The Fine Wine Ecosystem through Covid-19 (Part 2)
Uncertainty and change didn’t start with Covid-19. For several years now, both society as a whole -including the rules of international trade- and the Fine Wine ecosystem has been engaged in deep transformations. The current situation is increasing the pace of change, speeding up pivoting strategies, reinforcing burgeoning trends, straining imbalances.
Based on a month of conversations with 70+ Fine Minds, we identified six game-changing shifts, and extrapolated their probable impact on the Fine Wine Ecosystem (FWE). After presenting the first three ones last week, here are the outstanding shifts.
As we explore the wreckage from current situation and try to harness aspects of it as a potentially positive force of change for the Fine Wine Ecosystem (FWE), we would like to extend our thoughts to individuals and companies that have been deeply affected by the virus and are still struggling to make it through these unprecedented times.
Digitalisation of the conversation
As most of the world has now been in lockdown for several weeks, like everyone we all had to transfer most of our conversations to the digital world.
The first few weeks of lockdown have been very similar across all countries and industries, with a shared feeling of chaos that left most of us groggy and stressed. We all went to Zoom and videoconference tools with apprehension, yet powered by the need to learn and adapt.
The digitalisation of conversation requests two major change of mindset for the FWE. The first one – going from analogue to digital, on-site to remote – seems to have been quite a success. In a change that can be seen as very quick for such a traditional ecosystem, we all migrated online, our schedules filled with remote meetings, strategic webinars and online wine tastings.
“It’s a big shift for our company’s culture. Prior to the crisis, we were extremely centralised, with everything and everyone located in the vineyard grounds. It takes a while to adapt, but it’s interesting to see that we can be efficient remotely”.
But Fine Wine is a social and human product by definition, meant to be shared and enjoyed with all your senses. As we asked our attendees how our ecosystem can adapt to this digital filter, here are some solutions that we’ve heard along the way.
- Getting your stories right and establish long lasting trust
“All the online winetastings that I have enjoyed spent 10% of their time talking about the wines, using the remaining minutes to share their story and most importantly, take questions from the remote audience. The filter of digital removes some of the audience’s fear”
“Not only the conversations are happening digitally, they are also happening within one’s home. This instantly creates a sense of familiarity and trust, as you are now seen as showing the “real you”. No more BS, nor more marketing, just you with basically the same problems and anxieties as your audience. It creates a very strong bond”.
- Don’t expect perfection
Levels of expectations are lowered, as everyone feels “in the same boat”, struggling to adapt to the situation.
“I had to record some videos of me, with my poor-quality phone, in my living-room, explaining the differences in our portfolio. It’s a learning curve, an interesting exercise. The video has been seen more than 2000 times during the first week, people are definitely interested by this format”
- Include online conversations in your business models
Journalists, speakers and educators can add an “extra digital product” to their analogue speaking gigs.
“I ran three paid workshops through Zoom for a big company. There is clearly money that can be made through digitalisation of content.”
- Digital conversations are here to stay
“As a Fine wine enthusiast, I truly hope those online wine tastings are here to stay. Nothing will replace the feeling of walking into a vineyard to meet the producer, but I find the idea of being able to connect with fellow wine lovers instead of spending my business nights alone in my hotel room very comforting”
“Now that I have experienced online tastings with my suppliers, I’m going to integrate them post Covid-19. It’s working well when you already know the wineries and just have to be updated, and it’s in-line with our will to cut our international travels as part of our sustainability programme”
Listen to our conversation with Elizabeth Linder, CEO The Conversational Century
Digitalisation of commerce
Customers are trying their best to adapt to strange times, and buying behaviours are adapting as a results. From restricting brick-and-mortar shopping to bulk buying online, they respond to crises in different ways, trying to maintain a feeling of control and normality, or to find ways to fight boredom.
Many people are choosing BOPIS (buy-online-pick-up-in-store) or delivery options, and online shopping is booming for the food & beverage sector.
