Conjoint & Wine

Before the GSB I worked for two year in economic consulting, and about 80% of my time was doing conjoint analysis. Conjoint analysis is a really common tool in surveying and marketing to determine how much a consumer is willing to pay for a feature of a product. For example, are you willing to pay more for a jacket that is red or blue? Wool or polyester? And how much? The way that it is (generally) done is by showing consumers a few different options of a product, and seeing which one they select. So the study might show you three items:

(1)  A red jacket, made of wool, produced in America, priced at $100

(2)  A blue jacket, made of wool, produced in Bangladesh, priced at $120

(3)  A red jacket, made of polyester, produced in America, priced at $80

After showing a variety of different selections to thousands of people, researchers can parse out your willingness to pay for each attribute of the item (e.g., I am willing to pay $10 more for a red jacket than a blue one).

In academia, some very classical studies have been done on wine. There are multiple articles written by two professors in Spain (Mercedes Sánchez and José Maria Gil) that evaluate consumers’ preferences on wine from two different Spanish regions – Aragon and Navarre. One that I find particularly interesting evaluates the difference in consumer preferences by the outlet where they purchase (wine shops, supermarkets and directly from the producer). Here, instead of evaluating exactly willingness to pay, they used a slightly different model and evaluate the attribute that has the biggest impact on a consumer’s decision. They find that price is the most important aspect for wine shop consumers, origin is the most important attribute for supermarket buyers and vintage is the most important for those who buy wine directly from the produce.

What do you think are some potential reasons for this?

Put a Cork in It?

A couple nights ago, after a couple glasses of wine, I was opening a wine and the cork broke because we had a cheap wine opener. Some of the cork got into the wine and as I was straining out the cork so I could drink the wine (waste not, want not), I was wondering, why do they put a cork in it? Why not a screw cap? So, I researched a little bit about the screw vs. cork debate. Apparently, the use of corks has been supported because they allow wines a little bit of oxygen to age while screw caps historically did not. Screw caps had initially only been used on cheap wines but as caps became more acceptable, decent whites that are meant to be drank young started to use screw caps. Fast forward to today, screw cap technology has improved and can allow bottles to breathe. In fact, unlike corks which are all unique and thus allow different levels of breathing, screw caps can be constructed to allow the specific amount of oxygen you want. So, to me, it seems that screw caps are a no brainer. I personally hope to see more screw caps on wine going forward. I’d be interested to hear any reasons corks should create better quality wine that I might have missed. However, my lazy side hopes that my belief in screw caps being just as good as cork, if not better, isn’t dispelled.

Why It’s So Hard to Sell Wine on the Internet

I recently read a Bloomberg article titled, "Why It's So Hard to Sell Wine on the Internet" and I found it quite fascinating as it hit on some themes we have discussed in class. 

https://www.bloomberg.com/news/articles/2018-02-13/the-secret-to-selling-wine-online?mc_cid=eef05f185f&mc_eid=165016ea80

As the article writes, a major reason it is so hard to sell wine today is, "About 25,000 different wines are for sale right now, says Nielsen, with 14 percent of them having hit the market in the past year. Not even the most soused sommelier can keep up, let alone everyday drinkers who, if lucky, find a label they’ve tried before."

As we have seen through multiple guest speakers, brand, design, and a good story are crucial (along with delicious wine) to sell large quantities of wine in today's world. However the company highlighted in the Bloomberg piece, called Winc, decided to go all-in on the Silicon Valley approach and use data to figure out what their consumers wanted. By analyzing what wines they liked, the commonalities amongst them, etc, they were able to design a wine from scratch to hit on their demographics needs. Is this the future of wine? What is the balance between making traditional wines the traditional way and using data and technology to invent the perfect wine for a particular group at a particular price point? For cheap wine and self-centered millenials is this going to lead to the growth of "wineries" such as Ava Winery, "Wines without Vines", a San Francisco start-up that is making synthetic wine without grapes – simply by combining flavor compounds and ethanol?

Year of the Dog: Wine for Chinese New Year

Especially given the case we read about the Chinese wine industry a few weeks ago, it is an appropriate time to talk about what wines will be served during Chinese New Year, which is this Friday! It is the Year of the Dog and with Chinese New Year comes a plethora of dishes that wine can be paired with including pork dumplings, suckling pigs, spicy beef stews and clear broth noodle soups. 

The most traditional alcohol on Chinese New Year to drink and to gift is baiju - a clear alcohol that translates to "white alcohol" that is 51% alcohol (ouch!) Over the years though, wine is taking footing as a part of the alcohol of choice in Chinese New Year celebrations - below are some recommendations of wines that I have had while eating different types of Chinese New Year meals:

* Meat on Meat - there are so many preparations of red meat during Chinese New Year like a Shanghai Styled Braised Pork Belly that a Merlot would be a perfect way to balance the heavier dishes. 

* Peking Duck - there will be tons of poultry like Peking Duck and white vinegar chicken that a Côtes du Rhône that will balance out some of that fattiness. 

* Veggies - there will be heavier vegetables during Chinese New Year like Garlic Eggplant or Sweet and Sour Three Veggie Stir-Fry which a nice Chianti wine will offset with its more fruity taste. 

* Extra Spice - My favorite Chinese New Years are the ones I have spicy Sechuan food at. That numbing peppercorn spice is addicting but a Reisling will help to cool you down some in between bites. 

Hope everyone has an opportunity to celebrate Chinese New Year this weekend and maybe try one of these pairings. Gan Bei!

What's your type?

“What kind of wine do you like?” “Would you prefer a Pinot or a Cab?” “Have you had this one before?

