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- DTC - Selling directly to the consumer is a global trend, which has been given additional momentum by the pandemic.
- Producers have to become more involved in promoting their wines and the supply chain. Social media profiles, constant availability, online retailing and frictionless purchasing are all now increasingly demanded by customers
- Bloggers and influencers may have increased the number of voices, the number of opinion formers with the power to move sales is declining.
- New tech platforms such as Pix and Vivino are offering reviews to large numbers of consumers. They change the way ratings are viewed.
- While Vivino is based on customer reviews and generates much of its its income by selling wine, Pix is focusing on creating an editorial platform and data-driven innovations.
On January 12, a new business was officially launched that represents another major step in the modern evolution of the wine industry.
Called Pix, the well-funded, Napa-located, tech platform operates in the same database-focused sector as Vivino and Wine Searcher. In its own words, it combines “an intuitive wine search engine with reviews and articles from trusted voices in wine”.
To declare a personal interest, Paul Mabray Pix’s founder is a friend, as is Felicity Carter, former Meininger’s editor who has transferred her considerable skills to polishing the words that appear on the new business’s Drop editorial platform. I also know many of the writers whose words fall under Ms Carter’s scalpel.
Having said that, I can try to take a dispassionate view of what Pix and Vivino in particular are doing right now and how it fits into the ecology of the wine world.
Shifting Responsibilities in Customer Communications
Historically, everyone used to know which job they were supposed to do. Hundreds of thousands produced wine. Others – a far smaller group - sold it, while, in more recent times, another – even tinier – advertising and public relations professionals, writers and ‘critics’ handled of the communications.
Today, it’s a lot less cut-and-dried. The number of sellers has shrunk even further while, despite the arrival on the scene of bloggers and influencers, there are very, very few ‘opinion formers’ who have the power to move sales.
Consequences of Selling Directly to the Consumer
Today, responsibility is increasingly passing back to the producer. Selling directly to the consumer – DTC – is a growing trend globally, bringing with it the need for more sophisticated understanding of the tourism offers and digital marketing that it requires.
Where they once were happy to attend a few tastings, and send out samples to and/or entertain a few members of the media, wineries now pay people specifically to post Instagram images and video and to maximise their SEO.
Whether they are selling DTC or through traditional channels, the producers have to become far more involved with facilitating sales to a final consumer who wants to know where to get the wine, right now. The old model of giving the media a – probably out-of-date - list of stockists is no longer good enough for an audience used to hitting a ‘buy’ button within moments of seeing something and deciding to buy it.
Tech Platforms on the Rise
Wine Searcher has gone part of the way to addressing this need for buyers of fine wines, by allowing them swift access to the websites of merchants who should be able to supply them. But the business – largely funded by those same merchants on a per-click basis – is far from offering the frictionless experience to which Amazon users have become accustomed.
Vivino was a game-changer in elbowing rivals out of the way to master the field of wine label recognition. Today, with the help of $212 million of financial investment it has built a global audience of over 50 million users who collectively scan half a million labels every day and add to nearly 70 million reviews and 196 million ratings. This turns users into unpaid helpers who are instrumental in making the platform even bigger. Most of its users are people who would never read a wine column in a newspaper or magazine, and many live in countries where the promotion of alcohol is strictly limited. While the Vivino users who take the time and trouble to rate wines are a small minority of the total audience, their high interaction rate makes them very valuable to the platform.
Vivino’s Business Model: Revolutionizing Wine Sales
Vivino influences purchases by
- Providing ratings for wines users who are sufficiently interested to scan;
- Publishing global and local lists of ‘Top 100’, most highly rated wines;
- Working with big retailers, such as Marsh in the US and Sainsbury in the UK to display ratings in their stores;
- Providing background information for wines that may help to nudge a sale – but only when funded by producers or distributors;
- Emailing users to suggest alternatives to wines they have scanned – here again also only when paid for this ‘service’;
- Supplying members of its US wine club with mixed 6-bottle cases whose selection is based on ‘top-rated wines from around the world’ and based on members’ own Vivino ratings and preferences. No two boxes are alike, Vivino claims.
Vivino Income Model: Rapidly Increasing Sales
Vivino’s income comes from marketing fees paid by producers and distributors, margins on DTC wine sales through the platform by DTC producers and over 700 retailers in 17 countries through the platform, and subscriptions to its wine club which offers regular deliveries of wines users are likely to enjoy.
In 2020, according to Productmint, wine sales brought in $265m, over twice as much as in the previous year. It seems fair to expect 2021 figures to be even higher, especially given the sales successes some producers and distributors have said they’ve achieved.
Potentially even more lucrative in the future, Vivino is also daily amassing hugely valuable data on wine trends which it sells – without, it stresses, ever revealing information about specific individuals.
Vivino’s strength makes it look rather like the equivalent of the Microsoft of the 1990s software world or the Amazon of today’s online retail: hard to compete with. But it would be a mistake to underestimate Pix’s founder Mabray and the team he has assembled, or the financial support he has behind him.
Paul Mabray, CEO of Pix
The Pix Model
Much of what Pix’s business will do may compete directly with Vivino, but unlike that company, Mabray is keen to say that it won’t ‘own’ the consumer. It does, however, seek to build a loyal community of users. The editorial platform it is building to achieve this are superior to anything on offer elsewhere – despite the excellence of much that Wine Searcher has been doing.
It is not just that the writing and editing are often better; it is the range of content. Apart from Carter, the editorial team is led by ‘chief content officer’ Erica Duecy who was previously at the online magazine Vinepair where she learned the surprising breadth of readers’ interest. So, one of the most popular items in The Drop, Pix’s ‘online wine discovery magazine’, is the horoscope that combines traditional predictions – “Over the next couple of years, you will be asked to put your values to work in the world, which means commitments on all fronts, but in a good way” – with recommended wines for each star sign.
Pix Business Model: Data-Driven Innovation
Mabray, whose background is in wine data, told Vitisphere last year that “Crucially, we looked outside wine for inspiration, to platforms that connect users with books, podcasts, movies, music… We spoke to the people who created those platforms to understand how they tackled discovery with a long-tail product like wine.”
Key to the Pix offer will be the way the wines are described – using metatags like the ones used by Netflix, and what Mabray calls ‘thumbnail’ word pictures of each wine. These include
- texture – fresh or rich, for example;
- flavour, which might include cherry or spice, but not some terms that have little resonance for users;
- possible usage such as barbecue or dinner party;
- additional supporting information about the place where the wine was made or, for example, the fact that it was produced by a woman. (The essential requirement here is that readers will find these aspects to be of interest)
Pix Income: Keywords and Advertising
A Google-style search engine will enable users to find examples of specific styles or wines for particular occasions, and as with Google, producers will be able to buy key words. If a Prosecco-maker thinks their wine is ideal for a 21st birthday, for example, they could buy that term. And of course, also like Google, Pix will know what its users are looking for.
The sale of keywords will be a major focus, at least at first, but Pix is also talking to generic organisations and producers about helping to build awareness and understanding of their wines – with the strict proviso that there is a solid wall between the editorial words and promotional content.
A quarter of a million wines will apparently be available for sale through the platform, and if Pix is to give its investors a return on their money, producers will be paying to ensure that theirs are the ones the platform’s users are most likely to see and buy.
Taken alongside Vivino’s growth and Pix’s innovative potential – let alone any other competitors that might enter the field – that means that a lot of wineries are going to have to reconsider how they allocate their marketing funds.