Contents:
What is this about?
I have developed a deep affection for wine. It all started 17 years ago when I first tasted Sauvignon Blanc from Marlborough. A year later, I fell in love with wine when I spent a week pruning vines in the oldest vineyard in the Americas. While I really enjoy drinking wine, my genuine affection for this beverage comes from the mindful tasting process. It allows me to appreciate delicate nuances that transport me to different times or places. As time passed, I began to develop cognitive pleasure from wine by recognizing the regions, grape varieties, and similarities between wines.
However, it’s important to note that this paper is not a love letter to wine. Instead, it aims to ignite crucial discussions that the wine industry urgently needs to promote to ensure its survival. These conversations are necessary to encourage more people to engage with wine and counter the current decline in demand. Our focus should be addressing the lack of interest among newcomers to the world of wine, particularly Millennials and Gen Z. By 2030, these two generational cohorts will comprise 54% of the population aged 21 to 80[1], and the wine industry is not doing much to engage them. If we want younger generations and newcomers to like and buy wine, we must alter the current approach to selling wine. This new path will require us to consider wine as a product that goes beyond the bottle and rethink technology’s role in the overall strategy, starting with e-commerce.
Where is wine e-commerce standing in the US?
The United States has been the world’s largest consumer of wine for over a decade[2], fueled in part by strong double-digit growth in the early 2000s. However, since 2016, this growth has slowed down, and recent estimates indicate a YoY decline of 0.90%[3] in total wine volume in 2021. In response, the wine industry has turned its attention to online sales as a diversification strategy. However, while online wine sales have grown, it has not been enough to offset the overall decrease in volume and remains a nascent channel for wine.
The COVID-19 pandemic and subsequent closures and restrictions significantly changed online alcohol sales in 2020, with a 150% YoY increase. E-grocers like Walmart and Amazon experienced 238% YoY growth, while marketplaces such as Instacart and Drizly saw a remarkable 277% YoY growth. E-grocers already had an e-commerce infrastructure and could further activate the number of locations that offered alcohol online[4] or benefited from retailers that activated their online channel as a necessity in the case of marketplaces. Alcohol and wine e-retailers like Total Wine, Wine.com, and Bevmo also gained traction, experiencing a 151% YoY growth in 2020. However, the online direct-to-consumer (i.e., DTC) channel, primarily consisting of wineries and online wine clubs, saw more modest growth at 73%, as many companies had to unexpectedly shift online due to the decline in their tasting room business[5].
Despite the unprecedented growth of 2019, there are already signs of cooling demand for this channel in the US. In 2021, wine sales for e-grocers and marketplaces lost market share to beer and spirits, while wine retailers and online DTC sales (72% of total online sales) experienced a decline compared to 2020[6]. Moreover, as restrictions ease and we adjust to the new post-COVID normal, it becomes evident that at least for DTC, online wine sales cannibalized other channels instead of generating incremental sales[7]. Most online sales were not incremental because many companies hastily transitioned online without a well-defined digital strategy in response to the pandemic. Nevertheless, there is growth potential, as consumers’ online spending habits still lag behind their offline counterparts. A recent report from Rabobank highlights this potential, stating that if online alcohol sales mirrored in-store spending, online grocery alcohol sales would exceed $3 billion, nearly doubling the 2021 volumes[8]. Making online sales a strategic pillar and an integral part of a long-term plan presents significant growth opportunities. However, to achieve sustained and incremental growth, online wine sales must cater to consumer needs effectively.
How is wine e-commerce driving the current decline in wine?
In 2021, consumers aged 60 and above accounted for 32.6% of DTC sales (including both online and offline channels), and they are the only age group that has increased its share of sales since 2007, with a growth of 14% since then. On the other hand, the age group of 21 to 30 years has seen marginal growth of 0.12% over the same period and currently represents only 6.6% of wine sales[9]. Comparatively, this younger age group, consisting of Gen Z and Millennials, makes up 21% of the total population[10], indicating their underrepresentation in wine consumption. While various factors contribute to this discrepancy, it is particularly concerning the engagement of young consumers in online channels. Specifically for online DTC sales, Gen Z and Boomers are the generational groups with the highest percentage of wine purchases made online, with 12.5% and 15.0%, respectively. In contrast, Gen Z (10.6% online) and Millennials (10.7% online) predominantly make their wine purchases through physical channels such as events and wineries’ points of sale[11].
