Ep. 1608 E-Commerce And Trade Communication In The US | wine2wine Business Forum 2022

Since two thousand and seventeen, the Italian wine podcast has exploded. Recently hitting six million listens support us by buying a copy of Italian wine unplugged two point o or making a small donation. In return, we'll give you the chance to nominate a guest and even win lunch with Steve Kim and Professor Atilio Shenza. Find out more at Italian One podcast dot com. Italian wine podcast is delighted to present a series of highlights from the twenty twenty two White wine business forum, focusing on wine communication and bringing together the most influential speakers in the sectors to discuss the hottest topics facing the wine industry today. Don't forget to tune in every Thursday at two PM central European time or visit point to wine dot net for more information. Thank you for coming. But especially, thanks to Michael Price for joining us tonight. We're gonna talk about the online universe in the US market. Michael Price has been with top companies, which is one of the most historical, most important, importer and, actually, even distributor, if I'm not wrong, of wine in the United States. So, nobody better than him can introduce us to this very interesting topic because of he's gonna showcase a little bit the path of the online business before and after the pandemic that changed a lot. So, again, thank you, and thank you, Michael. Let's start. So thanks for having me. I am super excited to talk about e commerce in the US marketplace, both pre and post pandemic because There's a lot that's been happening over the last, three years. I've worked with the Taub family for over twenty years in a variety of portfolio, marketing, and now sales, functions, and specifically over the last three years overseeing our e commerce team and just to jump right in. This is the wine industry's version of the game of telephone. So twenty years ago, when I joined the TAB Company, I couldn't believe that the wines need to start at the winery, go to an importer, the best importer, but, you know, an importer nonetheless. We've gotta meet with a distributor executive who needs to green light the product. Needs then go to a distributor Salesforce who then sells it to a wine director or retail store manager, and then it eventually winds up in the hands of a consumer. And it was like could this be any more inefficient having to touch seven different hands to get from point a to point f? And the other part of this is not just the product, but the story of the winery directly coming from the owners having to be communicated through all of these different layers. By the end, the story is completely different. So what do consumers really wanna hear? They want the authentic story directly from the winery owners or the principals. And that's what e commerce has sort of leveled the playing field to be able to get the product quickly into the hands of customers and also tell the stories in a meaningful, passionate way. So when we at Tab talk about the US e commerce channel, there's a couple of couple different elements that, go into it. The three tier e commerce national pure play So these are the folks that buy through the distributor network, wine dot com, Amazon, Gopuff. Those are the principal players, the largest ones. And again, three tier means they're buying through the distributor network. Two tier. These are people that have national offers and marketplace, but no brick and mortar stores. This is Vaveno, wine access, a bunch of these other players that offer what's called Flash sales. And they send an email out with a low price. And as a result, customers buy and and have the wines shipped directly. And then three tiered specialty retail. Again, these are sort of regional brick and mortar stores Very famous K and L in California, Sherry Leemann in New York, wine exchange in LA, B twenty one in Florida, and these are folks that have a national reach and platform, because they've been doing this for a very long time. So March of twenty twenty, the world turns upside down. Restaurants completely shut down. Retailers completely shut down for in store shopping. And all of this pent up sort of demand for wines starts to flow to e commerce. And we use wine dot com as sort of the bellwether, the leading example, because they have twenty thousand SKUs available. They've been doing this for twenty plus years. They're really a good example of, you know, what's happening in the marketplace, and their results in twenty twenty were nothing short of astounding. So they went from about a hundred forty million in revenue. They did three hundred thirty million in revenue. So they more than doubled, their size. The active number of customers went from just under four hundred thousand to almost seven hundred thousand. The amount of their stewardship members, which is sort of like Amazon Prime, that also went through the roof, and the average spend also went through the roof. So Clearly, you know, e commerce did really well during the pandemic. That's amazing. We, as as Taub family, were named supplier of the year by wine dot com, which was Just an incredible honor during this time when everyone did really well in wine dot com's business doubled. Our business quadrupled with them. Why? Because we carried brands and and other people the same, carried brands that consumers trusted. They know they wanted, and they were able to find them on wine dot com. And, you know, that was a a real sort of testament to our portfolio power combined with customer customer demand. A couple other things that wine dot com did extremely well. So here's an example of virtual tastings. Wind dot com have a consumer base. They had seven hundred thousand unique people. They have the technology to do a zoom casing. And here's an example where Saskia Rothchild from DBR, we were able to get