Ep. 2189 Paul Mabray | Masterclass US Wine Market with Barbara Fitzgerald

What exactly is digital transformation? And what does it mean for a winery? Yeah. So it's overplayed like buzzwords around the world. I think people try. And I I'm a anti buzzword person, to be honest with you, but digital transformation is really this this notion of adapting your business to be using digital tools, essentially shovels to scale and be more efficient, more effective. Welcome to Masterclass US wine market with me Barbara Fitzgerald. In this show, we'll break down the complexities of selling wine in the US by discussing the relevant issues of today with experts from around the globe. Each episode serves up three key insights to help elevate wineries presence in the US market. So grab a pen and paper, and let's pave the way for your success in the US. Hello, and welcome to Masterclass US wine market. Today, I am thrilled to well from Paul Mombre to the show. Paul has been a powerful change agent in the wine industry for over twenty years. He's been at the forefront of significant digital trends for the wine industry Working with wine shopper dot com and wine dot com when they entered the wine digital space. He's also responsible for introducing winery e commerce with Inertia beverage group, which transformed into wine direct dot com. Pioneering their winery e commerce and also for introducing social media and social customer relationship management with Vintake dot com. He's currently the founder and CEO of Pix, the world's largest free wine discovery platform. Form. And as one of the industry's foremost futurist and thought leaders, Paul focuses his experience on helping companies with digital transformation and strategies that build innovative wine companies. So, wow, that's really amazing, Paul. Really great to have you here. I can't believe you have the time to come talk to us, but we're very grateful. Oh, I'm very happy to be here. Thank you so much. I'm excited. We're neighbors. I love that too. Just nearby. Yeah. We'll have to go, enjoy some of the sunshine before it goes away this year. Before we dive into today's discussion, can you tell us a little bit more about your background and how you came to work in the wine business? Yeah. It was an accident actually. I went to college at UCLA, and my first boss was a gentleman named John Wright who founded domain Chandon, and he needed a sales rep in LA. And I said, I need a job. I'm probably the worst salesman you'll ever meet on the planet, but I'm a nerd. So I wrote my own CRM program way back when, and it was very simple. It just told me who to call and And that's all sales is paying attention you need to call. And so my sales went hockey sticked up. He promoted me too early. And I quickly realized that the career of being in wine was going to be much more invigorating than the career in film because I had a bunch of buddies that were working in film and they were waiting tables and busing. And meanwhile, I had a two thousand a month expense account. I had free booze. I got to travel everywhere. It was a pretty pretty cool little experience. So that's how I got into wine. And then it became a passion about changing the industry, originating in ego at first, like, oh, I wanna be the next Mondavi being online, and then it came into and transformed into a passion about the people and my community because I could see this giant wave of digital coming, And if we wouldn't adapt, we'd have a, you know, almost an extinction level event of Darwinism occurring, and we needed to spread that so we could all succeed and carry this really amazing product that we have into the future. Yeah. I love that. And also because people, the people of wine are so are so special, so unique, so helping, you know, not just the product, but the people come into the future too. Yeah. No. It's a magical industry in so many ways. I don't think any people realize that It's one of the few industries where you could actually call your competitor and you could say, hey, which wholesaler should I use in this market or my fermentation is stuck? Can you give me a hand? That's really rare. Yeah. Definitely. Rising tide lifts all ships. For sure for us. Thanks to Robert Madonna. I mean, that was kind of his legacy. He went around sharing and making sure that we are a united community as opposed to competitive community. So, like, European wine, they used to have their house secrets, how they made wine, and Robert wanted to beat Europe and be better than the world. So he would say these these barrels work, this yeast works. This is how the the, you know, we should do Viticulture. So I think he left that legacy across all new world wines and it's trickled into the rest of the wine industry as well as. Yeah. The sharing of information. Well, our three key takeaways for today's master class and what we're excited to learn from Paul are first the macro changes impacting wineries and their digital adaptation strategies. Second, the analysis of online wine businesses, some of their successes, but also maybe some of their challenges in pitfalls. And third, the digital transformation process for wineries of