Demand for wine is declining as younger generations are reluctant to engage with online sales channels. We know that these generations like wine[12], or at least are curious about it, but they are simply not buying through this channel. This trend poses a risk to the industry, as it sets wine apart from other categories since consumers actively use online channels for purchasing and as a first point of interaction with brands and products[13]. Moreover, the lack of consumer-friendly online wine-shopping journeys is forcing younger generations to rely on less convenient channels. Therefore, to gain insights into why Gen Z and Millennials are hesitant to embrace, it is crucial to understand their motivations for purchasing wine and identify any existing gaps in the current online approach.
Back to basics - Why do people drink wine?
Several years ago, I had the opportunity to review and study slides from Project Genome during a first-year seminar in the Masters of Wine Program. Constellation Brands describes Project Genome as “the largest study on wine consumers ever, to help better understand their profiles and market and develop wines targeted to their lifestyles.”[14] The insights gained from this study were incredibly valuable, allowing me to confirm consumers’ intentions, and they have remained with me ever since. Although the study is no longer publicly available, I have incorporated some of the insights I gathered from this study in previous years, combined with my 15+ years of wine studies[15], to create distinct wine personas. These personas represent individuals with unique motivations and needs regarding wine but are not mutually exclusive.
Experts: They seek unique wine experiences and enjoy understanding wine on a cognitive level. They possess extensive wine knowledge and rely on sophisticated information to explore, purchase, and enjoy wine. They are adventurous in their wine choices, appreciating extensive wine collections that offer variety and choice. However, they also seek expert curation to access wines with distinctive characteristics. Core need: Provide me with as much information as possible and allow me to have control over the wine experience, including selecting and buying wine.
Trend chasers: Wine is an integral part of their lifestyle, serving to socialize and explore new experiences. They enjoy following trends and looking for wines that make a social impact, healthier options, and wines produced using unique methods (e.g., organic). While they are open to experimentation in their wine choices, they rely on guidance and look for unusual facts and information beyond what’s on the bottle. Core need: Show me how wine can help me make a statement and align with what I care about, my values, and my lifestyle.
Foodies: Wine is seen as a complement to their culinary experiences, enhancing both their cooking and dining adventures. They explore different wines to create perfect pairings with food and seek wine categories they can incorporate into multi-course meals, such as aperitifs or desserts. While they enjoy a hands-on experience choosing wine, they often seek expert guidance, especially around food pairing. Core need: Educate me on how wine fits into my gastronomical journey.
Mainstreamers: For them, wine is a habit and a simple pleasure they enjoy as part of their daily routine. They are satisfied with what they typically drink and prefer the most convenient path to obtain the wines they know. Consequently, they are not inclined to be adventurous in their choices and do not actively seek recommendations. Instead, they stick to a limited range of popular brands, common grape varieties, or renowned wine regions. Core need: Provide me with the simplest way to obtain the wine I typically drink.
Value Junkies: They seek the highest quality wine at the lowest possible price. They base their choices on the perceived value they can get from wine in relation to its cost. They are open to trying new wines, switching styles, or finding substitutes for the wines they like, as long as the value is compelling. Core need: Offer me discounts and promotions, or demonstrate how I can obtain extra value from a wine.
Overwhelmed: Curiosity drives these individuals to explore wine, but their knowledge is limited, making them feel confused and often intimidated by the complexities of the wine industry. They rely heavily on others for advice and may struggle to articulate their preferences. Specific grape varieties, regions, or brands do not hold much significance as they have not yet developed a taste or style. When things become overwhelming, they may turn to beer or spirits instead. Core need: Guide me and simplify the process of choosing a wine. I want to learn more about the world of wine without feeling overwhelmed.
What does buying wine online look like in 2023?
The best place to buy wine depends on individual needs and preferences. Below we will explore the wine-shopping experiences for each of the personas. Please refer to the appendix for a comprehensive list of companies (underlined below) and the assessment criteria.
