There continues to be a lot of discussion in the wine world about “The Long Tail”, and  am sorry to have to go against the prevailing trend and advise that there is no “Long Tail” for wine – at least not in the ‘category killer retailer’ sense.

For those who are unfamiliar with the concept, a few years back, Chris Anderson, Editor-in-chief of Wired Magazine, wrote a book entitled “The Long Tail”:  Why the Future of Business is Selling Less of More. In this book, he put forth a case that describes the niche strategy of businesses, such as Itunes or Netflix, that sell a large number of unique items, each in relatively small quantities, and the belief the business done with the small volume items, when taken together, can in fact be larger than the sales of the few high volume items. 

On the face of it, wine would seem to be the perfect “Long Tail” category. Tens of thousands of producers, millions of SKU’s, lots of passionate consumers. However, digging in a bit more, it becomes clear that wine, as a product, does not fulfill some of the basic requrements of being a ‘Long Tail’ product.

The Long Tail requires some fundamental conditions that do not and never will apply to wine – I’ll mention only three of the biggest obstacles to wine being a Long Tail product:

1)    Storage: The issue is obvious here: You can store a music file on a server at virtually no cost, which can be downloaded millions of times at no incremental cost to the retailer (other than bandwith). Even for books, you can build a large warehouse, without worrying about temperature control, regulations and distance from the producer, and hold vast quantities of titles at relatively little cost. Not so with wine.

2)    In the US, anyway, wine cannot be sold to retailers on consignment. This means that the retailer is going to have to invest vast amounts of capital in the skinny part of the tail, which in and of itself, will make the model unsustainable. There are ways around this legally, but they will require complicity from suppliers in subverting the existing distribution model, and I doubt any major importer/winery will want to do this.

3)    Shipping is a nightmare. Hard to do it in the heat of the summer, breakage an issue, heavy, expensive to move. Compare this to a book, or any digital file delivered over the internet and the challenge is very clear.

Amazon has been getting into the wine business since 2005. Amazon defines the Long Tail model, and today when I searched their site, I found wine books, wine accessories, but no wine. For a business that changed the retail scene virtually overnight, that is a long time for nothing to happen- and I suspect a symptom of the fact that it is hard to use their model for wine. 

So, while The Long Tail may be a fantastic model for books, music and software, it doesn’t really work for wine, and I think that to the extent that retailers are interested in new models for the category, this is not one of them. Having said this, there is probably a model for linking together existing inventories of retailers in some seamless fashion as an aggregator, and this is perhaps already being done, but it isn’t quite the same thing.

I relied heavily on this  excellent Wiikpedia article, which spells The Long Tail theory.

Barry Schwartz’s book, Paradox of Choice used to be required reading for all of the folks in our UK office- and I’d often go out and talk to big retailers about the concept.

The idea as the title infers, is counter intuitive: In western society, we believe that ‘free choice’ is an inalienable right, and that as such, the more ‘choice’ we have, the ‘happier’ and more fulfilled we will be. Schwartz reasons that the availability of so much choice, in fact, works to reduce our happiness because of various psychological factors at play: Regret over the realization of not having made the ‘best’ choice, and that sheer complexity effectively makes it impossible today, to make a ‘best choice’: The result is paralysis, procrastination, and in severe cases, depression.

In mid-2005, I was talking to a friend who was told me about his experience of buying wine in the UK grocery aisles: He said that for him,  choosing a wine was a “completely random experience” – and at that point, a light went on for me: For the first time, I understood that if one is not a ‘student of wine’, then the wine aisle is really unknowable – and more wine makes the problem worse: For many people, all the hundreds of choices means nothing but confusion as they simply gaze upon a wall of pretty labels. This did explain why the easiest choice is always to buy what is ‘on promotion’ –and could well be why wine promotions are so powerful in the UK.

Here is a video of a talk that Barry Schwartz did at TED in 2005 on the subject. If you are in the wine business, especially in retail, it is very worthwhile 17 minutes.

