some single vineyard and Barolo di Barolo may run out, trying to do more scheduling and programming of allocations by country
• Women in the wine industry - “always be yourself, don’t be scared of that”
• The future for Marchesi di Barolo - recently purchased Cascina Bruchiata in the Rio Sordo area of Barbaresco

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Becoming a wine critic sounds like a dream for many.  However, even though the cost and effort of setting up a website and putting out information have declined dramatically, doing the work of becoming a professional is no easy task - the time and effort it takes to taste and review thousands of wines a year is daunting.  Jeb’s journey from aerospace engineer to reviewer of The Wine Advocate to being the Editor-in-Chief of jebdunnuck.com highlights the passion required for the journey.  Jeb talks about his journey, critics going independent, blind tasting, score inflation, and more, all in service of helping his subscribers make informed wine buying decisions.  Another unique viewpoint on the evolution of the wine critic on XChateau!

Detailed Show Notes: 

• Jeb’s background
  • He grew up on a farm in rural Indiana - no wine on the table
  • Self-trained in wine
  • He traveled through France and fell in love with wine
  • He never had an epiphany wine
  • Worked at Lockheed Martin in upstate New York - was an aerospace engineer for his initial career
  • Did a part-time job at a wine store in Denver
  • 2008 - created a website - The Rhone Report
    • Released a quarterly pdf for free for 3 years
    • Built a subscriber base for 2 years
  • 2013 - Robert Parker asked him to work at The Wine Advocate (“TWA”)
    • Worked at TWA for 5 years
    • Having a chance to work with Robert Parker was key to joining
  • 2017 - left TWA and started JebDunnuck.com
    • The Rhone Report reviews were morphed into JebDunnuck.com
    • Left TWA because Jeb disagreed with the direction of the new ownership, the culture changed dramatically
• Wine critic vs. wine publication
  • Believes the person writing the reviews is more important than the publication
  • The business model of publications lean them to emphasizing the publication over the critic
  • It’s up to the consumer to know their critics
• JebDunnuck.com (“JD”)
  • More of a “singular voice”
  • He doesn’t believe in large teams of critics
  • JebDunnuck.com has a small group of critics covering multiple regions each
  • Jeb doesn’t pretend to be a writer as he comes from an engineering background => his goal is to help the consumer make buying decisions and find the wines they like
  • Writes concise vintage reports, talks about style and structure of wines
  • He doesn’t write opinion pieces, commentary, or do events
  • He doesn’t take money to review wines, completely subscriber funded
  • Reviews 9-12k wines/year
• Critics going independent
  • Believes the trend is actually towards more business-driven, team-driven critic reviews => the size of the wine world is so big that it is pushing that way
  • If the critic is the most important thing for reviews, going independent is the way to do wine criticism
  • Best practices for wine critic ethics
    • Don’t take money from people making the product
    • There are shades of grey - e.g., sometimes people pick up the tab at a dinner
    • Critics should pay their own way (airfare, hotels, meals, etc.…)
    • JD buys a lot of wines but could not purchase them all
  • Cost of being independent
    • Website and getting information out is low now
    • But providing professional (e.g., extensive) coverage is hard and expensive (time, travel)
• Blind tasting
  • Jeb is a fan of blind tasting for how to approach wines
  • Believes the role of the critic is more than the tasting note - it’s to provide context on the region and the producer (which can’t be done with blind tasting)
  • People promoting blind tasting are taking money from the trade, so Jeb believes they have to sell their process
• Impact of top scores
  • Less impact today because so many great wines out there
  • More great wines than ever before => lots of substitutes, even at 95+, 100 point scores
• Pathway for wineries to become iconic
  • Make a consistently great wine, takes time
  • Need to have wines tasted and reviewed by top publications
  • Need to make enough so people can try it and get exposure globally
• Score inflation and compression
  • “I do think scores have increased”
  • Believes there’s less compression - more critics are using the whole scale (up to 100) with more highly rated wines than in the past
  • The format of score presentation now gives the appearance of score inflation
    • Scores used as email marketing will only be high ones
    • Most people access scores online via a score database, sorting by the highest score vs. having to read through a printed document
    • Scores used for large reports to give delineation between wines
  • 100 point wines for Jeb must have the following:
    • Hedonistic pleasure
    • Intellectual pleasure
    • Intensity of aromas and flavors
    • Age ability
    • Singularity (they stand out)
• Barrel samples
  • Similar to evaluating a young wine, can still be useful
  • Range ratings for barrel samples are important because the scores can come out before the wines are released, giving subscribers guidance for purchasing
• JD’s subscriber base
  • Don’t have a lot of demographic info on subscribers
  • Pretty serious about wine, mostly collectors
  • ~80% US-based, so CA wines are important to them
• User-generated reviews
  • CellarTracker - useful because you can follow individuals
  • Aggregate reviews are not useful;  “0 x 100 = 0”

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Esther Mobley, Wine Critic for the San Francisco Chronicle, thought writing would be more of a passion than a career.  Yet, she’s one of two full-time wine writers for newspapers in the US.  Esther discusses how being at a newspaper differs from a wine magazine, the changing wine critic landscape, the impact of wine scoring, and even gives some tips for budding wine bloggers and influencers.  She believes that “More voices are great” when it comes to wine writing and celebrates when there’s a new wine writer hired.  A unique voice and angle in our discussion of the evolving landscape for wine critics. 

Detailed Show Notes: 

• Esther’s background
  • She went to Napa to work harvest after college (for fun)
  • Worked in restaurants and wine shops
  • Landed an internship at Wine Enthusiast
  • She got a job at the Wine Spectator in the editorial department
  • She was an English major, wanted to be a writer
• Role as the SF Chron’s wine critic
  • Plays both a new reporter and critic role
  • News reporter - cover local news for a major industry (wine)
  • Critic - look at wine through an evaluative lens
  • Doesn’t score wines, writes more narrative reviews of wines
  • “Wine of the Week” column - focus on one bottle of wine
• The decline of newspaper wine writers
  • Might be only 2 full time in the US - Eric Asimov (New York Times) & Esther
  • The local newspaper business model has shifted
    • All used to have a wine columnist, and no one goes to the local newspaper now to learn about wine
    • Newspaper wine writers have evolved - more local news-oriented, provides a view on something important to the Bay Area
    • Everyone works online now
  • Chronicle business model
    • Profitable and hiring a lot of people
    • Focused on subscribers vs. advertisement - would rather have fewer people read an article, but more subscribers
    • Not trying to be a national publication
• Newspapers vs. magazines
  • Magazines score wines, publish less frequently traditionally
  • Newspapers - more news, though Wine Spectator also doing more wine news
  • Differences are narrowing between the two
• Wine Critic landscape
  • “More voices are great”
  • The barrier of entry is lower than it used to be
  • A lot of people want to know “who’s the next Parker” -> probably will never be a next Parker
  • More people covering niches w/in wine
  • SF Chronicle / Esther - cover mostly CA wine, telling the story of Bay Area wines, enables the telling of interesting stories
• Wine Influencers
  • Some concern over the blurring lines between sponsored and editorial content
  • Some people may feel they have made wine too democratic
  • Esther believes most criticism against influencers is sexist -> influencers just doing the best to succeed in their medium
  • Influencers working w/in social media algorithms to get their success
• Wine Scoring
  • Anecdotally hear score remain important on the wholesale level - to sell wines to restaurants / retail buyers
  • “Wine of the Week” articles - have heard this does lead to some wines selling out at retail (publishes where wine is available, but sells out after it comes out online but before it hits print) -> recommendations from trusted sources still matter
  • Blind tasting - if someone is scoring wine, this is the best way to do it
    • Wine Spectator - tastes blind, includes a “ringer” in every flight (a wine that the critic has scored before) to see if scores are consistent
• Critics vs. Publications
  • SF Chronicle makes Esther’s name more public
  • The Wine Advocate invested more in the personal name of critics vs. Wine Spectator less so
  • Average consumers don’t know the difference between wine critics and their palates
• Stories that are interesting to Esther
  • “Things that don’t make sense on their face”
  • E.g., Andy Beckstoffer giving away grapes for free from a Lake County vineyard
    • Renaissance Winery in Sierra Foothills - a doomsday cult that craft a world-class wine
• Advice to wine bloggers/influencers
  • Read a lot of good, non-wine writing (e.g., The New Yorker, The Atlantic)
  • Don’t assume the reader has much knowledge of wine (e.g., don’t use too many technical terms, wine jargon)
• User-Generated Content wine forums (e.g., CellarTracker, Vivino)
  • Wine Berserkers - “it’s its own thing,” like a Reddit for wine, very knowledgeable people on it 
  • In beer, e.g., Untappd, Rate Beer - are taken more seriously than wine
  • General problem - no one’s figured out how to talk about wine on the internet

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The retirement of Robert Parker marked a major change in the role of the wine critic that had been building over time.  William Kelley, Reviewer of Burgundy, Champagne, English Sparkling, and Madeira for The Wine Advocate (“TWA”), gives us his thoughts on how the wine critic landscape is changing and why, the impact wine critics have on the market, and the role of TWA.  Dig deep into the mind of a wine critic on this episode of XChateau. 

Detailed Show Notes: 

• William’s background
  • He ran a tasting group at Oxford for 3 years
  • He was initially planning on becoming an academic
  • He ended up working a harvest in California in 2015
  • Makes wine - Chenin Blanc in California (beginning in 2015), in Chambolle Musigny (beginning in 2018)
  • Pitched a piece to Decanter and ended up becoming the North American and Burgundy editor
  • 2019 - got a call from The Wine Advocate (“TWA”) and became a reviewer there
  • Currently researching a book on Burgundy that would not be an encyclopedia-style of book
• The evolving role of the wine critic
  • Two main trends changing the role of the wine critic
    • The scale of the wine world is bigger, and no one can taste everything anymore (which was possible when Robert Parker started) -> creates the need for more reviewers, more specialization, and critics living in the regions they cover
    • The explosion of the value of fine wine - most people can’t afford luxury wines today, this makes reviewers of high-end wines dependent on the producers, whereas Parker used to buy the wines and retain the consumer perspective
  • More small niches are being created in wine media
    • Subscription models are still doing well (including at TWA)
    • Lifestyle writing is moving beyond the aspirational and anchored more in reality
  • Most wine media jobs are occupied by people who’ve been doing it for a long time (little mobility, ability for new voices to come up)
    • Many people in wine media don’t make enough to make a living
    • People doing blogs are likely to go to mainstream media as people begin to retire
  • Critic influence
    • Consumers spending a lot of money on wine still care which critics score the wines
    • Retailers generally show the highest scores, regardless of who the critic is
    • Strong/historic brands are “immune” to critic criticism
    • High scores (e.g. - 100 points) still matter
      • Cedric Bouchard - gave a 2008 100 points
        • He wanted to show there’s no glass ceiling for wines
        • This gave Bouchard feedback and recognition for his growing practices, which were counter the Champagne norm
      • Egly-Ouriet, already an established top grower Champagne, said his business increased 33% after getting 100 points
      • 100 point scores can be a disruptor of the traditional hierarchy
  • The business model issue with wine media - critics sell the wine but don’t get a stake in the profit
• TWA’s role in the wine world
  • Scores are needed in the industry to sell wine
  • TWA has become like the “Standard & Poor’s” of the wine world
  • Parker also sold a lifestyle - he had charisma, led a lifestyle of opening great wines and at well, including at events with clients
  • Recently launched new sustainability features
    • A filter for organic and biodynamic wines (for all wines)
    • Nominations for producers who work sustainably in an exemplary manner (a small set of producers)
  • William reviews ~5,000 wines/year and gets to choose which wines to review
• Pathways to becoming an iconic brand today
  • Bizot never got 100 points, still an iconic, cult brand
  • Need the right confluence of market dynamics
• Score inflation
  • There has been some score inflation
  • Score compression is a bigger problem - scores are less differentiated
  • This partly has to do with how people buy wine (e.g., they only buy 90+ point wines)
• New platforms that have an impact on the market
  • Instagram and WeChat are platforms that move the market
  • CellarTracker, Wine Berserkers are niche and don’t move the market as much

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Growing up around wine has not dimmed the passion Jacki Strum brings to her work as President of Wine Enthusiast Media.  In the first of a series on the evolution of the wine critic, Jacki tells us about how Wine Enthusiast has expanded its platform from print into web, social media, podcasts, and even Tik Tok.  As well as how they assess wines (blindly) as a wine critic and how those ratings are used to help people buy wine.  We really get under the hood of the wine media business in this episode of XChateau! 

Detailed Show Notes: 

• Jacki's background
  • She grew up in wine (her parents founded Wine Enthusiast in the late 1970s)
  • Studied wine through WSET Level 3
  • Digital media in wine & spirits background
  • Founded Thirsty Nest - a wine & spirits gift registry platform, media, and commerce hybrid that is part of Wine Enthusiast
• Wine media in the late 1980s
  • Wine Enthusiast (“WE”) magazine founded in 1988, Robert Parker wrote for WE for a while
  • Wine Spectator was around, but not much else
  • “French Paradox” on 60 Minutes (1991) about the health benefits of wine was the catalyst for the entire wine industry in the US, which helped the magazine take off as well
• WE media platform
  • Print publication - still successful
    • Did well during Covid as people were sick of screens and hard news
  • Website - growing exponentially
    • Houses the entire database of wine reviews
    • Buying guide went “through the roof” during Covid due to an increase in online wine sales
    • 65% of visitors go to the website to buy wine
  • Social media
    • Instagram - now the biggest platform, easy to shop, easy to comment
    • Facebook - still important, but fading vs. Instagram
    • Twitter
    • Testing Tik Tok - believes will be the future of educational content
    • Podcast - done well and testing a few other series
  • Newsletter / email - still core
  • Beverage Industry Enthusiast - trade/industry news grew a lot during Covid
• WE company motto - “We bring wine to life”
  • It plays into the journalism approach - including the lifestyle elements of wine
  • Ratings help people buy wine
  • Core demographic - “the curious wine consumer,” which is more of a mindset vs. an age or gender
• Wine criticism and ratings
  • Taste completely blind
  • Taste w/in 1 region
  • Advertisers have no say on ratings
  • Do points still sell wine? 
    • 100 points or Wine of the Year can still build a brand
    • Most ratings are a powerful tool in the marketing toolset, but just a piece of the puzzle
    • Certain critic/magazine names still carry more weight than others
    • More at the bottom of the marketing funnel - helps close the sale
    • At the top of the funnel - general brand awareness - WE builds partnerships with brands for marketing, including various content and social influencers
• WE Buying Guide (ratings)
  • It comes up 1st on Google, which gives it more credibility
  • Review ~25,000 wines per year
• Path to building a wine brand today
  • Scores are still helpful and free
  • Need to build out the marketing stack and figure out the storytelling - start with social media
• The catalog did well during Covid - people needed wine storage, upgraded glassware, etc.…
• Return on ad spend with WE
  • Partners wanted to get closer to the sale, have become more ROI driven
  • Implemented digital shopping carts to track purchases
  • Key metrics for ROAS (return on ad spend)
    • Email acquisition
    • Wine sales
    • Impressions
  • Podcasts - can use discount codes to track the impact
    • The natural feeling of podcasts make an ad feel more real
  • Webinars did well for email acquisition
  • Any campaigns that boosted DTC sales or signups did well
  • Digital advertising has grown a lot during Covid
  • Lots of influencer marketing - leverage 40 Under 40 contacts, usually people WE has written about
  • Often custom build ad partnership plans with clients
  • WE Catalog provides the richest database in the industry to create good ad targeting

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Natalie MacLean, a podcaster and writer based in Ottawa, Canada, has been bringing people into her wine world for over 20 years. With two books, a newsletter with over 300,000 subscribers, a mobile app, and the Unreserved Wine Talk podcast, Natalie’s main focus is on perfecting her food and wine pairing courses - The Wine Smart Course and an upcoming course on wine and cheese. Natalie tells us about how she built her personal brand, the most effective marketing channels she’s used, and where her primary revenue drivers are. If you’re interested in navigating how to be successful in the world of wine, Natalie’s journey provides key insights.

