Are direct-to-consumer sales really failing to lift the wine industry?

Last month I was surprised to read a headline on the industry portal Wine Industry Network titled Direct to Consumer Sales Fails to Lift the Wine Industry.  As a winery whose business model works only because of direct sales, I was curious to learn more about what the author Brian Rosen, consultant and former proprietor of Sam's Wine & Spirits, meant by the headline.  I posted my thoughts on Twitter:

Direct sales tweets 1

After which, he and I shot a few tweets back and forth, elaborating our positions:

Direct sales tweets 2

Brian's article was particularly interesting to me because it plays against the dominant narrative right now, that direct sales are on an inexorable rise, and that wineries should do everything that they can to make sure they're well positioned in this channel. What's more, that dominant narrative certainly jibes with our own experience here at Tablas Creek.  When we started, we believed that we would sell all our production through the wholesale channel.  Between the reputation of Beaucastel and the marketing muscle of Vineyard Brands, we thought that we could focus on grapegrowing and winemaking and the rest would take care of itself.

Five years of experience taught us that our initial expectations were unrealistic, and we made the decision in 2002 to take a much more active role in our marketing and sales.  We opened our tasting room, started our wine club, began participating in a wider array of events, worked harder and more closely with our distributor partners, and started participating more consistently in the promotional efforts of the regional and varietal organizations to which we belonged.  Little by little, we clawed our way out of what was a dangerous period when we were bleeding cash each year and became profitable.

In the steepest period of this climb, where we went from selling just under 4000 cases of wine in 2001 (all in wholesale) to nearly 20,000 cases of wine in 2007 (split between wholesale and direct) we saw significant growth in all our channels.  Our wholesale sales increased more than 250% over that period, to some 11,000 cases.  Our direct sales grew from nothing to some 9,000 cases.  But each year, as we looked at our financial reports, it became clear that our growing wholesale sales, far from driving our profitability, were only about a 50/50 bet to cover the cost of selling our wine in this channel.  As a company, all the profit that hit our bottom line came from the direct sales.

The greater profitability of direct sales should be intuitive, but it's likely even more important to wineries than you think.  Most wineries aim to achieve the same price out in the wholesale market and in their direct sales.  For product destined for the wholesale market, wineries back out the expected wholesaler and retailer markups, leading to a wholesale sell price half of full retail price.  Given that the cost of producing a wine is likely half or more of the wholesale sell price, the profit of selling a case direct isn't double that of selling it in the wholesale market; it is several times greater.  It is this disparity that means that a winery can offer good discounts to its wine club members and still come out far ahead. 

Further increasing the relative attractiveness of direct sales is that most wineries find, as we have, that the mix they sell direct skews toward their higher-end wines, while the mix that sells in wholesale skews toward wines that are less expensive, both because the wholesale market is naturally more price-competitive and because of the practical limit on wholesale price for wines that restaurants can pour by the glass.  When we did the math we realized that 75% of our revenue was coming from the 45% of our wine we sold direct, while just 25% of our revenue came from the 55% of the wine sold through the wholesale channel.  In simpler terms, we sold our average direct case for three and a half times what we sold our average wholesale case for.

OK, that was a lot of background.  But it gives you what you need to understand why I took objection when I read in Brian's piece, "I can tell you with 100% certainty that the DTC movement is not what you think it is and will not provide the added revenue that wineries around the globe are seeking."

The crucial question, and one that Brian himself addresses later in the article, is which wineries will benefit from direct-to-consumer sales, and which won't.  A winery's direct sales is limited naturally by its cachet, its tasting room traffic, and its perception of scarcity.  Even with high traffic, high cachet, and the perception of scarcity, there are only a handful of wineries selling more than 25,000 cases direct.  And most wineries' direct customers are far fewer than that; even established wineries I speak to around Paso Robles typically count a few thousand wine club members.  So,  imagine the challenge that faces a winery making a million cases a year, trying to have direct sales matter on the bottom line.  Even if they are able to build up to 25,000 direct cases per year (likely difficult given the challenge of creating the perception of scarcity) and able to sell those direct cases for 3.5 times what they sold their wholesale cases for, the direct sales channel would account for just 8.2% of the company's revenue.

Yet direct-to-consumer wine sales have grown to a $1.58 billion dollar industry: nearly the size of the total of wine sales to restaurants (some $1.8 billion last year).  It's still dwarfed by the $7.34 billion in retail wine sales, but it's growing.  So, is DTC important to wineries, or not?  It depends on your size.  Most wineries are small; by the Wine institute's estimate, 90% of wineries produce fewer than 50,000 cases, with three-quarters producing fewer than 5,000 cases.  Every one of those wineries should be looking to consumer-direct sales to make their business viable.  But most of the wine produced in America is produced by large wineries; estimates are that the three largest wine conglomerates produce half the wine sold in America each year.  And the twenty largest firms account for 90% of the market. For them, as the math showed above, direct sales are not going to make a significant difference in profitability.

If you're the average bottle of American wine, produced by one of the big companies in lots of tens or hundreds of thousands of cases, you're not likely looking at a future that involves transport via UPS or FedEx.  But if you're an average winery, producing a few thousand cases of wine a year, you should be focusing on selling a high percentage of however many bottles you produce directly.

