XChateau Wine Podcast

Tracking vine trunk movements down to the 0.5-micron level, Phytech is leveraging technology to optimize vine irrigation. Cody Ashurst, Director of Vineyards, and Lex Palmer, Marketing Manager, discuss how their solution optimizes and automates irrigation today and how it can be extended to optimize fertilization, harvest dates, and much more. 

Detailed Show Notes: 

Phytech - a global SaaS company that optimizes agricultural irrigation

• Technology includes dendrometers, irrigation pressure switches, soil moisture probes, and frost & weather stations
• Crops include nuts (biggest), citrus, pears, getting into row crops
• Vineyard solution primarily West Coast / CA, pursuing Portugal, Spain, Italy, Chile, Mexico, Texas

Dendrometer - digital devices mounted onto vine or tree, measures expansion and contraction of plant trunks at the 0.5-micron level (70 microns = 1 human hair)

Vineyard solution includes a dendrometer, soil probe, website, and mobile app with wireless comms and data loggers connected via cellular, satellite, or wifi

• The solution can be adjusted based on the type of farming (e.g., quality or quantity), rootstocks, clones, soil types
• Tracks trunk size and soil moisture to signal irrigation needs
• Optional: pump/value control for irrigation
• Can schedule up to 2 weeks of irrigation
• Can monitor fertilizer inputs (cost of fertilizer up 600% last 5 years)

Benefits:

• Don’t promise water savings, but see up to 60% less water use
• Improve quality by knowing when veraison happens and when vines stop growing or are stalling
• Optimize fertilizer, diesel, and electric pump costs
• Reduce labor for irrigation if automated
• The system logs data, enabling knowledge transfer when people leave
• Case study: High-end Napa vintner got WE94 points 1st vintage, then used Phytech in a heat wave year and got WE97 w/ tailored post-veraison irrigation; other growers had a 30% loss, the winery had a 3% loss
• Case study: one ranch was expecting a 50% loss, but down to 3% with irrigation changes

Pricing - depends on # of sites in a block

• There is a small upfront fee for installation
• Monthly SaaS fee (~$50-80/acre/year), includes maintenance
• Weather station ~$700/year (vs ~$3,500 to buy)

Case studies (videos on website)

• Ultra premium Napa winery Neotempo
• Larger Mendocino grower Bonterra 

Marketing most through word of mouth/referrals

• Digital media, video testimonials, trade shows & panels
• Video in digital media has been the most valuable
• Connecting 1:1 is very helpful
• Phytech is more holistic than other solutions

The most significant barrier to adoption is technophobia

The subscription-based model eliminates “tech graveyard” growers have

Product roadmap

• Predictive brix/pH model (growers input brix, system tracks weather, vine response) to predict harvest date by block
• GDD (growing degree days) monitoring tracking temperature and humidity in the field at the block level
• AI Advisor to look at past data and current practices and enable recommendations

Other exciting innovations - Autonomous spraying and tractors (Guss, Monarch), optical arrays for vine health (Scout), microalgae for soil health (MyLand)

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After struggling with tracking vineyard data firsthand, Shawn DeMartino, CEO and Founder of Sentinel, decided to create a solution with his partner. Enabling vine by vine mapping and data collection that could stand the test of time enables vineyard managers to increase the lifespan of a vineyard, manage viruses, and effectively create a “medical record” for each individual vine.  

Detailed Show Notes: 

Shawn’s background - winemaking, viticulture, now general management

Sentinel was a Covid project that became real, software that collects individual vine information over time

• “Patient medical system of record for vines”
• The solution includes a mobile app, desktop platform, and high-accuracy GPS (receivers that clip onto phones)
• Maps all the vines in the field
• Configurable data collection forms
• Available in 5 countries currently

Mapping the vineyard

• Create a 3D model with lat/long and elevation
• Basics (variety, clone), images, comments, discrete statuses (e.g., life stage, virus status)
• The vineyard mgmt team populates data, can walk up the vines and record
• Work with/ Sentinel to put in bulk metadata (e.g., block info, varietal)
• A client mapped 100 acres in 1 week

Work order function

• E.g., irrigation can be recorded
• Roguing, planting, and grafted statuses can auto-update when the work order is completed

Core benefits

• Extend the life of the vineyards
• Virus/disease management, see the program more clearly, identify asymptomatic vines in hot spots (case study: ~10% of vines asymptomatic) 
• Optimize pick areas (through mapping flavor profiles)