Experts: There are numerous online options available for experts. Sites like Acker offer rare and ultra-premium wines, including sought-after vintages. Experts can also access personal sommeliers through sites like K&L Wine Merchants, who can help them find rare bottles of wine. For those interested in Bordeaux futures, JJ Buckley provides a concierge service that assists with the entire process, including nine different shipping options, such as refrigerated services. Online stores offer advanced filtering options, such as lutte raisonnée certified farming (Kermit Lynch), sweetness levels based on measures like puttonyos (Millesima), or quality classifications like Grands Crus Classé (Millesima). Those interested in auctions can find advanced information to make an informed purchase decision, such as historical price graphs of a particular wine through WineBid. A lot of the differentiation of online vs. physical stores leans heavily on search, filtering, and grouping of extensive collections of wines. While these are useful for finding one wine at a time, no features allow users to search several wines at once by common themes or shared characteristics (e.g., X Chardonnays from different regions within the price range of X with varying aging approaches). There is an opportunity to provide advanced information that offers more insights into viticulture and wine-making practices. Currently, there are wine reports including sulfite levels in ppm, pH levels, and titratable acidity at Scout & Cellar. Still, these are rare and usually require a download file as opposed to being part of the UI.
Trend chasers: Companies catering to trend chasers offer curated selections centered mostly around natural and organic wines. Dry Farm allows consumers to find wines with no toxic additives, lower alcohol content, organic farming practices, vegan, keto, paleo-friendly, and can view the residual sugar of wines. Plonk offers wines with certified wine-making methods and low sulfite content. Theme-based subscriptions, such as Vivant, provide 100 ml tubes of sustainable wines that they tested for purity. Trend chasers will benefit from more flexibility on order sizes and frequency since they usually need to acquire wine bundles or subscribe to recurrent orders to get the after-mentioned wines. Socially conscious trend chasers can choose wines produced by women, women-owned, BIPOC, and others at Bottlerocket, but this area is underserved.
Foodies: Wine shopping sites often overlook the needs of Foodies. Many sites assume that wine is consumed in isolation or treat its relationship with food as an afterthought. However, there are limited features available for foodies, such as the ones from Plonk, that provide recipes that pair perfectly with the wine being purchased, including cooking directions and the ability to add all ingredients to an Instacart cart with one click. Bottlerocket allows searching for wine based on pairing categories like fish and getting specific results through subcategories like light, fatty, or dark fish. Many opportunities exist to develop tools to design multi-dish menus with recommended pairing wines. For example, “Based on your menu, we recommend getting this bundle of X wines, which includes X aperitifs, X wines to pair with main dishes, and X dessert wine. Foodies would also value alternative filters to find wines based on tasting notes, such as flavor (earthy, fruity, sweet) or structure (crisp, creamy, light, bold). There are limited sites like Sout & Cellar offering these features, and it’s an unattended need.
Mainstreamers: This persona is well-served across the online spectrum, with options ranging from simple winery DTC sites to robust marketplaces selling various categories, including wine. Mainstreamers can enjoy fast local delivery from stores like Bevmo and Instacart, often receiving their wine within minutes. They can also schedule deliveries within convenient time windows through sites like Drizly. For those who regularly drink the exact wine, options like Instacart allow them to purchase wine and groceries. Amazon provides multiple payment method options like card, debit, points from numerous reward programs, cashback, and gift card balances, all in a single wallet. Those who want speed and convenience can use express checkouts such as Shop Pay, Google Pay, and MetaPay through Parcelle.
Value Junkies: Online wine shops prioritize value and discounts for this persona through prominent placements. Sites like Naked Wines enable consumers to support winemakers directly, becoming angel investors and gaining access to low-price, high-value wines by cutting out intermediaries. Last Bottle offers hand-picked wines at up to 70% off retail prices, while programs like Underground Cellar randomly reward customers with free upgrades to more premium wines. Reward programs, such as the ones from Bevmo and Amazon, provide discounts or cashback on purchases up to 5%. Unfortunately, focusing on discounts can quickly become a race to the bottom, ultimately not serving consumers well as they favor unsustainable business models. Instead, we should emphasize value by identifying and contrasting the attributes of certain wines compared to equivalent options as Naked Wines does.
