XChateau Wine Podcast

Latest Episodes:

Investing in Experiences w/ Aly Wente, Wente Vineyards Sep 28, 2022

Show notes

From weddings to concerts to a golf course, Wente Vineyards has a whole portfolio of experiences to share the Wente brand with consumers. Aly Wente, VP of Marketing & Customer Experiences, shares how Wente thinks about managing the portfolio of experiences and how they embed wine and the Wente brand into everything they do. From becoming more of a data company to refactoring their tasting rooms and driving people to the wine club, driving deeper connections with their customers is core to the ROI of experiences at Wente.

Detailed Show Notes:

Wente Experiences overview

Championship golf course designed by Greg Norman
Tasting room with food & wine experiences
Concerts, including a tribute band series
Rent space for weddings and corporate events

Experiences are viewed as a connected portfolio

Everything should feel cohesive and true to the brand
Hospitality team overseas golf grill, tasting room, and booking events
Embody wine in every experience - concerts -> wine & music events; 5-star restaurant -> tasting lounge
Look at ROI across experiences to see which to invest more in with limited resources
Refactored tasting rooms, had two with different feels (one older, traditional, one more modern and food driven where the wine was more lost), into a single “tasting lounge” focused on wine with wine & food experiences

Recently upgraded tech to become more of a data company

Use CRM to take notes on customers
Track demographics and target some events to specific groups

Key metrics used for ROI

Customer surveys
Event ticket sales and difficulty in selling tickets
Social media engagement
Contextual ROI when at events
Wine sales at events - Wente makes money on wine, not ticket sales

Better understanding customer journeys and how they impact:

New vs. existing customers
Repeat visitation
Club membership
LTV of customers
The primary goal of the tasting room and events is to engage customers and create relationships vs. being the most significant profit driver for the brand

The team needs to be resourced to dig into the data and track it

Weddings

Get a rental fee for property (high margin)
Require min # of cases of wine purchased, and most people buy more
Pre-2020 - did >60 weddings/year, full-service incl wedding planning and catering - was not the most profitable business
Today - leaner experience - rent out the property with resources for planning

Primary priority - Flow into the wine club

The “pinnacle” of ROI for experiences
Club members often spend more than club shipments
Food & wine experiences convert the highest to the club - the more attention people get, the more likely they will join the club
~6-8% of visitors become club members
Provide incentives for staff for club signups (~$30-50/signup + club prizes for top performers)
Now have a “club booth” at experiences with customer incentives (e.g., 30% off 1st shipment if they sign up at the event)

Secondary priority - Getting everyone’s emails that attend events

Believes digital experiences will always be around now

During the pandemic, Wente was 1st to have Amazon Alexa and Google Home virtual wine tastings, buying wine at the grocery store

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Casting Long Shadows over Columbia Valley w/ Gilles Nicault, Longshadows Sep 21, 2022

Show notes

After spending two decades promoting the wines of Washington State, Allen Shoup founded Longshadows, a collective of partnerships leveraging internationally renowned winemaking talent to express the best of the Columbia Valley. Director of Winemaking, Gilles Nicault, describes how the partnerships work from both a business and winemaking perspective; what he’s learned from making wines with the likes of Michel Rolland to Randy Dunn; and how Washington State’s wine profile has been elevated from this concept.

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Detailed Show Notes:

Allen Shoup founded Longshadows

He was CEO of Ste Michelle Wine Estates (“SMWE”) for 20 years
His mentor was Robert Mondavi, who founded Opus One, a collaboration between the old and new world
At SMWE, Allen started collaborations with Eroica (Dr. Loosen) and Col Solari (Antinori)
Wanted to build partnerships for Longshadows - showcase the Columbia Valley, which is east of the Cascade Mountains and has very dry terroir (~6 inches of rain/year), enabling great diversity of grapes to be grown (Bordeaux, Rhone, Italian, Spanish varieties)
The name “Long Shadows” refers to renowned winemakers casting long shadows over the Columbia Valley

Partnerships

Poet’s Leap, a Riesling w/ Armin Diel (Schollsgut Diel in Nahe, Germany)
Saggi, a Super Tuscan (Sangiovese, Cabernet Sauvignon, Syrah blend) w/ Ambrogio & Giovanni Folonari (Tuscany)
Pedestal, a Merlot w/ Michel Rolland (Pomerol)
Pirouette, a Bordeaux style blend w/ Agustin Huneeus, Sr and Phillipe Melka (Napa)
Feather, a Cabernet Sauvignon w/ Randy Dunn (Napa)
Sequel, a Syrah w/ John Duval (Barossa Valley, Australia)
Gilles crafts his own Cab / Syrah blend with 30 months in French oak