As a wine amateur, these persistent questions cause me anxiety. By now, I should have mastered a more polished version of “Uhh, I’m not really sure” (the actual answer to all of those questions). But I haven’t. 

A few years ago, I tried in vain to start an Excel sheet listing all of the wines I had tried. There were columns for brand, vintage, tasting notes, and even with whom I had had it, to jog my memory. The sheet made it to all of six entries.

Last year, I turned to technology. There are several apps that allow you track wines, but I’ve ended up using Vivino. With it, you can take a photo of a wine bottle, and it will add that bottle to your list of wines, allow you to rate it, and tell you information on the bottle (tasting notes, grape varietals, average price, etc.). So far, it’s been helpful to recall something I’ve had before, since I now have a list on my phone. It has also helped me think more critically about wine I drink, since it asks you to rate the wines you drink. However, I still have no idea what “my type” is when it comes to wine, and I still linger aimlessly in the wine aisle when trying to find a bottle to bring to a party.

Incidentally, wine experts seem to dislike the apps, perhaps because the app’s price and rating features could skew your perception of the wine. I was once repeatedly told at a GSB Wine Circle event, “You shouldn’t do that… just taste the wine” when trying to log wines with my phone. Alas, getting smart about wine is hard work. But some investors seem optimistic: as raised by Professor Rapp in class, Vivino just raised another $20m this week, and its user base continues to grow.

Has anyone found a good system to better remember and recall wines that you’ve had, and discover your own wine preferences? In the end, maybe I just need to drink more wine. 

Where was the wine at the Olympics?

Last week, I was in PyeongChang at the Olympics. In short, it was amazing. The longer version of the story was that there were a few minor hiccups. And really, I mean minor, because let me repeat, it. was. amazing. As we enjoyed the games, we faced a few challenges related to food and beverage consumption (not the least of which was that Korean cuisine is not vegetarian friendly). Dietary restrictions aside, we often found ourselves asking a pretty simple question: Where was the wine? Not to mention the social enjoyment of wine drinking that my friends and I are accustomed to, in this specific case, the frigid temperatures would have certainly been mitigated by a glass of red wine (certainly more so than the cold beers more easily available). In fact, an article in Wine Enthusiast titled "Where to Eat and Drink in PyeongChang, South Korea" doesn't even mention where one might find a nice glass of wine (or even any glass of wine for that matter). Rather, it speaks of beer and soju cocktails, which are much more typical of the Korean preferences.

One might argue that selling wine at the Olympics could be an opportunity to showcase Korean wine and make a name for the industry on a global stage. The problem here is that South Korea doesn't have much in the way of domestic (grape) wines to showcase. The best example I could find was the Korean version of Two Buck Chuck: Jinro House Wine, which sells for 2,500 KRW per bottle (see below for photo). Here's a small sampling of reviews I could find:

• "Well firstly it’s nice that Korea finally is producing some reasonably priced wine plus it’s domestic which is also nice. However the wine itself is merely grape juice with a kick, it’s not really wine. Honestly the phrase “Mutton dressed as lamb” comes to mind when you first drink a glass." 
• "It's a mere grape juice with alcohol. Doesn't have any hint of wine."
• "It is overly sweet, and in my opinion, it is undrinkable."

... okay you get the point. 

Sales of wine (by volume) in South Korea have been declining since at least 2011, though sparkling wine and rosé are two growing segments (but also not what I want to be drinking in 15 degree temperatures). Local production is essentially limited to non-grape wines, such as takju or cheongju; over 99% of grape wine (sparkling and still) is imported from other countries.

But then the next side of this questionis that with so many visitors from all over the world, why not cater to international preferences and have some available for concession? Maybe international wineries want to take advantage of the global stage? Interestingly enough, the import tariff on wine from the U.S. into Korea was eliminated in 2012 (thanks to a free trade agreement), and the taxes and tariffs now only apply to beer and distilled spirits. I'm not sure whether other regions enjoy similarly friendly trade policies, but I'm certainly left wondering why at least no U.S. wineries took advantage of the captive audience to make what could have been fairly massive sales. There were at least 10 eager customers in us GSBers, and I'm sure there would've been thousands more. 

Korea's finest. 

Sources: Euromonitor, www.ttb.gov

Premiumization of Wine as Art

In March 2017, modern artist David Hockney created a label for the Rothschild family's Château Mouton Rothschild 2014 vintage. This is now a regular occurrence for French wine, spirits and even water brands. In 2013, Dom Pérignon partnered with Jeff Koons and Perrier developed limited edition bottles in collaboration with the Andy Warhol Foundation. It strikes me that this is yet another example of how Rothschild is seeking ways to effectively position its wine as a premium product. 

While joyful and whimsical in nature, this label marks the anniversary of Baroness Philippine de Rothschild’s death. David Hockney was chosen, according to Philippe de Rothschild by way of Women Wears Daily, as Hockney was friends with the baroness. "They met 30 years ago, when they performed in a play for a small New York-based theater company together and kept in touch until the baroness’ death." As Director of Development and Strategy Jean-Luc Vincent said in "Domaines Barons de Rothschild Lafite: Plus ça change...", "this is a conservative family operation with a great deal of pride in maintaining its unique quality reputation [...]." This branding decision is a way to open up the privacy of the Rothschild family to their consumers to promote a sense of exclusivity.

The selection of Hockney as a way to represent the vintage is no coincidence. In 2017, Hockney had a major retrospective at the Tate Modern in London, an opening at Centre Pompidou in Paris and a show at The Metropolitan Museum of Art in New York. The exhibit at the Met is open through February 25th!

Source: http://wwd.com.gsbproxy.stanford.edu/fashion-news/fashion-scoops/david-hockney-chateau-mouton-rothschild-wine-label-10837672/