 [youtube]http://www.youtube.com/watch?v=VO6XEQIsCoM[/youtube]

If we look at some of the most efficient wine retail models, they are not based upon maximizing choice, but LIMITING choice, and therefore ease of selection for the consumer: Retailers that come to mind are: Trader Joe’s and Best Cellars in the US, Aldi and Lidl in the UK and Europe. Companies like Direct Wines, have a business model where the consumer actually has no choice (subscription). The discounters have lower aspirations for selection, but this discipline also channels consumer attention to a limited number of products. Is buying wine at these retailers any less satisfying for the average wine consumer? 

We see some large retailers like Sainsbury’s doing this with their very powerful “top ten”shelf set. This is the kind of idea that is worth millions to any big grocer. We had developed a variation of this concept back then that could make the JS model even more effective, which I might dust off and post about. To be sure, last year one major UK retailer bravely experimented with adding range, to find that they bumped up against the Paradox – they are in the process of reducing range.

While all us wine guys fantacize about selection, tiny appellations and complexity, maybe the paradox is that what we want for ourselves, may not be what our customers want: They want simplicity and a helping hand in selecting. And, of course, something to believe in.

Photo Credit: http://www.flickr.com/photos/evert-jan/ 

 While preparing for my talk a couple of weeks ago at the Wine Bloggers Conference in Sonoma, I struggled a bit with topics. I was asked to do something on Blogging for your Business, but as you all probably know by now, blogging, is just a tool, no different than Word or Powerpoint, it is not about the software, it is about what you do with it.

So, I knew I was going to have to talk about messages, and since lots of our beliefs about wine are counter to the normal ‘producer’s’ view, I was a bit worried that I might offend a few people – as the audience was full of producers.

We have, largely based upon our interaction with people in the web2 space, come to realize that wine has morphed into something different than most producers realize. What has changed?

It must be said that, first, and most obviously, wine is still about quality. But, quality doesn’t mean what it once did. Quality is no longer about absolutes, it is about stylistic preferences. Technology has allowed winemakers to go from making 20% good wine and 80% bad, to 80% Good – globalization has spread quality far and wide. Yes, nuanced quality is a weighty subject that many people are interested in, but I am not so sure if the ‘average guy’ cares much about the discussion. 

 So, what happens in a world where every producing country from France to India and Lebanon, is making good wine?

Well, that is the point at which we start to have fun: It becomes about giving your wine meaning. What do you stand for? Is there something else there other than: “Great Wine” and “Passion” or “Place”?

About a year and a half ago, Hugh and I sat on and off, literally for weeks, talking about this very subject. We knocked around all sorts of ideas, wrote wanky manifestos, talked about all sorts of traditional wine messages, and then distilled our Stormhoek beliefs down to six things:

                                                LOVE

                                                BEING PASSIONATE

                                                DREAMING BIG

                                                BEING SPONTANEOUS

                                                CELEBRATING

                                                CHANGING THE WORLD

I know, that for some, wine is only about “handcraftedness” (sic) and terroir , but for us there was something far deeper, human and visceral. It was not about the ‘how’ it’s made, but the ‘what you get from it’ – It was really about a World View. Why shouldn’t our little winery represent our view of the world, rather than just walk the walk of the existing language of wine?

So, we decided to bake this into the wine, by loudly proclaiming these six beliefs on the new back label. Since then, emails have trickled in, some people clearly agreeing with it, some people asking WTF  it’s doing on the label, etc.

Earlier this week, I received the following email as follows:

Good Day,

I have just enjoyed a bottle of you excellent red wine. I have spent a lot of time in SA and prefer to drink SA wines. The label on this particular bottle is particularly inspirational, as I have a very difficult board meeting tomorrow. The label “Be Passionate, Dream Big, Be Spontaneous, Celebrate, Change the World or go Home” really hits the spot with both me and my wife. I will look out for Stormhoek and recommend to my friends.

Nice One!