all sizes. What are future trends and essential steps for success. Yeah. It's a lot it's a lot to cover. It looks really simple though with some definitions. So what exactly is digital transformation. And what does it mean for a winery? Yeah. So it's overplayed like buzzwords around the world. I think people try. And I I'm a anti buzzword person, to be honest with you, but digital transformation is really this this notion of adapting your business to be using digital tools, essentially shovels to scale and be more efficient, more effective. But underlying it is the fundamental of this kind of almost like a scientific method of being, you know, agile, change, and moving and learning all the time. So you're it's a continual learning adaption process. So I think that's really hard for the wine industry more than most industries because we are not fast by nature. We are a slow annual moving crop that's very risk adverse. Right? So as a culture, we don't do a lot of things that are really brave because there's too much risk associated with it. So for example, if we lose that crop that year, we lose our whole profit. If we mess up on making the wine, we have one swing at the plate Otherwise, it's done, you know, whereas if I mess up on a beer that I make, I can make more of it or vodka. And then similarly, because of that, the marketing and operational risks we take are also very conservative, right? I don't have a lot of money to market because I only make a finite amount of wine for the majority. So my budget's pretty fixed. Even if I make a successful marking campaign, I can't make more wine to make more marking, which is a traditional kind of marketing fuel and engine. So, again, every bet has to pay off to some degree in a way that we see it or it has to feel like it pays off. How's that as well? So given that and given the significant changes that are afoot in the wine industry at the moment, what strategies have been most effective for wineries and adapting to these new kind of digital and market realities. I don't think we're there still. And that's kind of a sad part of the story here. I mean, my whole lifetime, you know, I remember standing on stage or talking to people and, you know, I'll give you kind of a history lesson. When I started, inertia beverage group, which came line direct in two thousand two, we were running around the valley and I was like, god, there's this thing called the internet. We're gonna be able to sell wine on it. And the whining's like, oh, Paul, you're so cute. Come back when the internet fad is done. And in two thousand nine, they came running at him. I'm like, this social media thing is amazing. The customers all over the world are lighting up and telling us that they're drinking our wines. We've never seen anything like this where it can reach across time and space and talk to somebody about our wines and the old Paul come back when you're, you know, this social media thing is all gone. Obviously, those trends have stayed with us. So I was, you know, as terrible as we talk about COVID and, you know, that black swan event, I was optimistic that it had forced us to change and adopt digital because that's all we did and grow into the category. In fact, you know, the company I founded. Everything I did was trying to leverage that moment in time. Unfortunately, we're experiencing a perfect storm on a lot of things. So once the world went back to normal, we kind of receded back to business as usual with wineries. But business was not as usual anymore. Many of the wineries that actually adapted digital transformation or maintained their spend in their energy and digital were incredibly successful. So treasury has done an amazing job maintaining the pace of innovation on the digital level and, you know, Justinal and her stem shorts are just amazing out there. If you've not talked to those guys yet, they're brilliant. And then Little wineries, they've set up great digital infrastructure. In order to allow them to do e commerce and communicate are some of the most successful wineries right now when we're hearing all these stories of failure and challenges. I know many wineries are just knocking it out of the ballpark by, you know, having these systems tuned in their continue to reinvest and adapt and learn and keep adjusting those things. Would you care to mention some of the smaller wineries as an example for somebody doing it really well? Yeah. You know, let me think of a good one. So I think that Well, obviously, this one will not get me in too much trouble. So, Donham, obviously, my wife runs, Donham, she's doing an amazing job there. I not to pitch her winery, but they've really put together some good infrastructure, building up some good marketing automation. I think you'll see some pretty good changes that pays you. Thanks to Miriam Chey. She's leaned into that one, and she's reorganized that and and put together a pretty good process orientation. There's a few really star DTC consultants in the category. You know, Michelle Egan being one of them, Miriam Chey, and they're really driving some of this infrastructure support. And it's hard, by the way. As, you know, I I've