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July 2009

Wine Clubs vs. Mailing Lists

I've gotten several questions recently on why we choose to use the wine club model while other California wineries choose to sell their wine to their supporters through a mailing list.  As I have been answering these questions, I thought that it might be interesting to delve a little into the strengths and weaknesses of each from the perspective of a winery -- and from a consumer.

The wine club model should be familiar to most fans of Tablas Creek, since it's what we use.  In our VINsider Wine Club we send out six bottles of wine twice a year, typically in March and September.  Wine club shipments are generally sent out at a discount (ours is 20%) off of retail price.  Many wineries offer some basic customization options such as red-only or white-only; some also offer different tiers, such as three bottles, six bottles, or a case at each shipment.  A few offer significant customization options, or even allow their members to choose any collection of wines to make up their shipments.  While wineries may allow members to skip a shipment, in our experience few members choose this option, preferring to cancel their membership and perhaps rejoin later.  And most wineries avoid sending large amounts of any one wine in their club shipments, preferring to use them to expose their members to the breadth of the wines that they make, and focusing on small-production wines that are typically different from those in general release.  Members who are interested can order more of their favorite wines, sometimes at an even-greater discount.

The traditional mailing list model works a little differently.  Members receive allocations each ordering period (one to three times a year).  Newer members receive smaller allocations, or allocations of less in-demand wines.  Members who have been on the list longer receive larger allocations and/or better wines.  Members do not usually have to take their full allocations each time, but anyone who passes entirely, or who takes only a portion of their allocation repeatedly, tends to get either dropped from the list, bumped to a less desirable allocation, or just not progressed to more elite levels.  Very often, the mailing list wines are not otherwise available, and are viable commodities on the resale market, so members are able to take allocations of wines they may not necessarily want for themselves and then resell them to other interested buyers.  Typically, mailing list wines are not discounted per se, but the price for these wines on the resale market is higher than the release price, so non-members have to pay the higher prices on the secondary market.

Producer Preferences
From a producer's standpoint, there are advantages to each model.  A wine club allows you to build loyalty and expose a relatively wide audience to limited-production wines.  However, it is not a great way to move larger quantities of any one wine.  For example, at Tablas Creek, we have about 3500 wine club members.  Sending a bottle to each member requires roughly 300 cases of a wine.  But members may feel that as they are already receiving a case of wine over the course of the year, they may not need to order more.  We also have to create enough different wines each year to fill the slots in the wine club, which can be challenging in vintages with short crops.

A winery can target the offers to their mailing list to reflect the quantities of the different wines they have to sell.  So, if they have a lot of a particular wine (let's call it "Merlot") they can set the allocations of the Merlot higher for that vintage.  With 3500 mailing list members, they might set the allocation of that wine to 2 bottles for the lowest-heirarchy 2000 members, to 4 bottles for the mid-tier 1000 members, and to 6 bottles for the elite 500.  Assuming that their members take their allocations, In the end, they will have moved over 900 cases of Merlot to their members.  Members are going to be encouraged to take the wine, even if they don't particularly want it, because of the implied threat of loss of priority on the list and hopefully because they can always turn it over and at least make their money back on the secondary market.

For a winery, the mailing list model is typically a more lucrative way of selling its wine, since they can sell increasing allocations to their longest-term members.  Some wineries get up to sending 5 or 6 cases, or more, to their elite members.  And because they can tailor their offerings to their production, they can always match up supply and sales.  Plus, they typically sell at full retail price.  Some wineries (Turley is a much-mentioned example) can sell tens of thousands of cases through their mailing lists.  But, mailing lists really only work when demand outstrips supply.  I wonder if there are any wineries out there who began with a wine club model, and as their demand grew, switched to a mailing list model?  I haven't heard of it, but it must be tempting for wineries who've built up sufficient excess demand.

Wholesale Distribution Consequences
A wine club, because it contains mostly small-production wines, is largely noncompetitive with a winery's wholesale distribution efforts.  Still, it's always a juggling act for wineries to make sure that club members are getting best prices on wines, and we are careful that our club member discounts bring the prices of even our more distributed wines down to levels comparable to what the same wine might be sold for by the most aggressive discount retailer.  We have lost club members occasionally when a local discounter cuts their prices below our wine club members' prices.

Mailing list wines are rarely available in the wholesale market, or, if they are, are typically either restricted to restaurants (whose higher markups raise the price comfortably above mailing list prices) or sold at mailing list cost to retailers, who then mark up the wine and resell it.  Of course, if the demand on the secondary market falls so that members with higher allocations can't unload their extra, or the winery decides it needs to move wine into the wholesale channels, a mailing list system can fall apart quickly.  So, many wineries who use mailing lists have their hands tied when demand falls.  Wine clubs chug along in times of economic stress, and ours has continued to grow (albeit more slowly than in past years) throughout the current recession.

A Consumer's Perspective
For a consumer, I can see advantages to each.  A wine club is typically a less extravagant commitment than a mailing list membership.  And you tend to get additional discounts for additional ordering, and a wide range of offerings.  But wine clubs are often less flexible than mailing lists, and many wines may be made in quantities so small that it's unlikely you'll be able to get more even if you want to.