Overwhelmed: This persona represents a significant opportunity in the wine industry, which often overlooks them. Currently, overwhelmed consumers can receive personalized wine recommendations based on their taste preferences through sites like Bright Cellars. Some sites, such as Winc, offer recommendations based on minimal knowledge of other grapes or regions. Others like Firstleaf assume consumers know archetype wines (e.g., Argentinian Malbec, Napa Cab, Australian Shiraz), familiar brands, and styles. Those who are ok with minimal choice can get a curated tasting kit a month through Vinebox or choose from small collections of experienced-based tasting kits. However, most online sites assume consumers have some level of wine knowledge, leaving most overwhelmed individuals underserved. We’ll go deeper into this issue in the following section.
While there are plenty of online wine companies, there is a gap as limited solutions choose on the consumer’s behalf or guide them through the process. A handful of companies provide personalized recommendations, but these do not offer much education or detail on how they arrive at those. In addition, there is currently no solution for broad wine selections, which is the most critical opportunity. See the chart below to understand how online win providers map against value prop and type of selection.
NOTE on chart: Value prop: “You chose” means the consumer is in control. “I chose for you” means the company chooses on behalf of the consumer based on different inputs. Type of selection: “Specific wines” means that the selection is for one brand, style, or category of wine. “Broad wine selection” means multiple brands, styles, and categories simultaneously, usually in hundreds or thousands of wines.
Why aren’t younger generations buying wine online?
One of the first things we learn about wine is that the place of its production is important. Regulations, such as the Protected Designation of Origin (PDO) in Europe[16], aim to give consumers certainty about a product’s origin and specific characteristics. However, the situation quickly becomes complicated. In France alone, there are more than 350 Appellation d’Origine Contrôlée (PDO) regions, including renowned names like Champagne. Additionally, there are lower-level classifications like Vin de Pays. Each of the 11 primary regions in France has its quality classification, resulting in different quality rules for PDOs within the country. For instance, in Bordeaux, the highest quality classification is Premier Cru Classé, but this only applies to the Médoc subregion, as other subregions like Saint-Émilion have slightly different quality classifications. Italy has over 320 Denominazione di Origine Controllata (PDO) regions, such as Prosecco, and over 70 Denominazione di Origine Controllata Garantita regions, including Barolo. Spain has over 70 Denominación de Origen regions, like Ribero del Duero, 2 Denominación de Origen Calificada regions like Rioja, and other lower classifications, such as Vino de la Tierra.
These examples add up to more than 800 regions in just three countries, and that’s considering only the higher quality tiers. Other parts of Europe are similarly complex. For example, Germany and Austria base their quality classifications on the sugar content of grapes at harvest, which may or may not translate into sweetness in the wine. Furthermore, each country has qualifiers that offer (in theory) additional insights into the wine, but these qualifiers are only valid within specific regions. For instance, in Bordeaux, the term “Supérieur” means the wine has higher alcohol content than regular Bordeaux. The term “Reserva” provides information about barrel and bottle aging in Spain, but different regions have varying aging requirements. Adding to the complexity, some producers disregard these classification systems and produce wines of exceptional quality under lower-quality classifications (e.g., Super Tuscans). It’s worth noting that this complexity is primarily found in Europe, as the rest of the world tends to regulate the geographical limits of grape cultivation rather than implementing such intricate systems.
With all this complexity, one might assume that focusing on local wines would be easier. However, that’s not necessarily the case. There are over 10,000 wineries in the USA[17], giving consumers many options. One approach is to choose a wine based on the grape variety, but even then, at least 33 relevant grape varieties account for 50% of global plantings[18]. Furthermore, flavor profiles can vary by region, and sometimes there is not enough quality to reflect grape typicity. Additionally, different clones of the same grape can result in distinct flavor profiles, adding another layer of variation and complexity. If you are fortunate enough to choose a wine confidently, you must consider serving protocols. Temperature significantly affects wine perception, and dealing with corks can also be a factor. Aging and readiness to drink are other aspects to consider. For example, Spain releases wines ready to drink, while France assumes consumers know that certain wines need cellaring to reach their full potential. Moreover, fining agents used in wine-making can make a wine non-vegan, which adds difficulty when accounting for dietary restrictions.