Detailed Show Notes: 

• Natalie’s background
  • Has an MBA, did consumer packaged goods (“CPG”) marketing at P&G and tech
  • She took a sommelier course and fell in love with wine, as a full-bodied experience
  • Started as a writer - cold-called editors, then wrote books, and now publishes a podcast - Unreserved Wine Talk
  • She didn’t drink alcohol until she was in her late 20’s
  • Brunello was the wine that got her into wine
• Current focus - online food and wine pairing courses
  • Focused on 2 courses only - believes in doubling down on the Unique Selling Proposition (“USP”), wants to perfect courses vs. add more
  • #1 - The Wine Smart Course
    • Lifetime access to materials
    • 5 modules
    • Pre-recorded videos (on-demand, all “snackable” - 7-9 minutes in length, 70-75 videos)
    • Live webinars via Zoom - bi-weekly tastings
  • #2 - Beta: Wine & Cheese Pairing
  • Appeals to both consumers and hospitality and trade professionals b/c of the focus on food and wine pairing
  • It starts with food, then pairs the wine
  • Leverages some research from Tim Hanni, MW
  • Free wine and food pairing guide
• Core audience - vast, similar to the general population
• Newsletter / website
  • 300k email subscribers - free to join, C$3/mo for access to wine reviews
  • Has pairing tips (more depth in courses), a lot of free videos
  • It started as an email to friends and family
  • Uses LCBO pricing
• Wine scores
  • People use them as a shorthand for quality, to calculate the quality to price ratio (“QPR”)
  • People requested it, and now it’s a service for readers
  • Passion is writing
• Mobile app
  • Free to download
  • Scans front label and bar codes
  • Integrated liquor store pricing and inventory across the country (Canada) via API’s to provincial liquor control boards
  • Features - virtual cellar, wishlist, buy lists
• US wines in Canada
  • CA, WA, OR, NY well represented
  • #1 export market for US wines
  • During Covid - premium wines (C$20+) have done well, benefiting US wines
• Canadian wine palate - driven more towards cool climate wines, Canada’s heritage is beer and whiskey
• Marketing Natalie’s brand
  • Built over 20 years, started the website in 2000
  • Started with the books (Red, White, and Drunk All Over; Unquenchable) - published by Randomhouse, book tour, Amazon’s bestseller list - led to broad reach and TV and other media appearances and “exploded” newsletter subscribers
  • Podcast a core channel now
    • Podcast listeners stay with you, and most listen 80-100% through
    • Podcast listeners and paid online courses have the strongest overlap
  • Leverage and cross-purpose content to broaden the reach to many channels
    • Podcast videos for FB Live
  • Social media - gets people over to newsletter or free wine and food pairing guide, low commitment, usually not paying
  • Nothing beats email
  • Always strives to deliver value first - drive to something free (e.g., free class/webinar), then promotes paid courses
• Main revenue drivers
  • #1 - online courses
  • #2 - wine review subscriptions
  • #3 - online advertising

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Getting at the heart of what consumers want is essential for any business, but a vastly understudied area in the world of fine wine.  Pauline Vicard, Executive Director of ARENI Global, follows up her interview on Episode 28 and shares with us their latest research on the fine wine consumer - “The Future of Fine Wine Consumers 2021.”  We explore the role of fine wine merchants, how and why consumers buy fine wine, and the key attributes of fine wine brands.  The work covers the US, UK, China, and Hong Kong, and we discover the differences between consumers in each location.  We even touch on diversity and inclusion in the fine wine world.  An impactful, cornerstone interview to better understand the mindset of the fine wine consumer, a must listen! 

Detailed Show Notes:

• Pauline was the guest of Episode 28, where she shared findings from the 2019 research on the Fine Wine Consumer
• ARENI Global background
  • ARENI is a global research and action institute dedicated to the future of Fine Wine. Creating conversation platforms for the Fine Wine ecosystem, ARENI brings together critical thinkers, from iconic Fine Wine producers to leading academics and business leaders, resulting in a well-researched, global and multi-disciplinary approach to a world undergoing change.
  • ARENI studies six main forces of change and regularly publishes on:
    • The Fine Wine Consumer: A Customer-Centric Approach
    • Changing Societies: Fine Wine Evolving Social framework
    • The Digital Economy and Transformative technology
    • Access to market: Towards new commercial routes
    • Sustainability 2.0: Acting now, thinking long term
    • Money: An Essential Force of Conflict
  • Wants to break traditional silos to share information and collaborate, including with other industries
  • Organizes think tank platforms and conducts research studies
  • ARENI publishes a bi-monthly, free newsletter. To keep in touch with their research, publications, and events, sign up.
• Fine Wine Consumer Research
  • 2019 - was more qualitative research
  • 2020 - “The Future of Fine Wine Consumers 2021”
    •  more quantitative research
    • Studied fine wine consumers in the US, UK, China, and Hong Kong
• Definition of Fine Wine
  • Complex, balanced, potential to age
  • Produces emotions, reflects the winemaker’s intentions
  • Environmentally, socially, and financially sustainable (new part of the definition)
  • Price is not in the definition but used price brackets from La Place de Bordeaux for quantitative studies (€30+, €150+, €450+)
• Consumers perceptions of fine wine
  • Perceive it more as brands/chateaux
  • The average fine wine consumer can name 2.5 wineries, most common ones - Lafite, Latour, and Petrus
  • Does not associate fine wine as much with country, grape variety, or type of wine
  • US consumers >35 know more brands than those <35
• Fine wine merchants
  • Consumers very loyal to merchants, but not exclusive, tend to source from several
  • Have high expectations of merchants, want them to bring a diversity of wines and recommend new things
  • Key attributes: high customer service, pristine condition of wines, guarantee against fraud, want access to allocations and exclusive events, and easy delivery
  • Want access to the merchant through diverse communication channels but still have the human/personal touch
• How consumers choose a fine wine
  • #1 - vintage (UK, China, Hong Kong)
  • Burgundy buyers use both vintage and producer
  • Scores are still important, but most people don’t follow specific critics or guide books, but they still use the scores as validation of the quality of the wine
  • Price is not a key driver
  • #3 factor - grape variety
  • The reputation of the brand and winery important
  • Least important factor - celebrity or influencer recommendations
• Storytelling
  • Not as important as was expected, the wine’s story is not relevant for every fine wine consumer
  • Some want wines because of their status or what tastes the best
• Why consumers buy fine wine
  • Intimate consumption was bigger than expected - wine as a treat for self and/or partner (US, UK)
  • Special occasions, formal social events (Hong Kong, China)
  • Gifting (China)
  • Formal wine tastings (UK)
  • Business occasions (China)
  • Food and wine pairing (particularly in China)
• Fine Wine Consumer demographics
  • UK/US - 70% men, 30% women
  • China/Hong Kong - 50% men, 50% women
  • Women want to buy luxury
  • Millennial women are an important market
  • More young consumers (<35)
• Fine wine investors
  • Non-collectors that invest mostly go through a 3rd party
  • Look at it as another financial asset, rarely take ownership of wine
• Top attributes for fine wine brands
  • #1 - the capacity to age as wine evolves with time
  • #2 - high ratings from wine critics (the UK the lowest for this)
  • The reputation of a region of origin and producer
  • UK/US - complexity of taste
  • China/Hong Kong - scarcity important
  • Don’t really think of sustainability - assume wine is sustainable
  • Trade does think of sustainability - they are gatekeepers for consumers
• Diversity and inclusion
  • “Fine wine is whiteness” was discovered in research - references to colonial terms for many countries (e.g., India, US)
  • The industry has little to lose by having more diversity
  • Diversity issues and systemic difficulties are different for different countries
  • China - diversity more focused on gender vs. race
• To access the full report, become a member of ARENI.
• For more information: pauline@areni.global

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Part two of our interview with Damien Wilson, Hamel Family Chair of Wine Business at Sonoma State University, focuses on what wineries can do to align their brand, marketing messages, and how they sell wine to Millennials.  From hospitality to various marketing channels, with social media, Damien provides examples of what works and tips on what to do.  This episode also includes a “lightning round” where Damien and Peter discuss some of the major trends in wine marketing. 

Detailed Show Notes: 

• Millennial Wine Buying - tips for wineries
  • Limits on brand loyalty/retention mean wineries need to make more customer acquisition
  • High price points will put off younger consumers
  • Low-end wine brands (e.g., Charles Shaw) are not targeting Millennials well - they appear to be more about consumption (e.g., Carlo Rossi jug wine, Bag in a Box brand) vs. Millennial values
  • Seltzer likely hitting a peak as the category is starting to fracture and fragment with many new brands and brand extensions
• Hospitality best practices
  • We need to be better at the digital era
  • Wine industry good at talking about the product and quality (e.g., winemaking, terroir, product characteristics) but needs to know how to get people to the glass before what’s in the glass
  • Responses from wineries on social media are very slow or unresponsive
    • Good examples
      • Jason Haas of Tablas Creek in Paso Robles - very responsive, got back to Damien in 10 minutes of tagging, Jason responds himself
      • Nicole Rolet of Chene Bleu
      • Randall Graham - remains relevant but admits to not figuring out how to make money from social media 
      • Macrostie - has 12 different locations in their facility with different experiences - creates a reason for people to come back
    • Tagged 27 wineries on a trip to Paso Robles, and only 2 got back to him (1 of which was Tablas Creek)
    • Automated monitoring can help - so people get notified when activity occurs
• Millennials have a strong attachment to people behind the brands and ones that reflect their values
• Millennials ask questions, and they will tell you what they like
• Marketing channels that work
  • Social media
  • Retail with smaller producers/experiences (e.g., Whole Foods showcases smaller producers and is more experiential shopping)
• Marketing Lightning Round w/ Damien and Peter
  • Augmented Reality - “brilliant” according to Damien, cost of adoption is falling, e.g., 19 Crimes and Snoop Dog Rose
  • Natural / “Clean” wines - a way to premiumize lower-end wines with marketing; natural wine suffers from lack of consistency, making it harder to adopt; Clean wines - unsure if success is related to clean or celebrities that back them
  • Low/No Alcohol / No sugar wines - could work if they get people into the wine category, likely more a niche long-term
  • Celebrity wines - will likely grow but needs to be authentic - e.g., Kim Kardashian was behind a vodka brand but didn’t drink, which turned people off of the brand

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With values and attitudes formed around the turn of the 21st century, Millennials want fulfilling careers, are more into environmental and social causes, and grew up in the social media era.  Damien Wilson, Hamel Family Chair of Wine Business at Sonoma State University, explains who Millennials are, what drives their buying habits, and the brand loyalty of the group.  This is the first part of a two-part series on marketing to Millennials. 

Detailed Show Notes: 

• Damien’s background
  • Mid 1980’s - worked in grocery retail in wine & spirits
  • Early 1990’s - worked in hospitality as a wine steward
  • Mid 1990’s
    • wine sales rep
    • Completed 4 degrees in the wine business
  • 2007 - left the University of South Australia and Australia overall with a Ph.D. in Wine Business
  • Research areas include: 
    • History and usage of screw caps and natural cork
    • Consumer behavior - consumption patterns that lead to wine consumption
    • Digital marketing, tourism
• Defining Millennials
  • Generational cohorts - they may change their name as certain experiences become the dominant characteristic of their values
    • Each cohort is distinct because of their experiences, which have information and directive influences
    • E.g., Silent (formerly Great) Generation - values were set during war years
      • Baby Boomers - the boom in population growth post-war
      • Gen X (used to be called latch key generation)
      • Gen Z (1997 onwards) - have no real memory of September 11th (2001), were initially called the “i -generation” because they were attached to their iPhones
  • Millennials
    • Originally set from the late ’70s (as early as 1976) to the early 80s birth years 
    • Current definition (from Pew Research Center and Brookings Institute) - 1981 - 1996
    • Attitudes and values formed during the decades around the turn of the 21st century (1990s-2000s)
• Millennial Values and Attitudes
  • Want a fulfilling career vs. a stable or secure career
  • Exhibit stronger support for social and environmental issues
  • Have the largest perceptual gap of their long-term vision vs. their initial reality - they had huge expectations of adulthood and were hit with reality (you start at the bottom) and the Global Financial Crisis
  • Lived in the social media era - see the extremes (people curated perfect lives)
• Millennial Wine Buying
  • Wine buying is tightly correlated with economic status
  • Generational buying
    • Silent Generation - marked by frugality, drank less wine because it was more expensive
    • Baby Boomers - expressed interest in wine and shares with others, have been the driver behind the recent success of the wine industry, wine as a relatively inexpensive way to show success and luxury (e.g., Silver Oak success)
    • Gen X - eschews traditional brands, tried different things (e.g., led to the Rhone Rangers movement)
    • Millennials -
      • focus more on enjoyment and the collective vision of what wine means for their generation
      • want individualism, but also consume brands that are more representative of their group
      • Humor, innovative approaches, bohemian, off-kilter brands can be successful
      • Willing to accept something that reflects values and intent, even if not total wine specific, whereas the prior generation was more focused on the wine itself)
      • Receptive to sales and marketing messages as long as it is authentic to the brand
  • Buying pattern formative period in teen and early adult years, particularly for aesthetic consumption and will likely persist over time
  • Millennial brand loyalty
    • Brand loyalty starts with awareness - awareness of anything trumps lack of awareness which makes consumers start with a degree of brand loyalty
    • The pattern is repeated until people gain more comfort with products and they move to brand extensions
    • New wine consumers (e.g., Millennials) are still new to the category, still just learning what wine is
    • Proud of and support brands that support them (e.g., Supreme - streetwear); wines they drink are wines that support them and have brand loyalty to them (e.g., Buena Vista, Chateau Diana)
    • Perception of brand loyalty may be due to low wine club signup rate
  • Millennial wine spending habits
    • Spend 2x more than the grocery store average on wine
    • Highest spend per unit of any generation (high $20s - low $30s/bottle)
    • $10-15/bottle is the sweet spot in grocery/retail
  • Awareness key to buying wine
    • Napa has the greatest awareness of any US wine-growing region, which helps
    • Iconic wines to still do well due to brand awareness

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With a portfolio of luxury wineries, including Domaine de la Romanee-Conti and Biondi Santi, Wilson Daniels has developed deep expertise in marketing luxury wines. With allocations, deep tracking of where wines go, and a heavy event schedule, Shannon Coursey, EVP of Sales & Marketing, describes how taking great care of the wines is critical. 