her at one AM, she was seven months pregnant at the time. And we got her on a Zoom. Customers ordered four different wines and have the chance to do a virtual tasting with her. That would have never happened, you know, and she would have reached maybe ten, fifteen, twenty people during a wine dinner. Here she reads five thousand people in one shot. So true power and testament to the technology, that evolved during, this time. The other thing that I think is really important to talk about with wine dot com, something they do better than just about anyone else. Is engaged with regional you know, consortiums and and trade organizations. And I wanna give credit to, the calangelo, PR firm and to noni communications because they've really taken the lead in driving a lot of these consortiums to push, to go into e commerce, and to give, marketing dollars to e commerce players like wine dot com, where you're actually gonna see a return on investment for you know, those wineries by selling and getting the product into the hands of consumers. That's not to say that print advertising is dead or digital advertising is dead, but working with trade organizations is something that these consortiums like prosseco doc for a second week, Cecilia Doc are doing extremely well. And this is a powerful tool. So let's talk about some hard data. You look at two thou this is November of twenty one. And you can look on the far left that, gray bar is full year twenty twenty, where e commerce alcohol sales grew by two hundred eight percent. Okay? Everything doubled. Now you look at March to November that nine month time period of twenty twenty one versus twenty twenty when you start to comp against sort of the peaks of the the pandemic, the beginning. And you see a decline of twenty one percent. Yet still, if you look at the same corresponding time period versus twenty nineteen, we're still up a hundred seventy three percent, which is fantastic. On the right hand side, the shared e commerce, wine dominates alcohol beverage e commerce with almost two thirds. Spirits, a little bit less beer, flavor, malt beverage, and seltzers. It's quality. So Now the most current snapshot that we have with June twenty twenty two, Nielsen DETA. And this is looking against two years ago. K? So twenty twenty two versus twenty twenty you see that that hundred seventy three percent sort of carried all the way through until February of this year. And that's when things fell off a cliff. And you start looking at February, March, April, May, and you start to see declines of thirty, forty percent. So it came back to Earth. Right? Wasn't gonna be able to grow by two hundred percent indefinitely But in summit in summation, sort of like where we are today, in twenty twenty, e commerce alcohol sales in the US took four steps forward, and then one step back in twenty one. And one more step back in twenty twenty two. And wine dot com as an example as a leading player, you know, they hit three hundred thirty million in revenue. They're now trending off by thirty to forty percent along with other players. There's increased competition. So there's new entrants into the category that are fighting for those high value collectors. That's important. Curbside pickup is becoming a thing, total wine, Walmart, you know, there are all these folks that are getting in And then the other thing that is really critical is there's this massive arms race to find out who these collectors are to try and identify them. And wine dot com, some of the other players are spending millions of dollars in marketing to try to retain and find out who those players are. Brands absolutely matter. So what's doing well right now? Bordeaux, Burgundy, Corolo, Bernelo, Amarrone, Champagne, Nat McCabs. Portfolio. Portfolio. And, and so those are things that are, that are doing well now. Ecommerce. It's a natural canvas to tell the stories of our brands. So the video content, the rich imagery, it's still the platform and and a way that we wanna communicate the winery stories direct to consumers and again, it's still the fastest growing part channel of our industry where in twenty nineteen, it was one point three billion dollars, and it's projected to be four billion dollars this year. So there's no other channel that is growing you know, that amount of dollars and bringing that much revenue, into the into the channel. So a couple sort of highlights and and people that we like and are impressed by show of hands. How many people have the Vabino app on their phone? Okay. That's pretty good. Within the last six months. It's about the same number. It's a pretty active user base. The thing that, you know, we're so impressed by with VIVino is they were the first ones to figure out that everyone is carrying around one of these. Right? And the ease of use to be able to snap a photo, an image of the label to what have you. They were the ones that sort of, you know, got that quickly, and then grew scale on a global basis. So they're in seventy different countries. They have almost fifty six million users. K? And that grew by about twenty percent over the pandemic. One point nine billion bottle scans. Right? Let that sink in for a second. These numbers are unheard of in terms of a community, a marketplace, a place that wine lovers are sort of gathered together. No one else has this. So why do we like working with them? You can sell direct, and they can buy wine or they sell and market wine for us. In the US. There's seven other countries that they sell direct. And if you do a marketing spend to reach out to their customer base using, their platform for your winery and you spend fifteen thousand dollars, you have a leg up to be able to sell directly and hopefully recoup or get that ROI back. I think that's a really powerful thing that no one else is able to, sort of, bring together. So my wife and I were sitting on