French attitudes toward wine

I came across an interesting article this morning detailing a bit of a backlash against health authorities in France.

https://www.washingtonpost.com/world/europe/in-france-is-wine-still-a-national-treasure-or-is-it-a-health-risk/2018/03/05/729dfd74-2082-11e8-946c-9420060cb7bd_story.html?utm_term=.95afa26d4f97

Critics of the large amount of wine consumption in France are calling for more restrictions around wine and alcohol in general. According to the WHO, "French people over the age of 15 consume 3.2 gallons of “pure alcohol” per capita each year on average". These critics cite alcohol as the source of domestic violence, suicide, and accidental death, and are calling for health organizations to stop recommending alcohol "in moderation" and instead plainly state that alcohol (including wine) is just bad for your health. 

Macron, standing strong with the wine industry, insists that wine is perfectly fine and that he has wine with lunch and dinner every day. Interestingly, he says that there may be health effects from drinking spirits or beer, but not with wine. This is particularly curious, since wine has higher alcohol content than beer.  

I found it interesting to see this health movement in a country that holds wine so closely to it's national identity. It will be interesting to see how calls for public health interplay with the economics of the French wine industry and national identity in France. 

How to Pour Wine

Have you ever been impressed by the wine service in a fancy restaurant, but not sure exactly what the sommelier is doing that made you felt "nice"? Have you ever wondered what's the best way to serve wine at the fancy dinner party that you are hosting? In this post I'd like to share a few tips on how to serve wine like a professional.

Setting: assume that you are hosting a fancy dinner party and your guest of honor brought a beautiful bottle of 2012 left-bank Bordeaux. You have a party of 6 with both men and women.

Preparation: ideally you would have a clean white towel folded and draped on your left arm (you are right-handed), and a corkscrew in your pocket. You can skip the towel - not a big deal at home. Wine glasses are already set on the table on the guests' right. 2 coasters on the table (one for the cork, another for the bottle - no big deal if don't have them).

Temperature: I generally don't like splitting hairs with serving temperature. I prefer 55-60 F for red wines and a tad colder (50-55 F) for whites. If you don't have a temperature controlled cellar, chill the red a little bit in the fridge (~30min) before serving.

Presentation: hold the body of the bottle in your left hand and the neck in your right hand, label facing the guests, and present the vintage, appellation, and winemaker to your guests. Key here is label facing guests.

Opening the bottle: cut the foil from under the lips (clean cut), wipe the top with your towel (to get rid of mold if any), remove the cork using your preferred method, then wipe the top again (to get rid of cork dust). Put the cork on a coaster on the table.

Test pour: this is your guest's bottle... so you can skip it if you want. Or you can pour a little bit in your own glass, smell it (key here: don't drink it), and say, "ah that's beautiful!" Don't test pour for any of your guests.

Pouring: start with your guest of honor, then the ladies, then the gentlemen, in a clockwise order. For a party larger than 8 or if space is limited, it's okay to just pour clockwise. Always pour from one's right side (if seating area permits). Pour for yourself in the last place. After each pour, wipe the top of the bottle with your towel.

Finish: put the bottle on a coaster on the table. Enjoy the lovely bottle with your lovely guests.

In a fancy restaurant, the wine service is almost like a ceremony and can get quite detailed. However, the key components are roughly the same as outlined above (except that the sommelier will present to and test pour for you). Next time you order a bottle of wine at a nice restaurant, you'd notice those details that the sommelier performs for you!

Biondivino in Town & Country

My parents were here this weekend so early last week I went to Biondivino in Town & Country right near the Cheesehouse to spruce up my beautiful Schwab residence with a few bottles of wine. 

The associate helping me immediately asked if I had been in a Biondivino before as the main store is in SF, and when I said no, she went into a long description of why I was no longer in a typical wine store. As the website states, "our shop is more like a 'living wine list'. Commercialism and scores don't matter here – instead we focus on quality and history. We cover Italy top to bottom and hand select our portfolio of wines from smaller producers, featuring many organic and biodynamic wines as well as the harder to find cult wines."

Maybe I am just a sucker for a good differentiation pitch, but it really did feel like a different experience. The store itself is very minimalistic compared to the usual wine stores that feel almost like they are owned by a hoarder at times.   I am admittedly a novice when it comes to wine, but loved the focus on Italy and on organic/biodynamic wines. In a lot of ways, the narrow scope made the entire experience a lot less overwhelming. My choices were fewer, and on a sleepy Thursday afternoon in Palo Alto, I felt no sense of rush or stress by the sales associate. I highly recommend it to all! 
Picture of store front:

Wine as an investment

In this week's class, Carol mentioned that most people drink wine almost too soon now, and fewer people are collecting wine for investment purposes. There are many reasons for this, aside from people's shrinking attention-span. Cellars can be expensive to own and maintain, and for beginners, it is difficult to tell which wines are truly investment worthy.

Nevertheless, for people interested in investing in wine but do not want to physically store the wine themselves, I found that there are wine investment funds that are dedicated to buying wines with growth potential, and there are stock exchanges for wine (such as Liv-ex).

Here is the wine portfolio of the (UK) Wine Investment Fund, all their wines are stored in government bonded warehouses to avoid VAT. 

