New wine brand - #TBT

I've been reflecting on Terry Wheatley's talk every time I've purchased wine since she came in. While I always knew I was mostly choosing a wine based on how much I liked the label, Terry's words made me much more aware of the strategic marketing that was going on behind the scenes of the creation of the label and in many cases the wine brand itself.

Last week I met a friend for a glass of wine, he brought a bottle of #TBT Rose (pictured below). The label featured artistic, square photos like those that you'd see on an Instagram influencer's feed. As a Northern Californian, everything about me screamed "LA" - which happens to be where my friend is from.

This got me thinking - if most people are truly buying wine for the branding on the bottle as opposed to what's inside, is there an opportunity to mass produce one wine but localize the label? We've seen from the exhibits in our cases that the economics are best on very high end wines and on mass-produced low end wines. If a wine brand were to create one wine (or maybe one white, one red, and one rose) for production across the country, surely it would be able to take advantage of economies of scale. Rather than marketing the wine under one label, the company could localize and customize the labels (but not the wine). They could create these "LA instagram type" labels for that region as well as one more localized for the San Francisco consumer, the sophisticated New Yorker, or the proud Boston sports fan.

I think that generally, there is a lower bound on the volume needed to justify the creation of a type of wine, currently identified by it's label. By allowing multiple wine names/labels to share the same wine, you could raise that lower bound for each individual wine name/label. This "hyper-targeting" of a wine (or at least increased targeting) could perhaps allow you to raise the price per bottle (the assumption here is that someone's WTP would increase the more they identify with the item they're purchasing). Perhaps this could be a way to make an increased margin on the $10-15 per bottle range!

 

Wine and the Arts - Marketing or More?

As Peter Mondavi Jr. was giving his talk last class an image on the projector behind me caught my attention:

Artist in Residence - Judy Donovan

My first thought - "what a nice life these winemakers lead, they get to have a home in the middle of paradise, travel the world getting inspiration from other vineyards, and now they also get an artist in residence?" 

But I did a bit of research after class and saw some really cool examples of collaborations that I think could uniquely drive brand value or expand a winery's audience. 

1. Faust x Faust Collaboration 

What do you do when your winery shares the name with a popular New York street artist known for graffiti? You could sue, or you could collaborate. Faust Napa produced a bottle in conjunction with Faust the Graffiti Artist's debut in the Museum for Contemporary Art in Berlin:

2. Napa Valley's Documentary Awards

Although it initially seemed like an odd pairing, the idea of sponsoring a documentary series actually could be a great idea. Named awards (such as the Charles Krug Legendary Filmmaker Award) is a great way to get your brand out with a well-heeled audience and also potentially attract celebrity endorsement. In addition, it's a great way to attract foot traffic to your wine region. There's no way that the award winners, spectators, and other members of the ecosystem for this show are not stopping by some wineries on their visit, and in so they are boosting the local economy after a very difficult year. 

Trader Joe's: Surprising Wine Player?

A couple of years ago, my mom and I visited Napa on a particularly rainy weekend. We had planned to walk around, but an especially demotivating downpour convinced us otherwise. We parked ourselves at the Mark Herold tasting room, and spent a few hours enjoying the wine and staying dry, exteriorly at least.

My impression of Mark Herold from that experience was of a premium winemaker. Their price point for low-end wines was in the $20 to $40 range, with higher-end varietals drifting closer to $100. That's why I was particularly surprised when I found a bottle of their 2013 Flux at Trader Joe's available for $7.99. As expected, Vivino puts the average price for that vintage around $22, making this a pretty steep discount.


Besides just the general public service announcement for this being a great deal (at least to my amateur understanding), it made me curious about Trader Joe's buying power among wine. Their strategy broadly is to deliver value by providing premium private-label products at low costs. One case in this class discussed "Two-Buck Chuck" -- their Charles Shaw budget wine -- as a quintessential example of that tactic.

I tried to look into the Trader Joe's wine buying specifically, and found surprisingly little information. Costco's wine buying team is routinely scrutinized given their outsized impact on the industry (described by some sources as the most powerful wine buyer in the world). Trader Joe's is privately owned and has only an estimated one tenth of Costco's revenue, which explains some of the lack of publicity. Additionally, much of the available information centers around the almost cultish following of Two-Buck Chuck and its entertaining backstory.

What I did find was that Trader Joe's originally gained traction through its wine offering. In an interview, founder Joe Coulombe said "We built Trader Joe's on wine first, then food. I tasted 100,000 wines, and most weren't wonderful. They were submitted to us by desperate vintners." It seems that they're still focused on living up to that legacy.

Trend to Watch: Natural Wine

There's a new trend on the rise in a category called "natural" wine. At first blush, this seems like the least important to a consumer: "natural" as a designation is completely unregulated (unlike organic, which is certified by the USDA, or biodynamic as defined by the Demeter Association). In other contexts, like on a carton of eggs, the word natural is functionally meaningless. What would it even take for eggs to not be natural?

Natural wine, however, is loosely defined as wine that is hand-pressed and unfiltered. Additionally, there are usually no sulfites (or any other chemicals) added to the wine during the production process, which can add some variability to the final product. This means, among other things, that there is often more sediment in the wine. Sometimes the wine ends up a little bit effervescent (lightly sparkling).

While most people would probably struggle to taste the difference between an organic or non-organic wine, natural wines have a distinctive "wild" characteristic that has helped create a category among discerning consumers. You can find natural wine bars popping up in places like New York and Paris, and Bon Appétit named natural wine its 2017 drink of the year. There was even an entire book published about natural wine last year for those who are particularly eager to learn more. Or, you can just grab a bottle for yourself at Terroir to see if the hype is all it's cracked up to be.