Happy Valen-wine's Day

Consumer trends on Valentine's Day have been an interest of mine for years; having worked in the flower industry (at BloomThat) before business school, I have witnessed firsthand the buying power and huge spikes in sales that can change business' trajectories even after the holiday in an impactful way.  Naturally today, then, I was curious about how the wine industry fares on this holiday.

We'll state the obvious here: people gift or drink wine together on Valentine's Day.  Makes sense.

But just how much?

According to Nielsen, "Valentine’s Day is one of the top holidays for wine sales" and in 2017 came in at $620 million dollars.  That's not a huge surprise, but where my mind goes to is where can those in the wine industry take advantage of trends within a season that already sees an organic uplift?

One way is to watch the trends in types of wine consumed on Valentine's Day. According to Nielsen:

"While red wine remains a Valentine’s Day favorite, Americans increased their spending on white wine in 2017 by about $3 million compared with their 2016 spending. They also ramped up their spending on rosé wine, which boasted total sales of $11.6 million last year, up from $7.2 million in 2016. Sparkling rosé sales also increased nearly 7% last year, with Valentine’s Day sales totaling $5.5 million." (source)

This trend, while not wholly shocking, I believe has implications for marketing for Valentine's Day in the future. Looking back again to the floral industry, red roses are considered "on their way out" in favor of more trendy florals like pale pink peonies or white anemones.  I wonder if there's a way to not necessarily say red isn't trendy, but rather to market the newest, freshest way to celebrate with your Valentine.

Delectable

When it comes to tasting notes about wine, many minds jump to moleskins and leather-bound journals and inky pens. However, I’d probably end up with drips of pinot noir in my notebook. Thankfully, as with everything these days, there’s now an app for that: Delectable lets you track wine as you drink it.

The app instantly recognizes almost any bottle you take a photo of: it can identify the vineyard, year, type of wine, and even allows you to access historical pricing as well as ratings from fellow Delectable users and professionals alike.

For me, it’s been a great way to remember bottles that I’ve really enjoyed (because who’s ever going to remember to scroll back into your notes tab on your phone). Delectable prompts you to add a rating each time you upload a bottle, so the app can help you track taste preferences as well.

Turns out I downloaded the Delectable app 200 weeks ago. I was much more active on it a couple years back, though it’s still interesting to see what I’ve uploaded since then: in my “Tastes Insights” tab, I just learned that I’ve tracked wine from 56 regions (California, France, Italy, and Oregon were my top); pinot noir and petit sirah are my top styles; and I’m much more generous with my recent ratings than I used to be back in the day. One of my favorite wines was Gigondas 2011 from Olivier Ravoire (which I would not have remembered) and another was the Coppola Plum Label Petit Sirah (which I often remember).

Delectable isn’t the only wine tracking app out there: competitor Vivino also boasts similar features and user numbers. Delectable was acquired a little over a year ago by the wine company Vinous, which was founded by wine critic Antonio Galloni.

Pro tip: snap pics of the bottles in class on Delectable to remember all of the wine we drink this quarter and which ones you like the best!

The NBA Loves Wine

I just read a great article (linked here) titled "The NBA's Secret Wine Society." It talked about how many of the games greatest players are flocking to the world of wine.

Lebron James, Carmelo Anthony, Dwyane Wade, and Chris Paul are famously best friends off the court, and their get togethers are now defined by the wine each one brings. There is a sense of good natured competitiveness as to who will bring the best bottle, but all four, and many others in the league, are fascinated by the beverage beyond just name brand labels.

Teams from the Bay Area and Portland, or those that are visiting for a game, will oftentimes visit wineries on their days off as a way to unwind and learn more about how the wine is made.

One of my favorite quotes came from Portland Trail Blazers player, CJ McCollum. After scoring 50 points in a game, quite a feat, he said "We're going to have a lot of Pinot tonight!" According to current players in the article, Pinot was not always the celebratory beverage of choice.

We spoke in last class about the possibility of having athlete spokespeople for wineries. It seems like the NBA might be a good place to look.

More on the Commerce Clause

 One of my favorite podcasts, More Perfect, just came out with a podcast on the Commerce clause that I found particularly interesting given our discussion in class. I'm linking the podcast below - it's a really interesting listen!

The commerce clause itself is shockingly short - just 16 words. For reference - this is the entirety of the commerce clause: The US Congress will have the power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."

We learned in class about how the Granholm case (https://en.wikipedia.org/wiki/Granholm_v._Heald for more detail) invoked the Commerce Clause in it's argument, which was at least a small victory for wine shipments against the rigid 3 tier system. I thought it would be interesting to share a bit more context on the commerce clause, as it seems that there could be legal standing for further action on behalf of wineries and the wine industry as a whole (I'm not a legal scholar, and heavily biased wine lover, but still..).