Detailed Show Notes: 

Wilson Daniels (“WD”) overview

• Founded in 1978, they started as a domestic wine brokerage,
• In 1979, they were asked to represent Domaine de la Romanee-Conti (DRC) and became an importer
• Represents 37 families with ~50 producers, ~⅓ France, ~⅓ Italy, ~⅓ New World
• Owns distribution in 5 states
• ~35 sales managers, sells ~600k cases/year

Importer role

• Curate portfolio
• Distributor management - make sure strategy is executed
• Create messaging with the wineries
• Pricing - for WD, keep consistent around the country
• Education
• Channel mix - on/off premise, national accounts, chains
• Work with press
• Keeping wineries top of mind in trade - does a lot of events

Sourcing

• Sources wineries with estate vineyards, some with the ability to scale (~⅓ of the portfolio), look for regions where they will not take away from existing producers
• At optimal book size now, additions could be grower Champagne or 1-2 new Burgundy producers
• Grew portfolio a lot in recent years - ~20/37 families added in last 8 years, ~10 in last 3 years (including Gaja, Faiveley)

Distributor management

• With RNDC and Breakthru in ~50% of states
• Create groups within the portfolio to help distributors
• Manage pricing, inventory, programming (sometimes)
• Does not allow wine closeouts, prefers to buy back
• Fast Start program - incentives for new placements, not volume
• Wholesale Manager Bonus - for distribution managers, often trip-based
• Other support methods - ask to be on focus, market work, getting the producer in market

Marketing wines

• Crafting messaging is critical, and some producers already know what they want (e.g., Gaja wants to be known as 4 different wineries)
• Does a lot of grassroots marketing - events around the country at top restaurants, visibility of on-premise placements
• A lot of trips to wineries
• Iconic brands - taking care of the wine from start to finish, the allocation process is essential (~⅔ of brands are allocated)
• Lesser known brands - more about visibility, messaging is critical, can target a broader base (e.g., use more social media)
• Luxury - 3 key segments - sommeliers, collectors, critics
• For larger brands, does some consumer marketing: e.g., Bisol Prosecco - did 15 city tours, wrapped an Alfa Romeo car in Bisol green, did press, consumer, and trade events; went from 7k cases (2015) to 120k cases (2024)

Process for building brands in the US

• Create messaging
• Education - WD wholesale team, WD national team, distributors
• PR launch kit and sales kit
• Identify channel mix, including target account list
• Events (very different for each producer - e.g., vintage tastings for Biondi Santi, Faiveley; Gaja - white launch, Tuscan properties, Sicilian tasting)

Re-establishing brands that had poor marketing (e.g., Biondi Santi, Dal Forno)

• Need to work through inventory in the gray market
• Don’t lower prices to match the gray market
• Make a splash on new vintage releases
• Dal Forno - launches in the US 6 months before the rest of the world, helps reduce gray market activity

Private client group / direct-to-consumer

• ~300 people by invitation only
• Experience-driven
• Members support the entire WD portfolio

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One of the world’s leading grape geneticists, Carole Meredith, Professor Emerita of UC Davis and owner of Lagier Meredith winery, has spent decades identifying and profiling grape varieties.  It was so interesting that the interview has been split into two episodes. Episode 55 covers the background of Ampelography and DNA profiling as well as the definitions of key terms such as variety, clone, and hybrid. In addition, this episode features the stories of how she uncovered the history of Zinfandel (aka - Primitivo, Crljenak Kaštelanski, and Tribidrag) with Croatian researchers and how wineries use DNA profiling in wine marketing. 

Detailed Show Notes: 

• Discovering Zinfandel
  • Zinfandel has a long history in California. People assumed it was a native California grape, but it is a Vitis Vinifera, so it must come from Europe
  • People suspected Croatia, but no evidence
  • In the 1970’s - people noticed that Primitivo in Italy’s Puglia looked like Zinfandel, and it was confirmed they are the same grape variety
  • Italians said the grape is not Italian and came from Dalmatia (modern-day Croatia)
  • Croatia
    • They looked at Plavac Mali - a popular red grape in Croatia. It looks similar to Zinfandel, but is not the same, but related
    • Mike Grgich of Grgich Hills Winery made some introductions to Croatia, but those were dead ends
    • 1997 - Ivan Pejic of the University of Zagreb reached out and wanted to understand Croatian grapes better
    • After 3 years of gathering samples, they found it in a Croatian mixed vineyard (a grape named Crljenak Kaštelanski)
    • 2001 - At the Natural History Museum in Split, Croatia - found a specimen called Tribidrag that looked like Zinfandel
    • Tribidrag was an important grape as far back as the 1300s
    • 2011 - Croatian research group was able to extract DNA from dead leaves in the Split museum and confirm it was Zinfandel
    • Proves Zinfandel is an ancient grape with historical importance
• Tribidrag is not an approved varietal name for wine in the US. Lagier Meredith uses it as a fanciful name for their label
  • Lagier Meredith sells mostly to their mailing list so that they can explain the history and the name to their customers
  • Ridge calls a wine Tribidrag, growing vines from Croatian cuttings, and wants to partner with Carole to get TTB to have Primitivo and Tribidrag as Zinfandel synonyms 
• US TTB shows Zinfandel and Primitivo as separate varieties
  • California Zinfandel producers opposed having Primitivo be a synonym because they didn’t want competition from lots of cheap Italian Primitivo
  • EU wine label regulations list Zinfandel and Primitivo as synonyms
  • 2004 - US & EU sign an agreement on wine labeling to respect each other's laws, so now Italians can label their wines Zinfandel and export them to the US
• DNA typing - business impacts
  • It has been a boost for Croatian producers, put them on the map, and now a wine tourism destination with people even visiting the vineyard where Zinfandel was discovered
  • Mostly done out of research institutions
  • Foundation Plant Services at UC Davis has a commercial DNA typing service - costs ~$300 / sample
• Some producers (e.g., Schrader) use clones on labels - used as a distinction, helps to tell the story for marketing

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One of the world’s leading grape geneticists, Carole Meredith, Professor Emerita of UC Davis, and owner of Lagier Meredith winery, has spent decades identifying and profiling grape varieties.  It was so interesting that the interview has been split into two episodes, this one about the background of Ampelography and DNA profiling as well as the definitions of key terms such as variety, clone, and hybrid.  The second episode features how she uncovered the history of Zinfandel and how wineries use DNA profiling in wine marketing. 

Detailed Show Notes: 

• Carole’s background
  • Worked part-time at a retail nursery, got into plant genetics, and wanted to be a flower breeder
  • Changed to doing a Ph.D. on tomato genetics at UC Davis
  • Worked in biotech for a few years on cotton, corn, and soybeans
  • She went into grapes because a position opened up at UC Davis
• Ampelography - the study of grape identification before DNA testing
  • Grape varieties identified by their leaves, which vary distinctly, not by their fruit, which look similar
  • Before DNA testing, outside experts in Ampelography would often disagree with each other on grape identification
  • The upside of ampelography is that it’s very fast. Today grapes are usually first identified by ampelography and then confirmed with DNA testing
• DNA testing for grapes
  • Started ~1991
  • Looks at segments of DNA to look at specific markers
  • Need a minimum of 6 markers to identify a variety and more to establish variety parentage
  • Vitis Microsatellite Consortium - a group of academics that came together to develop DNA markers for grapes
    • In 1-2 years, developed 100s of markers
• Grape variety definition - used differently in trade or by scientists
  • Trade definition - grapes that make different wines (e.g., Pinot Noir and Pinot Gris) are different varieties
  • Scientific definition - a cultivated variety that goes back to a single seedling, scientifically, Pinot Noir and Pinot Gris are clonal variants of a single variety
• Clones - variations within a variety
  • Clones are subtypes that have developed over time
  • Usually have something to do with the fruit (e.g., color variants like Traminer vs. Gewurztraminer, Pinot Noir/Blanc/Gris)
  • Clones arise through somatic mutations of the variety
    • Older the variety (e.g., Pinot, Syrah) - more likely to have more clones
    • Young varieties (e.g., Cabernet Sauvignon) have fewer clones (<400 years old, likely a natural seedling in the early 1700s, and likely singled out to do late budding, which provided spring frost protection)
    • Some varietals (e.g., Pinot) are more likely to have mutations
  • People need to notice a difference (e.g., looser clusters which can have less bunch rot, early ripening, which avoids rainfall during harvest, or higher sugar levels for grapes like Riesling in cooler areas) and be preferentially chosen to plant new vineyards
  • ENTAV - an institution in France that systematically identifies and registers clones
  • In Chile, Jean-Michel Boursiquot, one of the world’s top ampelographers, identified that Chileans were calling Carmenere Merlot
• Grape Families
  • A term with no scientific meaning
  • E.g., Muscat - “muscat” is a type of flavor; all current varieties likely descendants of a couple of ancient varieties
  • Every variety is descended from 2 parent varieties
• Hybrids
  • Genetic/scientific definition of a hybrid is an offspring of 2 different parents of the same OR different species (e.g., Cabernet Sauvignon is technically a hybrid of Cabernet Franc and Sauvignon Blanc)
  • Interspecific hybrid or cross is an offspring of parents from different species (e.g., hybrids of American and European grape varieties used to try and combat phylloxera)

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Laura Catena, Managing Director of Catena Zapata, Founder of the Catena Institute, and Owner of Luca Winery, used to frequently get asked, “What’s next for Argentina after Malbec.”  While Argentina has diversity in wine, its core calling card, quality, and diversity can also reside in Malbec.  From storied beginnings to becoming a new classic, Laura shares with us the stories of the history of Malbec, how Argentina and the Catena family have elevated it with tastings, books, and scientific research, and how the future of Argentina is truly...Malbec.  

Detailed Show Notes: 

• Laura’s background
  • BA Biology from Harvard, MD from Stanford, also studied French
  • She grew up in the vineyards in Argentina, went to high school in the US
  • She wanted to help people, so she went into medicine, specifically emergency medicine
  • Nicknamed “La Lucita” by her grandfather for never standing still 
  • ER doctors have shifts that enable other hobbies or careers, thus working both in medicine and wine
• The History of Malbec
  • A background in French enabled Laura to read French historical documents about Malbec
  • Malbec was known in Roman times, w/ Cahors the main area
  • Cahors drunk by Eleanor of Aquitaine who married King Henry II, making the wine popular in the UK as well
  • In Bordeaux, Malbec was very popular, used to make Cabernet Sauvignon smooth and ripened at the same time as Cabernet, vs. the earlier ripening Merlot
  • After phylloxera, gets replaced by Merlot
  • Saved in Argentina, where there was no phylloxera
  • It was being pulled out in Argentina due to low yields (prone to coulure) when Nicolas Catena started to do something with the variety
  • The breakthrough moment in 1999 - a Wall Street Journal article about Malbec started to change things, Catena was noted as the top wine
  • Malbec gives different flavors from different regions
    • Salta - jammy, syrupy
    • Patagonia - spicy, herbal
    • Adrianna Vineyard - some are big and tannic, others more like Pinot Noir
• Flying Winemakers in Argentina
  • Paul Hobbs, Michel Rolland, and others came and helped with changes to the winery (fermentation, oak barrel usage, etc.…)
  • But soils and altitude were unique and different, which required new study, leading to the founding of the Catena Institute
• Promoting Malbec
  • Catena Malbec Argentino label - tells the history of Malbec through 4 women (including phylloxera)
  • Catena Zapata
    • Initially made Cabernet and Chardonnay for export (1990-1991 vintages)
    • 1st Catena Malbec was 1994 vintage
    • Did lots of blind tastings, Laura’s mom went to stores and bought the best wine and blind tasted Chardonnays, claiming that every time, Catena won
    • By the time Malbec was introduced, the Catena brand was already known for its quality
    • The initial key market of the domestic Argentina market - provided income to support the cost of building up exports
  • Books
    • Vino Argentino - wanted an English book to highlight Argentina
    • Gold in the Vineyards - talks about special sites globally, shows concept via illustration to make it more engaging
    • A new book to be published on the history of malbec
  • Believes in not telling too many stories at once and making it interesting, usually for 1-3 years
    • Malbec Argentino - created a 20 min theatrical play of the story, hired a UK actress to perform
    • Current discussion - “Let’s Talk about Grand Cru and Gran Vins” - discussion of Catena parcella wines with Pinot Noir and Nicolas Catena with Bordeaux or Napa Cab, with Larry Stone MS
• Catena Institute
  • Shares all research for the benefit of everyone in Argentina
  • Established to solve a specific problem: how to elevate Argentina’s wines
  • Publish all work - must be of high quality for peer reviews, wanted to share it, and made other institutes want to do research together
  • Recent Study:  Proof of Terroir through Malbec
    • It looked at 24 sites in Mendoza
    • 50% of the sites have a fingerprint that is identifiable (via 10 different anthocyanins and 20 different polyphenols)
    • Shows proof of terroir and that some terroir is more identifiable than others -> showcasing the meaning behind “Grand Cru sites”
• Making Malbec collectible
  • Need to be patient
  • Need to do a lot of tastings
  • Ratings are important
  • Tourism is also important - building a new hospitality center at Catena, want it to be the best experience in the world, something people will travel for

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“The last frontier of Europe,” “A pristine region,” “A mosaic of soil varieties and temperatures” are all ways João Gomes de Silva, Board Member of Sogrape, describes the Alentejo wine region.  João tells us about the evolution of Portugal’s wine industry, the complexity of the Alentejo wine region, and how the industry has been promoting and building the brand of Alentejo wine.  From “seasoning” to amphora, there’s plenty to get excited about with Alentejo and its wines!  

Detailed Show Notes: 

• João’s background
  • Family is in agriculture and farming
  • João is a wine lover
  • Worked in food retailing
  • Lived in Italy and Latin America
• Sogrape background
  • Founded in 1942 by Fernando van Zeller Guedes and launched with Mateus Rose
  • A family business where they work as a professional team
  • Combination of concept wines (e.g. - Mateus) and fine wine estates (e.g. - Barca Velha, Sandeman)
  • Mateus Rose - Sogrape’s founder said it had to stand out
    • Unique bottle shape - shaped after WWI cantil (soldiers’ water bottles)
    • The label has a picture of a manor house in North of Portugal, which was to look like a French chateau
• Portuguese Wine History
  • Early-mid 1990’s - Portugal joined the EU, lots of investment in the wine industry and a surge in domestic demand
  • 2005-2010 era - a lot of modernization happened in the wine industry
  • 2010+ - a boom in tourism in Portugal led to a boom in demand for Portuguese wine
  • Covid - demand for Portuguese wines did not dip
• Alentejo as a wine region
  • South of Lisbon, between Lisbon and the Algarve (a beach area popular for tourists)
  • The same size as the state of Maryland, but with only 700,000 people - a sparsely populated farming area
  • One of the last areas dominated by the Moors (until the 13th century)
  • Traditionally the breadbasket of Portugal, lots of cereal, grain growing
  • Dry, warm climate (>100F in summer)
  • During Roman times, made wine in clay amphora to preserve temperature during fermentation
  • 8 sub-regions
    • Portalegre  - north part of the region, the influence of the mountains (a colder, wet climate)
    • Eastern area near Spanish border - very dry, arid, pre-phylloxera vineyards
  • A mosaic of soil types, climates, and grape varieties
  • The notion of “seasoning” important in the region (e.g., using small amounts of different grapes varieties to blend)
  • Grape varieties - a mix of traditional and international
    • Traditional - Aragones (Tempranillo), Trincadera, Moretto, Arinto, Tourigal National
    • International - Syrah, Alicante Bouschet - the star of the region
  • Vinho de Talha - wine made in the traditional Roman way in clay amphora, the only region in Portugal that has this regulation
  • Wine style - fruit-forward, rounded tannins
  • Current consumers - wine explorers and hedonists who know what they like
• Alentejo Wine Consumption
  • Domestic - 80%
  • Export - 20%
    • Brazil - 30%
    • US, France, Poland, Switzerland - ~10% each
    • Canada, UK, Angola, China - ~5% each
  • Entry-level pricing ~$7-9 USD
  • The sweet spot is ~$20 USD to really show terroir
• Marketing messages
  • A unique, single message (especially for US/UK markets) - “taste of the last frontier of European wine,” a pristine region
  • Brazil - talk more about individual producers as people already know Alentejo
  • Journalists / somms - talk more about winemaking techniques, bringing people to Portugal
  • Consumers - the experience at the estate or virtually tends to grab them
  • Broad / “Generic” promotion - through Wines of Portugal and CVRA (Alentejo region wine marketing body)
    • Invests in trade fairs (e.g., Prowein, Vinexpo) which help
  • Herdade do Peso - invests in social media
  • Being closer to the distributor (and owning them) helps - has been important to the success of brands
• Herdade do Peso, a Sogrape winery
  • Sogrape’s founder believed he could change the Alentejo industry
  • Introduced Alicante Bouschet to the region, blended it with Touriga Nacional
  • “A mix of man’s ingenuity, dream of a family, and the natural conditions found there”
  • 16 soil types, 160ha of vineyards
  • Use clay amphora to season wines, but no pure Vinho de Talha
  • Wine positioning
    • Entry-level, single estate - ~$20 USD
    • Reserva, a blend of blocks with the best expression, can age
    • Essencia - block series, best block of each year
    • Icon - only been produced twice in 30 years, the highest expression of the grape
    • Another wine (collaborating with others) in the works
• Climate change - brought back Gobelet training, new grape varieties, use water from the artificial lake to protect plants against extreme weather

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“Ura-what?, Ura-where?”  Selling Uruguayan Tannat has many challenges, recognizing both the country and the signature variety not well known globally.  However, Christian Wylie, General Manager of Bodega Garzón, and owner Alejandro Bulgheroni have risen to the challenge.  So much so that the late, famed wine writer Steven Spurrier once said that “Garzón achieved iconic status in less than a decade.”  Hear all about the journey for Garzón and Uruguayan Tannat in general on this episode of XChateau. 