Considering all of these factors, it becomes clear that deciphering the world of wine is challenging for consumers. Even enthusiasts or experts with formal training find this landscape difficult to navigate. It’s no wonder that younger generations, who are inexperienced and represent the first step in the wine customer lifecycle, are not embracing wine consumption. They are curious about wine but often feel overwhelmed. Yet, paradoxically, they also represent the most significant opportunity for the wine industry.
We are failing to serve and engage younger generations and overwhelmed consumers because we are not adequately guiding them through online channels, which sets wine apart from other categories that are friendlier to consumers. Most current online offerings assume that consumers already know what they want or how to choose. As a result, these offerings tend to be transactional, expecting other sources to provide the necessary guidance and introduction to the world of wine. If we continue down this path, we risk failing to attract younger consumers and losing existing consumers who may already be purchasing wine due to the difficulties they encounter.
What can we do to promote wine online?
1. Promote wine as a product that goes beyond a bottle.
Château d’Yquem is one of my favorite wine brands. They continuously and masterfully create innovative concepts to generate hype around their wines, consistently securing their place as one of the most admired brands[19]. One concept that has stuck with me over the years is their “Liquid Gold” approach. It combined vivid tasting notes with great pride in wine-making and the rich heritage behind each bottle. Château d’Yquem has now moved on to a more artistic approach, where they emphasize the rarity of their wine and compare the experience to the ethereal nature of light and the silence after a musical masterpiece[20].
Not every wine or winery possesses the history, prestigious classification, branding power of LVMH, or the unique conditions that make Château d’Yquem’s wine exceptional. I also believe that not all wines should elevate the experience with so much poetry and artistry, as it would simply not resonate with many consumers. However, I think that wine, in general, is a unique product capable of providing rich stories and experiences beyond merely purchasing a bottle. Consider the scientific advancements used to identify the ideal vineyard sites, such as satellite-generated temperature heat maps and the discovery of climate-friendly locations[21]. Think about the breathtaking vineyards on steep slopes, terraces, or volcanic soils. Reflect on the incredible conditions grapes endure, including freezing temperatures or the presence of the notorious fungus, botrytis, which ironically contributes to the production of exquisite wines. Marvel at the monumental efforts made by viticulturists to protect grapes from adversity, like using silver mixtures projectiles to disperse hail without causing harm[22] or employing helicopters to circulate air and prevent unwanted freezing. Consider the dedicated individuals who make the harvest possible and the wine nomads who live six months in each hemisphere, chasing grape and wine cycles. Consider the intricacies of intracellular fermentation, centuries-old fermentation using indigenous yeast, and the philosophical approaches guiding these practices. Think about the ingredients (or lack thereof) that directly influence the wine and their effects on labeling (such as fining). Finally, consider the various approaches to vineyard management, like following moon cycles, embracing low intervention, or striving to create delicate ecosystems with a balance of beneficial and harmful pests.
Wine is a diverse product encompassing every step, from vineyard selection to bottling. Despite this diversity, there are abundant opportunities to expand the wine experience beyond the bottle and integrate it into the customer experience. A few websites have started moving in this direction. For example, Firstleaf allows consumers to embark on a wine journey from vineyard to bottle, providing details on the vineyard, wine-making process, region, flavor profile, serving instructions, and suggested food pairings. Wine Access shares the stories behind the wines they offer through their resident experts, which may include video reviews. However, these are still exceptions rather than the norm.
Those who embark on this path need to shift their perspective from selling a mere bottle of wine to selling a multidimensional product where origin, production methods, components, and other aspects genuinely matter. By doing so, they allow newcomers to engage with wine in a different, more experiential way which ultimately is a good business. It would be even more impactful to recognize that they are in the business of creating wine experiences. This approach is not new, and other industries have successfully mastered this approach. Paragon[23], for example, is not simply a travel agency offering wine-related itineraries; they are magic makers who believe the most profound human experiences occur during moments of discovery and exploration. Crowdcow[24] doesn’t just sell meat and seafood; they create a meaningful connection between you and the food you eat. Goldbelly[25] doesn’t merely ship food nationwide; they sell emotions through food in the form of memories, connection, and comfort. Limiting our perception of wine to bottle contents is a missed opportunity.