All partnerships were established when Longshadows was founded in 2003 except Folonari, which came in 2004

All are true partnerships - each partner owns 25% of their labels, which are separate companies. They are not consultants and are not paid any other fees

Longshadows does the sales & marketing for the wines

Working relationships w/ partners vary

John Duval can be there during harvest (Southern Hemisphere)
Partners did not give any recipes for wines but pitched in and developed styles together
Fruit sourced from across Columbia Valley and its 15 sub-AVAs through acreage contracts
Source both old vines and can work with growers to plant specific clones (e.g., German clones for Poet’s Leap Riesling vineyards)
Volume of wines set by Allen Shoup and Dane Narbaitz (current President and Allen’s son-in-law), choose quality over quantity
Wines that don’t make the main wines go into 2nd label Nine Hats

Each winemaker is so different. Gilles learned there are many ways to make wines

E.g., Randy Dunn wants the jacks of the fruit in the wine, whereas Michel Rolland wants all of them out
Winemakers are interested in what each other does but do not work together
Each winemaker has their own allocation of vineyards and blocks for their wines

Selling Longshadows

The wine club “Key Club” is a big part of sales
2 tasting rooms - at the winery (Walla Walla) and in Woodinville (near Seattle)
Some distribution in the US and a few international markets

Longshadows was honored to be selected 4x to be served at the White House

The future - partners are getting older, and many are on the verge of retirement. Gilles to carry the flame forward with lessons he’s learned from them

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Keeping a Family Business Family Owned w/ Aly Wente, Wente Vineyards Sep 14, 2022

Show notes

Family-owned businesses are notoriously hard to keep family-owned over multiple generations. Wente Vineyards in Livermore Valley, California, has managed to keep it going for 5 generations. Partially through having fewer children, but also through structures put in place to keep the family connected and business family-owned, Aly Wente, VP of Marketing & Customer Experience, describes how they’ve focused on connection and fun to keep the family business together for generations to come.

Detailed Show Notes:

Wente Vineyards was founded in 1833 by Aly’s Great Great Grandfather, CH Wente

Grandfather worked in Napa for Charles Krug
Livermore was similar to Napa in grape growing back then
Wente is ~800k cases in total
Brands include Wente Vineyards (~600-700k cases), Murrieta’s Well, Hayes Ranch, Angels Ink, and Ravel & Stitch
Has small lot wines only available in tasting rooms

Each generation has left its legacy

2nd generation - brought Chardonnay to California (1908, 1912) with the Wente Clone
3rd generation - bought a property in Arroyo Seco and pioneered it as a region for grape growing
4th generation - helped write the AVAs for Arroyo Seco, San Francisco Bay, and Livermore Valley; spearheaded experiences business, including concerts and golf course
5th generation - still starting out but focused on sustainability, company culture, and innovation

Family ownership has been intact through 5 generations

Partially due to the limited number of children
CH had 7 children, including 3 sons, only 2 interested in winery
Of 2 sons - Ernst & Herman (Gen 2), only 1 had children (1 - Carl)
Carl (Gen 3) had 3 kids (Gen 4)
Gen 4 has 6 kids (Gen 5)
Gen 6 will have many more people in the family

Benefits of being family owned

Not subject to shareholders, the family has complete control
Multi-generational relationships w/ other family-owned businesses can be helpful (e.g., Southern Glazers is family owned)
Large corporations may not have built the golf course or fine dining restaurant

Structures to pass on ownership to future generations

Annual “family council”
Prepares next generations for ownership and if they want to work in the company
Meet once a year
Topics include business topics to align on, educational topics (e.g., tax law), and even individual’s visions for the business
As more family works together, prioritizing more fun and bonding
Attendance starts as children, though not babies
Have policies in place for members who want to leave the company or sell shares, but no one has used them to date
The goal is to remain family owned

Wente Vision changing

Old - to be one of the most respected family wineries in the world
Changing to be more about employees