been volunteering time to wineries in my spare time. I give them my Sundays, and I can understand the challenges of digital transformation. It's you know, you're being very reactionary. One minute you're serving wine in the taste room. The minute you're trying to rush back and do an email marketing campaign, and then you're answering the phone. So the context shifting is is very hard. There's not a lot of vendors that make it easy to put those tools together. Right? There's a lot of vendors that say they want the tools. It's just easy and simple. Just tap into an API, but that's not a simple thing for a small winery of five, ten people to do. So what are maybe some of the tips that you have for a small winery to make that happen efficiently. I mean, do they need a consultant or, like, is there something they can do internally as well? The process actually starts with themselves. I mean, they they have to commit to change. And that's oftentimes one of the hardest things to do for them the ability to go try and test new things and understand that they're gonna fail forward. It's like introducing failure as part of the culture. Like I said, in a risk adverse culture is really hard to do. And I think that once you have the leadership and the team about that, then you start off really in a slow process. And functionally what I've done, and help them with is you, you know, you inventory what you have, and then you start working on kind of three main buckets. The first one is what is the foundational work that we need to develop that allows me to do the business work? Do I have a good email tool? And my what's my e commerce engine? Right? The second one is continual improvement. What systems am I doing? Can I start to optimize? I can do those slowly over time. And the last one is the sugar rush, which is I wanna do once a month, a high ROI, high, you know, return on investment, something that's gonna be give me that high and make me wanna keep continuing to invest in the things that are really not pretty, they're kind of ugly boring work. Right? You know, process optimization is pretty boring work. Right? And it is. It's like, you know, setting up your marketing automation emails and getting through writing a customer journey and all of these things are not fun work the way. They're just some people love them, you know, but most little wineries, it's it's a task that they don't know. They're learning, you know, optimizing your fulfillment costs or how you're charging for fulfillment or all of these better segmentation of your customers that's not fun work. Doing out a big campaign that gets you, you know, ten thousand dollars in return. That feels good. So, like, when you put those three buckets together, you can eat the elephant, right, one bite at a time that way. Yeah. Those are the three buckets we're choosing, and that's how you treat the process. And I think the fundamental thing is that people think digital as a project, and digital is not a project. It becomes a pillar of your business. Right? It would be like saying, look, I clean the tasting room today. I'm not gonna clean it for a year. You know, a website and e commerce is a living breathing object where you're continually in improving it, enhancing it, changing adjusting. Social media is not just one tweet or one, you know, Instagram post. It's a continue you feeding the animal. And I think that's hard for people to understand is that continual investment. Once you start the clock, it keeps going and you have to keep adjusting in. Sometimes it's gonna pay ROI or sometimes it's not and often it's a fish model, which is you're gonna lose money on it for a while before it hits that inflection point, and then it starts to pay dividends. Yeah. Well, I have a question. So, you know, you mentioned that in your history, people were like, oh, the internet selling wine on the internet. What's that gonna be? And and and so forth. But what are people now kind of? How are they pinching your cheek about AI? Yeah. So I look, AI comes up a lot. I just did a speech about AI. I think part of our problem with digital transformation is that we try to skip the basics and run to the new shiny object. You know, I I can't tell you how many people were talking about cryptocurrency or or NFTs or, you know, do you remember that app clubhouse? During COVID where you could go in. City, I wrote an article. I'm like, guys, don't talk about clubhouse. Just work on your e commerce. Work on the, you know, the nuts and bolts stuff. And AI has a lot of promise. It's AI has been around a long time, by the way, and especially this stuff. What's made it different is the generative AI given as a consumer app versus a B2B app. And so that's really fascinating. And really, I, I fundamentally believe that we're not there yet with AI. I think AI has three key really functional uses. One is, gives you a good head start. Right? So if you wanna say, hey, tell me how about the wineries to make the best chart now, I wanna write an article about it. It can give you some really good information to get you there, right, or start the article for me. I'm gonna go clean it up later. So it's it's