I have increasingly started to hear consumers refer to mailing lists where you're required to buy ever-larger quantities of wine to maintain your priority, or to buy quantities of wines you're not particularly interested in to maintain access to the wines you want, as "hostage" lists.  But most members seem to stay members, at least as long as they can re-sell (or "flip") their unwanted wines.  I understand this frustration, and we've always tried to make sure we're not overloading our VINsiders with too much of any single wine.  Anyone who wants more is welcome to order more, and lots of members do each year.

I'd be interested in feedback from anyone who is a member of both wine clubs and mailing lists.  As a consumer, do you have a preference?  Are there practices you'd like to see the wineries you patronize adopt?

I see trees of green...

I was struck as I walked back from the vineyard toward the winery today by the different shades of green in the landscape.  The grapevines really stand out in the landscape, yellowy-green and very lively-looking.  The olive trees which we use to line the roads are grey-green, the lombardy poplars that we planted years ago as a windbreak a drue, deep green, and the oak trees that line the hillsides a dark brownish green.  I managed to catch all four in one photo, below.


Of course, I was hoping to catch an iconic photo of the coastal fogbank being held back by the Santa Lucia Mountains.  This morning, the fog was visible just cresting the tops of the hills, with a few fingers reaching east toward us.  This is the magic of our weather pattern: while we chill off dramatically at night, the fog only rarely gets to us because of the height of the Santa Lucias to our west. 

Unfortunately, when I saw the fog this morning, I was taking a group of industry folks on a tour and didn't have my camera.  The fog was gone this afternoon.  But the weather pattern is supposed to continue tomorrow, and if I get the shot I wanted, I'll post it then.

Anchoring Bias (AKA Follow the Leader) in Community Tasting Notes

As more wineries focus marketing attention on new media such as blogs, social networking sites, and online bulletin boards I've begun to see some suggestions that the age of the all-powerful wine critic is ending.  I have my doubts as to that (of course, I also have doubts that the wine critic was ever all-powerful in the first place) but if a critic is going to be made obsolete, it is not by bloggers, or by bulletin boards, or by people posting wine tasting notes on Twitter.  It will be community tasting notes sites like CellarTracker.  With nearly 1,000,000 free wine reviews written by its users, CellarTracker is already a must-read for wine lovers and for wineries.  I check the listing of Tablas Creek reviews daily to see what people are saying, and to try to catch any trends that come up.  It's also a great tool to investigate what people are drinking on particular days (as I wrote about last Thanksgiving).

I've also been impressed with the degree to which CellarTracker has started to move from self-proclaimed wine geeks into the mainstream.  It boasts over 80,000 active users who have used its cellar management software to log over 13,000,000 bottles into the site.  I recently spent two days in Orange County, during which I hosted a tasting at the Wine Lab and a wine dinner at Sage on the Coast (read a nice writeup on the blog Mad Mary's Musings on Wine & Food).  At both events, I had attendees talk to me enthusiastically about their experiences on CellarTracker.  If you want independent confirmation, CellarTracker was recently judged the most valuable wine-specific social network in a comprehensive report published by the wine marketing company Vintank.

One of the selling points of community tasting notes sites is their integrity.  With so many users, the chance to purposefully influence scores is nearly nonexistent, and by summarizing reviews across different palates any individual taster's quirks are averaged out.  At least, that's the theory.  Up until now, there really haven't been any community tasting notes sites like CellarTracker except, well, CellarTracker, against which we can test the idea that there might be structural bias.

Recently, I've had growing suspicions that a different sort of bias creeps into community tasting notes sites.  I've termed this "follow the leader" bias, although my wife (who is a social psychologist) tells me that the correct psychology term is "anchoring".  Anchoring describes the tendency toward implicitly basing future judgments off of an initially suggested reference point.

With community tasting notes sites, the anchoring tendency is set by the probability that users check the notes of a wine they're about to open.  Once they do, particularly if the reviews note some flaw, the natural tendency is to expect to see (or at least look for the possibility of) the flaw that is mentioned.  I've noticed in the past that we have one reviewer on CellarTracker who regularly complains about the perception of alcohol on our white wines that are based on Roussanne.  It doesn't seem to matter that the wines are often quite low in alcohol by California standards (between 13.0% and 14.5%).  The taster appears to think that Roussanne, which does have a petrol character, just tastes high in alcohol.  And the next several reviews often mention an alcoholic character to the wine that was not present in the previous reviews.  Usually, someone dissents after a time and then the reviews gradually stop mentioning this character.

Still, when there is only one major community tasting notes site, it's always possible that trends in reviews can be explained by the wine going through a particular stage, and in fact that's one of the reasons I check CellarTracker so regularly: to see if any of our wines appear to be going into a closed stage, or if one may be coming out.  But, with the recent advent of a second viable community tasting notes site it's possible to cross-reference the reviews of a given wine.  The second site is VinCellar, a new free cellar management system created by the wine retailer and auction house Vinfolio. With about 23,000 tasting notes entered, its database is a small fraction of the size of CellarTracker's, but still large enough to make some interesting comparisons.