This podcast shed more light on the history of how the commerce clause has been used. The first major case that invoked the commerce clause was Gibbons v. Ogden - essentially saying that the commerce clause prevents states (NY in this case) from discriminating against other states' companies' use to favor local companies. In this case, NY was regulating the use of their port such that out of state shipping companies either couldn't use the port or had to pay massive tariffs in order to support a NY based company. This seems like a pretty straightforward application in 1824.

The next case they bring up was in 1942, and expands the use of the commerce clause quite a bit. For background, the US was in the middle of the great depression and the dust bowl, and in order to support the economy, Congress began regulating the wheat market. They guaranteed the price of wheat, and capped farmers at farming 11.1 acres of wheat (so as to not flood the supply with the guaranteed price).

Filburn was a farmer in Ohio who grew all sorts of things, including wheat. He grew his allotted 11.1 acres to sell, then a few more (well, quite a few more) acres to feed the animals on his farm. A government official inspected his farm, and fined him for the additional acres. Stating that these acres were for private use, and not for sale on the market, Filburn sued the federal government.

Now, since we've all taken micro here at the GSB I think we understand why the government wanted to regulate this guy. If every farmer just grew the wheat they needed in addition to what they sold instead of buying it on the market, many big buyers (aka farmers with animals to feed) wouldn't buy wheat and the government wouldn't be able to effectively regulate the market. That being said, this was one of the first times (according to the podcast, I'm not a legal historian myself) that the government regulated private conduct in this way. Some argued that if the government could regulate wheat grown for private consumption, could they not regulate the dress a mother and child sewed together? Or even prosecute for child labor? Stay tuned for how this applies to to the ACA at the end..

The government won, and we're past the Marshall court era. This decision expanded the commerce clause's power a fair deal, but nothing compared to what's to come in the Warren court.

Then in 1964, the commerce clause saw a whole new arena - civil rights. In 1964 many restaurants were still segregated, even after the passage of the Civil Rights Act of 1964. For whatever reason (not the job of this post to go into...), integration of restaurants and other establishments just wasn't happening in many places. Katzenbach v. McClung saw Ollie McClung, the owner of a barbecue joint in Birmingham sued for not serving African-American customers in the dining room (only through the take-away business). How does this connect to the commerce clause? The primary two arguments were as follows: 1) This was not a local business, it was an interstate one and thus subject to regulation under the commerce clause. While Ollie's may think they are local shop, they buy most of their meat from a company that sources from all over the country. Their salt? Ketchup? Same thing. Their product is created from a long chain of interstate commerce. 2) By refusing to serve customers of a certain race, these establishments significantly hindered interstate commerce by restricting flow of certain people from state to state.

This raises two questions for me in regards to wineries and the 3 tier system. First of all, is there a case to be made that by not allowing wineries to distribute in a more direct manner, that the 3 tier system is inhibiting interstate commerce of the inputs of wine that are not local grapes? Specifically, could it be argued that the 3 tier system is forcefully reducing production of wineries and therefore reducing how much they would engage in interstate commerce if they could produce more? (Admittedly a bit of a stretch, but hey - look at Katzenbach v McClung!). Second, if the commerce clause in McClung is essentially saying "you can't restrict service/sales to certain groups, that will impede the free flow of interstate travel and interstate commerce", could that not be said too for out of state winery visitors who want to purchase and ship wine home from that winery? Okay, I'm clearly stretching my legal training, which is entirely via podcast, but the parallels were interesting nonetheless.

For what it's worth, though, it seems the commerce clause is losing some steam with more conservative contemporary court constructions. This use of the commerce clause was again revisited in regards to the ACA - does the commerce clause have the ability to compel a private citizen to participate in commerce (via the individual mandate)? This is ever so slightly nuanced from Filburn.

Here's the episode for those interested! http://www.radiolab.org/story/radiolab-presents-more-perfect-one-nation-under-money/

K&L Wine Merchants

Professor Rapp has previously mentioned K&L in class, and I wanted to write a bit more about it because it's a store I went to a few times in San Francisco and was consistently impressed by its quality.

First, I was surprised by their selection of older-vintage wines at affordable prices, particularly for Bordeaux and certain Napa cabs. I previously thought drinking older wine was only for fancy people -- those who purchased wine at auction, or stored vintages themselves for a long time. If you're interested in trying out older wine, K&L seems like a good place to start.

Second, I was impressed by the selection and quality of champagnes K&L offered. I previously thought that drinking "nice" champagne meant paying a lot for a brand like Dom Perignon or Crystal,  but K&L seems to offer many interesting vintage champagnes for a lot cheaper than those brands.