Family vs. external management

The current CEO is 2nd CEO to be non-family
External people can help balance family and business interests and inter-generational interests
Wente doesn’t create roles for family members
If a family member wants a role, they still interview others for it and choose the best candidate, though the family member has a slight advantage

3 keys to maintaining and evolving a family-owned business

1) transparency - bringing family members in at a young age
2) respect - need to treat each other with respect
3) fun - need to have fun while working in wine and with family

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The Economics of Sustainability w/ Anna Brittain, Napa Green Sep 07, 2022

Show notes

As designer and Executive Director of sustainability non-profit Napa Green, Anna Brittain is passionate about taking action on the 7 pillars of sustainability. Spreading the word about how pursuing sustainability can save money is critical. Anna describes how she defines the 7 pillars of sustainability, what makes Napa Green unique, gives concrete examples of how wineries save money with sustainability, and the launch of the symposium Napa Thrives to accelerate the pace of action.

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Detailed Show Notes:

Definition of sustainability for agriculture has 6 pillars, now expanding to 7

1. Water efficiency
2. Energy efficiency
3. Waste prevention and green purchasing
4. Integrated pest management and biodiversity
5. Social equity, diversity, and inclusion
6. Climate action and regenerative agriculture
7. Communications and engagement

Napa Green

1 of 4 programs nationwide that have sustainability certification for vineyards and wineries
Addresses all parts of sustainability vs. 1 issue (most programs are only environmental; e.g., organic only for vineyards and not using synthetic pesticides)
~15 programs globally that address sustainability holistically
Boots on the ground for direct support achieve more action
90 wineries, 15k acres in the program
Policy vs. boots on the ground give very different perspectives
Certification requires >120 standards for wineries and >100 for vineyards

Economics of sustainability

Myth: sustainability will cost a lot of money -> it can actually help save money
Money-saving examples:
Variable frequency drives for energy efficiency, 1-3 year payback
Turn down the water heater temp when you don’t need it super hot - save thousands on water and energy bills
Chateau Montelena - used Tooley Technologies for real-time data on water needs on an underperforming vineyard, saved $0.5-1M in improving the vineyard w/in a few years; phased out wooden boxes for wine to branded cardboard, reducing shipments from 5 to 2 (less space and weight), cut materials cost 50%, cut emissions, reduced wine breakage
~50% of members have solar, but people don’t notice when inverters go down and don’t fix it until they see a high electric bill, it could save tens of thousands through monitoring and maintenance
Cakebread - focused on reducing waste, bought Big Belly solar trash compactors reducing trash pickups, saved ~$30k in first 3 years
Areas of opportunity: vineyards - develop a custom carbon farm plan (e.g., cover crop, compost, biodiversity, etc.), lays out how much carbon can be stored; compost is a big bang for the buck for carbon and water storage and nutrients; winery - water usage, including energy to transport, heat, and treat water, new regulations around wastewater also need consideration
~30-50% of emissions from packaging and distribution

Best practice: think systematically, from vineyards to winery to getting wine to consumers; members often think of one-off projects vs. looking at the entire landscape

Marketing sustainability

Hosts ambassador training to get people talking about it
Potentially $1-3/bottle premium for organic/sustainable wines
Wineries are often willing to pay a premium to buy sustainably grown grapes

Napa Thrives - symposium w/ Martin Reyes MW

Goal is to accelerate the pace of sustainability and climate action

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Ex-Pats, Tycoons, and Hand Carry - Hong Kong Wine w/ Polly Aylwin-Foster & Ian Ford, Nimbility Asia Aug 31, 2022

Show notes

Revolutionized by eliminating taxes on wine in 2008, Hong Kong has become a significant wine investment and trading hub for China and Asia in general. Polly Aylwin-Foster and Ian Ford of Nimbility Asia go deep into all aspects of the Hong Kong ("HK") wine market. From the HK wine consumer, the retail landscape, cross border transactions with China, the large "hand carry" market, and the British influence on the wine culture, they provide lots of essential data and detail for HK wine.