our sofa in, June of this year. And we're scrolling through Instagram one night. And literally, every single person that we know in New York is having an aperol spritz in front of the trevi fountain in Rome. And we're like, what is going on? Like, This pent up demand for travel, fear of missing out, whether it was Italy or Spain or France or Greece, this incredible demand for travel for experiences to get out was unleashed and let loose on Europe. So there was just this overrun of, like, US consumers that are out there. And, you know, we saw this headline, about United adding flights they're already looking ahead to twenty twenty three and saying, okay, what happened, you know, that was great. They're already, like, adding in and and and planning on additional growth. And that's a really powerful thing because if you look at and this is a revenue chart for global tourism, you can see in twenty twenty that, you know, things sort of fell off a cliff. They rebounded a little bit in twenty twenty one. In twenty twenty two, we're just a little bit below the pre pandemic levels of twenty nineteen. We expect in twenty twenty three that it's gonna increase and be above the pre pandemic levels. And then by twenty twenty six, talking about almost one trillion dollars worth of travel and tourism. That's a really powerful thing because These people, these travelers, at least from the US, are the ones that are out there visiting wineries. They're the ones that have money to spend. They wanna have these experiences, and there's an incredible value to these folks. So and we talk about agritourism and hotels and restaurants, you know, an example with a winery that we represent called Planeta. They have a hotel in Sicily called La Forse for rest area. You'll borgo Castello Banphe and Montal Chino Tuscany, a restaurant employee that we've heard is pretty good. And, you know, these are the the the places that you can engage with US consumers to have or global consumers, frankly, to have those experiences capture the the ex the the value of that and really, you know, create lifelong memories. And I wanted to give Vito a chance to talk a little bit about the restaurants that Tomaresca. No. Let's say we we are not really good at managing restaurants. So we always need to find good partners to, round them. It's a big, big headache, but, of course, it's an investment. So for us having, turmareska bistro in the center of Milan, it's a way to showcase our products, for free, basically. If the management of the restaurant is is at least well well run. And so it's it's a way to touch the consumer, directly. Of course, if you think in the, business wise that the most successful companies in the world have, a absolutely direct contact with customers, think of Apple, think of Gucci, they have their retails, they have their online shops, And, with wine is a little bit more challenging. That's why it's so interesting, Michael's presentation, because from his perspective, and he's an importer, he has to manage the needs of, producer of wine suppliers and the opportunities of the market. So kind of, as we say in Italy, so, having a footprint on every little opportunity that is around. One additional story about a producer that we work with, we'll we'll leave it unnamed. But pre pandemic, they were seeing seventy thousand, visitors globally. It's an Italian producer. They're seeing seventy thousand global producers and eighteen thousand visitors were coming through their doors from the US. And we said to them, hey, you guys, you know, capturing any data. Are you know, keeping email addresses? Are you able to, you know, communicate with them after they leave the winery? And it's kinda like, no, you know, we don't have the infrastructure. We don't have the resources, the human capital, you know, Italy's a little squirrely with, privacy data, all those things. Right? And, you know, my response to that as an importer and and trying to, you know, lead our wineries to this opportunity is those eighteen thousand customers are gold. It's pure gold. They're coming over. They're spending money to get to the property. They, you know, are probably the trusted advisors in their friend group of who to ask for the wine recommendations. They love food. They're coming to Italy because they have these experiences that they wanna have and then bring home. Those eighteen thousand consumers, that that's the what we're all striving to try to capture. And I'll give you, you know, an example here on the next slide. This is a winery in in Napa. It's a amazing brand, and, they've been at this for forty plus years. It's called Duckorn. They just went public in twenty twenty. This is all information that was part of their ten k financial statements. So it's, you know, public data, which is actually pretty unique because these Napa wineries don't like to share, what is proprietary D to C information. So you can see the chart that shows, you know, their revenue growth from a hundred seventeen million to, north of two hundred. Their twenty nineteen, which was the last year they released D to C data. They had fifty five thousand wine club members. So these are people that have signed up for their wine club. To get limited release offerings, shipments on a consistent basis. They had over a hundred thousand visitors to their wineries and tasting rooms. And twenty percent of their sales were coming through the D2C channel. Wine to wine business forum. Everything you need to get ahead in the world of wine. Supercise your business network. Share business ideas with the biggest voices in the industry. Join us in Verona on November thirteen to fourteen twenty twenty three. Tickets available now at point wine dot net. That's an unbelievable number. And, yes, they are an outlier. There's a few people that are like them. Maybe there's people that are smaller scale that are seeing