February 7 2007
A couple of days ago, I wrote a post intended to be delivered in two parts. The overall gist of the post, as something of a wine outsider myself, was the fact that I’ve been intrigued to meet numerous people over the course of the last several months that are outsiders to the industry who have arrived at entrepreneurial ventures that are trying to drive change in the wine industry.
The first post highlighted a distributor in Illinois who I believe has a tremendous business model—essentially taking a linear model like the three-tier system and turning it inside out with a maniacal focus on building a high-end wine book while at the same time conducting events to drive consumer demand to retail—bottle shops and restaurants—where their wines are placed. It’s just beautiful in its correctness and the fact that virtually nobody else does it this way, at least in practical terms.
Usually, in hindsight, when success has been assured, others guys would call them “lucky.” There’s not a lot of luck involved and surely a lot of hard work—or as a mentor used to tell me, “Luck is what happens when opportunity meets preparation.”
But, the way wineries are proliferating and shipping laws are changing, I’m not surprised that a distributor is seizing on a different business model and value proposition and, perhaps, it takes a fresh set of eyes on the situation to drive real change.
Perhaps the greatest opportunity for future peril in the wine industry is the diametrically opposed trends of distributor consolidation, while at the same time small boutique wineries growth is running amuck. Shrinking distributor’s options decrease the viability of small wines finding a home. So, it’s with some relief to see potential for an outlet for these wineries with boutique distributors. But, there are other options, as well.
We’re in the midst of tidal wave of change in the wine industry, the least aggressive change may actually be the area that traditionally drives the most change—technology and the Internet. Certainly, online consumer direct sales is an area that is growing significantly and has almost limitless possibility for growth.
The Wine 2.0 space, occupied by emerging Internet companies hoping to seize new direct customers sales, are in many ways, on more solid footing then their distribution brethren. This emerging Wine 2.0 channel, built on the backs of pioneers like wine.com who haven’t adapted to changing times, includes a lot of players with overlapping qualities—some are community based, others do commerce, others aggregate customers in order to deliver a sale to winery partners. All of them are trying to establish a beachhead in what is fast becoming the Wild West similar to the dot-com era in the late 1990’s
I was at Wine 2.0 in November when I first made the acquaintance of Justin Smith, a young entrepreneur starting up a site called Boutique Wine Cellar.
Then, as now, Justin and his business partner, Kevin Finn, struck me as the kind of guys with enough youthful moxie and wine industry “outsider-ness” to maybe do something interesting—particularly around technology and wine.
Justin explained that, while he is now in his early to mid twenties, he first became interested in wine in the early 90s at a Grgich Hills blessing of the grapes ceremony. Given that Mike Grgich, then of Chateau Montelena, was the winemaker for one of the Chardonnay’s at the 1976 Paris wine tasting event, it’s hard not to like a guy (Justin) that knows wines historical roots or has good taste, one of the two, and perhaps both.
Well, Boutique Wine Cellar launched their site today. And, by appearances, it has legs, not of the vinous ‘in a glass’ variety either—legs in terms of being a smart launch with good elements of success—design meeting function.
If you take a site and combine elements of social networking like myspace.com, user based recommendations like Amazon.com, recommendations like on Cellartracker and online commerce via direct purchasing and wrap that around a subject and product that engenders passion like wine, then you might be onto something.
And, as their name indicates, they are focusing on boutique wine which is equally smart given the demand for small wines from small producers by most wine enthusiasts online.
The challenge in all of this is securing customers, because this Wine 2.0 space is fragmented—it’s the double-edged sword of opportunity meeting “outsider-ness.” Simply, no clear cut winner has emerged to grab consumer’s full attention. WineQ launched in December, with a “NetFlix for Wine” model and there are likely a half-dozen other wine projects taking shape at the time of this writing, as well.
But, I have faith that these guys are smart and are doing the right things to do the simultaneous grab of wineries and alliances to drive traffic. Sooner or later, opportunity meets preparation and Justin and Kevin may well be the “lucky guys.”
(Full disclosure: my employ, Inertia Beverage Group, is working with Boutique Wine Cellar though I have had zero—actually less then zero—contact through my job responsibilities). My opinions are my own.
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