Alfred Marshall defined economics as the study of people as they go about the ordinary business of life. People who love wine believe that it is special and they are right to a certain extent, but it is also ordinary at least in terms of some of the business functions. Herewith the first of two posts about how ordinary and extraordinary intersect in the wine business.
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Information technology (the bits and bytes of the title) has insinuated itself into almost every aspect of our daily lives — why should wine (the sniff and swirl) be any different? And indeed it is not, although most of us probably romantically wish it were otherwise.
The most obvious place where IT comes into play is in the marketing of wine. Most winemakers today try to use social media vectors such as FaceBook and Twitter to establish and nurture relationships with customers. I’ve read that the hard sell approach isn’t generally effective (readers: use the comments section below to share your experiences with this), so the focus is on soft sell.
But is it worth it? That’s the business question. Yes, it is probably a mistake to ignore social media entirely (just as you would be crazy not to have a winery website or a website for your barber shop if that’s your business), but what’s the smart level of investment? After all, social media doesn’t create and manage itself. Someone’s got to represent the winery as host, posting content and responding to friends and followers. How much investment makes sense?
One big time winemaker friend put it this way. Which is better for the winery — a full time employee to manage social media or three full page advertisements in Wine Spectator? Wow, that’s a tough one, especially since the audiences and the nature of the impact are so different. But, from a business standpoint, that’s the sort of trade-off that must be evaluated.
It’s the same thing for QR codes. Wineries can use QR codes to enrich their story-telling to smart phone-enabled customers, which is surely an advantage, but not without some investment. The old marginal cost versus marginal revenue questions will always be there, even in the wine game.
Cloud Data Systems
Trend Micro sent me information about their SafeSync for Business cloud data system. It provides a safe, secure data storage system. What got my attention is that they featured a winery case study: Good Harbor Vineyards on Michigan’s Leelanau Pennisula.
“As a wine maker, we are highly monitored and regularly audited by numerous government agencies. We have to keep track of everything—every bottle and every ounce has to be accounted for—from purchase through production, bottling, sale, and shipment. We were worried that someone could gain access to these records. Losing our files would be crippling in any type of audit — and these take place frequently.
This made me realize that wineries have all the business IT needs that other types of firms do, and a few more as well. I think it is interesting that a big firm like Trend Micro would make a point to feature winery applications. I wonder if small and medium sized wineries (like similar businesses generally) have lagged behind the IT cutting edge and are therefore a ripe market for upgrades. Or maybe wine is just the sort of example that makes everyone realize how important data can be.
Extraordinary Business Needs
While some parts of the wine business are not so different from any other business (with a couple of special wrinkles in the cloth just to keep things interesting), some business needs really are fairly specific to wine. Every business needs to be able to track shipments and inventory, for example, but wine’s needs often go beyond the norm.
A London to Hong Kong shipment record.
The wine business is large enough to spawn IT applicantions to meet its particular specialized needs. For example, a company called eProvenance has been formed to provide reliable detailed information about wine shipping conditions. Wine buyers, especially those at the high end of the market, now seek assurance of the quality and authenticity of their investments and their concerns extend all the way through the supply chain.
A Bordeaux to Beijing shipment record.
Your bottle of Chateau Margaux (lucky you!) won’t be the same if it has been “cooked” in an improperly handled shipping container, for example. But how can you be sure it hasn’t been? Enter the NFC temperature sensor!
Boston, Massachusetts – December 6, 2011 – eProvenance, a Franco‐American company applying advanced technology to monitor the temperature of fine wines as they travel from wine producer to customer, has developed temperature sensors that are compatible with the Near Field Communication (NFC) protocol and can be read through wooden cases of wine. Using the NFC protocol, which makes it easy to communicate data via smartphones (like the Google Nexus S), the new eProvenance sensors can transfer the temperature history for the case of wine through a reader or smartphone to the secure eProvenance online database. Using their NFC mobile phones, consumers will be able to access the eProvenance temperature history, and thus verify the provenance of the wines they purchase.
As you can see from the two temperature tracks above, not all wine shipments are treated with the care they deserve (and their buyers probably expect), so the tracking data can be very important. And now data can be collected in the warehouse as well as the shipping container for longer time periods, another way to ascertain quality.
With a 15‐year battery life, the new 2G (second generation) eProvenance sensors can be embedded in the wooden wine case to provide continuous, long‐term temperature monitoring, which creates a record of provenance over time that adds to the value of the wine. eProvenance customers can choose either to convert the temperature data into a provenance rating or simply share the data, allowing the importer or customer to make their own judgment about the temperature conditions.
The Opus One Story
Opus One is taking the logical next step in the use of IT, according to the press release from eProvenance — combining story-telling and temperature tracking at the single-bottle level.
Presenting at WineFuture Hong Kong 2011, David Pearson of Opus One said, “Starting with our 2008 vintage, we have an NFC tag on each bottle under the back label, which connects consumers to a video of our winemaker. Now we envision adding an eProvenance sensor inside each case to monitor the temperature for 15 years, allowing consumers with an NFC phone to read the entire temperature history with one click. The potential to connect with our consumers and to safeguard their wine is tremendous.”
I’m not sure if Alfred Marshall liked wine, but I’m pretty sure he would like the wine business today for its combination of ordinary and exceptional business practices.
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Thanks to eProvenance for giving me permission to use the temperature charts above. Thanks to Ken B. for the suggestion that provoked the “ordinary business” blog posts.
The use of NCF tags with eProvenence temperature sensors on individual bottles would be a great boon to any fine wine buyer, and would seem worth the investment for the PR and marketing potential it could provide. At a case or pallet level, I can easily see the value to retailers, wineries, importers, distributors, and even transport companies. Thank you for spreading the word about this new technology. As so many of us have moved from the high-tech industry to the wine industry, I anticipate many future innovations with such positive impact on our wine-drinking pleasure.
Another great column! I just finished reading Wine Wars-fantastic book.
I agree, they are using social media to “pull in” customers. This is a different approach that’s much nicer so long as they have staff skilled at providing top-notch customer service.
Fine wine brokerages/ merchants have a noticable presence on social media. Hopefully, they focus more on social media instead of hard sell tactics via cold calling. Doings so will aid in providing investors, new and old, a more pleasurable experience whilst involved in this market.
Thanks for this post, Mike. Always enlightening.