Kind Regards, 

Bob H.

Managing Director

For Bob and us, we think that wine is really about the humanness that it brings out in people– it’s about what we all do with it. It is about possibility.

We know that there are lots of people out there who share our view and we’re going to start going on the road talking with these folks.

Our goal over the next couple of years is to help make the language of wine more personal, genuine and real. Less about us, more about them.

And of course, about Seriously Good Wine.

Last year we launched Blue Monster Sauvignon Blanc, and while our hook up with Microsoft was widely reported, we had a hiccup or two that got in the way of doing a proper launch.

So, while the Blue Monster has been doing his thing over at Microsoft, the wine has been happily residing in a temperature controlled warehouse.  So, when Kris Hoet, Digital Manager at Microsoft, asked where he could get some Stormhoek Blue Monster, we were happy to oblige.

Microsoft will be sponsoring Le Web this year, our buddy Loic’s, Paris based event that is by far, France’s best attended Web conference. Previously President Sarkozy has addressed the gathering and this year, they’ll all have a chance to partake of a bit of world changing social lubricant.

We hear that there are going to be some big announcements coming from Microsoft in the near term, and we’re honored to have been able to put the Blue Monster on our wine for them.

Our favorite neighbor, Charles Back, the marketing genius behind such iconic South African brands as Goats du Roam and Fairview, has joined the blogosphere! Last year, during a lovely lunch at the Fairveiw restaurant, The Goatshed, Charles mentioned that he was planning an entry into the Web 2 space, so it is great to see the blog finally up and running.

Charles has sent out a press release promoting the blog, so we thought we’d help him pimp it. At the same time, it seemed that we’d offer a few pointers for our new online buddy:

1) Doing a group blog is difficult, a lot harder than doing a single author blog. So, each author needs to find his voice and role within the blog. Make YOUR voice authentic.

2) Don’t just pimp your stuff.

3) Decide what conversation you want to own.

4) Short posts delight readers.

5) Nobody cares as much as you do.

6) Do a video

7) Link to people you like and even the ones you don’t like, if that are doing something worthwhile.

8) (bonus Suggestion) We love the Goat shtick, but have you thought about something new? Maybe, Emus Du Trot or something Afrikaans sounding?

Good luck with your Web2 endeavor, we know that you will stay at it until you get it perfect.

It was bound to happen sooner or later, as I pointed out yesterday during a panel discussion, the wine industry is only a few years behind the rest of the world when it comes to social media, and this is a fabulous fact, as compared to other aspects of the business!About 200 people assembled in Sonoma for the first US wine bloggers conference.Bloggers being Bloggers, there were lots of opinions. In addition to a panel on Technology, I got to express a few of my own opinions at a talk on “Blogging for your Business”, where I proposed some new ways of thinking about how wineries should communicate. Some of the topics I covered were: “The weirdness of wine speak”, “Wine Industry Narcissism”, “The paradoxical commoditization of the Premium Wine Market”, “The Winery Narrative” and of course, “Wine Silos”. Just email me if you want a copy of the presentation.Our buddy GaryV, the man who has a better than average chance of being one of the first to leverage his internet fame to “Real” fame, talked on Friday night, and before our very eyes he morphed from the guy who does WLTV, into the Tony Robbins of the wine world. His shtick is good, especially after a bit of vino. BTW, he didn’t talk about wine…..[youtube]http://www.youtube.com/watch?v=RYJ6pjmnn3A&eurl=http://www.inside-sonoma.com/wine-bloggers-vaynerchuk-vs-sonoma-county/[/youtube]Everyone was very impressed that on Friday the Twitterers at the event were able to get #WBC as the number two ranked term on Twitter after Obama. I’m not sure what to think, but they WERE gaming the system.There was a good vid done by Tim Zahn, of the Sonoma County Tourism Bureau, who spoofed on Gary. For a trade group, these guys are really with it. Ahem, it would be good if the folks at Wines of South Africa would take note, loosen up, and let their hair down.