Three final notes.  First, why, if they'll never notice it on their bottom lines, do the big wine companies still have tasting rooms and wine clubs?  I think (and based on the effort put into their direct sales by many of these large wineries, they agree) that it's valuable marketing: each direct relationship that a winery maintains is going to have a positive ripple effect as that customer communicates his or her enthusiasm to friends, and will support the work of distribution in a way similar to -- yet more profitable than -- advertising.

Second, you may be wondering why a relatively small winery like us bothers with wholesale sales at all.  Like a large winery with its direct sales, we think of it as powerful marketing, for which we get some revenue to offset the costs.  Having wine in great restaurants and wine shops means that customers don't have to come to us to discover us, and we have literally thousands of wine-savvy professionals around the country telling our story.  If we can get all this at something close to break-even, it's a big asset.

And third, if 90%+ of wineries rely on consumer-direct sales for their livelihood, why did Brian say that it won't provide the revenue wineries are seeking?  I think that there are two reasons.  First, Brian comes from a retail perspective.  The regulatory environment still makes it much more difficult for retailers to ship around the country than it does wineries.  And retailers are all competing to sell wines their competitors can buy at more or less the same price they can.  This level playing field, the regulatory patchwork, and the high cost of expedited shipping on a perishable, heavy item like a bottle of wine all combine to shield smaller local retailers from competition.  Will this equilibrium last forever?  Probably not. Given that Amazon is on their third foray into trying to sell wine, the e-commerce giants must see some potential here.  And here is an important area that I agree with Brian: whether you're a retailer or a supplier, Amazon and its ilk are likely to be neither savior nor apocalypse in the near term.

But all that's beside the point to a small or medium-size winery.  If that's who you are, you likely already know that direct-to-consumer sales isn't just your future.  It's your present, too.


Congratulations to Jean-Pierre and Francois Perrin, Decanter's 2014 Men of the Year

By Robert Haas

Congratulations to Jean-Pierre and François Perrin, "Men of the Year" in the current issue of the venerable English wine magazine Decanter.  I cannot think of any French wine family with better credentials.  We love them.

Perrins men of the year

My first encounter with the Perrin family was with Jacques in 1967.  It was during my short (1967-1970) period at Barton Distilling trying to create a wine division.  I was there to buy bulk Châteauneuf-du-Pape wine to be shipped to a négociant bottler in Bordeaux.  Barton had the idea of creating a line of French AOC wines under the André Simon brand for which they had the rights.  The whole thing eventually fell apart. The execution failed because, among other things, Barton's barons in the field didn’t dig anything under 80 proof.  Recognizing the futility of trying to create a wine division at Barton, I resigned in 1970 and went on to form Vineyard Brands shortly thereafter, taking all my suppliers with me.

Jacques and I had hit it off together.  He took me under his wing and showed me around other wineries and cooperatives in the Vaucluse to emphasize how far there was still to go in producing quality wines in the Côtes du Rhône.  I admired Jacques’ openness and the frank discussions with his family that took place around the dinner table.  I returned to Beaucastel in 1968, 1969, and 1970 to ask for U.S. representation of the domain because I thought it unique in Châteauneuf-du-Pape in its use of high percentages of Mourvèdre and Roussanne in its blends and because it was inaugurating organic farming in its vineyard.  I finally achieved success in 1970 and became importer for Château de Beaucastel.  That was the beginning of the deep family relationships that followed. 

In 1971 Jacques introduced me to his son Jean-Pierre, who had graduated from oenology school in Dijon and had started a small négoce in Jonquières with the brand La Vieille Ferme Côtes-du-Rhône.  We imported the first ever export (100 cases 1970 vintage) and sold it to Sherry-Lehmann in New York.  Today it is an international brand selling cases in the seven figures.

Jean-Pierre and I became friendly.  We had kids of similar ages and we visited back and forth as families.  Vineyard Brands started representing the early “boutique” Napa wineries, Chappellet, Freemark Abbey, Clos du Val, and Phelps in the early 1970’s.  Jean-Pierre accompanied me to Napa on one of my supplier visiting trips and was impressed by the amount of activity (“even the streets are made out of stainless”) and surprised that there were no Rhône varieties being grown even though the climate was more Mediterranean than Bordeaux or Burgundy (think chardonnay).  It was at that point that the germ of the idea of “doing something together” in California came to us.  It was not until 1985, however, that we started to act on it.

Vineyard Brands continued as importer for Château de Beaucastel and François came on the scene just before Jacques’ tragic early death from cancer in 1977.  Thereafter, all three families became good friends, frequent visitors, and business partners.

In 1985 Jean-Pierre, François and I decided to “do something” in California.  We started looking for property to start a vineyard and winery partnership.  We looked for high pH soils and a southern Rhône climate.  After scouring the state for five years looking and tasting, we came upon the then practically unknown Paso Robles area on west side of highway 101, the Las Tablas district, in which we found a 120 acre piece laced with calcareous clay soils and we bought it jointly.

