XChateau Wine Podcast

Latest Episodes:

Crafting Wines for Consumers w/ Nicholas Hammeken, Hammeken Cellars Feb 16, 2022

Show notes

Having studied what was important to wine consumers working at Oddbins, a British wine retailer, Nicholas Hammeken, Founder and Director of Innovation at Hammeken Cellars, founded a company focused on crafting Spanish wines that match consumer preferences. He develops concepts with unique selling propositions, plays to modern tastes, and tries to be an ambassador of affordable luxury. Nicholas tells us all about how he thinks through creating the concept, developing the product, and bringing the wines to market globally.

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Detailed Show Notes:

Nicholas’ background
- Danish-born, cellar master, worked at Taste of Wine in Denmark
- Worked in the Mosel (Germany), Burgundy, Bordeaux, and Penedes (Cava, Spain)
- Worked at Oddbins in the UK - where he learned about consumer preferences
- Fell in love w/ Spain and moved there when his wife got a job there
Hammeken Cellar Overview
- Spanish wine in the 1990’s - a little rustic, but could taste the tremendous potential
- Motto - “modern Spanish wines…developed through an understanding of consumers needs” -> want to respect the history of the region, but take data to match to consumer preferences
- Based in Valencia
- Winemakers live in different parts of Spain
- Exports 1.5M cases to 30 countries
  - Historically strong in Scandinavia
  - Germany and Holland are big markets, US and Canada are important, while Asia has been consistent with Japan being strong for many years
  - China rising as wine consumption growing (vs. gifting of wine)
- In 2021 - 50% of production are organic wines, sustainability is an important trend for Hammeken
Consumer preferences by market
- Europe - like a more lean style
- US - prefers riper, more bold style
- Often the style preferences match with the profile of local cuisine
- Wines have a base element and then have components to fine-tune the wines for specific markets
Organic trend
- N Europe was the driving force, particularly the monopoly markets, which gave distribution preference for organic wines
- US/Europe now more aligned with regulations on organic wines
- Whole Foods was a pioneer in the US
Brand development process
- E.g., “I’m Your Organic” brand
  - Had nice juice to make an approachable wine made the tannins softer to create a very juicy style of wine
  - Could make it cost $10-12
  - Need to communicate a message to consumers to create a competitive edge -> every bottle (or bag in a box) sold, they will plant a tree
- Leverages Global Data
  - to mine macro and micro consumer trends (e.g., organic product trend)
  - Used to support decision making
- Does other consumer research - “lots of reading” - real all magazines, including grocery store magazines
- Importance of the story -> need to have a purpose of the product, more USPs (unique selling propositions) -> e.g., where does the product come from (i.e., sense of place, which gives traceability), winemaker, etc. -> something apart from a pretty label
- Wants to be an ambassador of affordable luxury, $9.99 or $11.99 wines that taste and feel like $14.99 wines
- Packaging - requires a lot of trial and error to test
  - The more exclusive products tend to look more straightforward and more elegant
  - Scale buying power allows for lower costs for high-end closures, packaging
- E.g. - Mirada Rose from La Mancha
  - Defined specific fruit flavors - berry citrus
  - Want a “Provence” like color
  - Uses extended time on lees
  - It has a unique bottle
  - Uses repeat buying to measure success - Mirada is seeing steady increases year over year in sales
- Wines mostly have a DO/DOC designation - they need to taste like the region, but in a modern way
- Finding new names - “a major headache” - legal names for the US, Europe, and Asia has become a lot more complex than ten years ago
Creating the wine
- The company is asset-light, leverage other people’s facilities
- Go for a more modern, fresh style of wine
- Once they have a clear idea of what they want to do, they search for vineyards
- Try to source from a diverse set of vineyards to reduce nature risk (e.g., hail)
- Old vines are key -> gives a more unique expression, more balanced fruit
- Have their own winemakers, but rent facilities
- Vineyard sourcing a mix of long-term rentals, short term agreements, and spot market purchases at harvest
- Have a contract agronomist to direct grape growing
Go-to-market (“GTM”) Strategy
- Link up with partners, people who want to be first movers on the product
- Often have a dialogue in place before developing new concepts
- Target markets
  - For new concepts - test in smaller markets
  - For clear ideas - go for 3-5 markets to have volume from the beginning
- Keys for product placements
  - Monopoly markets - can lobby for 2-3 years to provoke a tender that you’ve helped define (therefore more likely to wine)
  - 3rd party endorsement is important (e.g., critic ratings)
  - Critic ratings big in US / Canada initially, but rest of the world has followed -> important because some buyers are risk-averse
  - Asia - likes to see success in other markets first
- Marketing & Promotion
  - Social media is important
  - Need to invest for products on the shelves
  - More important channels - product placement (the right place at the right price point), then a mix of endorsement with points and price proposition (e.g., discounts) can drive more significant sales
  - E.g., LCBO (largest buyer in the world) - showed them a gap in their portfolio (mix of packaging, style, and price point) and was willing to invest in promotions to be successful
- Wine critic influence
  - American media (e.g., Wine Enthusiast, Robert Parker, Wine Spectator, James Suckling) strong in US / Canada, but also have a global influence
  - Decanter - more important outside the US
  - Jancis Robinson - w/ 20 point score, need $25+ bottles for consumers to understand what this means
Brand lifecycle
- Most brands are regional stars, a few work worldwide
- Lifecycle is usually 3-5 years
- Product segments get overcrowded and make the brand lose market share
- Signal of downtrend - when the effectiveness of promotion falls
Corporate Social Responsibility
- Try to allow consumers to make an active choice, e.g., I’m Your Organic and planting a tree
- Uses Goodwings to offset the carbon footprint of corporate travel
- Wants to do a detailed mapping of CO2 footprint of product production and use this as a tool to educate wine buyers

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Library Release - Defining Natural Wine Feb 09, 2022

Show notes

An ongoing trend and a topic that crisscrossed many of our interviews on XChateau, the natural wine movement got a formal designation in March of 2020. It specifies a set of vineyard and winery practices to qualify for the designation. We discuss the potential challenges of implementing the designation and the potential impacts on producers, retailers, and consumers.

This episode originally aired in May of 2020. To access the rest of our library, become a Patreon supporter, as we’ll soon be making most back episodes only available to our Patreon supporters.

Detailed Show Notes:

New definition and denomination for natural Wine in France - Vin Methode Nature (March 2020)
Requirements: organically farmed, hand-harvested, indigenous yeast, no inputs added, no manipulations to the wine (e.g., - thermovinification, reverse osmosis, flash pasteurization, cross-flow filtration)
Two levels of designation based on SO2 additions - 1 with no SO2 added, 1 with up to 30 mg/L of SO2 added
Before this, there was no formal definition for “natural wine” people often confused or used the term for organic and biodynamic farming or with using minimal intervention
Natural wine trend
- Rise of natural wine bars, restaurants lists focused on natural wines, and natural wine stores/sections of retail stores
- Entire natural wine fairs - e.g. - e.g. - RAW WINE
- Specific books - e.g., Natural Wine by Isabelle Legeron MW
Challenges of the natural wine designation
- It may be difficult to make adjustments in farming or in the winery when issues occur, which may be increasing with climate change
- Hand harvesting may be challenging and even lower quality in regions with labor shortages (e.g., Australia, New Zealand)
- Champagne - does not use native yeast for secondary fermentation in bottle and may not qualify
- Burgundy - often doesn’t get organic certifications in vineyards due to weather challenges but strive for “lutte raisonnée” (the reasoned struggle)to reduce chemical inputs in the vineyard
- US importers - to be labeled as “organic wine” in the US requires no added sulfur, which applies to only 1 of the 2 designations. Wines without sulfur additions may have stability issues when they shipped to the US
Natural wine retailers - consumers may find the designation confusing as some of their wines will be labeled “natural wine,” but others will not, requiring detailed knowledge of the winegrowing practices of all the wines on the shelf
Consumer perceptions
- Product quality is critical, especially at the higher end
- Studies have shown people will be ~$3/bottle more for organic wine, which is a ~30% increase on ~$8/bottle average price point
- Consumers assume fine wines are a natural product and may find the labeling confusing
- Vegans - egg whites and isinglass (a type of fish bladder) are sometimes used as processing aids for wines (a process called fining) but are not ingredients - may find the designation useful
- Kosher WineWine - can not be labeled natural as flash pasteurization is not allowed

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Making Wine Approachable w/ Mark Warren & Tom Beaton, FitVine Feb 02, 2022

Show notes

Wondering why there was only beer and spirits but no wine at Crossfit events and races, Mark Warren and Tom Beaton, Founders of FitVine, decided to start their own brand. With a goal of making wine more transparent and approachable, FitVine aims to “fit into your lifestyle.” At the $15-20/bottle price point, FitVine is bringing more Gen X and Millennials into the wine category with wine that tastes good and takes away the stuffy image of the wine industry.

If you love the show, please consider supporting us on Patreon.

Detailed Show Notes:

Mark and Tom’s background
- Met ~20 years ago, both in the tech industry and entrepreneurs
- They have always been into wine
- Both former athletes got into Crossfit 2 decades ago at events. They saw spirits and beer but no wine and asked, “why isn’t wine part of an active lifestyle?”
FitVine’s founding
- At $15/bottle - many wines are overprocessed
- Target a “healthy” lifestyle, and the word “fit” means how does wine fit into your lifestyle?
- Want to have a positive impact on people’s lives - relieve stress
Market segment
- Initially thought they were targeting the athletes, but quickly learned it was the significant others at the races & events, the “aspirational group” that wanted to make better choices that were FitVine’s customers
  - Gen X “yoga mom/dad,” Millennials M/F both increasing
  - DTC business has customers from early ’20s to late ’70s
  - The segment is ~85-100M Americans
- FitVine vs. “Clean Wine” - try to be careful and not knock other wines
- Focused on 90% of the wine market and what people are drinking with an average ~$15/bottle price point
- Trying to establish a “go-to” brand people can trust and remove confusion for people without wine knowledge
Marketing
- Targeting the average consumer who’s not wine knowledgeable and intimidated by wine
- Trying to be more transparent and make it easier for the consumer
  - Have nutritional breakdown for all wines
  - Publishes calories, carbohydrates, sugar, alcohol
  - TTB stopped their ability to add more nutritional information (e.g., resveratrol, etc.) because it might show it as a healthy product
  - Does full lab tasting on all wines and have done competitor lab testing as well - sometimes show summary statistics (e.g., 90% less sugar than the Top 10 wines on the market)
- They took tasting notes away not to confuse the average consumer
- Start with the wine first, then discuss the positive attributes of the wines
- Wine often marketed as too “stuffy,” makes it intimidating
  - Want to change the approach, a higher level of YellowTail - which was easy and popular in the $5-8/bottle category
  - At $15-20, more of an investment, wine needs to be good
  - Primary differentiation is transparency - there are no more faces to the big brands/wine companies, the last one was Jess Jackson
  - Want to be very approachable - no beige chateau or river on the label
Products
- Low in sugar but “full” alcohol
- People want the alcohol in wine
- Alcohol also impacts the taste of wine - de-alc’d wine often tastes “thin”
- Low in tannins and histamines
  - Tannins can be added, but none for FitVine
  - High tannins are not suitable for non-seasoned wine drinkers looking for approachable wine
- No flavor additives (e.g., Mega Purple) or other additives
- “Triple Filtering” of wine - uses crossflow filtration that passes through 3 times (standard crossflow process)
- Wines are not bulk wines, controlled from grape to bottle
- Mostly Lodi fruit, sustainably raised with no pesticides
Production
- 2021 - ~425k cases
- 2022 - ~600k cases
Go-to-market strategy
- Started DTC only
- Started with social media
- Went anywhere, people would let them pour wine (e.g., yoga studios, gyms, etc.)
  - Gave out samples and postcards to drive to the website
  - 2021 - still did >5,000 events
- Went consumer first vs. pushing through distributors - Whole Foods called in 2016 - brought into retail in 2017 (started w/ 4-5 stores, then spread across the US)
- 2022 - will be in 25,000 locations in the US, ~35,000 in 2023
- Now focused on grocery stores and delivery (e.g., Instacart, Drizly, GoPuff)
- Strong repeat buying
- DTC offers limited-run varietals, which allows the testing of new SKUs before distribution
- DTC has stayed level (now
- 2017 - had a contract with the Boston Red Sox, created single-serve 187ml glass
  - Did well, but with a multi-layered business model, was not the best use of marketing investment
Wine industry trends to watch
- The Low or No alcohol wine category is challenging
- Need a different approach to educate consumers
  - Give people more transparency around what’s in the bottle
  - Give people more information in small, easy to understand chunks
- Growth of canned wine - believes due to being more approachable

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The Cleanliness of Clean Wine w/ Erik Segelbaum, SOMLYAY Jan 26, 2022

Show notes

Ever been curious about the claims people make about “clean wines”? In the same camp as “natural wines” and “better for you wines,” clean wines have no definition and often deploy misleading marketing to get you to buy their wines. They take advantage of the trend, particularly with Millenials, around a healthy lifestyle and spread misinformation in their marketing, according to sommelier and wine educator Erik Segelbaum. Explore the rationale behind the clean wine trend and how to read into their marketing messages on this episode of XChateau!

Don’t forget - you can support the show on Patreon to help us keep bringing you excellent wine business content!

Detailed Show Notes:

Erik’s background
- Was a chef in fine dining at the Park Hyatt Philadelphia
- As he grew into wine, he stopped drinking for alcohol and more for flavor
- He became a sommelier because it was more profitable than being a chef
SOMLYAY (Erik’s company)
- Does private events, education (including with the Smithsonian), a wine writer, private cellar consulting, and hospitality/wine list consulting
- Has done >300 private events in the past year, primarily virtual
Wrote an article called “Snake Oil for Sale: The Dirty Business of Clean Wine” (pg16) for the Sept / Oct 2021 issue of The Tasting Panel magazine
- The impetus for the article - Erik always gets the same questions during consumer events around sulfites, natural/clean/healthy/“better for you” wines
- He gets lots of ads using manipulative advertising around the wines
Definition of Clean Wine
- It’s an invented word. There is no definition, no standards - it doesn’t actually mean anything
- Implies other wines are “unclean”
Drivers of the clean wine trend
- Millennials have taken over as the dominant wine buying cohort. They like “healthy,” and the trend is playing to their preferences
- Celebrity endorsements backing trend (e.g., Cameron Diaz’s Avaline)
Clean wine claims are not false but spreading misinformation and are “lying by omission”
- E.g., all wines are gluten-free
- Vegan - sometimes animal products (e.g., egg whites) are used in fining but not really put into wine
- Organic - does not mean any chemicals, just no synthetic chemicals (e.g., sulfites are organic and a good thing - required to make wine otherwise, nature turns grape juice into vinegar)
- Additives - there can be bad ones (e.g., Velcorin, which is hazardous in large quantities, and Mega Purple, which adds color and sweetness)
Need to distinguish between “industrially produced wines” and “commercially produced”
- Industrial wines are mainly on the bottom shelf of retail and are highly manipulated wines (e.g., use lots of additives)
- Commercially produced can be well-produced wines, even at a commercial scale
Clean wine “obscures transparency”
- They often manipulate where the wines are produced (e.g., don’t mention where the grapes are grown, only that they are produced and bottled in a specific place)
- Targets naive consumers
- An excellent example of transparency - Ridge Vineyards - has ingredient labeling and all relevant details on the label

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Selection and Differentiation in Grocery Wine w/ Curtis Mann MW, Albertson’s Jan 19, 2022

Show notes

Grocery stores are one of the biggest sales channels for wine. Curtis Mann, Group Vice President of Alcohol of the Albertson’s Companies, gives us the inside scoop on buying trends, how to sell into Albertson’s, and the rise of the use of digital. Learn about the dynamics of the grocery wine market and what makes Albertson’s “locally great, nationally strong.”

Don’t forget - you can support the show on Patreon to help us keep bringing you great wine business content!