When the Uber badasses at Le Book rang recently to invite us to again participate in their London Show, we wondered if we could help get their creative juices stoked by pouring a bit of Stormhoek on the proverbial fire.

As you know, mash ups are our kind of thing, so we loved the idea of having some fun with the who’s who of the top Modeling and Artistic agents. The idea behind the event is to get the best creatives in the world together for some networking, trend spotting and portfolio viewing.

This year’s Three Volume Le Book UK was designed by Vivienne Westwood and the sort of folks in attendance were from companies like: Swarovski, Vanity Fair, Bvlgari, Chiat Day, Tiffany and Glamour.

Last year we turned these guys onto Couture, which after a sniff or two, they loved on ice. It was a new experience for the Dom Perignon set. They all knew that South Africa was somewhere they NEEDED to be.

This year, by the end of the evening, everyone wanted to “Change The World”.

We’ll see.

The new label and first release of the 2008 Sauvignon Blanc is about to arrive in the US, and we thought, what better way to have a pre-launch tasting than with some Californians? After all, they should be entitled to share in some good wine, from time to time 😉

So, for the third year now, we commissioned our house cartoonist, Hugh MacLeod to do a limited edition lithograph for the annual Techcrunch party next week at August Capital. Hugh will be in attendance, signing the prints live at the party. And we’ll be sipping some of the ’08 Sauvignon. As far as we know, the first South African ’08 vintage to hit American shores, so it should be a fun evening. See you there!

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Tech and Music? Something like 20,000 people show up each year at South By Southwest, the annual music/interactive and film festival held in Austin, Texas.

Hugh’s there Twittering, (he got a nice mention in the Guardian over the weekend as one of the world’s 50 most powerful blogs) and meeting up with some friends like Gary V, (the only other wine guy we know of who is there) Kathy Sierra and Robert Scoble.

A few months back SXSW asked us to sponsor the artwork on the schwag for the festival, here is a pic courtesy of Laughing Squid, of the cool canvas bags. you’ll notice the wee Stormhoek URL on the right. Sorry, you had to be there to get one 🙁

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Life is about change… Sometimes it’s good, sometimes it’s bad, sometimes it’s necessary, and sometimes it ends up being the best thing that’s ever happened to you.

Stormhoek, the business, was bought a few weeks ago by our long time bottler, Origin Wines. And, despite all our very best efforts, we seem to be unable to come to terms with our partner Graham, at the vineyard.

When we started Stormhoek back in 2003, we sat in our office in London and thought, “Why can’t we make great 5 pound South African Sauvignon Blanc? Why not beat the New Zealanders at their own game? Better, Cheaper and Faster!”

Our Managing Director at the time, Nick, was a great expert on South Africa, and he went there to research the project. Ultimately we went ahead, brought some tech, contracted out our production, designed a label, marketed and launched Stormhoek. People loved the wine!

But, as the brand grew, we realized that something was missing. There are some very successful brands in ZA that some nothing more than a label, with everything else being outsourced, but we felt that we needed a place to call home. So, we bought an interest in a little vineyard called Siyabonga, near Wellington. After years of effort, Siyabonga had not been able to sell its wine very successfully, and with Stormhoek’s growing business, it was a perfect place to buy what we could call a home. So it was a good fit for both parties.

And now Stormhoek is moving on because it has to, because the brand is growing internationally, and because change is needed. Its new owner doesn’t want to fix what ain’t broken– but he does want to provide a better home – kind of in the same way parents comes home one day and say “Kids, I bought a bigger and better house us to live in!” So, right now, we are continuing to bottle and blend our wines at Origin and we’re looking for a new home. We’re thinking something closer to Cape Town and maybe with some tasting facilities.

Graham and the good folks at the old vineyard will have to go back to selling Siyabonga, or maybe they can create a new brand to call their own, who knows. We wish them luck and hope that all goes well for them.

As our resident cartoonist, Hugh MacLeod likes to say, we live in interesting times.

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