Detailed Show Notes:

2008 - all wine duties removed for anything <30% abv, making HK the preferred place to store and trade wine

Wine importers - 310 (2008) - 790 (2021)
Speciality wine shops - 140 (2008) - 470 (2021)

HK wine consumers - 7M people

Expats - 500k - consumed wine at 5-star hotels, int’l restaurants
Indigenous people - wine consumption not part of daily culture
"Tycoons" - wealthy people, drive fine wine consumption, high value of wine purchased
Consumption mostly at restaurants and bars, big eating out culture
Pre-pandemic - 5-star hotels, int’l on trade, & large restaurant groups sold most of the wine
Culture of private kitchens, wine clubs, private room dining - for top wines

HK's more mature wine market

Bordeaux historically, massive Burgundy growth, some iconic American wines
The influence of British wine culture over many decades created HK wine culture (e.g., trading houses, merchants)
Average fine wine consumer more advanced in HK than China (started in 60s vs 90s in China)

HK retail landscape

Supermarkets drive bulk of sales (2 main players - Welcome, Park n Shop; Watsons wine owned by a supermarket) - sell big brands, sub-HK$ 100 (~$7-9/bottle)
Independent wine shops - importers' retail / private client arms, a few independents, British wine merchants, Enoteca (Japan) -fine wine
Online very small, <7%
Auctions influential - attract attention for brands, provides halo effect for in mainland China, mainland buyers participate
Pandemic - local airline encouraged uses miles on products, including wine, 1 importer sold $1M in wine via airline

HK wine market

4.3M 9L cases imported (2021), +10% from 2019, expected to grow 5-6%/year over the next few years
HKTDC figures - 26% officially re-exported (to China, Asia), 74% conveyed out by individuals, in storage, and local consumption

The "hand carry" market

People are allowed to take 2 bottles/person into China w/o paying taxes (~50%)
At HK/Shenzen border - many people would take 2 bottles, drop them off on the other side and go back and take 2 more bottles repeatedly
Impossible to know the scale, but a significant amount of wine goes across the border this way
Wines then put into commercial distribution in China

HK as a trading hub - initial idea of shipping to HK and re-exporting flawed

Add’l logistics costs make it more expensive
Taxes are paid on landed costs, including the add'l shipping costs
Need diff back labels for SE Asia and China (HK doesn't have requirements)

Cross border e-comm into China (TMall, JD.com)

Chinese consumers buy offshore at favorable tax rates
Limitations per year and per transactions
Opens up the availability of products to consumers

HK has a more Western media landscape

Douyin illegal (Chinese TikTok)
Does not have KOL (key opinion leader) industry like China
James Suckling invested a lot in HK, has a wine club, events
Int’l wine critics are critical - Jancis Robinson, Wine Spectator, Wine Advocate

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Tradition and Evolution of the UK Wine Market w/ Katy Keating, Lay & Wheeler Aug 24, 2022

Show notes

Drinking wine since Roman times, the UK market for wine is both mature and competitive. Changes happen slowly, and old traditions remain as the market evolves. Katy Keating, Managing Director of Lay & Wheeler, one of the UK’s oldest wine merchants, gives a deep dive into the UK wine market. She explains the history of wine drinking, its impact on wine purchasing, the up-and-coming wine regions, and the fragmentation of the UK wine retail marketplace.

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Detailed Show Notes:

Lay & Wheeler (“L&W”)

Fine wine merchant, storage, and broker
Founded in 1854, after Berry Bros & Rudd (1698), Justerini & Brooks (1749), Corney & Barrow (1780)
Owned by Wheeler Family until 2009, when sold to Majestic
Never integrated into Majestic, it was a breakeven business doing ~£10-15M/year
Had access to the best wines in the world and a loyal, long-standing customer base
2016 - started turnaround to put L&W back on the map
2019 - L&W sold to a private family, expanded the team, and brought MWs to buying team
Mission - “Connect the right people with the right wines.”

UK Wine Drinking

Very competitive and mature market - drinking wine since Roman times, customers know a lot about wine, buying is very relationship-driven
2nd largest wine importer (20% from France, Italy)
70% of households buy wine regularly
Beer & spirits are also big - pub culture
~50% on-premise, ~50% off-premise
Commercial wines - ~75% by volume, grocery stores mostly
Fine wine - ~25% by volume, ~40% by value, UK is ~33% of £5B fine wine trade
UK drinker drinks wine more mature (the US drinking 2009s & 2010s, UK equivalent is 1990s, early 2000s)

Wine storage is mostly in bonded warehouses

Popular regions / varieties

Old world love - history with Bordeaux
Fine Wine - L&W is 40% Bordeaux and Burgundy
Appetite for Burgundy is “insatiable” - high pricing has driven renewed interest in Bordeaux and some intrigue with Oregon PN
South Africa has been growing last 5-6 years (L&W has seen a 50% CAGR over the previous 5 years)
Champagne growing
Fortified wines - Port is most relevant for traditional settings (including Christmas, which is significant in the UK); Sherry & Madeira are not as popular