a good tool for head starts. It's a great tool for reviewing your work. Hey, tell me what what did I miss in this article? Tell me read this website, what, you know, bring me the best points from this website or, you know, read this report and tell me the highlights. Does a really good job of reviewing work. And the last one I think which is a very funny statement is good enough. What can it generate for me that's good enough? So, for example, can AI do an automated chatbot response that's good enough? It doesn't really matter that probably yes. Can AI do, you know, no one cares how the sausage looks when you make a website form that collects an email? AI can write a website form and make it work. Right? It's good enough. Or many of the images out are getting more than good enough. The image generation you know, from the eye, which is good enough. A lot of content is disposable. I think people forget about that, and we chase perfection, which is a wine industry attribute because we like perfect wine. We wanna make the perfect thing because we have one string with the plate. Candidly that email that you send out doesn't have to be perfect. You have it's gotta be good enough that it converts because it's gonna be in the garbage can, the digital garbage basket in an hour or two hours or, you know, it's it's people are living and dying by your last month's email. I can say I can promise that. Or your last month's social media posts. Right? It's what is good enough to keep that attention? So you're saying more, like, some of these more automated emails that people might be incorporating into their digital transformation anyway. Like, that's a good place to use AI. But, you know, if we're writing, if we're writing an in-depth research article about, you know, some beautiful wine region in Italy, that's really left better to the humans. That's right. Or even the head start, hey, write it. And now I'm gonna put the brand voice over so the polish actually comes from the human, but I've saved myself forty percent of the time putting the nuts and bolts together. Right? So it really is a time saver and I think that people forget all of these are just shovels. Hate to say that. You know, every digital tool is a shovel, whether it's an email tool, AI, e commerce, and how you use the shovel is almost more important than the shovel. Well, let's talk a little bit about online wine businesses because obviously there's been a lot of successes and a lot of challenges there. So can you share some insights into the key factors that contribute to these outcomes and maybe a couple lessons to be learned? Yeah. I think the wine online is a very fascinating topic. You know, it sounds so sexy. And believe me, I'm I've been lured. It's the sirens called more times than anybody. I can tell you that. I think we forget that wine is an infrequent beverage at infrequent time from infrequent cell meaning, like, I don't go and buy wine from the same place every day. Right? I'm in the supermarket today. I need some chicken and milk, and I need some wine for dinner. I'm gonna have you over for dinner with your husband, with my wife, and I want something very special. So I'll go to the high end wine store, right, down the street and buy something a Lopez they had ed or something beautiful so we can crack that. Or, you know, it's hard to find this wine. I have to buy it on the internet, and I'm gonna wait a few days to get it. Or it's only available via DTC through the winery. So because of that, it's hard to create a tool that's a selling tool where you're always buying from the same place over and over again because the availability of wine and the substitution cost is all there. Meaning, I can if I'm in the store and I don't have the wine exactly that I want, there's a hundred other ones that I can probably buy that are good enough of a replacement for tonight's dinner. If I don't have the lopes there already at the fine wine store for you and I for dinner with my spouses, I'm sure there's another beautiful bottle of wine in that fine wine store for me to buy and still show well. That substitution costs coupled with the infrequent purchasing behavior makes an online site much more challenging that people think. And trying to find that usage tool, that thing that's gonna create that recurring revenue or keep people coming back is harder than people realize. And then wine for the majority of the population, and I think this is something that we somehow get lost in is we all become impassioned, you know, ino files. And then we think everyone thinks like us and that everyone wants to experience wine like that. And even we, as human beings, even us as enophiles, don't want to experience wine the same way. Like, some days, I just come home and I want a cold glass of something wet with alcohol in it. Right? It's been a long day. Right? Other days, I want an existential experience where I, you know, I'm speaking to god through a glass, and then it's a variety of those things. And I think that that's the part that we've kind of lost track of. And I think the come over October movement is really interesting in the fact that we forgot that wine is