There are many reasons fine wine can be a good investment. The good investment-grade wine provides good risk-adjusted returns, and serve well as a portfolio diversifier. According to Liv-ex, fine wine investment has seen consistent annual return of about 12.9% since 1988. Wine investments can also be used as an inflation or currency hedge. Wine investment has existed for hundreds of years, and it is not going away. I am wondering if there are potential business opportunities to do crowd-funded wine investment, offering investors the options to "drink or sell" in a couple years. 

Wine in a can?

As I was researching innovative trends in wine, I came across a few interesting wine brands that decided to sell wine in cans. I was intrigued to find there has been a revolution since 2004 in alternative packaging for wine. More recently, a study done by the Texas Wine Marketing Research Institute found that millennial are attracted to functionality and convenience when it comes to packaging. While there is still stigma against boxed wine, people are becoming more open to alternative packaging that are done well. After all, there are advantages that come with canned wine, it is easier to transport, and more convenient to bring to locations such as the beach or a camping trip.

Successful canned wine companies usually have a strong social media presence, from instagram to their website, they convey a strong message to their customers about the benefits of canned wine.
Take The Drop for example, its website tells its founding story boldly and speaks directly to its target customers.

The drop also has an instagram account that promotes the active lifestyle with The Drop.



Would you drink wine from a can?

The Vino Volo Challenge

Like any true consultant, I've spent my fair share of time at a Vino Volo. One of my old managers has a favorite (self-created) airport game, which he calls the "Vino Volo Challenge." The rules of the game are simple:

1. Arrive and sit down at a Vino Volo
2. When you hear the first boarding announcement for your flight, order your first glass of wine
3. When you hear the next boarding announcement for your flight, order your second glass of wine
4. And only when you hear the final boarding announcement for your flight, pay your bill
5. Leave and board your flight

While that's one type of Vino Volo challenge, during class yesterday I was struck by another. I think that while the Vino Volo loyalty program is an interesting play, it will be difficult for them use the program to create value. When designing a loyalty program, there are usually two primary ways to directly generate incremental value: the first is to get an additional visit from a customer (which could be by encouraging them to switch to you from a competitor or by incentivizing them to come back when they otherwise might not have), and the second is to get a higher total ticket (either by higher priced items or add-on items). 

One difficulty for Vino Volo is that, since they're currently only operating in airports, there isn't a clear path to driving an incremental visit, which is a big source of value for other loyalty programs such as Starbucks Rewards. And since they're often the only option for travelers looking for an airport wine bar, they're not necessarily encouraging customers to switch from a different wine bar to a Vino Volo, which is the game for airline or hotel loyalty programs. Therefore, the natural play for Vino Volo seems like it should be driving higher total ticket (likely through up-selling to more premium wine or adding on food), but offering members a $2 wine taste on each visit seems like it's likely cannibalizing otherwise full-price sales. Even a simple change to offering a $2 taste after five visits or a $2 taste with the purchase of an appetizer seems like a more logical way to design the program. 

Beyond just the in-restaurant benefits the program could provide, I was surprised that Doug didn't have much to say about how they planned to use the program to learn about and build deeper relationships with their customers. I spent a few minutes brainstorming ways that Vino Volo could leverage their loyalty program, and here were some initial ideas:

• Track customer wine purchases to then offer them personalized recommendations
• Partner with airlines to give discounts to frequent travelers (could be a good sell for lay-overs or flight delays)
• Use the app as a platform to teach consumers about different wines, and sell wine flights alongside with tasting notes
• Track customer travel to determine next airports in which to open new locations
• Partner with wineries to encourage customers who've tried their wine at Vino Volo to buy in-store or visit the winery

I'd be curious to hear of other ideas for how they could take advantage of the customer relationships they're building (and data they're collecting). Any thoughts?

Also if you're feeling ambitious, I'd encourage you to try out the Vino Volo Challenge on your next trip. It's certainly a fun (and not at all stressful) experience :)

The Sideways Effect

While reading the case for this week, I was inspired to learn more about "The Sideways effect." Sideways, a 2005 Best Picture nominee at the Academy Awards, featured some memorable scenes that arguably single-handedly boosted the reputation of pinot noir and hurt that of merlot among American consumers. Here, Paul Giamatti's character explains why he is so into pinot:

In a perhaps an even more memorable scene, he makes known his feelings towards merlot:

(clips courtesy of https://www.npr.org/sections/thesalt/2017/07/05/535038513/the-sideways-effect-how-a-wine-obsessed-film-reshaped-the-industry)

To understand if this movie truly had an effect on wine industry sales, a man named Steven Cuellar put his Ph.D. to good use and wrote a paper on the subject (https://www.winesandvines.com/features/article/61265/The-Sideways-Effect). His analysis corroborated "The Sideways Effect", although he found that the positive effects on pinot noir sales outweighed the negative impact on merlot sales. He also found that the movie contributed to an overall increase in wine consumption.

Some claim that we are still continuing to feel the aftershocks of "The Sideways Effect," arguing that merlots are now underpriced relative to their quality. I grabbed a bottle of the Cannonball Merlot from Yoav when he was in class, which I'm now even more excited to try (although it was an especially good value for a bottle of wine given it was free). If I don't end up liking it, I can always pull a Paul Giammati and just leave...