In our travels around looking for property we discovered that there were no reliable cultivars for Grenache, Mourvèdre, Syrah, Roussanne, Counoise, and Grenache Blanc, the principal varieties that we planned to plant, so François arranged for supply of cuttings with his nurseryman in France.  The California USDA station for reception, quarantine, testing for viruses, and clearance was closed in 1990.  The USDA station in Geneva, NY accommodated us instead.  The vines cleared in 1993 and were shipped to California and multiplied and grafted in our own nursery.  Planting began in 1995.  We have continued importing cuttings from Beaucastel recently, bringing in the balance of the 13 Châteauneuf-du Pape varieties through USDA Davis and will make all available to US growers as we have in the past.  Ironically, the Foundation Plant Service in Davis will be the only facility in the world able to supply virus free all 13 (14 if you count Grenache Blanc and Grenache Noir separately) accepted varieties of the Châteauneuf-du-Pape appellation.

The availability of authentic vine material from our collection and the attention drawn to the Rhône idea by our partnership led to a wave of plantings by new wineries focused on Rhône blends, which in turn led to a new focus for the new Paso Robles community of adventurous growers, which in turn led to over 600 American wineries that planted, promoted, and marketed Rhône variety blends.

From the beginning our farming and style of wine making, were inspired by the Beaucastel model: organic farming going to biodynamic and wines with power, but with elegance and a respect for our terroir.  Contrary to most current California practices, all reds and some whites are vinified and aged for the most part in large (45 to 65 hecto) French oak.  We ferment with native yeasts to maintain our feeling of place.

Our wine maker, Neil Collins, spent the year of 1997 at Beaucastel.  Early on Jean-Pierre was the most frequent Perrin to be involved in the decision making, with François being involved in the blending and the vineyard most recently.  Jean-Pierre’s son, Pierre spent the year here in 2001, working in the cellar and son Marc is also involved, and François’ son César has been working in the cellar this last year. The style of wine making, as at Beaucastel, is classic, not trendy modern.

We are proud to be an important part of the Perrins' world adventures.  Without them Tablas Creek Vineyard never would have happened.


Congratulations to Robert Haas, Rhone Rangers "Lifetime Achievement Award" winner for 2014

This week, The Rhone Rangers announced that Tablas Creek founder (and my dad) Robert Haas will receive the 2014 Rhone Rangers Lifetime Achievement Award, for services to the American Rhone movement.  It's a wonderful honor, just the second-ever lifetime achievement award that the organization has given out. The first went last year, appropriately, to Randall Grahm of Bonny Doon Vineyard, the original Rhone Ranger.

Robert Haas Seated on Patio

Though my dad's wine career began focused on Burgundy and Bordeaux, his history with the Rhone is a long one.  He made his first buying visit to Chateauneuf-du-Pape in 1967, looking either to find an estate whose wines he could import, or barring that (few estates were even estate bottling at the time, and those few that were had established relationships) to find some bulk Chateauneuf-du-Pape that he could buy and have bottled for the American market.  He visited Beaucastel on that trip, convinced Jacques Perrin to let him taste through the cellar, and selected some barrels he would bottle and market under the "Pierre Perrin" label. [That story, if you haven't heard it, is detailed in the blog post a great dinner, an amazing restaurant, and the wine that marks the beginning of Tablas Creek, from 2012.]

His connection with the Rhone developed along with his friendship with Jacques Perrin and his two sons, Jean-Pierre and Francois, working together as importer and producer through the 1970's and 1980's.  For an American market still largely unaware of the Rhone Valley, my dad devised a marketing strategy of personalizing Beaucastel, and made dozens of trips around the United States with Jean-Pierre and Francois, promoting both the flagship Chateau de Beaucastel estate and their growing collection of wines under the La Vieille Ferme and Famille Perrin labels.  The brands are still a cornerstone of Vineyard Brands, the importing company he founded.

If the relationship had ended here, his contribution to the Rhone movement in America would still have been significant.  But his friendship with the Perrin brothers and their joint conviction that the Rhone grapes they worked with in France would thrive in California led them in 1985 to begin the search that would culminate in Paso Robles and Tablas Creek.

Several of the places that they looked at seriously (notably Sonoma, El Dorado and Santa Ynez) have become major contributors in the Rhone Ranger movement, but they settled on Paso Robles, which has become its epicenter.  From 1990, when there was negligible acreage of Rhones in the county, there are now more acres of Grenache Blanc, Roussanne, Syrah and Counoise in San Luis Obispo county than any other, and more acreage of Viognier, Grenache and Mourvedre than any other coastal or mountain county.  The focus that the partners' decision to buy land in Paso Robles brought to the region -- as an area for high quality wine grapes, but more specifically as a great home for Rhone varieties -- was enormous.

Perhaps the most lasting contribution that he (along with the Perrins) had in the American Rhone movement came with their decision to import new grapevine cuttings from France, and then to make them available to other vineyards and wineries, rather than trying to keep this potential competitive advantage proprietary.  More than 600 vineyards and wineries have purchased Tablas Creek stock since we began selling it in 1996.  This new high quality vine material both gave the Rhone movement a direct and dramatic boost and had an indirect effect, spurring the nurseries already in California to build new partnerships to themselves import quality new French clonal material.

Finally, I believe that Tablas Creek's focus on blends has provided an important counterpoint to the varietal paradigm that dominated California for decades.  We're far from the only winery who has tried to make our name on blended wines -- and the paradigm is far from broken -- but the winery's insistence in the early years, when the market was telling us again and again that what it wanted was varietally labeled wines, on sticking with what we felt was the best expression of our grapes, land and place, was one piece in creating space within that paradigm for alternatives.  I sat recently on an industry panel discussing the future of the proprietary blend, and I can't imagine that panel even existing without the work over the last two decades by wineries like Tablas Creek, and stubborn proprietors like my dad.