Organic/biodynamic not asked about by fine wine consumers

UK trends

Wine for investment
UK wine production - growing overall pie for sparkling, not taking from Champagne (L&W is <0.5% the UK sparkling vs. 10% for Champagne)

UK retail market - very fragmented

No 3-tier system, merchants can buy direct from producers and sell to consumers
Consumers need to go to 5-7 merchants to get everything b/c of exclusivity with producers (fine wine)
Exclusive relationships often occur when a merchant sells to private clients and restaurants
UK wine trading is standard; L&W gets ~25% of revenue from trading
En Primeur/Futures - a big part of L&W business for Bordeaux, Burgundy, & Italy
Low end - very competitive on price, grocery dominates
Online is slow to be adopted, and many still don’t have online ordering

DTC from Europe

Historically, Brits drive to France and buy at the cellar door
In the UK, buying direct online is not a thing

Brexit impact - more paperwork, more delays, hosting tastings and bringing in samples more difficult

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Building roads for Wine in China w/ Ian Ford & Nichole Mao, Nimbility Asia Aug 17, 2022

Show notes

Navigating a very fragmented and dynamic Chinese wine market is challenging. Ian Ford, Founding Partner, and Nichole Mao, Partner of Nimbility Asia, help guide wineries to the right pathways for import partners and building demand in China. They also discuss how important domestic Chinese wine production is, the market for US wine in China, and the importance of wine education.

Support the show on Patreon!

Detailed Show Notes:

Wine buying is very fragmented

An importer can sell direct, with no middlemen
With few regulations, one can buy wine everywhere, e.g., supermarkets, distributor friends, wine bars
Online ordering important, ~10-20%, WeChat, Alibaba, Jing Dong

"Go to retailers"

Sam's Club - known for wine sales to the mass market
Leading grocery stores - Jing Dong, Hema

Promoting and selling in China

Chinese social media platforms have integrated e-commerce (e.g., WeChat vs. Whatsapp, Douyin vs. TikTok), so people can immediately click and buy
KOLs get commission or paid upfront to promote, lifestyle influencers are important
Traditional wine media stays w/in the wine trade and doesn't reach the mass market
Need good importer(s) for availability, no longer need to be exclusive
View importers as partners, 1,000s of active importers, e.g., DTC importers (Vine Hu, Wiki Wines), big guys (ASC, Summergate, Torres) have extensive sales teams, operate omnichannel
Wine trials are necessary - tastings at festivals, grocery stores, etc.
Word of mouth is increasing in importance - as large KOLs are now often paid, people relying on smaller KOLs in their network more

Domestic production

Majority consumed in China, exports growing off a small base
Boutique wineries (50-100k bottles) - looking at more exports, most in Ningxia, the premium winegrowing region
Guochao movement ("national wave") - Chinese supporting domestic brands

US wine in China

9th largest by volume, 6th by value
Punitive tariffs hit imports, tariffs are more than tariffs, but a signal by the gov't not to buy the wines becomes a stigma
US wine doesn't have the legacy or prestige of Bordeaux, Burgundy, or Tuscany, but have the prices
Premium US producers are American centric not good at exports (Ridge being an exception)

Import duties

Including import, consumption, and VAT duties and taxes
Three levels:
Free Trade - ~26% - Chile, NZ, Australia (previously); wines ~1x US price
Baseline - ~48.5% - France, Italy; wines ~1.5x US price
Punitive - US, Australia (now); wines ~2x US price
Australia went off a cliff since tariffs - France benefitted the most, then New Zealand and South Africa

Wine Education important for growth

China's #2 largest student registration for WSET
WSET had to stop in 2021 due to a corporate registration issue - almost back up and running

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De-mystifying Wine in China w/ Ian Ford & Nichole Mao, Nimbility Asia Aug 10, 2022

Show notes

As one of the biggest alcohol markets in the world, China is slowly waking up to wine. Ian Ford, Founding Partner, and Nichole Mao, Partner of Nimbility Asia, walk through how the Chinese wine market has changed, what has led to success, and the current wine trends in the country. With significant growth potential, the Chinese market is a critical global wine market to grasp and understand.

Support the show on Patreon!

Detailed Show Notes:

Nimbility Asia

It doesn’t transact wines; not an importer
Acts like an export team for producers
Creates GTM strategy and aligns w/ the right partners
Creates research reports for data-driven decision making
Serves China (biggest market), S Korea (#2), Indonesia, India, Australia
Japan & China ~75% of wine shipments into Asia

Chinese wine consumer

Still very early stages for wine, not a daily drink for most people
2019 - 1.3 L wine/capita/year vs 51.9L for Portugal, 12.2L for US
~0.2L wine/capita/year 10-20 years ago - wine was for gifting, banqueting, and hosting, not home consumption
Coastal cities (including Beijing & Shanghai) have young consumers that go to wine bars, bistros, drink at home
The growing trend of home consumption, helped by e-commerce, gifting still exists

Chinese alcohol market

big, dynamic alcohol market - strong food & drink culture, no religious objections, very social culture
The largest beer market in the world, dominated by domestic production
Beer is a daily consumption item
Craft beer is stunted by regulations requiring a large minimum volume
Some craft beers (e.g., Boxing Cat, Great Leap) started as brewpubs

China wine market

50-60M 9L cases imported, expected to double in next 10-15 years
~100-120M 9L cases of domestic wine, hard to measure
Big domestic producers - Great Wall, Changyu, Dynasty
Emerging quality producers - Silver Heights, Grace Vineyard

Success in China

Consumer awareness creates customer pull (e.g., Casillero del Diablo, Penfolds)
Cluttered marketing environment
Unique digital landscape (no Instagram, Facebook, Twitter)
Penfolds Example (pre-tariffs) - Grange provides halo, central to the story (good formula for success), profit driver is 300k cases of Bin 407 & 389 at ~$400-450/9L case, also sold ~800-1,000 cases of Rawson’s Retreat entry-level wine
Lafite Example - Los Vascos (Chile) has higher demand due to Lafite affiliation
Sommeliers and lifestyle KOLs (key opinion leaders) can help
Social media amplification is massive

Popular regions / wines styles

Mass market - more price and style driven, like fruity, easy drinking style around ~100 RMB/bottle (~$15); Chile doing well; Cabernet and Shiraz are recognized varieties
Fine Wine - Burgundy has been the “hot bun” the last two years - pricing rising dramatically, can’t get enough; also helping NZ Pinot Noir
Very diverse market (e.g., natural wine bars in Chengdu)
Premium sparkling rising (e.g., Champagne, aged Cava)
More adventurous wine consumers (e.g., blind tasting clubs that compete with each other)
Rosé is a very small, but growing category
Fortified, sweet wines are tiny
Sustainable/organic help and are important for the future, but not big today

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The Wine Monopoly w/ Trond Erling Pettersen, Vinmonopolet Aug 04, 2022

Show notes

Celebrating its 100th year in 2022, Vinmonopolet, the retail wine monopoly of Norway, is tasked with reducing overconsumption of alcohol while enabling a growing food and beverage culture in Norway. With over 32,000 selections, covering 95% of the population, and educating customers with podcasts and other programs, Trond Erling Pettersen, category manager, describes how the monopoly serves all segments of its customers and operates in a fair, transparent manner.

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Detailed Show Notes:

Vinmonopolet = “wine monopoly”

~95% of the population lives w/in 30 min drive of a retail store
340 shops
>32,000 different products, >20,000 wines
Basic range - ~1,000 wines, always on display in stores
Ordering range - importers can stock anything, can be ordered from monopoly website or app, and have wines delivered or available for pickup
Stores can select ~25% of shelf space from the ordering range
2021 - 118M liters of alcohol sold, 96M liters of wine (10.6M 9L cases) worth KR27B (~$2.7B) - taxes and profits go back to the government

Monopoly’s purpose

Established due to overdrinking at the turn of the 20th century - it was a source of poverty, hunger, and social issues
Founded in 1922 - 100th birthday in Nov 2022
1919 - ban on spirits
1922 - created monopoly to have the responsible sale of alcohol

Restaurants and bars

Buy directly from importers and producers, do not go through monopoly
Some trends start in restaurants, then customers go to the monopoly to buy
Restaurants have higher-end wines and often cellar wines