Detailed Show Notes: 

• Christian’s background
  • Chilean from a British family
  • Studied agricultural engineering in Chile and enology at UC Davis
  • He was a hands-on winemaker for a while
  • An entrepreneur with fresh herbs
  • Met an Uruguayan woman and got married to her - started the connection with Uruguay
  • Worked at Familia Deicas (Uruguay, 6 years), Santa Carolina Group (Chile; 11 years) - turned it around and grew it 3x
  • Joined Bulgheroni Estates in 2016
    • Now has 21 wine estates in 6 countries
    • Garzon is the headquarters
• Bodega Garzón Overview
  • Garzón is a place in the NE part of the Maldonado province
  • Bulgheroni bought land in Uruguay in 1999-2000, started with olive trees and olive oil
  • 2006 - bought hills above olive trees for windmills, but Bulgeroni’s wife vetoed it
  • 2007 - Alberto Antonini comes and suggests vineyards would be good 
    • 34.8० S latitude - the same as Apalta in Chile, Barossa in Australia, and Stellenbosch in South Africa
  • 2008 - Vineyards planted
    • ~600 acres of vineyards divided into 1,500 lots
    • >20 different grape varieties, but mainly Tannat and Albarino
    • Atlantic ocean influence
    • Granite soils vs. clay in other Uruguayan winegrowing regions
  • 2016 - Winery opened 
    • 5-acre building on the top of the hill
    • 1st LEED-certified winery in the world
    • ~100 euro/liter winery capacity cost to build (very high)
  • ~$200M in Capex, 120k cases of wine produced
  • Has a PGA tour preferred golf course
• Uruguayan Wine
  • 6,000 ha / ~15,000 acres planted, but mostly table wines
  • Garzón represents ~20% of VCP (premium wines)
  • Exports ~5-10% for most producers, Garzón exports ~67%
  • 300 wineries, ~60 VCP wineries, ~25 actively exporting
  • Tannat - the national grape
    • Originally from Madiran, France
    • “Survival of the Fittest” likely reason for becoming national grape in Uruguay - hot and humid climate did not do well for other dry climate European varieties, Tannat likely had better yields
    • The name comes from the tannins, has the most polyphenols (2.3-2.4x more Resveratrol than Cabernet Sauvignon)
  • Traditional style - big, rustic, tannic, but easier to drink than Madiran; usually overripe fruit, heavy extraction, and lots of oak (heavy toast, American)
  • Garzón Tannat - more fruity, fresh, vibrant; minimal intervention, some carbonic, cold soak, unlined cement fermentation, large vat French oak
  • Other varieties: Marselan (lots in China, now an approved Bordeaux variety), Merlot
• Key markets for Tannat
  • Garzón - Uruguay (~40% of premium wine is Garzon), US, Brazil the three top; export to >50 countries (Nordics, Japan, UK, Canada, Netherlands other key markets; Growing markets - China, S Korea, Singapore, Russia, & Mexico)
  • Uruguay in general - Brazil #1 (mostly low priced, bulk wine)
• Garzón portfolio
  • Estate = entry-level, mostly sold domestically
  • Reserva = higher tier based on the quality of grapes, <$20 USD
  • Single Vineyard = areas w/in estate, ~$30 USD
  • Petite Clos = 1 specific parcel, ~$70 USD
  • Balasto = top wine, ~$100 USD in the US, ~$200 in Uruguay
    • Named after the decomposed granite
    • Blend of the best reds of different parcels
    • 3rd wine from South America sold via La Place de Bordeaux
• Marketing Tannat & Garzón
  • “Taste first, then say what it is”
  • Started Wines of Uruguay 20 years ago, but wines didn’t sell because no one had heard of it, needed to promote everybody
  • Consumers - banked heavily on social media - has ~80k followers on Instagram
  • Created a dynamic website
  • Trade (e.g. - MS/MW) - “reverse mission” - bring them to Garzón
  • PR - Glodow Nead - has brought Playboy, Architecture magazine, Robb Report, NY Times
  • Wine Critics - great scores from James Suckling, Wine & Spirits, Decanter, Wine Enthusiast’s 2018 New World Winery of the Year - consumers need the 3rd party validation
  • During pandemic - keeping the brand alive w/ 100s of “zooms” and webinars

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For the first time, European wineries can have direct relationships with customers, and lovers of many European wineries can consistently secure access to their favorite wines via the VinConnect platform.  Founder and President, Kevin Sidders, explains how VinConnect works, tells us some of the unique, rare wines that have been offered, and all the reasons how VinConnect benefits their winery partners.  Not a new way of buying wine, but bringing the American direct-to-consumer experience to European wineries. 

This episode is sponsored by Sonoma State University’s Wine Executive MBA program.  A 17-month, transformative program that builds leadership skills and business acumen focused on the specific needs of the world of wine.  Learn more about SSU’s Wine MBA programs here.  If this is something you’re considering, the next Global Wine Executive MBA session’s enrollment deadline is June 30, 2021, for courses starting in October!! 

Detailed Show Notes: 

• Kevin’s background
  • Lived in the Bay Area 25-30 years ago, discovered wine and joined mailing lists of California wineries
  • Was in the finance industry
• VinConnect founding - 10 years ago
  • Struggled to buy and collect wines from Europe
  • Was on mailing lists in California and wanted the same experience for European wines
• VinConnect Customer Experience
  • Just like signing up for a US mailing list
  • Sign up, get offers, have wine shipped to you
  • VinConnect works as an extension of the winery, a facilitator
  • Key benefits
    • Convenience, consistent access - “never miss a vintage,” which Kevin experience himself with Domaine du Pegau
    • Relationship / communications direct from the winery
    • Special treatment in hospitality
    • Provenance - authentic and shipping through winery approved channels (in good condition)
    • Occasionally special goods - unique wines (including a never release bottling from Chateau Musar, formats, vintages, library wines
• Logistics
  • Supports planning, strategy, and pricing with wineries - wineries decide how they want to operate their program (communications, offers, etc…)
  • 2 models for buying
    • Single national importer - who sells to distributors, then retailers
      • VinConnect buys from importer
    • Direct to distributors - winery may have ~30 relationships in US 
      • VinConnect buys from winery directly
  • Allocations - depends on the winery, some have purchase limits, some do not
  • Wine Clubs - a couple wineries run clubs on the VinConnect platform
  • Each winery list is separate, no cross communication
  • When a new winery launches on VinConnect, all customers are notified that they have the ability to sign up - this is the only communication to all customers
• Types of wineries that fit - high profile presence in US, flagship winery of their region - platform is more useful when the brand has a consumer presence
• How Consumers sign up
  • The winery - visits in hospitality (most European wineries haven’t been as good at this), signups via winery website, social media driving to mailing list
  • VinConnect website - can sign up for all lists via the website
  • Google advertising
• Benefits for wineries
  • They can’t do this themselves in US
  • Creates communication channel with consumers
  • Can create in-market events w/ consumers
  • Have access to all customer data (via dashboard portal)
  • 65 winery partners as of April 2021

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When Robert & Peter started the XChateau Wine Business podcast, the idea was to try and build a community around the business of wine. Part of that has been engaging with our listeners, as well as our guests. While it has happened on an ad hoc basis, we wanted to do it more proactively for our 50th Episode / One Year Anniversary.  We recorded our 50th episode live on Clubhouse to have a broader interaction with former guests (Juliana Colangelo, Lauren McPhate, and Maureen Downey), other guest partners (Barb Tyree from Repour and Tess Roche from WineBid) as well as listeners.  We covered topics around the current status of re-opening in the US, an update on the fine wine market, favorite episodes, and ideas for future episodes.  Listen in and let us know what you think! 

This episode is sponsored by Sonoma State University’s Wine Executive MBA program.  A 17-month, transformative program that builds leadership skills and business acumen focused on the specific needs of the world of wine.  Learn more about SSU’s Wine MBA programs here.  If this is something you’re considering, the next Global Wine Executive MBA session’s enrollment deadline is June 30, 2021, for courses starting in October!!  

Special Announcement:  Repour, one of our sponsors, has also created a special discount for XChateau listeners through May 21, 2021.  Use the code: XChateau on the Repour website and get 20% off for both retail and wholesale orders!  If you haven’t heard of Repour, find out all about it in Episode 24, where CEO Tom Lutz gives us all the details. 

Detailed Show Notes: 

• This  episode was recorded live on May 4, 2021, on the Clubhouse platform
• US Covid business updates and trends
  • Lots of open jobs right now, especially in hospitality, the US is recovering from Covid quickly
  • Juliana Colangelo (Colangelo & Partners) - returning to normal media relations, going through a transition period with both in-person and virtual; a client is hiring a virtual tasting room manager, there will still be demand for virtual events
  • Barb Tyree (Repour) - restaurants are coming back online quickly
  • Nadine Brown (sommelier in DC) - retailers did well in DC during Covid, huge staffing issue in DC
• Fine Wine Market update
  • Lauren McPhate (Tribeca Wine Merchants) - in fine wine, people are still more adventurous with their purchases, buying new regions; the store in NYC re-opened a couple weeks ago; tariffs removed from Europe leading to buying again from Europe, but shipping is the big issue currently
  • Maureen Downey (Chai Consulting) - wine collectors have drained their cellars, tariffs haven’t impacted buying at the very high end; Italian wines are trending, increased sale of counterfeits (e.g., Acker sold a counterfeit bottle of whiskey)
  • Juliana Colangelo - more wineries selling back vintages from their library
  • Tess Roche (WineBid) - continuing to see lots of new wine buyers on WineBid, increase of younger buyers purchasing, more mobile orders, increase in unique wines that haven’t had much auction activity in the past
  • Maureen Downey - fine wine has always been bought site unseen, so online is “normal,” but people who would have bought in the grocery store before have moved online
• Favorite episodes
  • Ivonne Nill (listener, MW candidate) - loves specific examples for Master of Wine essays, e.g., Wine.com, Wine Australia, and Juliana Colangelo’s episode on Social Media Influencers
• Future episode ideas
  • Roundtable discussion on global wine trends
  • Consumer-oriented brands discussing what’s working well for younger generations
  • Bulk wines
  • Wine buying journey of wine collectors
  • Career transitions into wine
  • Scoring publications and impact
  • Personalization/customization of wine buying

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Focused on helping the casual wine consumer buy better wine, Vivino has spent over 10 years building its database of wines, creating a structured tastings database, and network of merchants to make buying better wine more convenient.  Heini Zachariassen, founder and CEO, tells us about the journey, what Vivino is up to today, and where it’s going.  A must-listen for anyone interested in wine.  

Detailed Show Notes: 

• Heini’s background
  • born in the Faroe Islands, with only ~50,000 people and no wine
  • An entrepreneur into technology
  • He got the idea for Vivino from “seeing a wall of wine and not knowing what to buy”
• Vivino’s core challenge - buying wine is difficult. Vivino wants to help people drink better wine and know what to buy at stores through rating every single wine out there
• 1st slogan - “Never forget another wine” - because Vivino didn’t have the database to do more than capturing the wines
• With the database, you can now say if the wine is good and what else you might like
• Ratings with at least 10-20 ratings are highly correlated with expert ratings
• Users - 
  • 50M total users
  • ~20k users every day, ~10M users every month, ~20-25M active users every year (% of active relatively constant over time)
  • Top 3 areas of interest for consumers - #1 ratings, #2 price, #3 what does the wine taste like
  • A lot of people rate - 15-20% of scans rate the wine, 6-7% of scans review the wine
  • App use is 50/50 exploring wine (out somewhere looking at wines) and drinking wines (mostly at home, but could be restaurants, etc.…)
  • “Featured users” are pushed in the community. Some have 50-100k followers
  • The target audience is always the casual wine drinker first
• Launched taste characteristics - a structured tasting note (both wine structure and tasting profile), uses AI to get the data into the system
• AI recommendations (“Match for You”) - gives a % on the wine of how likely you’ll like it, leveraging structured tasting
• Marketplace
  • 700 merchants on the platform, 50% in the US, from small retailers to Wine.com
  • Sell in 17 countries right now
  • Today only a small % (single digits) buy wines through the app - he believes there is a big upside
  • Fully integrated w/ Vivino, users can use Google and Apple Pay
  • Money goes directly to the merchants, Vivino bills a marketing fee
  • Location matched by merchant's ability to ship to the location, the app only shows things you can buy
  • Can now search for styles of wine based on structured tasting notes
  • Wine sales - ~50% are pull (people looking for specific wines), ~50% are push (primarily surfacing what the app says is great value for money)
  • Sales can be 1,000s of bottles to 100,000s of bottles for the launch of Post Malone’s Rose in a few days
• Revenue Streams
  • The marketplace is the biggest
  • Sponsorships - newer revenue stream, for wineries - don’t directly push wineries, but make them look better when people come across them (e.g., show them a video when they scan the wine), provide data analytics to the wineries (based on Looker connecting to Vivino data), do campaign follow up (e.g., get an email about the brand after drinking the wine)
  • No ads - always want to show what Vivino thinks is the best wine for you
• Recently raised $155M round D (2021)
  • Vivino is currently ~200 people, looking to expand, particularly product engineering
  • Want to expand into more geographies
  • Do more marketing - today, only spend 1.5% of GMV (gross merchandise value) on marketing
• Vivino vs. Delectable - Delectable was more focused on somms and wine influencers, which kept them on the platform, but pushed away from the casual wine consumer and felt very “insider” vs. Vivino focused on the casual wine consumer
• Vivino vs. Wine-Searcher - Vivino values convenience more. Wine-Searcher focused on higher-end wines, looking for specific bottles of wine and where to buy it, don’t do transactions
• Vivino vs. Drizly - the focus is on convenience for delivery, has a network of 1,000s of retailers, faster and less concerned about what exactly the product is, Vivino more focused on wine exploration and ratings

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Having gone through the most difficult period in history with an unprecedented shutdown during the Covid pandemic, restaurants and their sommeliers and beverage directors are in a new world and need to evolve.  Mia Van de Water MS, of Cote Korean Steakhouse and the United Sommeliers Foundation, explains everything that has happened in the world of wine and restaurants.  From the scandals at the Court of Master Sommeliers to the pivots restaurants have done during Covid to the work of the United Sommeliers Foundation, Mia takes us through the many evolutions and the future of sommeliers. 