Wineries, merchants and retailers that already operated online with a tested delivery systems have flourished everywhere.
“We have been doubling our “best day ever” revenue every week for the last three weeks”.
As we considered the future of online-shopping and what it meant for the FWE, here are some insights that we’ve heard along the way:
- One small step for some, one giant leap for most
“Now that they have overcome their fear of ordering wine online, people realised the huge comfort it was to receive it directly at home. They will never come back from it, and online shopping will be flourishing in the upcoming years”.
“This shift to online shipping can be seen across the board. 80% of High Net worth individuals were tech savvy before the crisis, despite what they might think. The remaining 20% have all made the shift now, going online to order goods to send to whatever private mansions they are isolated in. Luxury brands have to be able to curate the same feeling of exclusivety and frictionless experience online that what they normally provide in real life”.
“I have switched all my Travel and Event budget to logistics and online marketing. Luckily we started those discussions a few years ago with our agency, now we have the budget (and no choice) but to operate the change”
- Think Consumer data
“One must not forget that going through an online marketplace is not going direct, you do not own customer data. As for every intermediary, you have to be extra careful when choosing your partner: the good ones should play collectively, save you time and marketing money, and provide valuable consumer insights.”
- Re-think packaging
“One silver lining for me is that we now have no choice but to think about lighter packaging. If most of our wines are being shipped through online platforms, we have to make it easier and cheaper to send”.
“We have no idea of how our labels will be perceived online. Are the consumers responding to the same visuals in a virtual shelf than in an analogue environment? What kind of information are they reading before purchasing? In the next weeks we will focus our research on visual impact and play around with the way our products are now presented on our website. It’s the perfect time to collect data”.
- Re-visit visuals to enhance belonging
Now that online is the main point of contact for wine consumers, wineries have been encouraged to re-visit their website visuals.
“We all love the great landscape photos and vineyards views. But consumers need to see other humans to project themselves. They normally see some when they visit a winery, they need to see some when they visit a website. And ideally, they need to see humans of every skin-colour, gender and ability…”
Disintermediation
DTC (Direct-to-Consumer) has been one of the hottest topic of the retail world for the last couple of years. Brands like Nike announced in 2017 their plan to crush competition thanks to DTC. Once again, the current crisis is not bringing new trends, but is definitely accelerating the implementation of forever-discussed strategy and tactics.
The constriction of its distribution channels is deeply affecting the Fine Wine Ecosystem, and DTC has in many situations been a life-saver, with quick changes in regulations in countries like the US to facilitate it.
Here are some insights that we collected during our conversations:
- DTC to balance long-term loss from on-premise
“We pivoted very quickly. As of this week and for the long-run, we want to go direct for 80% of our sales (we currently do 40%). The remaining 20% will be for carefully curated on-premise internationally that we see surviving the crisis.”
- Don’t cut every middle men
“Sommeliers will remain key intermediaries for Fine Wine, even outside of the traditional restaurant experiences. I have been asked to do so many online winetastings that brands can’t run themselves for fear of being seen as pure marketing. I am seen as a neutral expert, presenting wines because I believe in them the same way I did when I was on the floor.”
“Small brands should be extremely careful when pivoting to online direct-to-consumer sales. Competition is fierce, and e-commerce requires both skills and time that most don’t have internally. Being able to buy one’s wine online is now a must but you don’t have to do everything, everywhere, alone. Time spent curating a trusted base of partners that truly bring value to your brand will be time well-spent in the long-run”.
“My wines are in more than sixty countries. Despite my best effort, I will never know the diverse consumers as much as my local partners. In the long-run, my best bet is to work through every commercial relationship that I have and make sure that I can increase customer value –and get consumer data and insights- through each of my partners”.
- Revisit your prices
“The first thing we had to do to increase DTC sales, notably through our new website, was to completely revisit our price grids. Now that our prices are out there and we intend to ship to most markets, we need to be extremely careful not to be in direct competition with our remaining partners”
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