Detailed Show Notes:

Curtis’ background
- MBA at UC Davis in Wine Marketing and Accounting
- Marketing at Trinchero Family Estates
- Worked in wine retail at a small place
- Moved to IRI in category management in wine and spirits insights
- Was Raley’s wine buyer for 8 years
Grocery as part of the wine market
- Multi-outlet wine market ~$12-13B / year
- Total wine market ~$60-70B / year (multi-outlet ~20% of the total market)
Albertson’s Companies’ wine overview
- ~25 different grocery brands, ~2,000 stores
- Wine is a key element of business - it drives sales and customer loyalty; some customers come to stores because of the wine selection
- Some stores have up to 3,000 wine SKUs
- Stores with more premium selections are correlated with location (high socio-economic demographics) vs. by grocery store brand
- Focus is more on the “premium” price segment ($9+ based on IRI)
- Top brands - Barefoot, Kendall Jackson, up-and-coming brands - Butter, Josh, but wine is very diversified. Big brands are still a small part of the market
- Premiumization helping imports, including New Zealand Sauvignon Blanc
Wine buying trends
- Consumers are called to authenticity - they want to know what’s in their wine, the appellation, sustainability, and organic
- Convenience - cans, seltzer, ready to drink
- Premiumization - $10-20/bottle, $30-50/bottle, up to $100/bottle (e.g., high-end Bordeaux, Napa Cabernet) ranges all doing well, some categories accelerating with potential out-of-stocks
- Covid trends - return to cooking, consumers go to Albertson’s as a one-stop-shop
- With restaurants reopening, a little bit of regression in sales, but still robust as cooking at home has been sticky
Customer demographics (for wine)
- Gen X / Baby Boomers - still buying a lot (more in bulk and volume), but less than before
- Millennials are the new customers - buying more, less loyal to wine vs. other drinks, and have less expendable income; their preferences are different from Gen X and Baby Boomers
- To meet the changing demographics, Curtis looks forward 3-5 years to develop his shelf set/selections of wine
- Considerable diversity of reasons people buy wine - occasion based purchasing (e.g., going to a party)
- Many people exploring and learning about wine (proof point - the massive increase in people taking WSET classes, including lots of consumers, not just professionals)
Promotions / discounting
- Limited brand loyalty in wine, customers often default to price
- Given that, promotions are pretty important
- We need to work between price and product to optimize sales and not over-rely on price
Wine selection
- What does it mean to customers? Each wine must have a purpose vs. the other ~1,500 SKUs on the shelf
  - This could be style, story, or location/appellation
  - Want to remove redundancy on the shelf
- Tagline - ‘locally great, nationally strong’; try to give local stores more voice (e.g., Portland stores have more Willamette Valley Pinot Noirs)
- Flagship Stores (e.g., Andronico’s, Pavilions) - higher-end, eclectic offerings
- Steps to sell into Alberston’s - have the 4 P’s put together - distribution network, pricing, product, and where you fit on the shelf
  - Generally need to place wine 4-6 months in advance
  - It requires a UPC code on the bottle
Private Label / “Own Brand” wines
- The goal is to provide the best price to value for customers
- The intent is to drive loyalty
- Not a dominant part of the business
- Trying to create wines that are a draw and get good scores
- Selection is built around education, desire to learn about wine category through own brands
- Suppliers have connections to maintain supply, which can help Own Brands overcome supply challenges (e.g., 2020 Napa, 2021 New Zealand)
Digital Adoption
- Virtual tastings - have done well, 1,000s of people sign up, people buy the wines beforehand or buy wines later and watch the tasting on YouTube
  - Appeals to groups of customers who don’t get to visit wine country
  - Will continue post-Covid
  - Do education tastings 1x/month
- Keys to engagement - consumers have lots of questions
  - The team engages with customers via chat
  - Keep it educational - need a balance of explaining concepts but keep it understandable
- Consumers using their phones more for education want to reduce the complexity of wine
- Wine e-commerce - working on expanding this, challenging due to state regulations
  - Expanding drive up and go (“DOAG”)
  - Delivery (e.g. - Instacart) growing
  - Still a small portion of sales
- Core elements of success for the grocery channel
  - The selection keeps people in the store
  - Relating the wine to the food in the store (food - wine pairing)
  - E-commerce
  - Convenience (e.g., ready to drinks)

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Democratizing Wine Retail w/ Jeffrey Shaw & Jeff Hardy, Underground Cellar Jan 12, 2022

Show notes

With a vision to democratize wine for every wine drinker in the US, Underground Cellar’s founder and CEO Jeffrey Shaw and COO Jeff Hardy are focused on building a unique and disruptive platform for buying wine. Leveraging gamification principles, Underground Cellar gives you upgrades to the wines you buy, giving customers access to more expensive and rare wines. This has expanded into free wine storage in their Cloud Cellar, which they hope to build more community and a trading platform around. Dig into how it got started, the value proposition for wineries, and where they are going in this episode of XChateau! Underground Cellar offers listeners a discount code for $100 off your first purchase of $150 or more with promo code: XChateau at undergroundcellar.com.

Like what you hear? If you’d like to support us in bringing you the best content on the wine business, become a patron at Patreon.