2. Use technology as a way to engage and serve consumers.
Technological advancements in the wine industry have been ongoing for years, although most of these developments remain hidden from consumers, benefiting vineyards and wineries. Examples include thermal imaging for fermentation tanks, the development of pest-resistant grape clones, precise optical sorters, and many other innovations. Regarding consumer-facing applications, the focus primarily revolves around apps or online stores. Vivino stands out as a leading app that provides tangible value to consumers and has created a good benchmark for others to follow. However, wine e-commerce still lags at the industry level, and much effort is needed to meet consumers’ expectations. Here are a few examples of technologies that can enhance the online shopping experience and some initial ideas on how to approach wine e-commerce in general.
2.1. Help consumers choose a wine that matches their taste preferences: A handful of websites quiz consumers and offer recommendations based on their taste profiles. Among these solutions, Tastry stands out due to the rigorous approach behind what appears to be a simple user experience. Tastry asks the consumer for a simple flavor preference survey and uses those results to understand consumers’ palates and match them with available selections from a wine catalog (among other use cases). Behind the scenes, Tastry[26] uses machine learning to train models that suggest wine consumers will likely enjoy. Through an extensive data effort, they have collected numerous data points to understand the chemistry of thousands of wines and the corresponding consumer ratings. This data allows them to establish correlations and extrapolate them to a smaller sample of wines within a specific wine shop’s catalog, all based on a flavor survey. Considering how AI and machine learning have successfully addressed similar challenges in other industries, it is surprising that we have not utilized them more extensively, especially given the vast array of wine options available. Pandora, for instance, has effectively relied on its Music Genome Project[27] for years to provide personalized music recommendations with minimal input. There is much to learn from this approach, mainly as it helps overwhelmed consumers expedite the decision-making process when choosing a wine. I see a future where most wine websites have a Tastry-like app that provides personalized recommendations and allows consumers to understand better and articulate their preferences.
2.2. Provide customers with highly personalized digital experiences: Big Tech companies have been using AI and Big Data for years to offer personalized recommendations and opportunities to sell and cross-sell to customers. This approach is more efficient than traditional segmentation based on demographics, as it doesn't rely on factors like age, income, or gender. Instead, it uses alternative data signals generated from customer interactions with the website. Preferabli is an AI-powered software and recommendation system that employs this approach, allowing wine companies to deliver personalized content to their customers. For a wine company, this means offering consumers food and menu pairings based on the products customers are interested in buying, promoting products with similar taste profiles across different touchpoints, providing occasion-based recommendations, and much more. In addition, an AI content engine like Preferabli can be a powerful tool for creating highly personalized purchasing journeys. This could even mean customizing entire pages based on customers' preferences and changing the navigation (such as top menus) based on their choices. An AI-driven approach to content provides customers with a better experience, as companies can tailor content based on their preferences, enabling wine companies to optimize content placement, ultimately benefiting their bottom line. Wine companies could pass the cost savings on to the customers as a way to provide second-to-none pricing. Preferabli has a handful of reports on this topic that may provide a good PoV.
2.3. Create a quick and hyper-precise online wine consultant: We are currently witnessing the mass adoption of large language models (LLMs) and conversational AI, and the wine industry should quickly experiment with applications that assist consumers in navigating the complexities of wine purchasing. For example, an AI sommelier powered by these technologies could guide complex consumer requests that are challenging to address through filters, search, and navigation alone. The AI sommelier would allow wine sellers to anticipate unexpected requests and provide personalized results based on the data within their catalogs. For example, consider the following request, which would require a sophisticated navigational and user experience design but could quickly be resolved through the AI sommelier: “As a Riesling enthusiast, I am planning a wine tasting to explore five different Riesling wines. Can you suggest six distinctive Rieslings that represent the different styles of this grape? I am interested in wines from regions known for their high-quality Rieslings, with no more than two wines from the same region and a budget of less than $40 per bottle.” Within seconds, the AI sommelier would provide a list of wines available in the catalog that fit these criteria, including Rieslings from Clare Valley, Eden Valley, Alsace, Mosel, Wachau, and Finger Lakes, with a total cost of $X. The list might even include a bundle discount of $Y. The rapid adoption of non-specialized chatbots like ChatGPT[28] indicates that consumers already engage with these applications and will soon expect conversational AI solutions throughout their purchasing journeys. Wine should not be an exception, especially since plugins already integrate conversational AI into massively adopted services and apps[29].