So, on Saturday, April 5th my dad will be recognized at the Rhone Rangers annual gala in San Francisco.  I'll introduce him.  And I'll know that not only will I be standing where I am because of him, but many of the Rhone producers and enthusiasts around the room will also be there because of what he made possible.


Every now and then you get a particularly meaningful compliment...

The wine business is hard.  It may not get talked about a lot, but it is.  There are huge start-up costs, an ever-growing number of wineries which crowd the marketplace and compete for your existing customers, and a shrinking number of distributors that combine with a relentless stream of wines from around the world and make it hard to gain attention in the wholesale market.

Granted, there are positive demographics working in your favor as a winery, too.  America is becoming more and more a wine-consuming nation, which means that you aren't competing with the other wineries in your area for a pie of a fixed size; the pie is growing every year.  Liberalized wine shipping laws have put some 80% of American consumers in states we can ship to.  And Americans' acceptance of blends (and unusual grape varieties) has never been better than it is.  But it's still a challenge getting and keeping your name out there, particularly when you want, like we do, to succeed both in our direct sales business (our tasting room and wine clubs) and in the wholesale market.

HootnAnnie_logo

So it's great to see an article like the one we received recently from Paso Robles-based bloggers Matt and Annie Browne, whose blog Hoot n Annie is packed each week with first-person accounts of their explorations into the local wine community and their insightful analysis of what works in marketing and social media.  The title of the article is Paso Robles Wineries: Tablas Creek is Doing it Right and I'm not sure I've ever read anything so nice written about us.  They are social media experts, and much of their focus is on what we've tried to do in that sphere (I was very happy to read that they thought we'd been successful) but they also talked about our marketing, our facility, our people, and (of course!) our wine. 

It's easy, I think, to fall into ivory tower syndrome as a winery.  Unless you force yourself to get out into the market, or make sure you're searching out unbiased opinions, it's easy to hear only voices that tell you you're doing great work: those are the people who tend to seek you out.  Does this mean you're doing great work?  Not necessarily.  And even if you are doing great work in one sphere (winemaking, say) it's easy to assume that success will find you as a matter of course.  We had that problem at the beginning; our initial marketing plan could have been summed up as "people will buy Tablas Creek because people love Beaucastel".  It turned out to be wildly optimistic, and we spent some dicey years in the early 2000's turning around the business side of Tablas Creek.  In 2002, for example, we sold 4,000 cases of wine and made 12,000.  That's obviously not sustainable, and we realized that our problems weren't going to be solved by a single effort.  We opened a tasting room, started a wine club, started participating in wine festivals and working with our distributors around the country, and rededicated ourselves to being an involved and committed member of our community.  We made the decision to focus on maximizing the number of customer interactions and doing everything we could to give those customers an outstanding experience that they would rememeber and would tell their friends about.  And little by little we leveraged a successful business out of the good choices we'd made at the beginning in choosing our site and making our wines. By 2006 we'd stabilized our balance sheet and were selling roughly the same 18,000 cases we were making.

But it's not easy.  And each year brings new challenges, as you work to stay true to who you are while continuing to innovate in ways that keep you fresh.  We've tried hard not ever to take our fans for granted, or to rest on our laurels.  Reading a piece like Matt's and Annie's gives me faith that it's working.  Thanks, guys.


Congratulations to Neil Collins - 2013 San Luis Obispo County Winemaker of the Year

It was with great pleasure that we received the news that our winemaker Neil Collins was voted by his peers the 2013 Winemaker of the Year for San Luis Obispo County.  You can read the full press release here.

Neil - Praise the Lard

With one exception -- the 1997 vintage, for which Neil was working at Beaucastel -- Neil has had a hand in every vintage of Tablas Creek since our first harvest in 1994, when he was Assistant Winemaker at Adelaida Cellars and we were renting space there.  We used this rented space to make our first few vintages of wine before we'd built our winery and gotten our French clones into production. (Props to anyone who can remember some or all of the names those early wines carried on their labels; leave a comment if you do.)

So that means that this 2013 vintage will make twenty years since we first began to work with Neil, and be the sixteenth vintage he will have overseen here in our estate winery.  What a luxury that continuity is.  Grapevines aren't like most agricultural products; they take years (decades, even) to show their full quality, and a winemaker who joins a project mid-stream might well second-guess the vineyard choices that a previous administration had made and yet not have much flexibility to change it.  To have worked with Neil for so long means that he was involved in turning our vision into reality from the very beginning, and his input in our early choices is reflected across our operations, from vineyard to cellar to the events we host.

Equally important is the fact that Neil oversees both the vineyard and the winery here at Tablas Creek.  These are not, in our view, different worlds, to meet only at harvest.  Our goal has always been to make wines that are at their core expressions of this vineyard, and the choices that we make in the vineyard are a direct result of what we want the grapes to bring to the winemaking process.  Neil has been central in shaping our viticulture efforts, including dry farming, organic and biodynamic viticulture, our animal program and our efforts to bring biodiversity into the vineyard.  This has meant that his work in the cellar begins with grapes that have been grown specifically to emphasize the character of place that our winemaking seeks to highlight.