Special Announcement: XChateau Live!

When Robert & Peter started XChateau, the idea was to try and build a community around the business of wine. Part of that has been engaging with our listeners, as well as our guests. While it has happened on an ad hoc basis, for our 50th Episode / 1 Year Anniversary, we wanted to do it more proactively.  So, we'll be doing a live podcast on Clubhouse‬ and we hope our listeners join! We'll also have some former guests including Lauren McPhate, Juliana Colangelo, MBA. 

Details:

Tues May 4th, 12-1pm PST

Link: https://www.joinclubhouse.com/event/mJDAOoYb

Detailed Show Notes: 

• A 20-year career in restaurants started in high school
  • Learned how to talk about wine from distributor rep trainings
  • Read Setting the Table, worked at Union Square Cafe and North End Grill for 9 years, became sommelier and beverage director at North End
  • She spent 3 years at Eleven Madison Park for the ultra-fine dining experience
  • During Covid - worked retail with Whole Foods and other retail
  • Now works with Victoria James at Cote Korean Steakhouse
• Became a Master Sommelier from the Court of Master Sommeliers (“CMS”) in 2018
  • Part of the class that had to retake the tasting exam from the “Cheating” Scandal in Sept 2018
    • “Cheating” Scandal was when an examiner released info via email about two wines on the exam to some candidates but was unsolicited, so candidates weren’t “cheating”
    • She re-took the exam in Dec 2018 and passed
  • BLM / sexual harassment scandals - has discouraged many people from taking the CMS route
  • Currently on the Board of the CMS
    • The CMS started as a fraternal brotherhood of wine geeks
    • Today - trying to re-orient the focus off the membership and onto the candidates -> building towards a better, more inclusive, safer, and a more engaging experience
• The definition of a beverage director and sommelier
  • Key qualities - leadership and hospitality
  • Service is a critical component of the job - should be excellent at bussing tables, running food, etc.…
  • Job is to build relationships with guests, creating magical experiences from the beginning to the end
  • The Beverage director is also responsible for the financial health of the beverage program, which is the health of the restaurant
• Pennsylvania - restaurants need to buy wine at the same price as consumers from the state liquor store -> has driven a lot of BYO
• “Dollars trump cost of goods”
  • Mia’s strategy is to encourage people to buy more wine than they would otherwise
  • Still need a COGS engine, which is usually the BTG program (higher margin)
  • Encourages people to purchase a bottle
• Pre-2020 trends (more NY oriented)
  • BTG prices had gone up substantially
  • Tons of new fancy, a la carte restaurants being opened
  • Everyone needed a fancy craft cocktail program
  • Larger wine lists
  • More floor sommeliers
  • Natural wine was popular
• Covid pivots
  • CNN reported 110,000 (17%) restaurants closed in the US in 2020
  • Bev to go: Retail bottle sales, wine by the glass in small bottles, blind tasting kits
• The United Sommeliers Foundation
  • Founded by Chris Blanchard and Christie Norman
  • Aim to financially assist floor sommeliers during the restaurant shutdown
  • Expanded to general wine and beverage industry folks in restaurants
  • Raised money via auctions and donations from people and wineries
  • Raised ~$1M
  • Two types of grants
    • $500 base grants - granted to ~1,000 people, sized to avoid tax liability
    • “Grand Cru Scholarships” - paid expenses directly to creditors
  • Applications still open for those in need
  • Hope to continue to live on post-pandemic -> in the process of trying to identify what the future purpose will be
• Sommelier role going forward
  • Everyone needs to wear more hats
  • Somms need to become more financially savvy

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Too often known as just a value sparkling wine, Cava makes some of the world’s finest traditional-method sparkling wines. Ones that Javier Pagés, President of D.O. Cava, would like to see drunk on more occasions, especially with food. Javier gives us an overview of the Cava region, how it builds brand ambassadors across the globe, and how “Cava elevates every meal” on this episode of XChateau. 

Detailed show notes: 

• Javier’s background
  • Started as a wine salesperson, including in the US (both East Coast and San Francisco) with importers, distributors (e.g., Southern Glazers)
  • Was a sales director and then CEO of a Cava company (Codorniu)
• Cava
  • D.O. specialized in 1 thing - sparkling wine in the traditional method
  • Cava is named for the underground cellars where the wine is aged
  • Varietals used - Xarel-lo, Macabeo, Parellada, Chardonnay, & Pinot Noir; Trepat and Grenache for red varieties for rose
  • 4 main regions for Cava
    • Catalunya - the main region, has 4 sub-regions
    • Valencia / Levante - Eastern Spain
    • Extremadura - Southwest Spain
    • Ebro River Valley
  • 2 Cava quality levels
    • Cava de Guarda - aged for at least 9 months on lees
    • Cava de Guarda Superior - aged for more than 18 months on lees
      • Allowed to use sub-appellation names
      • Includes Reserva, Gran Reserva, and Paraje Calificado levels
• Cava is the most exported wine in Spain
  • 70% in 2020, up from 60% previously
  • Increase due to pandemic (on-premise and tourism down dramatically in Spain in 2020)
  • Top markets:
    • Europe - top 3 = Belgium, UK, Germany; other important markets = Netherlands, Nordics, France, Russia, Switzerland
      • Germany - very price sensitive
      • UK - very competitive due to grocery stores, independent retailers allow for some more expensive Cavas
    • North America - US (4th major market, ~20M bottles imported), Canada (11th biggest market)
    • Asia - Japan a major market, China hasn’t fallen in love with sparkling wines yet; S Korea, Taiwan, Hong Kong
    • Latin America - Brazil is a major market
    • Australia - #22 market and growing
• A major challenge for Cava - making it better known and agreed that Cava is a quality sparkling wine vs. only a value wine
  • Trying to increase consumer occasions for consuming Cava - current push is for more food pairing - “Cava elevates every meal” website mentions pairing with Mexican food
• D.O. Cava’s mission - to add value to all members
  • Adapt the region to today’s consumers
  • Different products for different consumers and different moments
  • Certify and track that what’s on the label is true, provide traceability
• Conducts consumer studies - measure the health of the Cava brand, understand consumer desires
• D.O. Cava’s members
  • Made up of production side (vineyard people, growers) and wineries
  • 12 person board - 6 from vineyards, 6 from wineries
  • Members pay a fee to D.O. based on hectares of vineyards or bottles sold
  • Membership is optional
• Marketing Cava to different audiences
  • Journalists - important to bring them to where the action is, want to know everything - the process, story, etc.…
  • Trade - more about educating them so they can sell the wine - webinars, wine academy course
  • Consumers - more impulsive, emotional connections, giving them experiences and sharing the wine through events and visiting the wineries
• Most successful marketing campaign - Wine Cava Academy
  • Creates wine ambassadors for Cava
  • Contains different modules - production, regions, tasting profiles, wine pairings, etc.…
  • Use well-known professionals (e.g., MWs, journalists) to teach courses
  • Get a certificate at the end of the course
• US marketing campaign - 360 Degrees of Cava
  • A multi-pronged marketing campaign where the elements support each other
  • Educational elements for consumers - masterclasses, tastings
  • Press
  • Social media
  • Tactical advertising

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In part 2 of our series with Nick Ramkowsky, Owner of Vine Connections, Nick describes how he builds brands in the US market, striving to turn “annual” brands into “perennial” ones. Partnering with distributors both directly and working independently with consistency helps create a virtuous cycle of long-term relationships. Nick also covers his interest in sake and how it overlaps with sales strategies for wine.  

Detailed Show Notes: 

Two types of brands

• Perennials - brands where accounts grow in value each vintage; very few become this
• Annuals - need to sell the same case to a new account each year; everything starts here

The goal is to build brands into perennials

Getting to perennials includes having value in the bottle, packaging (VC has three designers on staff), relationships (finding the right spots/customers for brands and supporting the accounts (staff trainings, consumer events)), identifying champions on the distributor sales team, and press

Creating brand value as an importer - consumers believe in the importer’s book through consistent producers and quality across the portfolio

Consistency helps develop brands

Marketing strategies to build distributor demand

• Press (primarily critics)
• Effective distributor work withs (distributors need confidence importer will support them)
• Creating credibility in the marketplace (trade events, work withs, samples, incentive/launch programs)
• Can’t outspend more prominent importers for incentives, need to create unique ones - e.g., one supplier affiliated w/ custom made shirts, created incentive around the shirts

Setting suggested retail price (“SRP”)

• Through tasting, looking at the competitive set, and where the winery wants to be
• $1 in home country becomes ~$3 at retail in US

Sales strategies

• VC has ten salespeople across the US
• Do work withs with distributors, but also on their own to not overwhelm distributor reps
• Partner with reps, sending recaps for follow-up

Sake - started in 2002

• He went to Japan to work in a brewery to study the process
• Had to make more accessible - standardized back label, 1st to put English names on front labels
• They use the same distribution network as wine
• Place importance on education; VP of Sake Monica Samuels is a great educator
• Now, 20% of the Japanese imported sake market
• Recommends drinking sake from a wine glass, at cellar temp, or warmed to order for hot sake
• Kome website is more focused on the style of sake (e.g., fruity/floral vs. round/rustic) vs. grade now
• 46 prefectures brew sake - lots of expression of place
• Gluten and sulfite-free

Wine importing trends - people drinking less, but better (Gen Z - less alcohol, and non-alc drinks, believes they will look at wine more as they age; value premium products that are authentic, smaller, good stewards of land)

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Family-owned, diverse, and artisan are the key messages for Sonoma County wines, according to Michael Haney, Executive Director of Sonoma County Vintners. When people hear about the diversity of Sonoma wines around the world, they want to know more! Michael takes us through the global situation of Sonoma wines, the events they put on, and how their foundation supports the entire Sonoma County community. Listen in for a peek into the diversity of Sonoma and how it markets its wines. 

Detailed Show Notes: 

• Background on Sonoma County
  • 1 hour from San Francisco
  • >1M acres with only 6% planted to vines, a lot of forest and pastureland
  • 18 different AVA’s - lots of diverse growing climates
  • 85% family owned
  • Lots of diversity - 18 growing regions, 60 varietals, and diversity within varietals (e.g., Pinot Noir from the Sonoma Coast vs. Russian River Valley)
• Key Message of Sonoma Wine - family-owned, small, artisanal winemaking, diversity, and quality of the wines
  • The diversity message creates intrigue, “people want to know more”
  • They use the same message regardless of geography
• Sonoma County Vintners (“SCV”)
  • Mission - be a leading voice for the Sonoma wine community
  • 3 main areas - trade association, event production, and charitable foundation
  • Success = meeting the challenges of the wine community and the community as a whole
  • Part of “The Trio” - Sonoma County Vintners (focused on wineries), Sonoma County Winegrowers (focused on vineyards), and Sonoma Tourism (collaborate together on marketing and consumer engagement)
  • Also partners with the Sonoma County Farm Bureau
• Collaboration with Sonoma sub-regional bodies
  • SCV has 15 committees, with members of the groups from the regional bodies (e.g., Russian River Winegrowers)
  • Help other organizations with political advocacy
  • Help promote the story of the growing region
• Members - 75% of the ~500 wineries in Sonoma County
  • Range from mom and pop winery to large wineries
  • Most are also a member of another sub-regional body
• Affiliate Members - e.g., barrel, legal, HR companies - who want to support the wine community
• Business model
  • Membership fees - based on cases sold
  • Event participation - Barrel Auction - trade event that raises money for SCV
  • Sponsorship and partnership program
  • Foundation - mostly funded through charity auction (Sept), raised $6.1M in 2019
• International interest spiking for Sonoma wine, especially Pinot Noir, mostly Asia (incl Hong Kong), Netherlands, Canada, Mexico
• SCV Events
  • Barrel Auction - trade-focused
  • Charity Auction - for consumers, in the fall
  • Taste of Sonoma - was 2,500 people pre-pandemic
  • Virtual events during the pandemic
• Marketing Tools & Plan
  • Need a comprehensive approach
  • It covers all bases - social media (incl influencers), print, panels/webinars, etc...
  • Media engagement - both w/in Sonoma and out in local markets
  • New consumer engagement - “Road Trip” - put together a playlist for those going to visit Sonoma wineries
• Improving and best practices for marketing/events
  • Survey consumers and incorporate feedback
  • Did a focus group that had 25 suggestions, 24 of which were implemented
  • Best practices for events - listen to those involved, create a collaborative plan (including sponsors, community leaders, wineries, etc.…)
  • E.g., Taste of Sonoma
    • Was Labor Day Weekend
    • Wineries said it was hard b/c it overlapped w/ harvest. Consumers said it was too warm
    • Changes implemented -> covered the entire area wines were served and now looking at moving the event to June or the Summer to not be during harvest
• Pivots during Covid
  • A virtual auction last May
  • Virtual continuing education series
  • Helped organize 1,000s of vaccines for winery workers
  • Believes there will be a hybrid model (both virtual and in-person) post-pandemic
• Foundation
  • Founded in 1988, more active in the last 5 years
  • Raised >$37M to date, all the money stays in Sonoma County
  • Supported >85 different non-profits in 2020 with $4M of cash donations
  • Also did food drives, supported restaurant workers, and a variety of other causes

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While “cheap and cheerful” might have been an apt description of Australian wine 20 years ago when Yellowtail was the #1 wine brand in the US, “Made our Way” is the new Australian marketing campaign that emphasizes the complexities and innovation of the modern Australian wine industry.  Aaron Ridgway, Regional GM of the Americas for Wine Australia, tells us about how they are “complexifying” and “re-mystifying” Australian wine, showcasing the substantial innovation, 100 different grape varieties, and extreme regional variations in growing climates.  Listen in for the journey of Australian wine through decades and regions of the world. 