Third, I felt that there was a strong commitment to wine education at the store. Rather than being consistently upsold on product, salespeople I've interacted with consistently steered me to wines both slightly below and slightly above my initial price point, and helped me discover interesting new regions and varietals. They also offer wine storage on-site, for folks who may not have enough space, or the right conditions, to store wine in the Bay Area.

Fourth, although K&L only has physical stores in the Bay Area and Los Angeles, they offer a pretty well-designed website and affordable shipping rates to customers in other areas. I'd be curious what their split of wine sales is between online and in-store.

Two other interesting tidbits about wine shipping: first, the USPS will not ship alcohol under any circumstances, so K&L only uses FedEx and UPS. Second, it is a little more expensive to ship champagne with K&L than other types of wine (about $0.50/bottle or $6/case). I'm not sure whether this has to do with the size/shape of champagne bottles, or the conditions needed to properly ship champagne -- this may be the topic of the next blog post!

CIRQ. Deconstructing a Wine Label.

After Terry’s talk last week I found myself reflecting on the wine brands (and other products) that have stuck with me over the years. I realized that they all had a strong storytelling component, reinforcing Terry’s point that successful brands are all about telling an authentic, sticky story.

One salient example I thought I’d share with the class is Michael Browne’s label CIRQ. Michael Browne is best known for being the winemaker at Kosta Browne, an ultra premium California Pinot Noir producer. I was given a bottle of Kosta Browne Pinot by my boss as a present after a promotion and I was floored. I had never tasted a wine that spoke to me like this one did.

I naively went online to try and join their wine list, before I learned one does not simply join the Kosta Browne wine list. They have a waiting list of 3-5 years (!) to get an allocation of their single vineyard Pinots. Years later, I was lucky enough to get to visit Kosta Browne with a small group as part of a silent auction prize. Who did we see walking around the winery but Michael Browne! I ended up chatting with him for a bit, and he started bringing out wines to open for us (no this was not a dream!).

He absolutely lit up when he started talking about CIRQ, his foray into viniculture. While this wine is part of the “Kosta Browne family,” it is a separate brand. Kosta Browne sources the very best grapes from the best vineyards in Russian River Valley, while CIRQ is Michael Browne’s new side project to become a winegrower himself. He spent years finding two new sites in the western edges of Russian River Valley for this new venture, and the land he found is extremely special to him. Michael told us about his time performing in the circus in Wentachee, Washington as a young child, and how he learned to master several stunts to entertain his audience, making parallels between the physical and mental training required for both performing in the show and for mastering winemaking. And thus, CIRQ was born.

In thinking back to that story now, I realize that 1) it’s interesting he decided to make CIRQ a standalone brand and 2) you can easily see how a circus theme could have gone horribly wrong. On the first point while it might be tempting to leverage the strong Kosta Browne name for his new project, Browne was really taking a risk to try his hand at viniculture. As we’ve learned in class, a reputation takes years to build and can be destroyed in an instant. On the second point, it’s clear that Browne went through great pains to carefully think about branding and packaging for this wine to keep it out of gimmicky territory.

“CIRQ is a performance that happens once per year. A show that we are constantly rehearsing, sharpening our skills for and anticipating delighting you with.” - Michael Browne

The back label is made to look like an old time circus ticket, signed and numbered by Michael Brown himself. He has also turned his own handwriting into a font, and the label has a craft, hand-made quality to it. He explained that the small thin line under the name of vintage was color matched to the very unique soil in each location, emphasizing the importance of the terroir. He's created high quality videos that tell the story of each region and of the brand, tying everything together. Each allocation of wine also comes with a handwritten note from Browne and beautiful packaging. These small details stuck with me, and made me a convert before I even tasted the wine.

Piedmont's Barbarescos and Barolos

The Barolos always happen to be on the top shelf, an aspirational wine from Italy's Piedmont region. On rare occasions my fiancee and I will splurge on a Barbaresco from TJs or a local wine store, but we had never gone big for the Barolo.

Luckily one of these local wine stores was having a Nebbiolo focused tasting (the grape found in Barbaresco and Barolo), and we jumped at the opportunity to finally try some of each, side by side.

The first 5 wines were from 2013, 1 Barbaresco and 4 Barolos. The difference between the Barbaresco and the 4 Barolos was incredible, especially for wines produced from the same grape and grown within 10 miles of each other. The Barbaresco was bright and approachable, while the Barolos were incredibly dry at first. As the wine sat on the table for a longer period of time, the Barolos seemed to soften. This might be what's known as "opening up"?

However, the final wine was a 2009 Barolo, and it was one of the first times I've realized that aging wine really does help. Some of the posts on the blog have mentioned aging, and this seems like another data point to add to the conversation. It was an entirely different experience from the younger wines, and was one of the most exciting glasses of wine I've been lucky enough to try. I don't think it's going to become our table wine anytime soon, but it's nice to have a new idea for special occasions.