about communal beverage. It's about our job is not to deliver flavor profiles in a glass. Most people don't care. Our job is to deliver joy. Our job is to deliver community. Right? So when we're opening a bottle of wine, sharing with people, That's a moment in time that we're an occasion based beverage, and we should lean into occasions not in blackberry and Cassis or asking a consumer to be educated about wine or even worse denigrating other parts of the category that are actually bringing people to wine. And I think that that's something that we've really become terrible at denigrating all the different parts of wine. And certain parts of wine are worse at it than others, but it's something that I think is harming us as a category. Yeah. I agree. Like, we don't need to judge what we think the quality of somebody else's taste preferences are. If they're engaging in the category, that's a win for us. Don't yuck their young. Yeah. Don't yuck their young. And I think what's really it we forgot about that. All of us is wine consumers. At one point in our time, it was red or white. It was Charnee or Catier. And then some of us keep graduating up. And most people that came to the category, I, you know, like, this whole generational thing, I think, is very funny. Right, where we talk about. We need them to appreciate wine from a place, wine from land. Look, when you were twenty one, you weren't trying to understand wine from a place. You were drinking, you know, whatever that alcohol was, and wine was one of the choices you had and you grew into that evolution over time. Right? You can name all of those gateway wines from other generations, whether it was, you know, Sutter Home White infantell to, Kendall Jackson Chardonay, you know, these inexpensive wines and Canty in a in a fiesta go in the sixteenth? All day though, hardy, hardy burgundy, or even Bartles and James, right? Take all of this. Yeah. You're a hundred percent right. It's interesting because we all have the same goal, but sometimes maybe the way we're approaching it is kind of impeding the larger goal for everyone. Yeah. I think that there's a sense of gatekeeping associated with that. You know, someone's become an impassioned wine expert, and all they can do is talk bad about the other wines because that shows their knowledge base. And look, I'll give you two great examples. So I'm growing up through my career in the early days. Some of the biggest talk was not about younger generation was demographic shifts. How do we get more Hispanic Americans into the category? How do we get more African Americans into the category? Those were gigantic conversation pieces during my entry into the career. Nineteen crimes has done more to bring African American wine drinkers than any other camp pain in the history of wine. Stella Rosa, jalapeno. Yeah. I was gonna say Stella Rosa is amazing with their connection to the Mexican. I mean, can you say? And we should be celebrating that, you know, and I've been on stage a couple of times and said, hey, who's ever drank? Nineteen crimes, and you should hear the statements that come from the crowd. Who would drink that big wine garbage? And you're like, that's the problem. You you're the problem. Yeah. We're we're all in the same industry. Like you said, at first, we we start those they can shift some day to at one day it was red, and then it was nineteen crimes, and then it was something something else. Exactly. Exactly. Yeah. So let's talk a little bit more thinking about, you know, really specifically for Italian wineries since they have a lot of challenges on top of the already existing challenges for, like, selling wine online to a US consumer. If you were consulting for, you know, a small Italian wine or navy, they make sixty thousand bottles what advice would you give them to start their digital transformation or to make most out of digital transformation? So look, at the end of the day, storytelling accessibility are a universal trait. Right? And I think that the one of the things that digital provides beyond all other tools is it transcends time and space. I could be right now looking at an Italian website, reading the story about the Italian wines, and if they've told their story well, I'm in love with that piece. And if they've helped me find a way to access where their wines are purchased or purchase them directly or any of those things are through social media to learn more about that winery and that their brand and what that means. And that could be anything from family to the variety to the land. Everyone has a story to tell, and the digital tools allow you to tell it asynchronously to when you're actually running business. They're telling in their sleep. They're telling it when they're traveling. They're telling when they're on vacation. So I think it's the fundamentals that are really real, which is how do I tell my story? What is my story first of all? And then how do I get that into a digital form that lets people access it in the most easy, simple way? And so authenticity is so important because you're story is unique, and we don't wanna curate it to, like, you know, a Pinterest page. We want