Detailed Show Notes:

Jeffrey Shaw’s background
- Fell in love with wine in college, wine tasting, etc.
- Had a small exit with his first company and wanted to do something in wine
- Started 6 companies simultaneously (based on a statistic that 5 out of 6 companies fail in the 1st year) to find 1 to focus on, dropped the rest after 90 days except for Underground Cellar
- The goal is to “democratize” the wine experience and convert wine drinkers to wine collectors for life
Jeff Hardy’s background
- Tech background, worked at Google and Yahoo!, building smaller startups focused on small and medium-sized businesses
Underground Cellar’s model
- Curate wines into collections (e.g., Napa Valley Cabernet)
- People don’t buy specific bottles, but into a collection with different price point wines
- 50% or more of the bottles you buy are upgraded to more expensive bottles
- Collections can include rare wines (e.g., a Heidi Barrett signed bottle of Screaming Eagle)
- Cloud Cellar - everyone can store up to 500 bottles for free
- Upgrade determination
  - an algorithm helps determine the number of upgrades
  - Focus on lifetime value received as a customer
Goal to “democratize” wine
- Three elements of wine that can be democratized - knowledge, money, and relationships/access
- Underground Cellar tries to educate in easy to understand, more approachable ways
- Upgrading allows customers to experience higher levels of wine
- Ability to source some scarce, valuable, and hard to find wines enables access to these wines
Target market = everyone
- Wine aficionados - enticed by the rare wines available (e.g., the signed bottle of Screaming Eagle)
- New wine drinkers - want great value, like the process of being upgraded
- Wine lovers building collections - want variety for their collections, which is inherent in the collections
Supplier benefits
- Wines are never discounted
- Underground Cellar can buy small lots of wine
- Can buy less popular varietals, etc.
- Promotes the brand and story on social media (~12k followers on Instagram) and email (~250,000 email subscribers) => wineries have said that foot traffic and sales spike after being featured
Cloud Cellar
- Get unlimited duration storage for 500 bottles for free
- Let’s people buy wine when they usually couldn’t due to weather/shipping constraints or for space/storage constraints
- 85% of customers use Cloud Cellar, most storing ~1 case - most customers use it to buy wine at any time
- Future: people can start to trade with one another on the platform
Marketing channels
- Use social media, direct mail, radio
- #1 channel has been direct referrals - people like to share their upgrade stories
  - Offers a “Give $50, get $50” referral program
  - Future: the potential to add wine as a reward in Cloud Cellar, similar to Robinhood referrals where you get one share of stock
- Barbara Corcoran is an investor
  - Initially approached Mark Cuban via email, but he doesn’t invest in alcohol
  - Approached Barbara afterward to prove Mark Cuban wrong
Technology platform
- Built from scratch in-house
- The new upgrade model was not supported by other platforms
- Needed to de-couple wine buying from wine-shipping
- 60 employees currently, including data scientists and business insights analysts
Future for Underground Cellar
- With 84M people in the US as wine drinkers, lots of room to grow
- Want to get the experience out there to more people
- The goal is to make the experience fun and exciting
- Want to build community within Underground Cellar and turn people into collectors
Promo Code for listeners:
- $100 off your 1st purchase of $150 or more
- Promo Code: XChateau
- Go to www.undergroundcellar.com

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Wine Consulting Turned Retail w/ Thatcher Baker-Briggs, Thatcher’s Wine Consulting Jan 05, 2022

Show notes

Sommelier turned wine consultant turned online wine retailer. Thatcher Baker-Briggs, Founder of Thatcher’s Wine Consulting, has continued to evolve and expand his presence, helping clients drink better and navigate some of the intricacies of Burgundy and other fine and geeky wines. He tells us about his journey, how email responsiveness is a competitive advantage, and how he believes some of the distribution allocations of top European wineries need to adapt to where the demand is. An engaging and insightful episode of XChateau!

Don’t forget - you can support the show on Patreon to help us keep bringing you excellent wine business content!

Detailed Show Notes:

Thatcher’s background
- He started cooking at 10, worked in restaurants, was in the kitchen for ten years
- Pursued sommelier route, spent time in Japan, came back to SF to work w/ Saison Hospitality
- Helped collectors to manage the world of Burgundy and expanded from there
- Launched a small, online boutique website pre-Covid
- Has both an importer and retailer license (possible in California)
- Import focus is on 1st and 2nd generation winemakers, often younger (in their 20s and 30s)
Wine Consulting
- It started when a regular guest at the restaurant asked for personal wine consulting
- He had to rely on other retailers, which was challenging for some short turnaround needs, and built a small inventory of products, which got put online for the retail arm
- Clients are on an annual retainer basis - annual necessary to set goals for the cellar and wine education
- Initial clients came from personal relationships
- New clients are mostly through existing client referral
- You don’t need a lot of clients to be successful and cap the client base so that each client can get enough attention
- He doesn’t source exclusively from TWC retail but from a variety of sources
- Challenges with wine consulting business - dealing with an old school wine world, inventory management, logistics of getting wine, and communicating “no” to collectors can be challenging
Wine Retail
- Differentiation - wines highly curated by the team
- Ability to source wines due to decades of experience and relationships with importers and retailers from sommelier experiences
- Sourcing rare wine is complex, as often wines can’t be fully authenticated - TWC usually takes a very conservative approach, e.g., buys DRC only with a Wilson Daniels back label and from an original buyer
Essential to work with importers who are investing in building wine brands
- General importer margin - cost converted to local currency, 1.5x the cost plus a couple dollars/bottle for transportation
- Some importers take too high margins on hard to find wines, which leads TWC to need to source directly from Europe
- TWC doesn’t undercut the market not to upset other wine merchants
European wine distribution is often flawed and challenging, creating market dislocations
- E.g., Raveneau - has low ex-domaine pricing, the wine immediately sells out, the family makes a great living, and doesn’t require work, but may have more wine in Switzerland than in the US where it sells for multiples higher
- Wineries often are small businesses without a lot of people working there
- Nicolas Faure example - sells so cheaply ex-domaine that people buy everything upon release, primarily other retailers buying to resell for much higher levels
Technology
- Has a team of developers
- Uses Zoho (CRM) and Shopify (E-commerce)
- Custom-built integration between Shopify and Zoho
- The aim is to make the website faster, more efficient, have correct pricing, amongst other space
- He believes there is a lack of core technology in the wine space, currently dominated by Wine-Searcher and CellarTracker
Wine Pricing
- Believes Burgundy is a bubble, but it can’t burst due to lack of supply (particularly with short 2019, 2020, and 2021 vintages)
- Prices are so high they are pricing out drinkers
Links to Thatcher
- Instagram
- Thatcher’s Wine Consulting