Pricing

• Mostly software, hardware costs small
• Annual subscription based on acres, not users (<1% of farming cost)
• Biggest growers ~$2k/year

ROI example: client roguing 1% of vines/year w/ growing virus problem, Sentinel enabled them to get ahead of the problem in 1 year

Marketing mostly organic search

• Articles and podcasts helped
• Last 18 mo, mostly word of mouth
• Referral program: The referrer gets a bottle of Krug

Barriers to adoption

• Worries about time requirements; the goal is to collect data when already in the field
• Worries about less flexibility to manage vineyard; full customization of data enables more flexibility
• Next on the product roadmap - continue to flesh out more work order functionality

Other tech Shawn is interested in

• Winery management platforms (e.g., Innovint)
• Soil moisture probes for irrigation

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With the recent launch of a new $300 retail icon wine, Boulder, Kaiken continues to explore the potential for luxury wines from Argentina. Building on the last 15 years of Kaiken's other icon wine, Mai, Anita Correas, Commercial Director, and Gustavo Hormann, Director of Winemaking, discuss the global market for luxury Argentinian wines, how they approach launching them, and the brand-building impacts for the Kaiken brand. 

Detailed Show Notes: 

Kaiken background

• Founded in 2002 by Aurelio Montes (Chile)
• "Kaiken" is the name of a wild goose that crosses between Chile & Argentina
• Exports to 60 countries
• Winery in Vistalba, Mendoza (28ha), vineyards in Agrelo (60ha) & Los Chacayes, Uco Valley (150ha)
• 60% on-premise
• Frances Mallmann restaurant at the winery

Recently launched new luxury tier/icon wine - "Boulder"

• $300 retail price, 3,700 bottles
• Developed over the last 10 years
• Unique 3ha block in Los Chacayes due to overflow of Arroyo Grande, full of big rocks/boulders
• Malbec (64%), Cabernet Franc (28%), Petit Verdot (8%)

Boulder launch plan

• Launched in Buenos Aires, Hong Kong, Korea, Brazil (São Paulo, Argentina's #2 export country), US
• Brazil's event had a more direct impact on sales
• Mostly press/trade events that are smaller, in-person
• Likely less on-premise than Kaiken overall, more hand-selling to collectors and Michelin Star restaurants
• VR w/ Google Glass to see the vineyard up close and go inside the soil has gotten positive feedback, but it is more expensive than a regular video (required 3 days of video shoots and a special camera)

Mai - prior icon wine

• $100 retail price, 12,000 bottles
• Launched in 2009 from a 120-year-old vineyard
• Marketing more "maintenance" now
• 2021 - redesigned packaging, got 98 pts and Top 100 from Suckling
• Primarily sold in Argentina, then UK, US, Brazil, Japan

70% of Argentinean wine is consumed domestically, delaying the need for exports

• Average export ~40% higher price than Chile (export-focused market, ½ the population, 2x wine production vs Argentina)
• More high-end wineries in Argentina vs ~5 in Chile

>$100 market for Argentine wine - "not a huge market"

• Big domestic market - much of Mai, Boulder sold domestically
• Consumers looking at super high-end often do not look at the country of origin but more at the concept of the wine
• Value Prop for Argentine luxury wine - not influenced by oceans, high altitude, dessert wines, driven by the Andes

Return on Boulder is more than sales, but brand building for Kaiken

Focused on relationships with importers

• Want long-term relationships as they represent the brand globally
• Reach collectors through import partners
• Has affiliated importer in Argentina

Montes relationship

• Was helpful on launch to piggyback on Montes brand
• Now Kaiken is more independent and only shares importers in a few countries (it used to have the same ones)

Kaiken Ultra ($26) awarded Wine Spectator Top 100 (#30, highest Argentine wine)

• Wine drinkers can graduate from Ultra to Mai and others
• Kaiken's focus for each range of wines is to over-deliver for the price point vs linking the wines

Good press in 2024 for Kaiken - #1 New World Winery from Sommelier Awards, Boulder rated best Argentinian red blend by Patricio Tapai (wine critic), Estate Malbec was Wine Spectator's best value wine

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With many macro headwinds for the wine world, Gino Colangelo, founder of Colangelo PR, felt the negative and often poorly fact-checked press around alcohol and health posed an existential threat. Teaming with Karen McNeil of The Wine Bible and fellow PR leader Kimberly Charles, they founded Come Over October, a campaign to create a positive narrative around wine. With freely available media assets and over 120 partners, the movement, in its first stretch, has shown the power of focusing on the positive elements of wine.  

