The Wine Gourd: August 2023

Monday, August 28, 2023

The future world of DTC wine selling

Last week, I wrote about The modern (sustainable?) world of wine packaging. Immediately afterwards, three related articles appeared during the week:

This was clearly a hot topic, at the time, and continues to be a pointer to the future.

So, this week I thought that I might write about something just as topical: modern ways of selling wine direct to the consumer / customer (DTC). After all, we have been told that in many places DTC is the lifeblood of the wine industry; and it would be in the USA if it sorts out its cross-state wine transportation problems (Wines are no longer free to travel across state lines). We have also been told, by contrast, that a third of legal-drinking-age adults in the USA say they have not consumed alcohol in the past six months (US consumers want to moderate their alcohol consumption), and especially that Young adults in the U.S. are drinking less than in prior decades. So, wine supply and sale is clearly becoming a more tricky business than it has been — as the French Agriculture Minister recently said: the industry needs to “look to the future, think about consumer changes ... and adapt”. So, DTC should be of relevance.

Obviously, the traditional way to buy wine has been to walk into a retail store and grab a suitable bottle from a shelf. However, one common DTC way to bypass this arrangement has been what is called the Wine Club Model (Clubs vs Subs):

This recurring sales model is structured to offer repeat customers a winery-curated selection of wines at a small discount, delivered to their homes monthly or quarterly. Clubs are typically free to join, and the benefits of being a club member include a discount on wines (typically 10–20%), first access to new releases of wines, and invitations to events. Some wineries will have special seating areas or experiences for participants, and members are encouraged to visit the tasting room for complimentary activities.

This model has been common during my adult life (Why are Wine Clubs so popular?), both from producers and from retailers. There are also clubs for supermarket chains, for example, which offer financial discounts each week to their members; and it has also applied to things like newspaper and magazine deliveries to your door.

However, this arrangement apparently does not quite suit modern generations (eg. Millennials and Generation Z), along with many of the other things favored by my (now aging) Baby Boomer generation. The issues seem to be (Clubs vs Subs):

This model is frustratingly rigid. Consumers who grew up with the internet are accustomed to variety, transparency, and immediate access with no strings attached. Moreover, younger consumers don’t want the same wine delivered periodically. They grew up with the internet and know what it is to have options; so, their goal is not to decide on a favorite and stick with it. Instead, they live in a perpetual state of trial.

So, the suggested alternative to the Wine Club is the more general Subscription Model (Clubs vs Subs):

Subscription models are different from Wine Clubs because they place control of the relationship in the customers’ hands. Typically, all interactions are online so that they can be managed anytime and anywhere. Many have apps. The consumer signs up and chooses the frequency and dollar amount. The focus is on new brands and products, typically highlighted with in-the-box extras containing stories about the new items.

Indeed, this seems to have become The Way for the younger generations (eg. urbanites 25-45 years old), half of whom apparently have four or more subscriptions, with various providers. Indeed, subscriptions exist these days in all parts of life, from phone usage to apps to video streaming to food delivery. Therefore, the wine industry is being encouraged to re-consider its approach (Wine clubs vs. subscriptions: which is better?); and advice is now being provided for any of we wine oldies who need to adjust to this somewhat different way of selling (Let’s discuss if it is time to move your Wine Club to a Subscription).

One of the many differences between clubs and subscriptions is that The future of pricing centers on the customers. The old approaches to pricing have been: (i) Product-centric Pricing, which is when the prices are set based on their tight link to the cost of production (plus desired profit), (ii) Value-based Pricing, which is when prices are set based on the value that the products or services create for the customers, and (iii) Demand-based Pricing, where increased demand increases the price. Customer-centric Pricing, on the other hand, is not based on maximizing profits for each individual transaction. Instead, it places priority on building long-term relationships with customers, rather than short-term yield, by doing things such as automatically adjusting prices (downward) whether the loyal customers have asked for it or not.

A wine-industry example of how these issues can be addressed is in the recent announcement about wine retail from a traditional figure (ie. my age!) in the wine industry: Wine critic Jeremy Oliver to launch online platform for wine retail:

Australian wine critic and author, Jeremy Oliver, has developed a new online retail platform for wine tailored to user experience, featuring a website and online store with a recommendation engine, an accompanying app and WeChat store, and a library of Oliver’s tasting notes, articles and videos.

This is clearly a modern approach (see here for more details: Consumers ‘being fed the lie’), which touches all of the bases highlighted above for what younger adults seem to want in their retail experiences. We should therefore all be interested in how this particular wine business (called Oliver’s Wines) gets on.

To finish on a cautionary note, however, subscriptions are very popular in many places, especially on sites like Youtube, where we are constantly being exhorted to “subscribe to this channel”. This doesn’t stop us also having to watch a set of annoying ads during the next video, or listen to the presenter advertise the “sponsors” of their channel. Even an old guy like me can see that the Subscription Model can become very annoying! You also need to keep track of all of those recurring subscription payments, lest you forget to renew one (Here are the best subscription trackers to help you stay on top of recurring payments). Newer alternatives are therefore definitely also worth exploring (People are sick and tired of all their subscriptions).

Monday, August 21, 2023

The modern (sustainable?) world of wine packaging

Everyone in the modern world knows about Climate Change and its basic cause (increased human production of so-called Greenhouse Gases, notably CO2. So, there are now explicit governmental directives to address this issue (e.g. EU reaches new milestone to make all new cars and vans zero-emission from 2035), although we do not know whether these will be effective anywhere near fast enough.

In this regard, there recently has been a rash of articles about the long-term sustainability of the packaging used in the wine industry (see the list below). If we wish to address the issue of the wine industry’s impact on the world’s climate, then change can’t happen overnight; and so we need to act sooner rather than later.

So, the world’s top wine-producing countries, including France, Italy, the U.S.A., Australia, Chile, Argentina and South Africa, have pledged to have carbon dioxide (CO2) net zero-emission by 2050; and >50% of the carbon footprint of a bottle of wine comes from the packaging. Sadly, we have recently been told (Global beverage industry lags behind green targets) that: “the global beverage industry ... is not currently on course to meet either its 2030 or 2050 greenhouse gas targets.”

For wine-making itself, there has been the expansion of organic and biodynamic production, and the emergence of ‘natural’ orange and pet nat styles. However, for wine’s packaging we have always had the same basic four options: glass, metal, plastic, or cardboard; and there has also been the option of re-using (ie. re-filling) the containers. How do these options compare?

To find out, the five Nordic government-owned alcohol retailers have launched a joint program to combat climate change. They have (Can the Nordic monopolies turn the drinks world green?): “combined forces to cut carbon emissions by 50% by 2030. These countries have a high rate of recycling and acceptance of alternative packaging.” As part of this effort, Alko (from Finland) and Systembolaget (from Sweden) have done life-cycle analyses of alternative packaging to determine the volume of carbon produced when manufacturing and using each packaging option.

The resulting data were (in g CO2 e / l):

Glass bottle 722
Light glass bottle 523
PET bottle 283
Returnable bottle 110
Can 163
Bag-in-box 70
Paper packaging 84
Plastic bag 141

As we might suspect, a standard wine bottle is the worst of all — it can weigh >900 grams, while the lightest glass wine bottles on the market now dip down below 400 g. So, this standard bottle CO2 “cost” is what the wine industry needs to work on for the future, because around 40% of the carbon footprint of a bottle of wine comes from the glass bottle itself.

As an aside, it is worth pointing out that glass recycling is often quite successful, as shown in this graph for the European Union (Recycling rates in Europe: glass lags behind in Germany). This matters, because manufacturing a bottle from recycled material involves much less heat, and thus generates far less CO2. Recycling is thus an essential part of any sustainable system.

There are all sorts of sustainable–packaging initiatives that have recently been proposed within the wine industry. For example, these articles will bring you up to date:

One important question, though, is where are we at the moment? What progress has already been made? In this regard, we have been told (How canned wine is attracting new drinkers) that: “We are also seeing huge interest in cans from the Nordic countries, especially Sweden which has a sustainability focus to their wine buying habits and are much more adventurous with alternative wine packaging.” So, we could do worse than look at the current data for Sweden, to see where the advance guard currently might be.

I have therefore delved into Sweden's Systembolaget database, and come up with the following table. The packaging types are the rows, and the alcohol types are the columns, with the number of SKUs being the contents of the cells. As you can see, there are getting on for a total of 24,000 SKUs, with the vast majority of them being standard glass bottles. This does not indicate much progress, as yet!

There are some light-glass bottles in the list, and a few PET bottles (there is a refundable deposit on the latter). Fortunately, almost all of these are wines. There are 10% as many cans as bottles (there is also a refundable deposit on these), although almost all of them beers, not wines. Bag-in-box and paper packaging, however, both focus on wines, few as they are.