Detailed Show Notes: 

• Australian Wine
  • Has been a big wine exporter since the 1980s
  • ~2M tons of grapes per year (smaller than the US)
  • A$3B of wine exported to 150 countries (A$450M to the US)
  • Old vines (including some own-rooted ones), 100 varieties grown, 65 wine regions make the country unique and diverse
  • Lots of climate diversity - cool climates, deserts, wetter and drier regions
  • 200 years of winemaking history
  • Yellowtail, which was launched in 2000, was the #1 wine brand in the US for a while
• Wine sales
  • Affordable wine demand has remained, but higher-end wines have grown
  • 2x the sales of >$10/bottle in 2020 than in 2017
  • Peak Australian wine sales around 2007-2008, many Australian wines were sold out and flying off the shelves
  • Top Export Markets
    • North America (US, Canada) - growing mid-single digits
      • Canada - 24% market share; Canada is behind the curve in terms of what’s new and exciting (vs. the US)
    • UK - up 30%; 80% of sales is bulk wine, very price competitive market
    • China (was big, major importing challenges right now)
• Wine Australia messaging
  • Global message - Australian wine is diverse and exciting
  • The goal is the complexify and re-mystify Australian wine - pushing stories of individuals and the many diverse wine regions vs. Australia as a single category
  • Current strengths - natural wines (from the strength of character and experimentation) and innovation (e.g., 19 Crimes Augmented Reality, Penfolds’ California Collection, new packaging)
    • E.g., Ochota Barrels - a story of a “new classic”
      • Experience with very commercial wineries globally, including Two Hands in Australia
      • A punk rocker who bought a vineyard in the Adelaide Hills
      • They make unique wines with contemporary packaging
• Wine Australia organization
  • Mission - make Australian wine more competitive globally, want to raise the average price
  • Tagline / PR Campaign  - “Australian Wine, Made our Way”
    • Fighting the sense of “sameness” in wine marketing
    • More drone photography, scenes where the desert meets the ocean, tannin stains under the fingernails
  • Success?  Driving organic growth, both in volume and price 
  • The US has 3 priorities
    • 1) Digitally nimble in education - Australia Wine Discovered - customizable, fully downloadable library of wine content, including educator guides
    • 2) Business Development - help retailers, wholesalers, chain restaurants - with staff education, programming
    • 3) Market Entry - only ~20% of Australian wines are in the US market
• Major marketing techniques
  • Try to match the content and level of detail with what the audience is seeking
  • “Australia Decanted”
    • Trade education conference in Lake Tahoe (2018-2019)
    • 100 people each year
    • The location chosen because no wine was made there, can focus without distraction, and it's much closer than Australia
    • It changes people's minds, creates a more spiritual connection with Australian wine
    • Many alumni of the program go out to talk about Australian wine
  • Global blind tastings - to focus on match in the glass, 8 Australian wines, and 4 global wines of the same variety
  • Techniques vary by market
    • Canada - focused on exploration and increasing the range of wines available with the provincial monopolies
    • UK - white glove, fine wine, trade-focused (as most of the sales are bulk)
    • China - focused on consumers, 10s of millions of interested consumers - lots of local educators to deliver the messages (leveraging Australian Wine Discovered)
    • Germany - mostly trade education

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“You gotta be a little crazy to plant vines in New York,” Sam Filler of the New York Wine & Grape Foundation tells us.  Yet, New York is the third-largest wine-producing state after California and Washington. It showcases a diversity of high quality, cool and cold climate wine growing regions, such as the Finger Lakes, Long Island, and Niagara.  Sam gives us an overview of wine (and juice grape growing) in New York and tells us about how the foundation supports its members by building the brand of New York Wine, its winegrowing regions, and  primarily family businesses that make it up.  

Special Announcement: "Be the Change is hosting a virtual job fair on April 22nd for the beverage alcohol industry. Registration is now open for all employers at bethechangejobfair.com. Sign up to connect with up to 1,000 jobseekers.  This is an equal opportunity job fair, open to all."

Detailed Show Notes: 

• New York Wines
  • 470 wineries, ~100 vinifera producing
  • Mostly family-owned wineries
  • #3 in US wine production behind CA and WA
  • $6.65B in economic impact supports 72,000 jobs
  • ~40,000 acres planted, 11 AVA’s
  • Has a diversity of climates - maritime (Long Island), river influenced (Hudson Valley), great lakes (Finger Lakes)
• Main AVA’s
  • Finger Lakes - Riesling; lots of winegrowing history; 1st wine trail (1983), Pleasant Valley Winery founded in 1860 - 1st US bonded winery
  • Niagara - could be a leading Pinot Noir region
  • Long Island - debate on the signature grape, Merlot the base of Rose, Sauv Blanc, Cab Franc; the breeze from bodies of water reduce mildew pressure
  • Lake Erie - major Concord grape growing region for Welch’s grape juice, Double A Vineyards nursery an important player; Riesling, Traminette (like Gewurztraminer)
  • Hudson Valley - Cab Franc focused, 500 acres planted
  • Finger Lakes and Long Island recognized both locally and globally
• Main varietals
  • Riesling - grown in most regions, biggest in Finger Lakes
  • Cab Franc - grown in many parts
  • Chardonnay - Finger Lakes, Lake Erie, Long Island; more Chablis style wine
  • Pinot Noir - big for sparkling wine production
• Unifying elements of New York wines
  • Cool climate, mainly driven by family businesses
  • Defined by bodies of water that surround the regions
  • Personalized hospitality (elevated with Covid, e.g., Macari Vineyards glamping tents)
• NY Wine & Grape Foundation
  • Established in 1985 by state law - to lead promotion and research efforts for the state
  • Associated with Cornell University and various programs, including the wine analytics lab
  • Includes juice grapes (⅔ of vines planted in the state) - Welch’s a key partner for viticulture research; very limited table grapes in the state
  • Success for the foundation is building the capacity of the industry - e.g., getting DTC online, improved websites, connections to customers, and maintaining relationships
  • Members are mostly “farm wineries” (a legal term that means wineries use 100% NY grapes), grape growers, and business partners
  • State provides baseline funding for infrastructure, receive some matching funds for research, and some membership dues
• Working with other local wine marketing groups
  • Used to fund some marketing materials
  • Now co-sponsor events and collaborate closely with the local marketing bodies
• Geographic Focus
  • New York City is the #1 focus
  • Chicago and Florida also important; PA difficult b/c of the liquor control board
  • Some export but need to find the right niche
• Marketing efforts and programs
  • NY wine ~70% sold out of tasting room - hospitality key
    • For markets w/in a 5-hour drive of NY state, NY is the #1 destination to visit
    • Tourism sales did well in Covid with people traveling locally (less visitation, but higher sales/visitor)
  • Building more online presence (e.g., Macari vineyards dialed in their wine club program during Covid)
  • Virtual tastings helping broaden the geographic reach
  • They did some advertising on Levi Dalton’s I’ll Drink to That podcast and now with SevenFifty to reach the trade audience
  • The key effort is in keeping consumers engaged with wineries
  • Believes telling the individual stories of wineries is compelling, potentially more than having a signature grape
  • Most effective marketing - when people can connect in person, started experimenting with incorporating local elements in trade tours (e.g., state park visits, walk-around tastings with a meal, more curated events vs. bussing around to many wineries)
• NY State Wine messaging
  • Used to be “Uncork New York”
  • Now “Boldly New York” - embodies the risk-taking spirit across the state, “gotta be a little crazy to plant vines in New York”
  • Vision - To be the world’s greatest cool and cold climate grape-growing region
• NY wine investment
  • Paul Hobbs started a winery in the Finger Lakes focusing on Riesling
  • The trend has mostly been family wineries buying other family-owned wineries - the industry is investing in itself

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Used to celebrate the drafting of the US Constitution and the Declaration of Independence, Madeira wines are the ultimate in American wines, though not made in America.  Originating from shipping goods from Europe to America and being born from wines traveling that route, it became the most prominent wine in the US pre-prohibition.  History, culture, and the wines' versatility benefited their relaunch in the 1990s by Bartholomew Broadbent, Owner of Broadbent Selections, which imports an array of wines from emerging regions and has its own line of Madeiras, Ports, and other wines.  Learn more about the history and the journey of reintroducing a long-lost style of wine back to America in this episode of XChateau. 

This episode is sponsored by Repour, the simple, effective way to preserve your wine...without planning ahead.  Extensively used by top sommeliers, wineries, and wine students, Repour prevents wasted wine and saves money.  Please find out more at repour.com and listen to Episode 24, where CEO Tom Lutz gives us all the details on Repour.  

Detailed Show Notes: 

• Bartholomew’s background in wine
  • Son of Michael Broadbent (led wine auctions for Christie’s, Decanter Magazine writer for decades, & leading wine author)
  • Went to Australia at 18 to work harvest, Cognac as a tour guide, worked in wine at Harrod’s in London and at Harvey’s Fine Wines
  • He moved to Toronto and met the Symington Family, where he spent 10 years teaching about Port & Madeira, based out of San Francisco
  • He married a Virginia girl and now lives in Virginia
• Broadbent Selections
  • Founded in 1996
  • The goal was to create their own brand of Port & Madeira
  • Started an import company as well, which focused on emerging wine regions, including: 
    • Portugal (now just the Broadbent brands)
    • South Africa (e.g., Eben Sadie)
    • New Zealand (e.g., Spy Valley)
    • Chateau Musar from Lebanon
    • Gusbourne from England
  • Broadbent wines include Madeira, Port, Vinho Verde (single biggest selling wine), Douro, and Gruner Veltliner from Austria
• Madeira
  • It was the biggest selling wine in the US until Prohibition
  • Invented through shipping to America from Europe, ships stopped in Madeira (600 miles off the coast of Africa / Morocco) to re-stock; when wines accidentally made it back to Madeira and went through two journeys by sea, the wines tasted better through the heating
  • Now the wine style is a cooked and fortified wine
  • Lots of history around Madeira - the wine used to celebrate the Constitution and Declaration of Independence, was on the table w/ Betsy Ross sewed the American flag
  • Benefited from a tax loophole, when the King taxed all European goods going to America, it did not cover Madeira
  • Destruction of the Madeira market
    • Phylloxera - destroyed lots of vines
    • Prohibition - Prior, 95% of the wine was sent to the US, 5% to the UK and Russia
    • Upon appeal of Prohibition, shipping had improved and no longer needed to stop in Madeira for supplies
  • Re-launch of Madeira in the US - Bartholomew relaunched in 1989 with the Symingtons
• Production
  • 8 producers of Madeira on the island, who buy grapes from ~1,000 growers
  • Vines mostly grown on trellises with other crops underneath (there aren’t a lot of vineyards to see and visit)
  • Two types of heating methods
    • Estufa - artificial heating in tanks, 3 months at 115F, mostly for the 3-5-year-old styles of wines
    • Canteiro / Traditional - left in attics of buildings to heat; Broadbent ages in 3 locations - attic, ground floor, and basement to blend and get more complexity
  • 8 producers make lots of different brands, Broadbent made by Justino’s
  • Island producers ~100,000 cases/year of drinking Madeira (vs. cooking Madeira), Justino’s ~55%, Henriques & Henriques ~20%
  • Grape varieties
    • 3 red grapes (~80%) - Tinta Negra
    • 7 white grapes - incl Sercial (grown in hills, ripens less and more acidic), Verdelho, Boal, Malmsey
    • Both name of grapes and style of wines
  • Drier Madeiras partly made by adding brandy later in fermentation
  • Rainwater - needs to be a lighter style
  • Vintage  or Frasqueira Madeira - needs to be aged for 20 years before release, at least 19 years in cask and 1 year in bottle, but bottles  the word “Vintage”  does not appear on the  label as that is trademarked by Port
  • Colheita - min 5 years of age
• Selling Madeira in the US
  • ~25k cases/year in the US, #2 or 3 market globally
  • England and Japan drink a lot of Madeira, Canada also a big market
  • The slowdown of sales for Port in the late 1990’s - believes due to the rise of high alcohol wines and not leaving enough capacity for fortified wine at the end of dinner
  • Madeira appeals to the intellect, stories tied to US history, the beauty of island and tourism, and versatility of the wine due to acidity (pairs with anything)
  • No specific demographics for Madeira
  • Older, rarer wines sold mostly at restaurants
  • Mannie Berk of Rare Wine Company also started a Madeira brand and has done a good job of educating consumers
  • Sherry market has improved due to mixology and cocktail culture, Spanish restaurants (e.g., tapas) have also helped support it
  • Pricing of rare Madeiras has increased a lot, especially in the auction markets, as sales have depleted the stock on the island
• Broadbent vs. other Madeiras
  • More elegance, considered one of the top brands made by Justino’s
  • Named in Wine & Spirits Top 100 wineries of the world
  • Great sales team, including 2 Master Sommeliers, who help to sell into restaurants and retail

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The hardest wine exam in the world, an elite community of >400 wine professionals, and learning how to engage with wine more.  All those elements are used to describe the Institute of Masters of Wine and the Master of Wine (“MW”) exam.  Mark de Vere MW tells us about how becoming an MW landed him a full-time job in Napa to all the rigors required to pass the MW exam.  A must listen to episode for those thinking of applying for the MW program or those who just love learning about challenging wine exams.  

Detailed Show Notes: 

• Mark’s background
  • He grew up in Oxford, United Kingdom
  • Studied wines through a wine tasting group at university
  • Worked at a local wines shop in Oxford
  • Worked harvest in Australia, did Wine & Spirit Education Trust (“WSET”) exams
  • In 1997, he had a summer job at Robert Mondavi, passed the Master of Wine exam during that time, and was hired on full time and still at Robert Mondavi / Constellation Brands
• Institute of Masters of Wine (“IMW”) background
  • Currently, 418 Masters of Wine, >490 have passed the exam over time
  • Started in 1953 in London as London was the most globally-focused wine trading hub in the world
    • ~20 people sat the exam in 1953, with 6 passing, was only open in the UK at that time
    • The purpose was to measure who was a master of the overall wine trade
    • 1st non-UK residents were Australians and Americans who went to the UK to work and sit the exams
  • Now a global institution - MWs in 30 countries, exam offered around the world (London, California, Australia), head office is still in London
  • The mission of the IMW - to promote excellence, interaction, and learning in the global wine trade
    • Interaction through tastings and the MW Symposium (held every 4 years)
    • Excellence and learning through setting the MW exam
  • Not an educational organization like the WSET
• IMW vs. Court of Master Sommeliers (“CMS”)
  • MS has a more laddered programs (i.e., more levels before the master level)
  • MW has no practical, service element
  • MS exam is oral, MW is all written
• The MW Study Program
  • Goal: to help orient people to understand what the end goal is - to gain the depth and breadth of the challenge of the MW exam
  • Need to know every step of the wine business, from the vineyard to wine landing on the table
  • 3 Stages
    • Stage 1 - 1st orientation to the program, has the Stage 1 assessment - proving you can understand the issues, 12 wines blind, 1 set of theory essays
    • Stage 2 - preparation for the MW exam, which is 3 x 2.25-hour blind tasting exams with 12 wines each, 5 x timed theory exams
    • Stage 3 - research paper, developing something new for the world of wine
  • There are time limits for getting through the program now, ~5 years, with the goal of not getting people stuck in it
• Pass Rate of the MW exam
  • Used to say ~10% of people that sat the exam
  • Hard to calculate a rate due to people who sit multiple times, and you can pass certain portions of the exam
  • IMW actively trying to increase the pass rate by making it more difficult to get in and sit the exam
  • ~15-20% of people who enter the program actually complete it; ~75-100 are admitted to the program each year and ~10-20 people become MWs each year
  • Value of the program, if you don’t complete is learning how to understand the issues around wine better, engaging with wine differently, and building communication skills
• More people are applying for the MW program and it’s becoming a more global program
• The IMW and diversity
  • The exam is completely blind, making it unable to discriminate via grading
  • Conduct outreach to all parts of the world to generate a diverse pool of candidates
  • ~150 female MWs today
• Being an MW
  • Titles do carry some weight within the wine world
  • Got Mark a permanent job at Mondavi after being hired for only a seasonal position
  • Join a community of MWs, where giving back to the wine world is one of the core tenets

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From its start as a way to build demand for French wines in the US to a global program with 100 approved program providers in 30 countries, the Wine Scholar Guild (“WSG”) is a theory-focused wine education program targeting the “committed students of wine.”  Lisa Airey, Education Director of the WSG, tells us about the different levels of the program, instructor online courses, and how the WSG fits into the wine education landscape.  