Perhaps most importantly, it's not every winemaker who is excited to let the expression of place take center stage.  California is full of wines that bear the indelible stamp of winemakers' stylistic decisions, from signatures of new oak barrels to specific yeast strains, extreme levels of ripeness or extraction.  It takes a winemaker with a particular personality and a high level of self-confidence to let his or her own work be to modulate and reinforce the signatures of place, grape and vintage.  We are exceptionally fortunate to have found in Neil such a winemaker, who despite plenty of creative vision -- on full display in the wines he makes for the Lone Madrone label he owns with his wife Marci and his sister Jackie -- is willing and able to step into the background in order to give pride of place to ... well ... place.

Congratulations, Neil, and cheers to many more great vintages.


Tablas Creek is a finalist for 2013 Best Winery Blog!

WBA_Finalist_2013We are proud to have been named a finalist for "Best Winery Blog" at the 2013 Wine Blog Awards.  This is the sixth consecutive year we've been honored as a finalist, and we've taken home the trophy twice, in 2008 and 2011.  We'd love to make the 2013 awards a three-peat.

This year's finalists include several past nominees and two former winners, and is I think the strongest field to date. If you aren't reading them, you should: they're all compelling glimpses inside the world of a winery, from vineyard to cellar to market:

It seems an appropriate time to look back at some of my last year's most memorable blog posts. If you missed them, or you're a new visitor to the blog thanks to the recent nomination, it's an admittedly idiosyncratic selection of the posts that resonated most with me, with a brief explanations of why for color.  If you're a regular reader, hopefully you'll find some old friends here.  I am particularly proud that this is our most collaborative effort to date, with great posts by several members of our team supplementing my own work. In chronological order:

  • Seeing red -- and green -- in Santa Fe In which National Sales Manager Darren Delmore stakes his claim as the Hunter S. Thompson of the Tablas Creek blog. If you don't feel like you're in Santa Fe with him, check your pulse.
  • When wine tasting, step away from the carafe The post that got the most echoes this year, with excerpts or links posted on scores of other social media sites and the complete article reprinted in several wine associations' newsletters. Why the buzz? We made some simple experiments that showed that when you rinse your glass with water, the next wine is diluted 7%, with some effects you'd predict and some you might not.
  • Harvest 2012: The End of the Beginning I could have chosen any of Assistant Winemaker Chelsea Franchi's posts; they're all beautifully written and illustrated with her terrific photographs, and give an amazing glimpse into the psyche of the cellar. But this one stood out for how raw it was, reflecting the exhaustion and elation of the end of harvest.  Maybe my favorite post of the year.
  • In which we dig ourselves a hole, on purpose Viticulturist Levi Glenn digs into the results of a soil survey on our new parcel conducted by a Cal Poly class.  If you're a soil junky, or just want to understand some of the complexity of what's there when you get below the topsoil, Levi makes this detailed, complex picture compelling and comprehensible.
  • Is the bloom off the user review site rose? I take a look at the number of reviews we and some other comparable wineries around us have been receiving from Yelp! and TripAdvisor, and come to the conclusion that we're in the middle of an industry-wide slump in review authorship. It was fun to see other wineries chime in on what they were seeing, confirming our suspicions.
  • Surviving consolidation in the wholesale market A preview of a talk I gave to the Unified Grape and Wine Symposium in Sacramento, in which I represented smaller wineries and shared some of the essentials of keeping yourself viable in a crowded, noisy market with an ever-shrinking number of wholesalers and an ever-growing number of wineries.
  • The costs of state alcohol franchise laws  I only put up one post this year focusing on the labrynth of legislation a winery has to navigate to get its wares to market, but it was an important one and will preview, I think, the next frontier of court challenges to state-sponsored restraint of the wine trade.
  • Can I get an ice bucket for my red?  A post I'd been thinking about for a while that also seemed to resonate with audiences, deconstructing the myth that red wines show best at room temperature and whites should be served cold.
  • When Terroir Was a Dirty Word A recent post by my dad that dives into the surprising history of the meaning of terroir.  You may not have realized that as recently as the 1960's, it was a bad thing for a wine to taste of terroir.  I certainly didn't.

As always, the winner will be determined 50% by the votes of the expert panel of judges who culled the nominations to the five finalists, and 50% by the votes of the public.  I encourage you to browse the finalists, and if, at the end, you believe us worthy, we'd be honored to receive your vote (Vote here).  Voting ends this Friday, May 24th.


Lyricism and the Power of a Great Wine Review

The wine review is a bit of a hoary tradition, much ridiculed among the new generation of wine writers. And I get some of that. Describing which red fruit (Is it raspberry? Currant? Huckleberry?) or what herb (Thyme? Savory? Chervil?) is most evident in a wine can get esoteric, arbitrary, even twee.  And, sure, it's easy to see how someone tasked with writing dozens of reviews each day can fall into patterns which make one wine seem much like another.  As an antidote, Eric Asimov from the New York Times challenged the 2011 Wine Blogger's Conference in his keynote speech to spend the next year not writing a single wine review, instead focusing on why their readers should care about the wine in the first place.