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Adaptation: 2021, a Year of Re-Opening, Wine Pricing, and Clean & Natural Wine Dec 23, 2021

Show notes

2021. A year with big expectations. The re-opening of economies around the world with Covid vaccines in distributions instead led to fits and starts with the Delta and Omicron variants. Wine pricing and costs went through gyrations with the tariffs between the EU and US imposed and then lifted and supply chain disruptions creating both cost and availability issues. And clean and natural wines continued to become a broader topic amongst wine consumers and the trade who struggle with their definitions and impact. XChateau assembled a panel across the wine value chain (Producer - Diana Snowden Seysses of Snowden Vineyard and Domaine Dujac; Importer - Xavier Barlier of MMD; Distributor - Michael Papaleo of Banville Wine Merchants; Retailer - Kyle Meyer of The Wine Exchange; and Lisa Perrotti-Brown MW of The Wine Advocate) to discuss these issues and answer audience questions live on Clubhouse. A wide-ranging and captivating conversation!

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Detailed Show Notes:

Panelists:
- Producer perspective - Diana Snowden Seysses, winemaker at Snowden Vineyards in Napa & Domaine Dujac in Burgundy
- Importer perspective, Xavier Barlier, SVP of Marketing & Communications for Maison Marques & Domaines USA, the importation arm of Champagne Louis Roederer and related companies
- Distributor perspective - Michael Papaleo, VP of Sales at Banville Wine Merchants, an importer and distributor focused on the New York, New Jersey, and Mid-Atlantic region
- Retailer perspective - Kyle Meyer, Managing Partner of The Wine Exchange, a leader wine retailer in Orange County, California
- Wine Critic / Reviewer perspective - Lisa Perrotti-Brown MW, Editor-in-Chief of Robert Parker’s The Wine Advocate for the last 13 years
Topic: Re-opening from Covid
- Diana - producers in Napa and France weren’t required to close. Their biggest concern was keeping employees safe
- Mike - learned how to conduct non-in-person sales (online and on the phone) by creating compelling content and using humor to find ways to engage accounts
  - Luxury wines did well - the average case price pre-pandemic was $136/case; increased by $30/case
  - On-premise recovered, but not all the way - 2019 - 55% on-premise, 2020 - 27% on-premise, 2021 - 44% on-premise
  - Collectors who were drinking through their wines started re-filling their cellars
  - Banville Wine Merchants was able to expand through the crisis (headcount went from 12 salespeople in 2020 to 16 in 2021, with 21 expected in 2022)
- Kyle - 2020 Q2/3 - online orders went up dramatically - people bought everything
  - 2020 Q4 - needed more inventory, supply chain issues created lack of access that persisted into 2021
  - A lot of people are now comfortable buying wine online, do to a big pick up business
  - 75% of sales online pre-Covid, now 85-90%
  - 2021 felt more normal, like 2018 (2019 had issues w/ tariffs, etc.)
- Xavier - MMD’s luxury portfolio was positioned mainly towards on-premise
  - Pivoted to off-premise (e.g., high-end Safeway stores in Los Angeles)
  - Champagne shortages in 2021 - Roederer is sold out, pricing of Champagne is higher than it was before, bubbly is more popular than ever
- Lisa - The Wine Advocate piggybacked on the success of online wine sales -> web views were up 10x vs. pre-Covid, subscriptions showed strong growth, but not as much as web views
  - Events had to be canceled in 2020, tastings re-factored, including re-packaging wines into little bottles for tastings
  - Pulled off some events (e.g., Kings of Rhone, Bordeaux 2010)
  - End of 2021 - lots of Zoom fatigue, people want in-person events, but push for smaller events (e.g., masterclasses, dinners) to avoid large groups
  - Hope to keep some virtual events in the future w/ hybrid elements
- Xavier - used to have to travel a lot before, pivoting to virtual staff training in the B2B context in 2021 was more efficient and convenient
Topic: Inflation / Wine Pricing
- Kyle - some prices have gone up, but more steady than expected
  - CA prices are going up because of the light 2020 vintage (fires)
  - Bordeaux 2020 releases prices much higher
  - Burgundy - pretty steady pricing with slight increases
  - Germany - top producers are increasing prices as they were underpriced before
- Xavier - w/ tariffs and increased shipping costs, MMD has tried to absorb the impact with their partners - sharing ⅓ producer/supplier, ⅓ importer/MMD, and ⅓ distributor
- Mike - bought long on some products pre-tariffs, which helped through the first half of 2021
  - Did reduce some margins and tried not to pass on increased costs to customers
  - Some allocated Burgundy had to pass on cost increases
- Lisa - people looked more at domestic wines than usual, specifically 2018 and 2019 Napa wines, primarily because of 2020 fires and short vintage
  - Bordeaux 2020 is a lot higher pricing than 2019, even with a less consistent vintage
- Diana - had supply chain issues pre-Covid, including a glass shortage (as only river sand can be used, not desert sand)
  - Have learned to order early to deal w/ shortages (e.g., glass, labels, capsules)
  - Facing labor shortages globally
  - Wineries have absorbed increased costs of glass and corks
Topic: Clean & Natural Wines
- Lisa - there is no definition of clean wine. It’s just a marketing fabrication
  - Natural wine is a misleading term as well. It means different things to different people
- Kyle - no one has asked for clean wine yet
  - Customer curiosity around natural wine, but people believe they are faulty wines (e.g., mercaptans, Brettanomyces)
  - Wine merchants need to educate consumers around these topics
- Xavier - positive part of this trend is that it creates a conversation around wine
- Diana - need to educate consumers around sustainability. It’s positive that people are worried about the climate and sustainability. If there’s no definition of the term, it becomes greenwashing
Audience Questions:
- Matthew - how do you best educate, communicate organic sources, and implement sustainable practices without greenwashing?
  - Lisa - be very honest about what you’re doing
  - Kyle - make them “a” point vs. “the” point, the wine should be “the” point, make the best wine you can
- Ziad - how is the wine sector coping with climate change?
  - Lisa - need to live w/ extreme events (e.g., wildfires, water shortages) more frequently, all over the world
- Xavier - Piemonte & Champagne have benefitted from climate change, and some have adapted winemaking; e.g., Louis Roederer has evolved their Brut Premier multi-vintage wine to “Collection 242,” a new multi-vintage wine that will have a unique number and release each year as the wine is now based around a single vintage
- Diana - there are two conversations - one on adaptation and one on decelerating climate change through GHG emission reductions
  - Adaptation - France has to deal with frost issues, especially in Burgundy, Napa has drought and heat