2.4. Provide consumers with an online wine purchase experience similar to other product categories: Wine.com is a prime example of a robust e-commerce solution. It stands out as one of the best options for buying wine online, primarily due to its vast selection of wines. While other reliable options exist for consumers to buy wine online, the available solutions vary in maturity levels. The most recurrent gaps across sites include ease of navigation, proper screen display (lack of responsive versions of desktop sites or mobile versions), user login through third-party credentials (such as Google), secure wallet options, multiple payment methods, express checkouts, and others. Companies like Total Wine and Wine.com have developed custom-built sites with dedicated and specialized teams focused on building the online user experience. While this approach offers greater control over the final solution, not all companies have the resources to support a dedicated online team, and the learning curve may be steep, especially for companies in the early stages of their e-commerce journey. Fortunately, industry-specific e-commerce solutions, such as Commerce7 and Wine Direct, are available, which provide technology tailored specifically for the wine industry. Other e-commerce platforms like Shopify offer comprehensive solutions bundles through their proprietary products and integrations with specialized third-party providers. The wine category is in a privileged (yet somewhat delayed) position, as other industries have already developed most of the technology needed to sell wine online.
In addition to the aforementioned online examples, an effective online strategy should be integral to any company selling wine. Wine companies that want to be successful in the long run should integrate an online strategy seamlessly with complementary channels, selection, and supply[30]. Total Wine sets a unique example by allowing consumers to buy from their 240+ stores or through their website and app, providing an omnichannel solution with excellent coverage across the US. While not all wine-selling companies plan to open physical stores, there are valuable insights to gain from Total Wine’s approach and their ability to adapt to what consumers experience in other product categories.
Final thoughts
In the words of Rob McMillan[31], the question remains: who will lead? How can we reverse the current decline in customer adoption trends? While I cannot pinpoint the exact leaders, I am confident that successful companies will be those that rapidly change their mindset and overall approach towards wine, focusing on meeting consumer needs. As I elaborated, two areas stand as good starting points for this transformation.
First, we must promote wine as a product that goes beyond the bottle. Few products offer such diversity and complexity regarding raw materials, production, labeling, and consumption. However, the current approach often alienates consumers because we make it unnecessarily complicated. We need to shift this paradigm and utilize the richness of the product to create a customer experience that attracts, engages, and fosters consumer interest and loyalty. Currently, consumers bear the burden of deciphering and navigating the intricacies of wine, but it should be our responsibility to make it easier for them.
Second, we need to adopt technology to engage and serve consumers fully. This does not necessarily mean developing cutting-edge, world-changing technologies. In fact, this may not be about creating technology at all but rather about assembling technology components to build a robust digital ecosystem that can serve the consumer. The previously mentioned buzzworthy solutions exemplify how wine companies can adapt existing technology to the online wine business to deliver tangible value to consumers. Of course, not all of these solutions will apply to every company due to differences in business models, product selection, target audience, and other factors. Therefore, this paper does not aim to provide a comprehensive tech blueprint for the industry; instead, it serves as an invitation and source of inspiration for wine companies to embrace a technology-driven approach.
To succeed in these two areas, the wine industry must truly understand its customers and their needs and develop solutions that offer new and improved CX for purchasing wine. Examples such as Amazon’s customer obsession[32], design thinking[33], and product-led growth[34] methodologies demonstrate the importance of prioritizing customers and working backward from their needs. Embracing this approach requires a paradigm shift from simply selling bottles of wine through an online catalog as the standard business model. Opening job postings for tech, strategy, and innovation roles and looking preferably for people with 10+ years in the wine industry will not cut it. Instead, the wine industry needs to acknowledge the problem and realize that there are plenty of solutions and people that know how to implement those outside the wine industry.
While this is not a love letter to wine, it is a strong call to action with the intention that more people fall in love with wine.