Interestingly, the (non-can, non-PET) returnable containers are for beers. However, Erica Landin-Löfving has noted (Could reuse be the future of wine packaging?): “When I was a child in Sweden, we had refillable wine bottles. Not in the Italian or French sense where you brought your bottles and refilled; instead we returned bottles to monopoly stores and they cleaned and refilled them like milk bottles.” Those days are long gone, apparently. Remember, re-use involves a 90% reduction in carbon emissions, and it does not produce waste, nor does the product involve a shelf life.

Anyway, it does seem that the global beverage industry is, indeed, not currently on course to meet its greenhouse gas targets. Even the keen countries (like Sweden) do not have access to the sorts of modern (sustainable) wine packaging that they would like / need. So, let's get into it!

Monday, August 14, 2023

Which countries have most of the oldest vineyards?

Last week, I looked at Where in the world are the oldest vineyards and wineries? This week, I will look at the oldest vineyards in more detail, using the same dataset. As we will see, these vineyards vary from country to country, but not necessarily in the way that we might expect. Indeed, there are apparently only 14 UNESCO–listed vineyard sites around the world.

I will start by noting that some of the oldest vines are in Georgia and Slovenia, not unexpectedly, given their long history — indeed, wine is believed to have originally come from Georgia and the Caucasus region (and then spread from there to Greece and Italy). So, these days, Georgia has two of the oldest vine collections, at 400 and 250 years old, while Slovenia has a well-known single (massive) vine of 150 years of age. However, England claims to have the largest single grape-vine in the world (called The Great Vine), which is now 255 years old (as shown in this picture).

Below, I have produced a series of graphs, each one showing the ancient vineyards for a particular country. Each graph point represents one vineyard from the Old Vine Registry database. These vineyards are between 50 and 300 years old (horizontally), with their area shown vertically (note the logarithmic scale). Sadly, not every vineyard has its area listed in the database, so that they cannot all be shown in the relevant graph — the number of vineyards graphed out of the database total for that country is listed at the top of each graph.

France is the biggest wine producer in the world, and we might therefore expect the French to have preserved much of their vinous heritage. However, they have not really done so, at least compared to many of the other countries listed below.

Even more notably, given that Italy is the second biggest wine producer, it has done very poorly at preserving its vinous heritage. Indeed, this graph is somewhat embarrassing — the locals apparently do not value the concept of old vines. It is perhaps worth noting, though, that there is one vineyard with plants that are 350 years old (and thus not in the graph).

In many ways, Spain is the big gun in the world of old vineyards. The next graph shows you that there are oodles of them, especially compared to France and Italy. In this sense, Spain has been a very conservative country viticulturally, and thus preserved its vinous heritage well.

Notably, the USA also has many older vineyards, almost as many as Spain (although area data are missing for half of them). This situation may surprise a lot of people, since the USA has a reputation for constant renewal (ie. the infamous “disposable society”). However, the vinous heritage has clearly been of importance to many Americans, for which we can all be pleased.

Like the USA, Australia also has managed to keep quite a few of its oldest vineyards. Indeed, relatively speaking, it has actually done somewhat better, in terms of numbers. Who has been copying whom?

Portugal has the oddest graph of the lot, as shown next. Last week, I pointed out three peaks in vineyard numbers based on age, at 1930, 1960 and 1970, attributing them as simply being approximate years (rather than accurate records). However, a commentator on that post noted: “there is something very interesting going on in Portugal in 1930 and 1970 that led to hundreds of vineyards being planted in those years in the Douro region ... it's super odd to see so many producers with a 1930 planting and a 1970 planting, over and over and over again. I'm thinking government subsidies, or something like that”. This odd pattern is clearly evident as the two vertical rows of points in the next graph. An explanation would be very interesting to read, if anyone knows one.

Chile has an old vinous heritage, and it has managed to keep quite a few of its oldest vineyards. Indeed, it has more of the world’s oldest ones than any other country — at least half a dozen are >150 years old, including one quite large vineyard.

Argentina has many fewer old vineyards, compared to Chile, and so has done less than it probably could have.

Compared to many other countries, South Africa has also not done very well at preserving its older vineyards. Indeed, it is the worst of the world’s large wine-producing countries.

Given its long heritage, Germany has also not done well at preserving much of its heritage. Indeed, it makes even Italy look good. It has been good at keeping its old castles, for the tourists to look at, but the vineyards near them along the scenic rivers are much more recent. It is perhaps worth noting, though, that there is one vineyard with plants that are nearly 400 years old and another at 600 years old (not graphed).