these kinds of numbers. But the the takeaway here and this is the number that just sort of blew me out of the water is the free cash flow that throws off on two hundred, you know, twenty million worth of of revenue and they've got EBITDA of north of forty percent. That's incredible. So the financial implications of being able to own that customer relationship, to have that communication to know who your customers are. This is the power. This is the future. And even if you're an Italian winery that, you know, is eighteen thousand you know, US visitors. If you can take one small step towards getting there, there's huge financial gain and power to be had there. A couple more, just, you know, elements that I wanna touch on here. So the digital toolbox, Every winery has photos, videos, content, stuff that you're putting out on Instagram, social media. Like, there's just a a wealth of of stuff that you have. If you can put that together and drive it towards commercial applicability. Retailers will clamor for this to help sell wine. This is an example of the wine exchange. It's a retail store in Los Angeles Our guys were able to go in there and we were able to sell in two thousand six cold orchard Bernola de Montalcito in twenty sixteen. So a decade ten year difference of this wine offering, they put it out in an email blast to their people. They use video content. They used a story. They used photos. They told the story of the Shinzano family. We sold a bunch of wine. That's awesome. But look at this image that gets sent out to ten thousand email recipients. It's a marketing play. Right? It's pure marketing, and it's exclusive only to that winery. And if you multiply that out by, you know, these are a handful of some of the bigger names that are doing this and have been doing this for a long time. But the pandemic has taught us and taught retailers that e retailing is the future. So there's a thousand retailers that are using email blasts that if you can create digital content, hand that over to your importers and allow the importers to implement that as a commercial viability. The multiply effect is massive. So two last slides that, I just wanted to touch on. Wine Access is one of the sort of historic names in e retailing out of Napa Valley. They've been around for twenty plus years. They were typically a flash sale site, so they would send out an email blast and, you know, get, responses on it. And that business started to sort of suffer. They had a change of management. There was a lot of things that were going on with them. But in twenty twenty, twenty twenty one and twenty twenty two, They saw their business change a little bit. And they started to see a real uptick in their subscription model, their wine clubs. And I think the biggest reason why was they affiliated and worked with some really big names like the Michelin Guide De Cancer Magazine, and helped sort of, like, market themselves in those email databases, but also They have Michelin Somalier's curate specific brands that were part of this. This wasn't just like Vito and Michael's wine club. Right? The Michelin Guide really meant something. And the brands that are going in there are the biggest names that we represent. There's credibility that comes with that. And this is another example of technology, allowing us to connect directly with consumers and take away that distributor bottleneck, which is a hindrance to everyone. And then one last slide, again, you know, wine club's two point o. I think this is a fascinating example. Of something that, you know, the pandemic caused to make people pivot. Table twenty two is a technology platform that's based in the US. And restaurants when they shut down or, you know, I had to, close for a limited amount of time and in twenty twenty. They were looking for revenue streams to be able to offset some of the lost revenue. So they started to offer meals to go, drinks to go. Like, there were all these things that were being offered. One of the things that restaurants hit on was, okay, we have relationships with our distributors. We're buying wines. Why can't we curate a wine to go program where you come by and pick up a selection of wines that you drop off or what have you. And that idea has spread like wildfire. So table twenty two is now in sixty different cities in the US. They're working with some of the biggest, most reputable names They're offering, restaurants can do food, produce wines, a big one. And the beauty of this is restaurants tend to buy the more esoteric boutique memes and brands. And this is an equalizer for restaurants or sommeliers that you've had a chance to build relationships with over the course of years to support your brand. And instead of buying ten cases a month, maybe it's twenty. Coat, is another big name restaurant in Manhattan. They created a wine club and really did a a pretty big, deal marketing effort on this. You get a membership card. You get a shipment of wine. You get discounts to the restaurant. Private access to the events, reservations, restaurants have really embraced and pivoted, into this. And then the last one is, the hottest restaurant in Miami. It's a Michelin star called Boya Day. They just launched a a wine club in tandem with table twenty two. And this trend just feels like it has a lot of legs and a lot of, runway to go. And it's another way that when you think back to that original slide of winery and end consumer, you're squeezing the channel in the supply chain to get the wine and the story directly into the hands of consumers. And I think that's the magic of what technology, e commerce, has done. And it's really an exciting future, for us all. So that's it on, the slides. I think we're gonna open it up to questions. You wanted to Yes. I think we have fifteen minutes. So I I, I hope there's many questions because such an interesting topic, but, I'm gonna