Cheers,
Federico Espriu
References and comments
[1] US Census, Rabobank 2019 data. Rabobank 2022 Alcohol e-commerce Playbook. [2] OIV data. OIV State of the world vine and wine sector 2021 annual report. [3] Shanken Impact Databank Review and Forecast, 2021. SVB 2023 report. [4] As an example, in 2019 there were 1,100 Walmart locations offering delivery but only 18% offered alcohol delivery. By 2021, there were 3,200 and 47% of them also offered alcohol delivery. Rabobank 2022 Alcohol e-commerce Playbook. [5] All online alcohol sales figures as reported by Rabobank and include wine, spirits and beer when available in those channels. Rabobank 2022 Alcohol e-commerce Playbook. [6] Rabobank 2022 Alcohol e-commerce Playbook. [7] Online wine sales increased as percentage of all sales, but total volumes decreased. SVB Annual Winery Conditions Surveys. SVB 2023 report. [8] Rabobank 2022 Alcohol e-commerce Playbook. [9] Customer Vineyard, Sovos ShipCompliant. SVB 2023 report. [10] Customer Vineyard. SVB 2023 report. [11] WineDirect and Enolytics 2022 Direct-toC-Consumer Impact Report. [12] Rob McMillan from SVB shared two studies in his latest Wine Report that provide insights into this. First, he surveyed consumers on alcohol consumption patterns by age band. He found that 64% of consumers between 20 and 29 drink alcohol, but only 16% are core wine drinkers, and 13% are marginal wine drinkers. Second, he surveyed consumers between ages 21 and 34 years and asked for their preference between wine and other alcoholic beverages assuming the same price and relative quantity, and 42% of respondents stated that they preferred wine. SVB 2023 report. [13] Forbes. 38 E-Commerce Statistics Of 2023. [14] Project Genome. Constellation Brands. [15] Novel Vino. About Federico Espriu. [16] European certification system. [17] The Wine Business Monthly. The Number of Wineries in the U.S. Surpasses 10,000 Mark. [18] OIV. Distribution of the world’s grapevine varieties. [19] Drinks International. Most admired brands of 2023. [20] Château d’Yquem. [21] Washington Post. How satellites help wineries pick new climate-friendly sites. [22] Vineas. Preventing hail damages in the vineyard. [23] Paragon. [24] Crowdcow. [25] Goldbelly. [26] Tastry CEO Katerina Axelsson’s presentation at Unified explains the science behind Tastry’s wine recommendations. [27] Forbes. How Pandora knows what you want to hear next. [28]Reuters. ChatGPT sets record for fastest-growing user base. [29] Open AI. ChatGPT plugins. [30] As an example for supply, blockchain-driven transactions present a missed opportunity to address the issue of counterfeit bottles. By leveraging an immutable, decentralized, and public ledger, blockchain technology could track the provenance of ultra-premium wines and provide visibility into their storage history. [31] As stated by Rob in SVB’s 2023 report. [32] NY Times. Amazon customer obsession. [33] McKinsey. What is Design Thinking. [34] LinkedIn. Product Led Growth.
Appendix:
For this paper, I assess the following sites:
Online DTC from wineries: Ste Michelle, Robert Mondavi
Online wine clubs: Bright cellars, Denegoce, Dry Farm Wines, First Leaf, Naked Wines, Plonk, Scout and cellar, Vine box, Vivant, Winc, Wine Access
Alcohol e-retailers: Acker, Astor Wines, Bevmo, Bottlerocket, K&L Merchants, Total wine, Wine exchange
Wine e-retailers: JJ Buckley, Kermit Lynch, Millesima, Parcelle, Wine.com
Marketplaces & e-grocery: Amazon, Drizly, Instacart, ReserveBar, Vivino
Others: Garagiste, Last Bottle, Underground Cellar, Wine Bid, Wine searcher
For each, I assessed more than 40 items across value proposition, selection, UX, discovery journeys, product pages, purchase & fulfillment, and content. In addition, I assessed only public information and restricted the analysis to desktop pages/sites.
If you would like to get the assessment, please connect and DM me at https://www.linkedin.com/in/federicoespriu/