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Becoming a Wine Retail Institution w/ Phil Bernstein, MacArthur Beverages Dec 15, 2021

Show notes

An early mover focusing on fine wine, Bordeaux and California futures, and becoming a dual importer/retailer, Addy Bassin’s MacArthur Beverages has become a wine institution in Washington DC. Phil Bernstein, General Manager of the brick & mortar wine retail store and importer, tells us about how he thinks about wine pricing, direct importing wines, the changes in consumer buying patterns, and more as we continue to delve into the future of wine retail.

Detailed Show Notes:

Phil’s background
- He grew up in Long Island, played Trumpet, and pursued a career as a professional trumpet player
- He ended up begging for a part-time job at a retail shop in Ann Arbor, MI, and got his start in wine
- Saw a job at Calvert Woodley in DC on winejobs.com and moved to DC
- He moved to Macarthur Beverages so he could become a wine buyer and became GM in April 2018
Macarthur Beverages history
- An institution in DC, in the Palisades suburbs
- Founded in 1957 by Addy Bassin and his wife, Ruth
- One of the 1st to offer Bordeaux En Primeur
- He was notable for bidding on one of the Jefferson wine bottles
- They had a focus on fine wine from an early stage
- Both a national shop (because of fine wine focus) and a neighborhood store
- Pre-pandemic - 50% online / 50% in-store; today - 70% online, 30% in-store
  - Used to have tastings every Sat in-store to drive foot traffic
  - People now do curbside pick up after ordering online
  - Does a lot of DC area delivery (can only legally deliver in DC, not nearby suburbs in MD or VA)
Physical store for wine retail - “nothing beats the human interaction”
Pricing for wine retail - “price is everything”
- Believes that price often trumps customer loyalty
- Looks at wine-searcher.com when pricing wine, having the best price on wine-searcher meaningfully drives sales
- Used to do a standard markup with a case discount, but believes now having the best price upfront is key
“Reliability” for MacArthurs is good customer service
- Take care of the wine (temp control, only ship when weather is good)
- Never makes vintage substitutions
- Always makes good on promises, even if they end up losing money on the sale
Both an importer and a retailer
- Only possibly in DC and CA in the US
- Can buy Bordeaux direct from negociants
- Have access to more fine wine from overseas
- Can cut out the middle man - improving profitability and reducing the price to the customer
- Finding their wines to direct import - have exclusivity, mostly locally
- Imports 6-7 full 50ft containers a year
- Not allowed to sell to other distributors or retailers
- ~60% of business from wholesalers, ~40% imported
- Believes more importers will sell direct over time
Bordeaux Futures/En Primeur
- The value of it can vary a lot by campaign
- The only way for it to work is for wines expected to either be sold out or at higher prices when the wines are released for customers to tie up their money
- In most years, En Primeur only works for the top 50-75 wines, which doesn’t make sense for most Petit Chateau
- 2019 campaign - Bordelais knew people couldn’t taste during En Primeur due to Covid, Pontet Canet and Angelus came out early with low prices and set the tone - lots of interest and buying
- 2020 campaign - “somewhat of a dud,” Bordelais took prices back up to between 2018 and 2019 levels
California Futures
- Starting to go away from this model
- In the early 1980s (pre-internet), set up barrel tasting of CA wine producers, people could taste the wines and order futures at a discount
- E.g., Randy Dunn, Ridge, Shafer were some producers
- Robert Parker came and did a private tasting after the event
- It has since been taken over by the internet, mailing lists, and wines have wider distribution
- Now more of a social event, less about selling wine
Customer demographics
- Largest revenue from males 45-54
- Growing population according to Google Analytics - females 35-44, more younger buyers tend to be female
- Buying habits changing
  - The old model - buy by the case (based on points and price)
  - The new model (as wine prices have gone up and selection has increased) - lots of 1-2 bottle buying, trying things from all over the place
  - Points are less important
  - Restaurants are a way for consumers to explore new types of wine
  - Bourbon is a very hot category
Communications
- Email is still the #1 way to sell wine
- Social media - doing more, can highlight boutique items, good for promoting local events (tastings, wine dinners)
- YouTube - did some video tastings for customers - got excellent feedback
- Working with a digital marketing company

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Driving Personalization in Wine Retail w/ Addie Wallace, Wine.com Dec 08, 2021

Show notes

As the largest wine e-commerce site globally, Wine.com has been a leader in leveraging technology to sell wine. Addie Wallace, Director of Brand Marketing, gives us insight into how wine.com leverages the marketing funnel to drive awareness and conversion, has built a differentiated offering online, and is pushing the boundaries of customization with their new personalized wine club Picked. There’s a lot to learn about the future of retail in this episode of XChateau!

Detailed Show Notes:

Addie’s background
- She started her career in finance
- In business school, led the Wine & Cuisine Society and created a wine recommendation app
- Completed her WSET Level 3
- Pitched Wine.com an idea to have a personalized wine club, which she launched
- Manages brand, customer insights, and subscription businesses for Wine.com
Wine.com’s history
- It started as evineyard.com in 1998
- Acquired wine.com URL and brand in 2001 when original wine.com went bankrupt
- Key milestones
  - The most extensive assortment of wine in the world, over 17,000 wines vs. ~2-3,000 in a typical wine store
  - Live chat functionality w/ sommeliers (started 6-7 years ago, one of the first to use the functionality) - replaces people in aisles helping you in a wine store
  - Building out physical presence - serves 42 states and DC, can reach 80% of customers in 2 days
  - Working on personalization
  - $355M in revenue in Fiscal Year 2021
E-commerce trends
- Believes e-comm growth will continue, but not at the same pace in the pandemic
- Pandemic showed people they could shop for wine online (built awareness)
- 2016 study - showed e-comm only ~3% of alcohol shopping
Wine.com core differentiators
- Variety / selection - leads to continual discovery
- Live chat - people are not commissioned, only there to help you find the best wines
- Convenience - including StewardShip for free delivery
- Personalization - with Picked, the personalized wine club, and building more personalization into the website
Marketing channels
- Uses different channels for different parts of the marketing funnel
  - Top - get people to know the brand
  - Middle - get people familiar with how the brand is differentiated
  - Bottom - use promotions to get people to convert
- Wine.com does a lot of digital advertising - social media, affiliate marketing, search, Google shopping
- Each channel is effective for different customer needs
- E.g., - Google Shopping - good for when customers are looking for something specific
- Podcasts - for educating people that they can buy wine online and get them to shop at wine.com
- Search/Google Shopping - has the largest # of eyeballs
- High ROI - direct mail, the non-digital marketing Wine.com does
- Discounting / coupons - help with getting customers to convert, promotions need to be structured to attract the right audience
- Social media - has been challenging, changing regulatory landscape, privacy restrictions, and constantly changing algorithm, as well as lots of competitors using it makes it hard to be winning at it and need to evolve continually
- Some marketing channels are hard to measure results - e.g., - print media (can use QR codes or promo codes to help track)
- New channels - spending more time on podcasts, new social platforms (e.g.,- Snap, TikTok) don’t currently allow alcohol ads
StewardShip Program
- It started as a free shipping program, for an annual fee (currently $59/year)
- It gets consumers to shop more frequently
- Becoming more comprehensive, like Amazon Prime, more perks to feed the wine lifestyle
  - e.g., - free tickets to events, both in-person and virtual (gave away 100 free tickets to James Suckling tasting events, 1:1 virtual tasting with the Gaja family)
  - Special promotions and early access to some wines
- ~60% of revenue is from members
- Drives high retention rate for members
- The annual fee pays for itself if you buy 2 cases/year
  - ~$40/case, ~$30/6 bottles to ship normally
Picked - personalized wine club
- Launched in 2020
- Tell them wine preferences, get matched with a personal sommelier
- Select 6 wines every 1-3 months
- No two customers get the same thing
- Leverage tech to make sommelier selections more manageable and more diverse, but lots of human judgement
- The sommelier writes a personal note for the wines
- One sommelier could theoretically support thousands of Picked customers
- Club differentiation
  - Personal element
  - Selection - a lot of new discoveries
  - Only sell “real” wines, no private labels
  - Level of control/customization - price points, frequency, feedback, amount of red vs. white
- Some overlap w/ StewardShip but primarily targets different segments
  - StewardShip - more self serve customers
  - Picked - people who want more help in selecting
Other wine.com personalization initiatives
- Making the largest wine store curated just for you
- Elevate recommendations and put them in context
- Use prior purchase data, ratings, and if a wine was added to the shopping cart
User ratings
- StewardShip members rate more frequently
- Send emails to encourage ratings
- Wine.com App - users more likely to rate
- Picked members provide ratings to help personal somms
Leveraging technology to elevate the wine retail experience
- Recommendation engines, email programs
- Wine.com App - the store and wine encyclopedia in your pocket
- Virtual tastings
Wine.com is likely never to go brick & mortar
- Would limit the selection available
- Would limit personalization of experience