This episode is sponsored by Repour, the simple, effective way to preserve your wine...without planning ahead.  Extensively used by top sommeliers, wineries, and wine students, Repour prevents wasted wine and saves money.  Find out more at repour.com and listen to Episode 24, where CEO Tom Lutz gives us all the details on Repour.  

Detailed Show Notes: 

• Lisa’s background - 13 years in wine wholesale sales, education director and interim executive director for the Society of Wine Educators (“SWE”), then joined the French Wine Scholar program, which is now the Wine Scholar Guild
• Met Julian Camus, the WSG President while at SWE, who was trying to help find importers to the US for French producers
  • He created the French Wine Society to build interest and love for French wine amongst consumers
  • FWS events would have ~500 people and sell thousands of dollars of wine for each event
• WSG founded in 2008 as the FWS program, an education and credential body
  • Became an advanced program right away
  • For the “serious wine hobbyist” or “committed student of wine”
  • 100 program providers in 30 countries
• Differentiation vs. other wine education bodies
  • WSG is specialized in France, Italy, and Spain, the 3 largest producing countries in Europe
  • Other programs are more generalist / global
  • SWE is more of a membership program with study and certification. WSG is more study/certification with membership as a sidebar
  • Exams are 100% theory - 100 questions multiple-choice (75% is passing, with honors and highest honors)
  • WSG fills the niche of some self-study courses like WSET Diploma and Master of Wine with detailed study materials
• 3 Course types
  • Classroom - instructor-led, taste along in class
  • Instructor Online - live instruction online, if you miss a class, you can go back and replay it on-demand
  • Independent Study - for self-motivated who can’t make the schedules work
• Scholar vs. Master level courses
  • French Wine Scholar coursebook is 274 pages just on French wines
  • Master Level programs are 125-375 pages on 1 region (Bourgogne is the largest)
  • Master programs can be important for people in the industry that need that level of expertise for their jobs
• Study trips
  • Some for educators and approved program providers
  • Study immersion trips - open to the public, have top names as hosts (e.g., Andrew Jefford), that can open doors
• Digital Programs
  • Went digital early in order to go global
  • Benefits of online learning - no travel, parking, easy to miss a session and catch up
  • Partnered with Coravin to have a discount for members so students can purchase wine and not have to pop a cork
• Membership
  • To foster continuous learning after programs
  • 4 webinars / month, with 150+ on-demand
  • Pronunciation programs
  • Discounts on Coravin, 10% off education programs
  • Costs $100/year
• Scholarships
  • Tripled the amount during Covid
  • Provide Instructor Online courses as scholarships
  • Have 2 programs today - need-based/financial aid and Master of Wine scholarships
• Offer group rates for distributors

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Bâtonnage, the French word for stirring the lees, is now about stirring up the conversation about women and wine.  The Bâtonnage Forum, founded in 2018, is creating a safe space to have difficult conversations about gender inclusivity in the wine world.  Katie Canfield and Rebecca Johnson, partners at wine PR agency O’Donnell Lane, are currently carrying the baton for the forum.  They tell XChateau about transitioning the forum to virtual, launching a mentorship program, and filing for 501c3 status.  

This episode is sponsored by Repour, the simple, effective way to preserve your wine...without planning ahead.  Extensively used by top sommeliers, wineries, and wine students, Repour prevents wasted wine and saves money.  Find out more at repour.com and listen to Episode 24, where CEO Tom Lutz gives us all the details on Repour.  

Detailed Show Notes

• The mission of The Bâtonnage Forum - to open up the conversation about women and wine and create a safe space to have difficult conversations
• Founded in 2018 by Stevie Stacionis and Sarah Bray
• Set up to “pass the baton” every two years
  • Katie and Rebecca are the lead organizers for 2020 and 2021
  • This brings in new ideas and changes to the organization
• The Bâtonnage Forum has transformed from 1 day in Napa to a robust, active community from all sectors of the wine industry
  • The broad focus is a unique selling point
  • It’s a platform for education and engagement
  • They have gotten lots of positive, direct feedback (thank yous, emails, volunteers who want to be involved) 
• The Forum
  • 1st two forums held in Napa
  • Went from 1 day to multi-day, multi-session virtual forum, expanding the audience to all of North America and some global participants
  • 2021 - will be 3 days at the end of June
• The issue
  • Only ~30-40% of wine businesses are women-owned
  • Only 14% of CA wineries have female head winemakers, though this has improved some
  • The Sommelier industry has meager female participation
  • #metoo movement has been helpful
• How to Help
  • Step 1 - acknowledge and recognize the issue, join the conversation, including at the Bâtonnage Forum
  • Step 2 - improve HR and hiring practices
  • Step 3 - mentoring (spread the word about the mentorship opportunities to potential mentees), education (including WSET, MW, etc.…), and shaking up the conversation
  • Donations (currently filing for 501c3 status)
• 2020 accomplishments
  • Pivoted in-person forum (was planning to be at Sonoma Broadway Farms) to virtual due to Covid with 10 sessions, 35 speakers, and 20 winemakers and chefs for a virtual walk-around tasting
• 2021 Initiatives
  • Launched Mentorship Program - Level 1 of 3
    • Mentoring leads include the founders, Priyanka French, Tonya Pitts, and Mary Maher
    • Sponsored by Napa Valley Vintners
  • Filing for 501c3 non-profit status, targeting $10k/year for 3 years
  • Launching a Bâtonnage Forum branded canned wine with Nomadica
  • Want to dive deeper into uncomfortable conversations
• Actively collaborates with other gender and under-represented inclusion groups
  • Diversity in Wine Leadership Forum - bringing the various diversity and inclusion groups together to understand what each group brings to the table and avoid overlap
  • Assemblage in Willamette Valley
  • Wonder Women of Wine (now Lift Collective) in Texas
  • Black Wine Professionals by Julia Coney
• How we’ll know when we’re “there” - when there’s no longer a place for diversity committees in organizations

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Creating inclusivity and change is not changing current structures. It’s about creating new spaces. Ikimi Dubose of The Roots Fund is pushing change for diversity and inclusion of the BIPOC community in wine through passion, accountability, and transparency. She tells us how The Roots Fund is more than scholarships, has been able to change lives, and is expanding its impact with a high school enrichment program, a job board, and a language program. Dynamic only marginally describes Ikimi and The Roots Fund and the impact this nascent non-profit organization is having with only a year under its belt.  

This episode is sponsored by Repour, the simple, effective way to preserve your wine...without planning ahead.  Extensively used by top sommeliers, wineries, and wine students, Repour prevents wasted wine and saves money.  Find out more at repour.com and listen to Episode 24, where CEO Tom Lutz gives us all the details on Repour.  

Detailed Show Notes: 

• The Roots Fund supports Black, Indigenous, and LatinX in wine
• Founded by Ikimi, Carlton McCoy (CEO of Lawrence Family Wineries), and Tahiirah Habibi (owner of Hue Society)
• Ikimi and Carlton met as scholars of the CCAP program
• Board includes the 3 founders currently, expanding with 2 more in 2021
• Mission: to empower BIPOC (Black, Indigenous, and People of Color) in wine through scholarships, mentorship, and job placement
• Some definitions:
  • POC = people of color
  • HBCU = historically black colleges & universities
  • DEI = diversity, equity, and inclusions
• Diversity in wine
  • Wine is <5% POC
  • Hospitality more diverse than wine in general - more chefs are POC
  • Many people forget the ownership part of inclusivity
  • Diversity is growing
    • Support from NBA players - the Roots Fund doing some work with Dwayne Wade
    • POC make up ~11% of wine consumers, a big customer base
• Creating change
  • Start with changing hiring practices
  • Have HR people with DEI training
• The Roots Fund differentiation
  • “No glass ceiling” - not just scholarships for tuition/fees, but funding can include the wines and other elements needed to pursue a career in wine
  • It doesn’t stop at scholarships - mentorship is mandatory, building a community
  • Send funders synopsis and videos of stories of scholars with the impact their scholarships are having on their lives
  • The lean organization, efficient operating structure - a lot of volunteer-based work, transparent (financial statements will be available end of March), 70% of funding goes directly to scholarships (vs. ~50-60% at other non-profits), no office space
• Scholarships
  • Types
    • Location-based (e.g., Rooted in Napa, Rooted in France) - work and study in a location
    • Stay Rooted in Education - wine business focused
    • Rooted in Education - for wine certifications
    • Rooted in Culture - for joining membership organizations
    • Rooted in Wine, a Vintner’s Story - a partnership with Naked Wines, creating a wine and product, keep ownership of the wine and brand, Naked Wines distributes 1st round of product
  • Scholarships open quarterly, targeting 20 scholars/quarter in 2021, but have ~70 applicants today
• How to help
  • Jobs - reach out with internships, jobs
  • Mentorship - people of all backgrounds desired, mentors and scholars are matched with purpose, want mentors who can create a safe space for people with different experiences, build them up, and share their network
  • Fundraising - 2021 goal - $500k, but hoping to exceed $1M
• 2020 Accomplishments
  • Had a $100k fundraising target (for 10 scholars), raised ~$300k
  • 30 scholars in the program working
  • Domaine Dujac and Naked Wine sponsorships
• 2021 Programs
  • High School enrichment program
    • Take students to community colleges and universities with wine programs
    • Spend time at some wineries
    • Conduct tastings with the parents - educating them on wine and the opportunities in the wine industry for their children
    • Launching with 2 cities in 2021
  • Job Board
    • It should be open at the end of March
    • The Roots Fund pre-vets candidates, only passing along the best fits
    • It requires follow up and feedback to improve candidates
  • Language Program - a partnership with Lip Service by Cha McCoy to empower people in wine with language education
  • Gearing up for 2022 - jobs, internships, and trips
• Other areas of support
  • Building a massive program with Lodi, California
  • Waiting for more support from Napa Valley - as the industry leader, they can change the view of inclusivity in the industry
  • We will be doing a raffle/fundraiser for Women’s History Month in Spring

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Art, comedy, food, movies, performance art, outdoor cabanas, food and wine pairings...are some of the draws that bring people to Charles Krug winery in Napa Valley.  President & CEO of C Mondavi & Family (parent company of Charles Krug) Judd Wallenbrock tells us about the history of innovation at Charles Krug and the Mondavi family.  As the first winery and first tasting room in Napa Valley, Charles Krug has spearheaded many different elements of hospitality and now drives them virtual.  Hear all about their programs and what has worked in the virtual space on this episode of XChateau!

Detailed Show Notes: 

• Judd’s background - 41 years in the wine industry
  • He visited Napa as a 16-year-old in 1974 (Charles Krug, Mondavi, BV)
  • Did stints in retail, restaurants, a winery rep, and has his own backyard winery
  • 4 years ago - became President and CEO of C Mondavi
    • The original Mondavi family business
    • Founders - Cesare & Rosa, who settled in Virginia
    • Did hospitality for miners in 1908
    • Got into wine in 1928 - their saloon closed due to prohibition, and they bought and sold grapes and yeast for home wine kits
    • Sons - Peter and Robert Mondavi
    • 5th generation of Mondavi’s was just born
• Charles Krug Winery
  • Founded in 1861, oldest winery in Napa
  • 1965 - Peter & Robert split, Robert founded Robert Mondavi Winery; both were running winery before, then just Peter
  • 1882 - 1st tasting room in Napa
  • Charles Krug - created a legacy of innovation
    • Introduced wine press to Napa, taking the idea from apple cider
    • 1st to bring Cabernet to Napa
    • Started the 1st wine club, took wine into San Francisco to sell wine
    • Mondavi innovations - brought in French oak barrels, did cold stabilization
• Hospitality at Charles Krug
  • Wedding - grandfathered in, limited to ~20 per year
  • The aim is to create the cultural hub of Napa Valley - present wine as part of the arts
    • Culinary, art, comedy, host the Napa Valley film festival, “SIP” - series of interesting people, like TED talks, music, performing arts
    • Wine is food, but not in the restaurant business
      • Provide a “teaser” for guests
      • Partnership with Pete Seghesio - makes world-class salumi with C Krug wine
      • Pizzas - hand made in the outdoor pizza kitchen
      • Has the same sourdough starter from the 1940s from the Mondavi family
  • See 40,000 guests per year, 10,000 delivered from Napa Valley Wine Train
    • Small relative to ~300,000 visitors/year at Robert Mondavi winery
  • Event-based marketing
    • Use events as a discovery vehicle for the brand
    • It gives a reason to come, confident that wines will speak for themselves
    • Events ticket-based, sometimes include wine
    • Some events curated but not put on by the winery
    • Events targeted to break even, then winery’s job to convert people to sales and club members
    • Help generate word of mouth and 3rd party endorsements
    • Build customer database - for follow up marketing
    • Events themselves not always a good selling opportunity, but do post-event marketing (e.g., free tasting for event attendees that come back)
• The GAME plan - a method for measuring and evaluating programs
  • Goal, Activities, Metrics, Enhancements (after post-mortem)
  • Key metrics for Charles Krug
    • Conversion rate to sale
    • Conversion to wine club
    • Club retention rate
    • Referrals (from all categories - events, hotel, restaurants, social media, etc.…)
  • Found more intimate and focused events do better for conversion, e.g., outdoor cabanas doubled wine club conversion
• Virtual hospitality
  • pre-Covid started in-home tasting groups
    • Revolved around club members in their homes, up to 20 people
    • Blew away goals for sales and club membership
    • Also did recruiting for next tastings
    • Moved to virtual during the pandemic
  • Doing virtual for consumer, distributors, and country clubs
  • Building comedy and trivia night virtually
  • The entertainment part is still evolving
  • Corporate tasting packs for customers been a big virtual business 
  • Have a 360-degree virtual tour
• Marketing virtual
  • Started with the wine club
  • Leveraged social media
  • Word of mouth and referrals
  • Not a lot of advertising, just limited digital (Facebook and Instagram)
• Digital best practices - need to keep pace with constantly evolving technology, content matching to the audience is important
• Important to always keep things fresh - future release - chocolate truffles that look like the soil from various Napa appellations, with flavor profiles to pair with wines
• Other digital programs
  • Telesales - none pre-Covid, now a big business - not hard sales, but courtesy calls, customers enjoy hearing from the winery
  • E-commerce - release more content, find its building customer relationships
  • Website chat box - has been very effective

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“Even Cooler Than You Think” and “Where Wine Takes You” sum up not just what the Paso Robles region is about but also the names of marketing campaigns and the Paso Wine Country podcast.  Chris Taranto, Communications Director of the Paso Robles Wine Country Alliance, tells us about the diversity, friendliness, and character of the Paso Robles wine region.  As well as how they promote and position the region within the state and across the country.  From Zinfandel to Rhone blends and weekly zoom webinars to consumer events, Chris educates us on all things Paso.  