And yet, a great review can bring a wine to life in amazing ways, turning a description of a wine's colors, flavors, aromas and textures into a character sketch that is indelibly individual.  Last week we received such a series of reviews from Nashville, Tennessee-based wine writer Fredric Koeppel on his blog Bigger than Your Head.

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I've followed Bigger Than Your Head for several years, since I became aware of Fredric's work thanks to the 2008 Wine Blog Awards, for which he was a finalist in the "Best Wine Review Blog" category (this blog won the much less competitive "Best Winery Blog" category that same year).  Fredric didn't win that year, but did in both 2009 and 2010, deservedly so, and was a finalist in both "Best Wine Review" and "Best Writing on a Wine Blog" the last two years.  What sets his reviews apart from the herd?  There are several aspects, none of which make him unique, but which in total set him among the very top cohort of wine reviewers, for my taste:

  • He values context, and pulls out threads that tie together all the wines, describing as accurately as any article I've seen the style and influence of Tablas Creek's people and place.
  • His writing is precise.  He doesn't recycle the same few descriptors, but brings in evocative flavors one doesn't normally associate with wine (our article included the descriptors "graham cracker", "marsh grass","iodine", "briars", and "spruce").
  • He breaks a wine down into color, aromas, flavors, texture, and finish, and describes each piece sufficiently that you feel you come to know a wine. Of course, this takes a certain freedom from word limits and column inches.
  • He gives a quality judgment, independent from the flavors he describes.  This isn't the omnipresent 100-point scale, nor is it some similar but simplified 20, 10, or 5-point scale.  His quality descriptors are intuitive; the ones used in our wines that he reviewed were "very good+", "excellent" and "exceptional". He's also not afraid to note wines that he does not recommend, which gives him credibility with the ones that he does.
  • He notes value, highlighting wines that punch above their price category.

If you need further convincing to click over to his post, here's one review I particularly loved, that I felt captured our 2010 Esprit de Beaucastel Blanc -- a wine I think is the best white we've yet produced -- perfectly. If you don't agree, well, don't go read the rest. But I think you will.

Esprit de Beaucastel Blanc 2010, Paso Robles. 13.5% alc. 2,100 cases. 60% roussanne, 35% grenache blanc, 5% picpoul blanc. Pale straw-gold color; lovely balance and poise, light on its feet with a wonderful well-knit texture with finely-honed acidity and plangent steely, limestone qualities; again, a white wine of shades and degrees of nuance, lightly spiced, delicately fitted with lemon and pear flavors and a hint of apricot; all bound with that spruce-tinged minerality. Excellent. About $40

 


Is the bloom off the user review site rose?

Last March, I wrote the post Has TripAdvisor overtaken Yelp for winery visitors, suggesting that of the two major user-review Web sites, TripAdvisor seemed to be replacing Yelp as the preferred forum for people writing user reviews of Paso Robles wineries.  The graphic I included in that post showed a pretty dramatic shift over time:

Reviews by Site

The graph also shows a steady increase in the number of user reviews posted for Tablas Creek on the two sites, from 10 in 2008 to 15 in 2009 to 22 in 2010 and 42 in 2011.  With the first quarter of 2012 showing as our busiest quarter yet for user reviews (18) I fully expected to see continued growth.  But something happened around the middle of last year, and while our annual total (63) was still our highest ever, the quarterly total peaked in the second quarter at 25, then declined to 13 in the third quarter and just 7 in the fourth quarter.  I have gone from checking the sites daily for new reviews to now checking only every week or so, and getting used to seeing the same months-old reviews I saw last time.  The curve looks a little different now. To smooth out some of the noise, I've added a rolling average, which averages each quarter with the quarters before and after:

User Reviews Trend thru 2012

It's worth noting that my conclusion that TripAdvisor -- which to most wineries at the time was much less salient than Yelp -- was a player to watch turned out to be true. TripAdvisor tallied nearly three times the number of reviews of Tablas Creek as did Yelp in 2012.  But by sometime around mid-fall the flood of user reviews had turned to a trickle.

I was curious to know whether what we were seeing, both in the drop in user reviews at the end of 2012 and the dramatic shift toward TripAdvisor and away from Yelp, was standard for our area.  So, I picked three other popular, well-established Paso Robles wineries (Justin, Adelaida and Eberle) and took a look at what they'd seen.  I found that the shift toward TripAdvisor and away from Yelp is real, and dramatic.  In 2011, the four wineries (including us) showed 133 reviews from Yelp and 44 from TripAdvisor.  In 2012, Yelp reviews declined 34% to 88, while TripAdvisor reviews grew 390% to 216.

And I found that the dip in reviews I'd noticed in the second half of last year was echoed by our neighbors, though we saw a larger decline than most.  Here are the four wineries' results for 2011 and 2012, using a stacked area graph that allows you to get a good sense of the aggregate:

User Reviews Four Wineries 2011-2012

My first thought was that this could be explained by the number of customers visiting Paso Robles.  After all, the summer season is typically the busiest one in Paso Robles, and the winter the quietest.  But when I looked deeper, I found that at least at Tablas Creek our tasting room traffic doesn't vary that much by quarter.  Our smallest quarter last year was indeed the fourth quarter, but at 6880 visitors it was only 12% less busy than our busiest (the third quarter, at 7815).  I don't have any reason to think that our traffic trend differs significantly from the other wineries in the area, so I tried dividing the total number of reviews for each quarter by that quarter's traffic.  The results show that per Tablas Creek customer, we are seeing a decline in user reviews submitted for the four wineries:

User Reviews per Customer

There are few possible ways of explaining away the development, none of which I find particularly convincing.