it to be, right, from person, from brand. Yeah. I think authenticity is a really interesting word. I love that word for so many reasons, but I also think authenticity to your point, it could be brand authentic, and the brand is made up to be fun and silly and has nothing to do with an authentic wine family. Right? Could be absurd on its own or it could be all about just I wanna talk about the actual person that's made the wine for, you know, and the my generations of ownership or it could be just what the winery represents, you know, there's so many things that are authentic. And I think a lot of people try to overplay authenticity as if it's just about telling that that from that person. It's about what does your brand represent authentically? Yeah. That's a great call out. It's not just, you know, who's who's the family and speak in their voice, but, you know, how do people receive your brand and how to do you want people to receive your brand? But also how are they receiving your brand? That's right. Like, nineteen crimes authentic all day long with ZoopDOG, you know, in that place, you know, and I'm using that as a great example because it's so different, right, than everything else, and people find their own ways into the brands, because once you put a brand out into the world, it becomes the people that consume it as much as yours. Right? Right. You guys share it. You're co creating the success of the brand. So Exactly. Exactly. A hundred percent. And I think we forget that you, especially because luxury wine has its own thing where it's a tries to narrow cast what authenticity is. Right? When you're going very high up to Patrice or Kisler or Harlan, that that's a very managed image for a very small subset of the universe. And I think too many people think that that same formula applies, you know, across all wiring. Right. Right. Well, you've given us some fantastic insights already. So thank you again so much for that. As we wrap up now, we're going to take our rapid fire quiz where we ask all our guests three questions to help our listeners better understand the US market and specifically this episode. So answer in a couple sentences, please, if you can. Number one. What is your number one tip for adopting digital technologies in wine and sales marketing? My number one tip in adopting is read a lot. Read a lot. And, you know, find some experts that you listen to and learn from and just continue to read and learn. It's a digital is about it's a forever changing object. The way that Facebook is operating to you and me right now is probably even different in our own experience or Google. Google today is gonna be different Google tomorrow. That the only thing that's constant is change in digital. Yes. And it happens fast. Right? Yes. Tell me about it. Yeah. Alright. Number two, what is something you would have told your younger professional self about selling wine in the US? I would have definitely told myself that it's very hard. That it's going to be very hard, and I would tell myself that it's also about relationships. Back to the people. The people of wine are really important. Absolutely. Yeah. Alright. Number three, what is your favorite travel hack when doing market work. Wow. That's a great one. My favorite travel life. That's a really good one. Protein bars are one for sure because, you know, you're never eating. You're always on the run on that one. Here's one that I do. So, whenever I travel, for quite an extended period of time. So over two days, I write a note to my wife for every day that I'm gone, a letter, and so that she opens them up every day that I'm gone. So, you know, there's the old saying happy wife, happy life. So that way when I'm out and travel. Yeah. That is very sweet. A little, marriage therapy here on, the Italian White Podcast too. Exactly. Yeah. ProTip ProTip. Thank you so much for joining us today. Master Claus swing market. How can our listeners connect with you? Yeah. You can find me at Twitter threads at p Maybury, p m a b r a y, and I'm pretty, consistent on there. And then I've been riding on Substack a lot, which has been really a passion where I'm sharing a lot of the digital leaders in the world, but also analyzing all the online digital models just to kind of understand it, so that everyone can understand. Those are my bread crumbs to lead my legacy so that someone can conquer those challenging models and make a better wine experience online. That's great. Well, thank you so much for all of that you offer in general on the subject, especially for your time with us here today. I hope to see you again very soon. Yeah. It was my pleasure. I love Italy. I love spending time there. And, Thank you for having me very much. Awesome. Alright. Take care. And that's a wrap for this episode of Master Class US wine market. Thank you so much for joining us. If you enjoyed this episode and want to stay up to date with the latest industry trends, remember to like, follow and share our podcast. And if you find value in our conversations, please leave us a review to help others discover the show and grow our community. Stay tuned for new episodes every Monday. Until then.