Detailed Show Notes: 

Macro wine challenges include marijuana, Ozempic, and RTDs, but “no alcohol is healthy” messages from WHO and other gov’t organizations potentially pose an existential threat to the industry

Come Over October (“COO”) founding

• Campaign to advocate for wine
• Commission research - 60%+ 21-39-year-olds would change consumption if alcohol health guidelines changed, 60%+ participate in Dry January or Sober October (which equates to 17% of the year)
• Karen McNeil, writer of The Wine Bible, got backlash over post against Dry January and ideated Come Over October
• Kimberly Charles, owner of an SF wine PR firm, joined as co-founder
• Started the company in spring 2024 (Come Together, a Community for Wine) as a mission-driven company to advocate for wine

Fundamental principles

• Had to reach consumers
• No negativity towards other alcoholic beverages
• Involve everyone in the wine world

The goal for success: turning the narrative around wine positive (e.g., more articles on the social benefits of wine)

• Measured by impressions of negative vs. positive articles about wine
• In a battle for hearts and minds vs just getting the facts right

Asked for two things from partners

• Modest check - $1-10k to pay for campaign, website, social media, media asset creation
• Activation - use campaign assets (free to all) to run a COO campaign

Example activations

• Total Wine - in-store signage, direct marketing, social media posts
• Constellation Brands - bought in-store radio ads for 800 Kroger stores under the COO banner (promoting Kim Crawford, Meiomi, & The Prisoner with Karen McNeil doing voiceover) and reversed negative sales trends in stores
• Jackson Family - free tasting, events, cash support for COO

Campaign success metrics

• 120 companies participated
• >1,000 retail stores engaged (e.g., Kroger, Total Wine, Gary’s)
• ~$100k donated media (e.g., Wine Enthusiast, Vinepair, Wine Spectator)

Next Campaign - Spring 2025

• Focus on the food message
• Differentiate wine as food vs alcohol
• Continue togetherness message
• Bring in chefs, restaurants
• Then roll back into October
• Would like to hire a Director to run the company

Health debate

• Loneliness epidemic - 30% of males don’t have close friends
• Wine has a unique ability for positive wellness in bringing people together
• Does the industry need a positive health message/research to turn things around truly? (e.g. - wine → better relationships / friendships → stress reduction → better health)
• 60 Minutes show on The French Paradox (1991) changed the wine world and led to 30+ years of growth
• Not yet seeing health impacts of marijuana usage as it has only been legal recently

Contact info: [email protected] or [email protected]

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With a second year of volume declines, 2024 has been challenging for the wine industry. Digging deeper into what trends are shaping the wine industry’s malaise, Cathy and Chris Huyghe, founders of sales analytics software platform Enolytics, have uncovered important insights into the US DTC wine market, including the decline of women and the divide between the affluent and middle class in wine purchasing. Enolytics has also developed a free service for the industry called EnoInsights, which is worth checking out.  

Detailed Show Notes: 

Enolytics launched b/c no one in wine knew what to do with their data 

• Builds sales analytics software for the wine & spirits industry for both DTC and wholesale depletion data
• Customers primarily small (<$1M DTC revenue) & medium-sized, growing in larger wineries
• US, Canada, Australia - primarily US w/ 80% California

Partnership with WineDirect

• Exchange anonymized data every quarter and analyze it to build reports for the industry
• ~2k wineries in database, ~1k wineries analyzed after removing outliers

2024 DTC trends

• Revenue flat-ish, volumes down significantly
• Women purchasing less (-4%) - overall (-3%), men (-2%); reverses a recent trend of women buying more wine, not generationally different, impacting white (-5%) and rose (-10%) more than red (-2%)
• Affluent areas are doing better (flat revenue, lower volume), middle-class & poorer areas are down more
• Wineries increasing pricing (+5% through Q3 2024), AOV up due to pricing
• VA is doing reasonably well, CA - particularly Napa and Sonoma, hardest hit - they largely depend on tourism (70% of purchases from people outside CA), Central Coast CA is not down as much (70% of purchasers from CA)

Hospitality/visitation declined 7% (# of purchasers) in 2024 (also declined in 2023)