  • Perhaps there is a different type of customer who visits in the summer months, a younger, more tech-savvy customer, who is more likely to post a review on Yelp or TripAdvisor.  Maybe, but If you look at the results for 2011, the two summer quarters showed the lowest percentage of reviews per tasting room visitor. Why would this reverse itself in 2012?
  • Perhaps there is something about the four wineries that I chose that makes us all subject to some trend that is out of step with what's really happening.  This is possible, but seems far-fetched.  Other than that we're all in Paso Robles and all of roughly similar scales, we represent wineries that are in different parts of the AVA. Could, say, newer... or smaller... or larger wineries have been getting more reviews at the end of last year even though our traffic stayed steady? I just don't see how. The implication would be that there is a specific sort of person who writes these reviews and that sort of person hasn't been visiting Tablas Creek, Justin, Adelaida or Eberle as much in the last six months even though our overall traffic numbers are steady. Maybe they're now boycotting Paso Robles in favor of other wine regions? I have trouble believing such an explanation.
  • Perhaps there are as many user reviews being written, but there is a new competitor in the field that is siphoning off reviews from both Yelp and TripAdvisor.  The obvious option is Google, whose Google+ allows users to write reviews. But the five Google+ reviews of Tablas Creek include only two written in the last year. The other competitor mentioned sometimes is CitySearch, which has only three reviews of Tablas Creek, just one written since 2008.  So, if they're moving away from TripAdvisor and Yelp, where are they going?

In the absence of another plausible explanation, I'm left to think that there has been some sort of shift against both Yelp and TripAdvisor among their users in the last six months.  Unless this is a statistical hiccup that will correct itself over the coming months (possible if unlikely) the possible conclusions are that we're seeing the bursting of a bubble that will eventually lead to a steady but lower-level number of new user reviews, or that this is the beginning of a long-term trend that will result in the category's gradual obsolescence.  I would tend to suspect the first explanation: that like with many new technologies, lots of people jump onto the bandwagon when they see their peers doing the same, but many find that it's just not for them. And it is work, writing these reviews, uncompensated work at that.  It's easy to imagine a reviewer getting fatigued with what's involved.

From a practical standpoint, even if it is true that user reviews are declining, the sites are still important for wineries to monitor. Both sites (particularly Yelp) are search engine goliaths, and there is well-documented evidence that even a single negative review can make a significant difference to a restaurant. A decline in the authorship of reviews doesn't imply a decline in readership, and in fact good reviews are more important now than ever, as there are fewer reviews being written and a negative review is proportionally more influential with a lower volume of other reviews in which it can get lost.

Still, I was interested to see that what seemed like an endless escalation of user reviews has not just slowed, but reversed itself. We'll see, over coming months, what this means.


Reflecting on a decade of Esprit de Beaucastel

This week we're bottling the 2010 Esprit de Beaucastel.  About 2000 cases are going into national distribution. Another 1000 will go out to our wine club. 1500 will be allocated to our tasting room.  500 will go into our long-term library for later release.  Some of the cases, palletized and ready to be picked up this morning:

Esprit 2010 in 6-packs

This is our tenth vintage of the Esprit red, though it doesn't seem possible to me that it's been that long.  Of course, it doesn't seem possible to me that I just turned 39, either.  But reflecting back, a lot has changed in that decade.  When we bottled the first Esprit in the summer of 2002, Tablas Creek was in a very different place.

That summer we were coming to terms with the fact that for all our care in choosing our site, importing our clones, and making wine in a manner consistent with Beaucastel, we'd been wildly optimistic with our estimates of how easy our wines would be to sell.

Some of the challenges we faced, at the time:

  • Blends were still an uphill battle. Non-varietal wines, particularly those that weren't a traditional Bordeaux-style blend, were typically consigned to the "other" section of wine lists and the least desirable -- and often unlabeled -- locations in retail.  The fact that our first wines were called, rather unhelpfully, Rouge and Blanc didn't help things.
  • Rhone varieties, at least those from America, were still a very minor category.  Robert Parker's first comprehensive reviews of California Rhones didn't come out until February 2002 (Issue #139) when he declared "No wine category in California has grown as much as the appropriately named 'Rhône Rangers'". That same year, the Wine Spectator wrote a feature article titled "California Rhones Arrive", though the category was small enough that the accompanying "top scoring California Rhone-Style Wines" sidebar shows only 10 wines that topped 90 points.  Still, it took some time for the excitement about this new category to percolate down to the wholesale, restaurant, retail and consumer levels.
  • Paso Robles was still relatively unknown.  Parker had just visited the area for the first time in late 2001, and his first coordinated reviews of the area appeared in his Rhone Rangers piece in 2002.  In the Wine Advocate's first 138 issues, although the region had had the occasional wine reviewed, the words "Paso Robles" did not appear in a single article.