Wine sourcing

>600 importers supply monopoly, needs to go through a supplier, no direct purchasing allowed
Ordering range - free access to market, suppliers that list whatever they want
Special selection - high-end, allocated wines purchased for monopoly
Basic range:
It starts by looking at sales figures, trends, customer demands, and holes in the range
Conduct research by meeting with producers and importers
Develop a tender plan (tenders 2x/year) to outline what to purchase for the next year with very detailed specifications (e.g., max price, packaging, region, etc.)
Get samples and conduct a blind tasting panel which is scored
Launched in stores with guaranteed placement for one year
Wines then compete based on sales volume
An extensive and fair process

Pricing - uses a standard formula

Average wine - ~50% taxes, ~10-15% monopoly margin, ~35-40% supplier share
Monopoly provides calculators for suppliers to set pricing
Pricing transparency on the website

Secondary market

Started auctions ~10 years ago for people to trade wines
Monopoly has people that value and inspect wines
Set % fee for monopoly margin (lower than US auction houses)
Partnered with an auction house

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The Norwegian Wine Consumer w/ Trond Erling Pettersen, Vinmonopolet Jul 27, 2022

Show notes

While traditionally a beer and spirits market, wine has now risen to equal footing in Norway. As a category manager for Vinmonopolet, the retail wine monopoly of Norway, Trond Erling Pettersen describes the wine culture in Norway, the four categories of wine consumers, and the major trends for wine consumption.

Detailed Show Notes:

Wine in Norway

Wine is now equal to beer and spirits, traditionally was more beer & spirits
Norwegians into food and wine pairing, don’t have the traditions of Continental Europe
Higher taxes on alcohol reduce consumption, but it doesn’t impact wine; taxes are set by abv, so spirits are taxed higher than wine which is higher than beer - pushing consumers to lower alcohol drinks
Alcohol advertising is banned
Consumption is lower than in other Scandinavian countries - Denmark (which does not have a monopoly) - 10L alcohol/person/year, Finland ~9L, Sweden ~7L, Norway ~6L
Big seasonal impacts - more spirits and big reds in winter, whites and rose in summer, but changing with more sparkling and rose year round
Norwegians don’t have a strong restaurant culture, so most wine is bought from monopoly and consumed at home

The monopoly sells 96M liters of wine (10.6M 9L cases) - 53M liters red, 27M liters white, 8M liters sparkling, 5M liters rose

No other retailers of wine, not allowed to buy wine at a restaurant and take it home

Four main customer groups

“Open Minded” - the largest group has a price limit but is willing to spend (KR150-200, ~$15-20), likes to try something new - often recommended by monopoly staff or a journalist
“Assured Customer” - know what they want, educated in wine, clear preferences
“Price Focused” - ~20% of customers; lower priced wines, convenience is essential
“Collectors” - ~10% of customers, very educated in wine and food, willing to pay for quality
Higher end segment is growing
Pandemic got more people into wine
The average price is rising for all segments

Organic, biodynamic, and fair trade are important to some customers

Lightweight bottles, bag-in-box preferred by customers for environmental impact and practical use for bringing to summer cabins and on boats

Bag-in-box popular last 15-20 years, now top categories supply it (e.g. - Chablis, Sancerre, Piedmont Nebbiolo); up to KR500-600/ 3L box ($50-60)

Journalists have a large impact on sales

Bodega Weinert (Argentina) said 30% of sales are to Norway, and wine reviews drive sales
Journalists are important because of no advertising
Collectors may follow international wine journalists, but the majority follow national or local newspaper wine writers
Local journalists use dice as a rating scale (1-6) vs. 100 point system
Monopoly has >32k products to select from, so journalists help with recommendations
Monopoly’s podcast educates on drinks and food, regions and grapes, and answers consumers’ questions (e.g., glassware), but doesn’t mention specific producers or products

Norwegian wine trends - 7 main ones

1) Known and Dear - the classics on the rise
2) Expanding Wine World - emerging wine regions (e.g., UK, Canada, Scandinavia, cool climate regions, etc.)
3) Alternative Packaging - bag-in-box (can be 50-60% of sales for some categories)
4-6) Green and sustainable, authentic/handcrafted, organic/natural, vegan/no sugar/lower alcohol (the no-low alcohol wine trend is also in Norway)
7) Young, Urban Consumer - into natural wines, skin contact whites, juicy red wines, more social eating and drinking, want genuine, handcrafted products (e.g., pet nats)

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