• Impacts wine club sign-ups, with hospitality the main club sign-up engine

Wine club growth -3% (# of members) in last 12 months

• 2020 +7%, 2021 +11%, 2023 -1% (20% attrition through Q3, 28% total; 19% sign-ups), 2024 -2% (19% attrition, 17% sign-ups)
• Club doing best of all major DTC channels - revenue flat, volume down
• Less expensive wineries getting hit more (less affluent customers)
• Customizations up - 20% of shipments, higher revenue per shipment
• Avg club tenure falling
• Best practices - better training of tasting room staff, use data to manage attrition (Enolytics has an algorithm to determine attrition risk; wineries that use it see 20% less attrition than average), use data to target customers to join the wine club (high spenders that are not in the club)

Website sales have the most significant room for growth, -42% since 2022, still up from pre-pandemic

• 2020 +250% in online sales
• Texting, “concierge” services, more targeted telemarketing (highest AOV channel, 6x tasting room; potential to leverage tasting room staff)
• Average winery emails the entire list, gets lots of unsubscribes, recommends hyper-segmentation, creates messages for 100-200 people

Events - same levels as 2022

• Opportunity to take tasting room on the road
• Recommends targeted events with a specific goal
• Go to places where there’s an existing customer base

Cross-channel marketing can be effective, e.g., using DTC data to sell out a restaurant event

Wholesale data partner - VIP - includes “can buy” and “lost” accounts

Regional wine marketing boards (VA, Paso Robles) engaging Enolytics to do studies on DTC data - currently doing baseline analysis and onboarding more wineries, sending quarterly reports

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Having “taught a computer how to taste” and using that data to help winemakers improve their processes, Tastry has turned to leveraging AI and their consumer preferences and wine chemistry databases to help wineries sell wine.  Katerina Axelsson, CEO, and Charles Slocum, Chief Business Officer, discuss Tastry’s Sales Accelerator Ecosystem, which includes the Wine & Consumer Insights Report, which gives wineries, distributors, and retailers tools to help them sell more wine.  

Tastry has provided an example report for listeners. 

Detailed Show Notes: 

Tastry overview - see Ep 157 for a deeper dive

• Tagline - “taught a computer how to taste”
• It has two unique data sets - wine chemistry, US consumer taste preferences
• Helps improve winemaking, predict and react to changing consumer preferences
• Works with wineries, retailers, and distributors

Tastry commercialization history

• 1st 2 years - establish trust with winemakers
• Last year - focus on helping sell wines

Sales Accelerator Ecosystem

• Takes data from 3 areas (winery input metadata, wine chemistry, Tasty validated wine market data) to feed accelerator (AI system)
• Consists of Wine & Consumer Insights (“WCI”) report, Sales Accelerator platform app, & integrations into other platforms (e.g., e-RNDC)
• Has AI search and chat functionality
• Salespeople use data to sell to on/off-premise accounts
• Sometimes, consumer-facing in-retailer displays

WCI - 2-page report to help sell wines

• Used to train salespeople, it can be a leave-behind
• P1 - for the category buyer; P2 - for servers, staff to educate them

WCI Components: 

Top left - bottle shot, label zoom in (helps for retention); name of wine; varietal; appellation; price (what it is actually sold for in the market); wine category (AI curates category to be highest scoring on Tastry score)

Category Score - 200 point scale, 100 is average for the category

• Not a critic score
• >100 is better than the average, <100 less than average in terms of expected performance in its category against the Tastry consumer preference database (e.g., Cupcake Pinot Gris got a 181 score)
• Percentile rank - e.g., 129 = performs 29% above avg
• 10,000s wines in database out of ~160k wines in the US
• Never <15 wines in a category
• Creating a new WCI for more rare and unique wines
• Lower priced wines, terroir matters less; higher prices matter more

Tastry Notes - AI-generated tasting notes, breaks into average and more experienced drinkers

Segmented Consumer Appeal - insights into buyers of wine; if there’s at least an 85% match (roughly equates to Vivino’s 3.9-4.0 score or 88-90 critic score), consumers tend to notice they like the wine and will buy it again

Flavor profile (p1) - e.g., fruitiness, oakiness, sweetness

P2 - flavor profile (major flavors), retail talking points, food pairings - used as a training tool to help people sell wine

Launching a new page for marketing teams to update data

Retailer recommender - has shown +3-12% sales in 90 days

Tastry Pricing - $1,580/year subscription, $370/wine analyzed

How Tastry can help in the current macro environment

• Creating low / no alcohol wines
• Marketing tools (Sales Accelerator) - addressing younger audiences (e.g., pairings with kale salad and frozen pizza rolls)

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With 600 acres, a polo field, a lake dock, and even a zebra and camel onsite, the Folded Hills Winery and Farmstead in Santa Barbara is able to create unique and memorable experiences. Kim Busch, Founder and Co-Owner, and Kylie Enholm, Director of Operations, discuss how they bring this vision to life through the platform of Rhone varietal wines. From hiring for the “hospitality gene” to having a full-time events manager, Folded Hills is creating memories they hope to get people to tell their friends and add to their wine club program. 

Detailed Show Notes

Folded Hills founding - intended to grow and sell grapes, vineyard manager convinced the Busch’s to start a label, Folded Hills ties into family history

• Heritage labels - e.g., Lilly Rose after Lilly Anheuser (grandmother)
• Photo labels (reserves) - mostly from photos the Busch’s took themselves

Folded Hills overview

• 600 total acres for Homestead, Farmstead, private ranch
• Southernmost winery in Central Coast, right off 101
• The urban tasting room in Montecito, Homestead (winery tasting room), and Farmstead at the winery
• Rhone varietals (Grenache, Syrah, Clairette Blanche, Marsanne, Grenache Blanc)
• ~5k cases/year
• 98% DTC, would like to increase wholesale to 10% for more exposure
• Has its own polo field

Visitation

• ~8-10k visitors/year total
• ~2.5k in Montecito (more club members, a “Cheers” vibe), rest at Homestead
• Mainly from Santa Barbara, Ventura, San Diego

Creating memories through events differentiates Folded Hills

• Sparkling rose launch party in Montecito - brought in a mini horse with a unicorn horn
• Launch vinyl nights (Thurs, Sun) in Montecito
• Does 1 large event/month at estate Homestead - e.g., polo games, tailgate contest
• Oktoberfest - beer & wine
• Animal feeding (including zebra, camel)

Prices events to primarily cover expenses (range from $15 - 195 winemaker dinners)

The focus is on creating memories vs selling wine to create word-of-mouth buzz

• Andy’s dad said “making friends is our business.” - he created beer and baseball while owning the St Louis Cardinals

Hospitality differentiation through events and experiences

• Has a full-time events manager
• Enabled by lots of land (600-acre ranch), private lake dock, ATV group tours in the vineyard, animals to feed
• Homestead appeals to families (w/ Farmstead - U-pick fields, animal feeding)
• Hires people w/ the “hospitality gene”

Wine club benefits

• Wine is the biggest draw (“purity” of wines believes does not lead to “stuffy nose” or “headaches”)
• Word of mouth around Folded Hills taking care of club members (access to private lake, private ranch)
• ~10% of club members are local (live w/in 1 hour), next largest group from St Louis (does ~2 events/year, launched brand in St Louis)
• Get 15% off organic produce at Farmstead
• Plan to relaunch farmstays on a adjacent private ranch

Farmstead - “heart of soul” of brand

• Best sellers - animal feed, ice cream, baked goods
• ~30% of visitors go to both Homestead and Farmstead, increasing as tasting room visitors now given free bag of animal feed

Santa Barbara wine region differentiation - diversity, 75 varieties grown; unique climate (transverse mountain range)

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With the health and wellness and moderation trends booming, the non-alcoholic wine market has been growing quickly off a small base. Launched in 2019, the Giesen 0% range has solidified its position as one of the leaders in the NA wine market. Duncan Shouler, Director of Innovation, explains how the 0% range was developed, the critical elements of non-alcoholic wine, the current market conditions, and what it will take for the non-alcoholic wine market to succeed.

Detailed Show Notes: 

Duncan’s background - was in marine biology and shifted to wine ~20 years ago

Giesen - family owned, 40 years old, large winery (crushes ~20k tons/year), a broad range of wines from large scale to single vineyard

Started non-alcoholic (“NA”) range 5 years ago (2019)

• ~17% of production today, growing
• Has a more significant reach and impact on the market vs. regular wines

The creation of the NA range came from a fitness challenge in 2019, when he could not drink alcohol for 1 month and discovered there were no good choices in the NA space. Spinning cone technology (good for quality as it uses lower temps than other processes) also became available in NZ at that time

NA winemaking process - create regular wine, then remove alcohol; for red wine, you need to balance the tannins (need ripe, soft tannins)

More expensive to make - costs 15-20% more

• Need to replace ~25% of volume
• Need to go through spinning cone technology
• Lower cost from no alcohol excise taxes

NA taste - loses some of alcohol’s texture, body, heat

NA wines age similarly to regular wine (except in cans)

NA wine markets - still in growth mode, needs higher quality wines to succeed

• The US is ahead of most markets, and the UK is slower with more traditional drinkers
• Mainland Europe is booming, and NZ is behind
• Most off-premise, some growing pains (e.g., Boisson closed its stores), mostly bought where people buy alcohol
• On-premise still embracing category (Giesen launching super premium range to target on-premise)
• Most large players (e.g., Constellation, Treasury) are looking at NA wine

NA wine drinkers - originally abstainers driving growth, now people substituting wine driving growth from moderation trend; broad market from boomers to legal age Gen Z; 35-60 females largest cohort

Price points aligned with regular wine ($9 low end, up to $18/bottle, some products ~$55/bottle)

Removed alcohol of high quality can be used for other things (e.g., gin, biofuel)

NA wines can have up to 0.5% abv, Giesen wines 0.4-0.5% abv

• You need to consume 5 bottles of NA wine to get 1 glass of 13.5% ABV wine
• .45% abv similar to ripe bananas, some fruit juices, bread
• NA wine should still be kept away from children as it is still a wine experience

Marketing NA wines

• Low calorie is significant; Giesen is low in sugar (drives calories), which plays into the health and wellness trend
• Most effective - social media and influencers - play well with Millennial and older Gen Z’s, essential NA wine growth category
• Older consumers know Giesen from regular wine

Nutritional and ingredient labeling - mandatory for regular wine in the EU; NA is a food product and requires it

• Giesen back labels specific for each wine, the main driver of differences are in sugar content
• Nutritional data has some positive elements (e.g., potassium)
• Large serving size (12 ounces, ~½ bottle) driven by US FDA, looking to change back to a 5-ounce glass

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Having struggled to manage and maintain distribution for her family winery, Cheryl Durzy, CEO of LibDib, decided to start her own distributor. In comes LibDib, a tech-enabled distributor that lets any alcohol producer have distribution in most of the key US markets. Cheryl provides background on the US 3-tier system, the role of a distributor, and how LibDib is helping producers get distribution, enable wine sales, and become a tech platform for other distributors. 

Detailed Show Notes: 

US 3-Tier System

• Put in after prohibition to keep one tier from owning alcohol distribution
• Tiers - producer, distributor, retailer

US distribution heavily consolidated into 3 large ones, lots of smaller specialty distributors vs. many distributors in the 70s/80s

Distributor function

• Helps consolidate suppliers for trade accounts; accounts don’t have resources to manage each supplier separately (e.g., invoices, checks)
• Pay taxes, do compliance
• Logistics (heavy, fragile product)
• Customer service (mistakes, breakage, returns, samples)
• Sometimes act as a winery’s salesforce

Getting a distributor

• 2024 - distributors are shedding brands vs. taking on new ones
• Typically - look for fit w/in a distributor’s portfolio, pick someone with a good reputation
• Distributors will ask - what will be your investment in the market? How often will you be here? Do you have feet on the street?

LibDib - enables wineries to sell themselves, a tech-enabled distributor

• Started as a wholesaler in 2017 (CA, NY), enables distributor for any producer
• The platform enables rich content and e-commerce
• Has license in 9 states, enabled through RNDC in 6 states (e.g., Texas)
• ~1,500 suppliers w/ active accounts, ~700 wineries w/ ~450 actively selling
• Originally focused on spirits, wineries have increased by ~50% in the last few years
• Uses FedEx to send wine, integrated API to track status, negotiated good rates <50% of DTC rates; have cold chain, ice pack options for hot temperatures
• New markets launching late 2024 / early 2025

LibDib use cases

• Get wine to specific accounts in a market
• Enable wine brokers in other states
• Importers sell directly to accounts
• Ship special projects from large wineries that distributors don’t want to touch

Pros/cons of LibDib

• Pro - always have distribution, good communications/customer service, good technology experience for producers and trade accounts
• Cons - no salesforce, need to be a little tech-savvy

Business model

• Markup of 14-18% on sales (vs. 30-35% for most distributors) + producer pays for shipping
• Subscription service (Gold, Silver, Plus) - get lower markups and services (e.g., portfolio management, VIP chain assistance, advertising on platform)
• ~250 subscriptions (of 1,500), mainly on Gold for chain services