The wine which highlighted, for me, the possibility of an anchoring bias in community tasting notes sites was our 2007 Vermentino.  Vermentino typically makes crisp, citrusy wines relatively light in body with pronounced mineral signatures and low alcohols.  The 2007 vintage, though, was incredibly lush, and produced wines (both reds and whites) with very rich mouthfeel and unusually intense flavors.  For most grape varieties, this was a good thing, and I am convinced that our Esprit de Beaucastels from 2007 are the best red and white wines we've yet made.  For Vermentino, however, it produced an unusual wine which people tended to have strong reactions to.  Some loved it for its spice and saffron aromas and its rich mouthfeel; others found the aromas (which were spiced somewhat differently from most Vermentinos) offputting.  We got a handful of complaints from club members, and replaced the wine for anyone who wasn't happy with it, and also some kudos from members who thought it was the best Vermentino we'd ever done.  I just opened a bottle as I was finishing this post and thought it was delicious.  But look at the reviews of the wine on CellarTracker and VinCellar and it looks like we made two totally different wines.

Cellartracker reviews of 2007 Vermentino (average score: 83 points in 13 notes)
VinCellar reviews of 2007 Vermentino (average score:90 points in 7 notes)

This is why I cringe when I see a negative review posted on CellarTracker.  It takes a reviewer who is strong in his or her convictions to post a review that is knowingly contradictory to a string of very different reviews, and the suggestion of a flaw per force encourages other tasters to taste the wine looking for that flaw.  If I am right, it should be possible to shortcut this cycle by posting a review that contradicts a negative (or positive) review, which would free future reviewers to just use their own judgment.  Of course, to test my hypothesis, it would be necessary to subvert the integrity of these sites, which I am not suggesting.  But it's worth worrying, as the sites begin to have an impact on the mainstream wine market, that wineries, importers or other interested parties might try to "seed" the reviews with positive ones to encourage future reviewers to follow their lead.  It's probably also worth considering how someone might rebut or correct a negative review.  Other community review sites do this; for example allows a business's owner to make a comment on a review if he or she wants.

Of course, there have been similar biases with the major reviewers for decades.  Often a writer like Robert Parker or the Wine Spectator (the two reviewers with the broadest reach in the market) can set a baseline for a wine.  But I think it's in many ways easier to understand that the review of a professional, however eminent, is just one person's take on the wine, and that you, as a consumer, are welcome to disagree, than it is to distance oneself from the cumulative reviews of other consumers.

In any case, it seems clear to me that it's worth looking in a bit more detail at how sites like CellarTracker can start to influence the perceptions of their users, and starting to reflect on what biases might be present in this new --  and increasingly powerful -- forum.

Early impressions of the cool 2009 early summer

So far, except for a scorching hot weekend that (of course) coincided with the 2009 Paso Robles Wine Festival, it's been cool.  Days typically have been topping out in the mid- to high-70's, with relatively frequent cloud cover at night.  Normally, by June, we're seeing cloudless, deep blue skies and temperatures routinely into the 90s.  By contrast, here's a photo from this afternoon, looking over the hill behind the winery:


Combine the recent cool weather with a late, cool spring and significant portions of the vineyard which were knocked back by our April frosts, and you have a recipe for a very late harvest.  We've just finished flowering, about three weeks later than normal.  A few shots of young clusters in the vineyard, Viognier on the left and Grenache on the right:

June_vineyard_0009 June_vineyard_0010
The vineyard, overall, looks very healthy, and the vines look like they've set a good crop this year.  This is in keeping with what we've seen with the exceptionally vigorous cover crops this winter, and local farmers (of grapes and other crops) report that they're seeing heavier fruit sets than either of the past two years.

It's interesting to note that we're seeing such relatively heavy fruit set from a year when the rainfall was only 60% of normal.  But the manner in which we received the rain -- relatively frequent, light precipitation rather than fewer, heavier downpours -- seems to have encouraged the vines.  What we didn't see was the heavy rains necessary to replenish the reservoirs and ground water, so vineyards that rely on irrigation may see hardship later in the season.

We do see some residual damage from the frosts.  While every part of the vineyard re-sprouted, some weaker or younger vines didn't set a crop.  Others have set a small crop from their second growth buds.  These clusters will be smaller (and ripen later) than the vineyard around them, and will require that we be careful when we harvest.  A photo of a Grenache vine, frozen bud above a second growth shoot, will give you an idea:


Still, despite the frosted areas, the major challenge for us in the vineyard now is controlling the explosive canopy growth.  Most of our vines, with energy stored up after consecutive light crops and encouraged by the regular rainfall this winter, are sending out dozens, even hundreds of shoots.  We're going through the vineyard thinning out the canopy and letting air and light in to circulate around the clusters.  A good (if extreme) example of this dense growth is the vine below, from our oldest Grenache section:


At this point, we're expecting a substantial but late harvest, probably not beginning before the middle of September.

Anyone who is interested in seeing the rest of the photo set, include a few more detailed photos of the frost damage, can do so on our Facebook page: