Is wine a good or a service?

Monday, 16. July 2018 - 14:30

If you are a wine producer, wholesaler or retailer, what are you selling? Goods or services? The answer ‘goods’ would appear to be obvious. After all, surely that’s the appropriate description for the tangible liquid in the tanks, the cartons in the delivery trucks and the bottles in shoppers’ bags?

But what about the staff training? The glass hire? The wine list compilation? The online and over-the-shop-counter story-telling? The advice on investment, food-matching and when-to-open-your-old-bottle? The winemaker tastings and dinners?

Those all sound pretty much like services to me.

Today, in every sector, the line between goods and services is blurring. As Nick Owen, chair of Deloitte North West Europe and the UK Professional and Business Services Council, told the Guardian, it was “simplistic” to separate goods and services. Many goods sold to the EU, he said, came with service and maintenance contracts. In 1939, in the US, two people worked in services for everyone in manufacturing. Today, the ratio is more than eight to one. And growing.

Until recently, this kind of differentiation was arcane stuff that normal human beings – including most members of the wine industry – did not have to bother about. But that may no longer be the case, as news reports increasingly cover discussions of such matters while negotiating Free Trade Agreements and Brexit.

Although wine is, obviously, a ‘good’, wine producers need to give more thought to the services they offer.

Most obviously, there’s wine tourism. Europe is belatedly getting better at this, but it still has a long, long way to go. Far too many wineries still imagine that all they have to do is invest in a tasting bar, some glasses and a cash register. The most successful wine tourism efforts I have seen do not start with the notion that there are lots of people driving around looking for a chance to taste and buy some wine. Their creators know they are competing with beaches, cathedrals, museums and activity parks and heaven knows what else for an hour or so of visitors’ time. So, there are things to look at and do for kids, and for non-wine drinkers who have been dragged along by other members of their party. Among the cleverest ideas have been mazes formed out of vines, nursery gardens and hands-on biodynamic exhibits, as well as varietal grape-juice tastings for children and wine-and-chocolate pairing.

The US model of running winery subscription clubs not only offers producers a good source of regular cash flow; it also focuses their minds on giving potential members who walk through their door as good a time as possible, as well as a glimpse of the limited releases and winemaker dinners that might also be on offer if they sign up at the right level.

Staff training is pretty commonplace, but some distributors are far better than others at teaching waiters and sommeliers to ‘read’ customers well enough to be able to offer them bottles they will most appreciate, and giving them genuinely memorable ‘stories’ rather than the same-old stuff about family-owned, quality-focused wineries.

By-the-glass programmes and wine-flights can be all about wine education, but I see them far too rarely outside the US. The opportunity they offer for relationship building with consumers can be huge.

Range-planning, and creating and printing wine lists has also long been part of a supplier’s job, but the UK wholesaler Bibendum has taken the extra step of analysing regional tastes and behaviour in sufficient depth to be able to predict the styles and prices that are likely to satisfy customers of restaurants that have yet to be opened.

Kegs, Enomatics and Coravins all offer brilliant ways to combine service with goods – by increasing choice and reducing waste. Unfortunately, they’re under-exploited.

Events are another obvious service opportunity – and not just wine tastings and dinners. The Indian winery Sula now runs an annual music festival, for example that attracts more than 10,000 people. A growing number of producers host fashion shows featuring local designers – and demonstrations by chefs. Again, unfortunately, all of these activities tend to be found in the New World.

Finally, there’s communication – the area where the wine industry arguably fails most badly at service provision.

Labels are often impenetrable, even for those with some wine knowledge, but few producers have taken the opportunity offered by QR codes to link to an informative website. The advent of Augmented Reality should overcome aesthetic objections associated with the QR codes, but it probably won’t lead to the creation of websites that attempt to respond to users’ likely requirements.

Among fine wine producers, Penfolds, which also runs a recorking clinic that helps customers to keep their wine in the best state possible, holds expert tastings every five years that allow it to reveal on its website when each of the vintages of the brand’s many labels is ready to drink. Bottles of 1966 Bin 707, for example are less likely to have gone over the hill than 1965 or 1967. When will a Burgundy negociant follow this simple example?

In Japan, two years ago, Amazon entered the wine service arena by launching a live telephone sommelier service. Doesn’t the fact that they were the first to do this rather put the traditional wine trade to shame?

Whatever you are selling today, the word ‘experiential’ is increasingly becoming part of the marketing, sales and after-sales process, and anyone who imagines that they can ignore that trend is likely to be consigned to the commodity business. So, if you’d rather stick with goods and leave services to others, the world of bulk wine and private label may well await you.
Robert Joseph