Finally, we come to Turkey, one of the oldest wine-making places on the planet. Therefore, it is good to see that it still has some of the oldest vineyards, as well as one very large old vineyard (at the top of the graph). However, the latter is noted in the database as being communal: “an area of 1,980 hectares, with 120 households and 774 people.” Sadly, this is not to say that there are no problems with the current old-vine situation in the country; see: Turkey's old vines: a disappearing delight.

So, the older vineyards are not randomly distributed among the wine-making regions of the world. Some places have definitely done better than others at preserving their vinous heritage.

Monday, August 7, 2023

Where in the world are the oldest vineyards and wineries?

This title is actually two separate questions, because the oldest wineries are not necessarily associated with the oldest vineyards, and vice versa. So, I need two lots of data to answer this question, at the global level.

Wine-making itself goes back a very long way, of course. It has been noted (The oldest vineyard in the world is 6,100 years old) that:

The Greeks had Dionysus — the ancient Greek god of wine, among other things — who was worshipped as early as 1,500—11,000 BCE and is referenced in the works of Homer and Aesop. Mentions of wine can be traced back to Georgia in 6,000 BCE, Iran in 5,000 BCE and Sicily in 4,000 BCE; and the Egyptians also tried their hand at winemaking with all kinds of grapes, as well as with figs, dates and pomegranates. The alcohol is even mentioned 231 times in biblical literature.

It was during a 2007 research expedition in Armenia ... that a drinking bowl, grape seeds, desiccated vines, pottery sherds and fermentation jars were discovered and dated as 6,100 years old ... This discovery is said to be the earliest example of wine production — with the grapes in question most likely the Vitis vinifera species, according to botanists.

However, there are no extant wineries this old. Indeed, the World Atlas tells us that The oldest wineries in the world are apparently as shown in the table above. According to this information, Germany has by far the oldest known winery (at 1,161 years old), with France also having one at c. 1,000 years old. Italy’s oldest seems to be 882 years old. By comparison, Spain’s is only 474 years old, with Switzerland right behind. Outside Europe, Mexico’s oldest is 426 years old, and South Africa’s is 335 years old.

However, as I noted, this has little to do with the oldest vineyards. Plants have an upper limit to their life-times, and we cannot expect the above sorts of numbers for their ages. For this reason, there is an Old Vine Registry available online, which lists information about all of the known old vineyards. To quote from the website:

The Old Vine Registry is a grassroots, volunteer effort inspired and begun by wine critic Jancis Robinson and several of her colleagues. Robinson first started writing about the heritage of old vines more than 15 years ago, and in 2010 she and writer Tamlyn Currin began compiling a registry of old vines, triggered by a growing sense that these old vineyards were important elements of cultural and scientific heritage, as well as the source of some particularly beautiful wine.

The launch of the Old Vine Conference provoked a lot of interest in the Old Vine Registry, and it got to the point where all parties involved realised they needed something more searchable, more accessible, more elegant, and more useful. The project needed to become an online database, somewhere people could go to find old vineyards, learn about them, track down the wines made from them and the people farming them. With the help of Alder Yarrow, author of Vinography.com ... (who handily has a background in digital marketing and user experience), funding was found, talented developers were tracked down, and under Yarrow’s direction, the real Old Vine Registry was born.

By and large, the Registry lists vineyards that are at least 35 years old, with currently more than 2,650 entries listed worldwide. I will explore these data in more detail in future blog posts; but for now let’s simply take an overview of the oldest vineyards. The graph above shows a count of how many vineyards there are for each of the ages greater than 50 years old. (Note that the vertical axis is on a logarithmic scale.) Surprisingly, there are 2,335 such vineyards, scattered over the whole globe. Seriously, would you have guessed such a large number?

It is worth noting, as an aside, that not all of the actual ages are necessarily perfectly precise. For example, you can see that there are three odd peaks in the data (ie. the top three points in the graph). These three points denote vineyards listed as being planted in 1930, 1960 and 1970, respectively. Clearly, these are simply approximate times, presumably based on memory rather than written records. [Update: please see the first Comment below.] However, the other entries seem to be quite precise.

Anyway, here is the list of the locations and ages of the very oldest vineyards. You will note that eastern Europe gets mixed in with Germany and Italy, in comparison to the above list of wineries, and that France and Spain are quite some way down the list. Note, also, that only the top 5 vineyards would actually make it onto the wineries list, and that none of these are actually in that list, anyway. The oldest wineries and vineyards really are not connected at all.