steal the opportunity first. So I'm gonna ask the first question. And it's a sneaky one. So, you have to forgive me. We know and and Michael really describing it perfectly how, now, knowledge about private, consumers or their data, their informations, is maybe the most precious treasure that any business can hold. And so, the question is to Michael, the importer and the distributor. How can you manage to, let's say, let the wineries share those information without them trying to get straight to the consumer. And so how to manage, let's say, this, constant, fight around this precious, datas. This is the big struggle here. That's a great great question. You know, I think it it really speaks to the importance of the relationship between the importer and the the winery. Right? Leading importers, and and I'll use us as an example, the way that we interact with our wineries is we try to lead, our wineries to these opportunities. When the pandemic shut everything down, we pivoted and we led them to these relationships that we had cultivated with wine dot com, wine access, and and the myriad of others. There's a trust that goes in that we are stewarding your brands into the right places we're positioning them in the right channels and the right arenas. And in the same way, the customer relationship, the people that are visiting the wineries, we're going to do the right thing to sort of manage that data and make sure that it's entrusted and, you know, utilized with care. And I think that really speaks to the power of that importer winery and consumer relationship. And there's a few importers that are are like that that have these long term thirty, forty year relationships with their wineries in the US. The tabs are are one example of that. And I think we do that. Incredibly well. And I think we're really on the cusp of capitalizing on these consumer visits. That's the holy grail that, we're sort of all working towards right now. So More questions, please. First of all, brilliant presentation. I have a question and a couple of the, seminars we've had in on this week. There's been a lot talked about building luxury fine wine brands, the importance of doing that in the on premise, your presentation that you've presented today. So clearly it's a little bit contrarian to that in the way that you're allowed that you've been able to tell the stories of these wineries and have real, tangible marketing, value add through e commerce. So I just wanted to give you a platform to speak about that and what you think done? Yeah. I mean, I think when we talk about the building of luxury brands, right, and that fifty, sixty, seventy five dollar price point and up, e commerce is just the perfect channel to to do that to be able to tell the stories effectively, to talk about the history, to talk about the families, the relationships, like what makes those brands special? And so unique. Right? You don't get that ability to tell a story in a shelf talker in a store. Right? So, you know, again, sort of going back to the richness of the video content the pictures, the the stories that, you know, come through on these. I think e commerce is the the perfect vehicle to be able to supplement that. In addition to on premise and independent luxury retail. And it's sort of that trifecta and I'll I'll sum up here because I think we're we're coming down to the wire. But, you know, in this new normal, Right? November of twenty twenty two, it's all about omnichannel. You have to have the on premise working and distribution in the places where restaurants you know, have the right brands, the right wines. And as an example, you know, we work with Michelin rated restaurants, three star restaurants. Our biggest on premise customer also happens to be the olive garden. And there's a place for customers to discover those wines and have entry into the wine category at the olive garden. It's an important customer. So the omni channel be it on premise, retail, and e commerce, and we talked about this, you know, just before, it's a three legged stool. And it's critical that all three legs are built and that you have your brands being built in the various markets where you're selling using all three tools right now. Secondly, brands still absolutely matter. Customers gravitated towards those brands in twenty twenty. Those were the things that did extremely well. They still are doing well and will continue to do well, in e commerce. We talked about the natural canvas for the storytelling of our brands. It is the perfect place, the perfect venue and channel to be, using this digital toolbox that we've talked about. D2C, owning that customer relationship and that lifetime value of those eighteen thousand visitors that are going through your winery door. That's a lifetime value that will never ever go away. And then I think the thing that the pandemic taught us all is, okay, we have to pivot. Now we have technology to be able to utilize and to create these new wine clubs or Gopuff direct to consumer or whatever it is that's now coming down the pipeline that we didn't even think about three years ago. So, I've heard a little bit story about, like, this conference and these presentations. And the the the comment was, like, if we can sell one more bottle, then we did before, that would be a huge win. And I'd like to add one caveat here, which is If we can sell one more bottle of wine via e commerce as opposed to having that bottle sit at the distributor in their warehouse, I would consider this presentation a huge win. So thanks very much for your time. Listen to the Italian wine podcast wherever you get your podcasts. We're on Sunco out Apple podcasts, Spotify, email ifm, and more. Don't forget to subscribe and rate the show. If you enjoy listening, please consider donating through Italian wine podcast dot com. 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