Detailed Show Notes: 

• Paso Robles wine region overview
  • Halfway between San Francisco and Los Angeles
  • Along the California Central Coast (Monterey to the North, Santa Barbara to the South), close to the Pacific Ocean
  • 41,000 vineyard acres, >600,000 acres total
  • 11 different AVA’s
  • 60+ different grape varieties
  • ~200 wineries, ~170 physical wineries
  • ~600-2,200 ft elevation for vineyards
  • Population - ~30,000 people in town, ~100,000 in county
  • Up to 100+F during the day, but cools off to 50F at night due to the impact of Estoro / Morro Bay creating invection fog through the Templeton Gap
• Rhone varietals
  • Syrah introduced by Gary Eberle in the late 1980s, early 1990’s
  • Tablas Creek (the Haas and Perrin families) - imported grapevines from the Rhone (Chateau Beaucastel, owned by Perrin’s) and propagated
    • TCV (Tablas Creek Vineyard clones) - shared these clones, jumpstarting the region to embrace Rhone varieties
    • Perrins chose Paso due to calcareous soils, similar to limestone
• AVA’s - started in 1983 when Paso Robles AVA was created
  • York Mountain was excluded because the owner of land in the area believed it was very different from the rest
  • Submitted for all 11 AVA’s at once, took 7 years, approved in 2014
  • Have conjunctive labeling law - wineries must include both sub-AVA and Paso Robles, which must be of equal or greater font size
• Paso Robles Wine Country Alliance
  • Mission: promotion and preservation of Paso Robles
  • Marketing organization - preserve the Paso brand and brand integrity
  • Works with member wineries with educational tools
  • Market Paso to different audiences - consumers, sommeliers/retail buyers, journalists (3rd party endorsement)
  • Metrics that are measured
    • Consumer events - P&L, experience surveys
    • Advertising - reach
    • Articles / PR - audience numbers
  • Members are primarily growers/vintners but capture the whole wine community, including hotels, restaurants, and associate memberships (e.g., suppliers like bottle or label manufacturers)
  • Fees are a sliding scale based on case production or vineyard acreage, room count (for hotels)
  • Almost all wineries are members - ~190 of 200 wineries are members
  • Have sponsorship opportunities for suppliers -> allows them to speak to the members
• Trade & consumer events
  • In-market events are mostly budget neutral
  • Local events - profits help augment the operating budget
  • Volunteer participation for wineries, most have no fee (except for one annual event in Cambria)
• The geographic focus of promotion
  • California (south of Paso is a big feeder market, Bay Area more challenging due to competition with Napa / Sonoma)
  • TX, IL, NY, FL also important
  • Export - mostly Canada, and most activities through the Wine Institute
• Most effective promotions are 3rd party endorsements / PR strategies - journalists, bloggers, etc.…
  • Advertising more to get lots of eyeballs at once
  • Hosts a weekly Zoom webinar - “Paso Wine Hour”
  • Tell members to tell your own true story; Paso is full of mavericks and cowboys, no real rules
  • Paso Wine tries to layer up personalities of Paso in PR messages
  • Podcast - “Where Wine Takes You”
    • The audience has mostly been driven organically
    • Anecdotal evidence of driving sales, but no hard data yet
• Member education
  • Have a monthly education series - for growers, winemakers, tasting room managers, hospitality
  • Bring in expert guests to provide educational tools for their businesses
  • One of the next ones - building a playbook on how to present your brand on digital platforms best
• Tourism important for the region
  • 2015 - tourism economic impact of $1.5B for Paso Robles ($1.9B for the county, San Luis Obispo) with tourism spending of $194M
  • A lot of messaging is to drive people to visit
  • Consumer tagline - “Where Wine Takes You”
• Major issues for Paso Robles
  • Water - there’s a moratorium on new vineyard planting within the water district. It doesn’t get a lot of rain
  • Wildfires - no meaningful impact in 2020, but a constant issue
  • Sommelier/trade perception that the region is too hot for grape growing - came up with the tagline “Even Cooler Than you Think” - though wines may be high alcohol, they are balanced
  • Consumer messaging
    • Don’t try too hard to understand the AVA map yet
    • Get the personality of the region - there's friendliness to it
    • Be adventurous. There’s lots of diversity

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After falling in love with wine through a year abroad in Burgundy in high school, Nick Ramkowsky, Owner of Vine Connections, has built a premium national importer of South American wines and sake. Nick discusses the types of wine importers in the US, how he thinks about building a brand portfolio, and the keys to success as an importer in part 1 of this 2-part series.

Detailed Show Notes: 

Vine Connections

• A national import and marketing company based in CA and has a retail license
• Focus on regions with winemaking history but not globally recognized
• Started as a broker and distributor (when Nick was 25)
• Worked with Billington Imports and met Laura Catena, went to Argentina, and fell in love with wines
• Established 1st premium portfolio of Argentine wines (1999-2000) - least expensive wine was $24 retail
• 2002 - imported sake
• 2013 - 1st premium Chilean wine portfolio
• Has wholesalers in all 50 states, including RNDC (#2 in the US), Breakthru (#3), and other smaller ones
• 30 people today, from 2 originally
• Split company in 2 - Kome Collective (Japanese), GeoVino (wines)

Types of wine importers

• All importers are also distributors in their state
• Sales Geography - can be state, regional, or national; Vine Connections is national for control over brands all the way through, exclusive for all 50 states, contracts w/ producers outline the responsibilities of importer and producer
• Portfolio Focus - world or specialized; Vine Connections is specialized in S America and sake

Role of importer

• Bring wines in, warehouse, sell to distributors, & work with sales teams to sell to various channels (on-premise, off-premise, chains)
• Work with press, do consumer events, lots of training and education

Sourcing wines

• Looks at people first, then property, and consistency in product and pricing
• New wines don’t cannibalize the current portfolio
• Complementary driven by a sense of place and identity, even if the same region, varietal, price point
• Looking at expanding to more regions to take advantage of the distribution network
• Originally specialized to have more of an identity as an importer
• Optimal book size - has ~120 SKUs in portfolio vs. ~900 at some importers and ~10,000 for RNDC as a distributor; optimal size varies by business model (e.g., focused on chains vs. independent stores/restaurants)
• More in not better - high cost to inventory and more challenging to prioritize

Pricing wines

• In general, SRP is fixed, but each state is different (based on freight & tax differences, distributor margins (larger tend to work on lower margins), and retailer margins (some take less margin)

Selling wines

• Used to self-distribute in CA, now uses wholesalers (couldn’t service all the accounts, wanted to focus on national sales)
• Distributor salespeople don’t have time to focus on everything
• Importer needs to generate interest in brands

Key elements for success

• Find good partners - share the same philosophy (quality, value, consistency), support each other
• Vine Connections doesn’t add new wineries often (only one new Chilean winery); only one winery left in 20+ years
• $1M revenue/employee benchmark for success

Vine Connections differentiation - good communications, both in transfer and transparency (e.g., sales by state), consider Vine Connections an extension of the winery

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Educating students about wine is more about the “psychic paycheck” than the monetary one for Peter Marks MW, partner and Vice President of the Napa Valley Wine Academy (“NVWA”), the leading provider of Wine & Spirit Education Trust (“WSET”) courses globally.  Peter tells us about the different levels of the WSET (from Level 1 to Diploma), the full costs of wine education, and the benefits.  He also discusses the innovations happening with online learning, including sending wine kits out with their courses and best practices for virtual seminars.   Listen in on this deep dive into wine education from one of the foremost leaders in the field. 

This episode is sponsored by Sonoma State University’s Wine Executive MBA program.  A 17-month, transformative program that builds leadership skills and business acumen focused on the specific needs of the world of wine.  Learn more about SSU’s Wine MBA programs here.  If this is something you’re considering, the next session’s enrollment deadline is Feb 28, 2021, for courses starting in April!!  

Detailed Show Notes: 

• Peter’s background
  • Started in wine retail in 1981 (worked at Drager’s markets)
  • In wine education for the last 20 years (with Copia and Constellation Brands)
  • 2019 - joined NVWA and became a partner
• Being in wine education is more about the “psychic paycheck” - getting feedback from your customers and students
• Napa Valley Wine Academy
  • Founded in 2011, offering Wine & Spirit Education Trust (“WSET”) programs
  • Now the largest WSET provider in the world
  • An Approved Program Provider (“APP”) for WSET - it’s like a franchise, NVWA buys materials, study packs, and exams from WSET; grading is done by WSET in London
  • 65% of business in WSET, 35% other wine programs
  • Develop proprietary courses - e.g. - Wine 101, Wine 201, Napa Valley Wine Expert, Oregon Wine Expert, the Business of Wine (with Tim Hanni, MW)
• WSET
  • 4 levels, 1 through 4 (4 is called the Diploma)
  • Levels 3 & 4 provide more understanding of the subjects
  • The diploma includes the business of wine and is a precursor for the Master of Wine program
  • Geared towards all aspects of the wine industry, very broad view vs other programs (e.g. - Court of Master Sommeliers focused on restaurants/service and Society of Wine Educators focused on education)
  • Wine industry (or “trade”) participation in courses
    • Level 1 - ~90% consumer, 10% trade
    • Level 2 - ~75% consumer, 25% trade
    • Level 3 - ~40% consumer, 60% trade
    • Level 4 - ~10% consumer, 90% trade
    • More consumers are coming into the program
  • The benefits of a wine education, the 3 C’s of the WSET
    • Credential - showing your accomplishment
    • Confidence - knowing the facts about wine, speaking with confidence
    • Culture - participating in the culture of wine...the pay may be low, but being a part of the friendship and social aspects of the wine industry
  • ~100,000 WSET students/year - now the “go-to” wine education organization - it covers the entire industry and is global
  • Recent changes to the program - giving students what they want
    • Launched a Sake program
    • Split spirits from Wine for the Diploma
    • Introducing Beer soon
• Virtual classes
  • Has always been an option - was called “self-study” and had to go in person to take exams
  • Exams for L1 and L2 now offered online, L3 and Diploma cannot be because they include tastings
  • NVWA launched wine kits (wine samples re-bottled into small vials) for virtual classes - do virtual tastings with them, the wines are disguised to be blind
  • Had to learn how to better engage students online - using breakout rooms, polls/quizzes, reducing seminar times to 1-2 hours, best practice is to engage with students every 3-5 minutes
  • Do live webinars that are recorded
  • Students save money by not having to pay for travel to classes, academy saves a bit of cleaning of facilities
  • Pricing is the same as in-person, but not travel costs
• The cost of wine education
  • Course fees, wine (for Diploma ~200-220 wines are recommended to know, wine can cost $500-2,000 for samples), travel
  • Wine kits are included in course costs
  • Can have mentoring for an additional fee
  • Scholarships
    • WSET offers some, but after having passed for the top scores
    • NVWA has several partners for scholarships
      • Wine Unify for L1-3
      • Wine Access
      • The Roots Fund
      • John Hart (former NBA star) - for the BIPOC community
    • The diversity of students is growing
• The return on wine education
  • Constellation Brands paid bonuses for employees who passed WSET qualifications and also offered tuition reimbursement

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Historic influences of both France and Germany have shaped the region of Alsace and its wines.  Foulques Aulagnon, Export Marketing Manager of Conseil Interprofessionnel des Vins d’Alsace (aka - “CIVA” or “Wines of Alsace”) tells XChateau about how CIVA promotes this small corner of northeast France globally.  CIVA takes Alsace global to spread the word about some of the world’s most underappreciated wines, from Wine Trucks to an emphasis on food and wine pairing.  

This episode is sponsored by Sonoma State University’s Wine Executive MBA program.  A 17-month, transformative program that builds leadership skills and business acumen focused on the specific needs of the wine world.  Learn more about SSU’s Wine MBA programs here.  If this is something you’re considering, the next session’s enrollment deadline is Feb 28, 2021, for courses starting in April!!  

Detailed Show Notes

• Alsace background - “a pearl” of a winegrowing region
  • 38,500 acres
  • 2 million-year-old soils
  • 2nd driest wine region in France
  • 90% white wine, 10% red wine (all from Pinot Noir)
  • 25% of production is Cremant d’Alsace (sparkling wine)
  • German influence (varietal on the label)
  • Mosaic of soils and grape varietals (e.g., Sylvaner, Pinot Gris, Gewurztraminer, Riesling, Pinot Noir)
  • > 300-year-old family estates
• CIVA responsible for everything but the rules of production, with 3 major roles: 
  • Business monitoring and strategic planning
  • Technical viticultural support
  • Marketing communication
• Mission & purpose - increase positive awareness of Alsace globally and boost wine sales
• Main areas of focus (marketing side)
  • Public relations - programming with media and trade
  • Promotions and communications - in-store, social media, POS, educational materials
  • Commercial development - support wineries looking for importers, distribution
• How does CIVA measure success? 
  • Sales increase in value and volume
  • PR / press impact - readers reached and exposure
• CIVA members - every independent winegrower, co-operatives, and negociants - anyone in the AOC is automatically part of CIVA
• It’s a private organization but recognized by the French state
• Funding is through mandatory contributions by winegrowers with small support from the EU
• Market focus and support examples: 
  • Investing in over 15 countries
  • Historically active in EU, especially Northern Europe
  • Now more in the US, Canada, and Japan
  • Examples of support
    • Switzerland grocery store chain - provided media support to boost sales
    • Wines of Quebec - offered content and help to bloggers to produce content on Alsace wines
    • Provide info on food and wine pairings and consumer events
    • Provides information for visiting the vineyards of Alsace
    • Alsace Rocks - a 360-degree program of press, trade, and consumer events, started in New York City in 2018, went global afterward
    • Wine Truck Tour in Canada (Ontario and Quebec) - a food truck styled wine tasting with a terrace, tables, and chairs; competition to win Alsace wines, taste at your own leisure, and opportunities to share on social
• WWII Impact on Alsace
  • Became French again post WWII
  • History of being both German and French gives the region strength
  • But, only being consistent since WWII has resulted in Alsace being a bit behind in building its reputation as a wine region
• The leader in organic and biodynamic wines
  • In 2020, 32% of the wine was certified organic
  • 1st producer of biodynamic wines (in the 1960s)

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A tasting term, specific elements in the soil and grapes, and even geological elements and rock types; the term minerality in the context of wine has taken up a rather broad usage.  Robert and Peter explore a bit of the science, the use of the term as a tasting descriptor, and how the industry has used minerality as a sales tool.  Listen to grasp a hold on how the term is used and what it is used for. 

Detailed show notes: 

• Minerality as a wine term started in the 1980s
  • A tasting term - related to flint, matchstick, chalk, saline characters
  • Mineral elements - e.g. - potassium, phosphorus, calcium, etc…
  • Geologic elements - e.g. - quartz, limestone, etc…
• As a style of wine
  • Minerality is like a macro tasting term, like “fruity”
  • Can have sub-elements to the category, e.g. - reduction/sulfur related compounds, stone related, saline / salty related
• As a flavor, it is not from the actual minerals in the rocks in the soil
• Minerality could be a positive term for the absence of fruity and floral flavors in a wine
• It comes from a combination of terroir and winemaking
• Wines generally associated with minerality
  • Whites: Chablis, Sauv Blanc (e.g. - Sancerre), Gruner Veltliner, Alvarinho, Chenin Blanc, Rieslings, Assyrtiko
  • Reds: Pinot Noir, Cab Franc
• Using minerality as a sales tool
  • Some wineries have labels that specify rocks/soil types
    • E.g. - Didier Dagueneau’s Silex; Mullineux’s Schist, Granite, Iron; Dr. Loosen’s Blue / Red Slate Rieslings
    • But, these wines may not necessarily be referring to minerality in the wines
  • Sommeliers and restaurants tend to enjoy minerally wines and may have sections on their wine lists for them
  • Retail stores that are organized by wine style do not yet use the term, but may in the future
  • Randall Graham of Bonny Doon experimented with infusing rocks into wine, but that led to higher levels of other trace materials and was shut down by the government

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