RNDC partnership - OnDemand division

• Onboard w/ both RNDC and LibDib, no sales support
• 28% markup, inclusive of shipping
• 6 states, ~400 suppliers
• Most people want to get regular distribution, which can act as a trial for RNDC

Trade account benefits

• ~30k accounts (~50% active), not including RNDC states
• No minimum shipments
• Enables direct contact w/ wineries
• Access to smaller items not available elsewhere

LibTech (launched Jan 2024 in TN)

• RNDC invested in the last round, and LibDib built e-RNDC
• Selling e-commerce platform as SaaS to other distributors

LibDib is developing AI tools for suppliers, early 2025 launch

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As the pioneer of Vitis Vinifera in the Eastern US, Dr. Konstantin Frank is one of the key leaders of the Fingers Lakes region in New York. Meaghan Frank, a fourth-generation vintner, has been leading the charge to evolve its hospitality program to create brand ambassadors for the winery and the region. Its 1886 Wine Experience has won Best Wine Tour by USA Today in the last two years. Meaghan breaks down their hospitality program and its impact on their business. 

Detailed Show Notes: 

Finger Lakes region, NY - 150 wineries (of 400 in NY), NW NY State - 5 hrs from NYC

• Skinny, deep lakes that moderate weather
• Glaciers left diverse soils
• Tourism-driven, seasonal visitors (spring to fall) for lakes, hiking, close to Niagara Falls, Corning Museum of Glass

Dr. Konstantin Frank - PhD in Viticulture from Odesa, Ukraine; a grape scientist; fled to NY during WWII

• 35 years of cold climate grape growing experience when moved to NY
• 1st to plant vinifera in Eastern US
• Planted experiment station in the 1950s - 68 varieties, including Furmit, Pedro Ximenez, and Touriga Nacional) to research what would work best

Dr. K Frank Winery

• 17 vinifera varieties → 40 wines
• 60% wholesale, 40% DTC
• 40 states, 9 export markets (5%, incl Japan, Aruba (lots of NY visitors), UK)
• DTC 60% e-commerce (driven by wine club), 40% hospitality

Hospitality program

• The goal is to create brand ambassadors and loyalty, get the word out about the Finger Lakes
• Inspired by Australian hospitality programs - private, educational
• ~40k visitors/year (#1 PA - 1 hour away, NJ, OH, NY core markets) - all seated, paid
• Pre-pandemic - ~80k visitors/year for free bar tastings
• Moved to an experience-driven program with wine educators, take advantage of lake view

Three experiences:

• Eugenia’s Garden - modeled after great grandmother’s garden, most casual, can do a la carte glasses/bottles/flights; enables people to enjoy the day; targets a younger demographic
• Signature Seated ($15pp) - most popular, educational, 1 hr, 6 wines, 5 different themes that are part of the winery’s story (e.g., traditional sparkling, Riesling pioneer, groundbreaking grapes, red wines)
• The 1886 Wine Experience ($75pp) - only May-Oct, 2-2.5 hrs, led by wine educator, a tour of the vineyard, sparkling and still wine cellars, seated tasting of 4 wines with bites, followed by additional tastings; won best wine tour by USA Today last 2 years; lots of 1st-time visitors book 1886 due to unique nature
• Lessons learned - used to do 6 wine flight w/ bites, which was too many; did themed months (e.g., sparkling) - did not work with mostly tourists
• Differentiators - spend lots of time, has a separate private space for 1886

Wine club evolution

• Used to have people pay upfront for the year - bigger barrier to signing up, always feel like “playing catchup” to ensure value delivered, concentrated work during shipment periods
• Moved to more subscription model - quarterly, 3 wines w/ default package, fully customizable, no upfront fee, 20% discount on wines, and get free tastings (no limit)
• 8% club conversion - the only way to get free tastings now, used to waive w/ 4 bottle purchase
• Locals small portion of the club - pickup option only 10%, PA #1
• Avg tenure 1.5 years, seeing it extend with the new club model

Popular wines

• Hospitality - Rkatsiteli #1, traditional method sparkling
• Wholesale - #1 & #2 - dry & semi-dry Riesling
• Riesling 60% of production, traditional method growing

Increasing issues around climate change - 2023 had the largest spring frost in history, increasing water issues

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