Despite the headwinds detailed above, we'd been working under the old-fashioned European model, where marketing was not a primary consideration for wineries, and tended to be left to agents or distributors.  We'd come to the uncomfortable conclusion that this model wasn't working, at least not when we grew beyond the few thousand cases of wine we made in our first couple of vintages.  In 2002, the year I moved out here, we sold a little over 4,000 cases of wine.  And we made about 12,000.  Of course, you don't sell wine the same year you make it, but if we were struggling to sell the 5,000 - 8,000 cases we'd made in recent vintages, it was clear that we needed to take a much more active approach in our own marketing. 

So we started pushing every way we could think of.  We opened our tasting room.  We started our wine club.  We began to participate in many more events, to spread the word about Tablas Creek to consumers.  We set up work with our distributors and agents around the country, to spread the word to the wine trade.  We reached out to our export agents.  And slowly, with help from many quarters, we turned things around.  A few of the key drivers:

  • The media came on board with Paso Robles in a serious way. Looking at Parker's annual reviews after his cautious beginning in 2002, you can feel him getting more and more excited about the region's potential, and by 2005 was confident enough to declare "there is no queston that, a decade from now, the top viticultural areas of Santa Barbara, Santa Rita Hills, and the limestone hillsides west of Paso Robles will be as well-known as the glamorous vineyards of Napa Valley." Other press would follow, with notable features on Paso between 2005 and 2007 in Decanter, Bon Appétit, Wine Enthusiast, Gourmet, Wine Spectator, Sunset, Decanter (again) and Food & Wine.
  • The Paso Robles Wine Country Alliance did incredible work in promoting the region.  Not only did they bring media into the area, they coordinated a road show that has brought scores of Paso Robles wineries to dozens of stops around the country and touched thousands of trade and consumers, and they began an advertising campaign that raised the region's profile tremendously.  I've written before on the impact of the PRWCA, and I think that it's worth reiterating that the way they've been able to raise the region's profile while keeping a diverse collection of stakeholders united has been remarkable.
  • The Rhone Rangers category has become much higher profile, and increasingly associated with the Paso Robles region.  The media, particularly Robert Parker, played key roles in this, of course, but two organizations have also had a big impact. The wonderful Hospice du Rhone festival, based in Paso Robles, brought exceptionally high profile media, trade and consumers to town each April, and created a strong association between Paso Robles and high-end Rhones.  And The Rhone Rangers have brought the word about Rhones to major markets around the country, including San Francisco and Los Angeles each year and regular stops in Seattle, Washington, DC and (this year) New York.  Over the decade I've been involved, Paso Robles wineries have grown from about 10% of the Rhone Rangers membership to its current level of nearly 40%.  This growth is reflective of real changes in what is in the ground in Paso Robles, driven at least in part by our own decision to settle here, but the region has also been successful at self-identifying with Rhones. Paso Robles wineries put together the first local chapter of Rhone Rangers, back in 2005.  Sadly, Hospice du Rhone announced recently that their 2012 celebration in Paso Robles would be their last, but I got the sense that one of the main reasons was a feeling on the part of its organizers that it had largely achieved what it set out to do.
  • The Sideways Effect.  Although we didn't see a direct benefit (we don't make Pinot Noir and we aren't in Santa Barbara Wine Country) we saw several powerful indirect effects.  The most important, in my opinion, was that the movie popularized and personalized the experience of going out wine tasting, which benefited wineries everywhere.  We also saw a surge of dedicated Southern California wine lovers who skipped the tourist-overrun venues of the Santa Ynez Valley in the couple of years after the movie's release and came, many for the first time, to Paso Robles.  Finally, the message that there are wineries outside of Napa and grape varieties other than Cabernet, Chardonnay and (of course!) Merlot helped all of us in California's less-well-known regions making California's less-planted grapes.

In those early days, I spent a lot of time on the road, showing people the wines, telling the story, encouraging restaurants and retailers to take a flyer on wines that they themselves would have to work to sell.  That so many did and have become regular customers still humbles me.  That we've moved from having to sell each case one at a time to having to allocate our cases so that they don't all get snapped up by a handful of accounts amazes me.

Thank you to all of you who have joined us on this journey.  A decade in, the best is still yet to come.  Cheers!

Bottling 2010 esprit 2


Has TripAdvisor overtaken Yelp for winery visitors?

I keep a regular eye on Tablas Creek's reviews on TripAdvisor and on Yelp.  Reading these reviews helps me keep an eye out for potential problems, and also gives me a good overall sense of what people are thinking about the experience they have when they visit Tablas Creek.  Happily, it's overwhelmingly positive.

I have noticed a recent trend away from Yelp and toward TripAdvisor.  For years Yelp was the dominant review site.  Between 2005 and early 2011, Yelp tallied 69 reviews of Tablas Creek to only 5 for TripAdvisor.  In fact, I didn't even start watching TripAdvisor until mid-2011.  But in the last year, we've received an equal number of reviews (23) on each site, and so far in 2012, TripAdvisor has tallied 13 reviews to just 5 on Yelp. The chart below will give you a sense of how the trend has changed recently.

Reviews by Site
Both Yelp and TripAdvisor are powerful players in travel, dining and entertainment.  Per month, Yelp claims 66 million unique visitors, while TripAdvisor claims 50 million.  And the prominent placing of both sites' reviews in search engine rankings means that increasingly, consumers are using these sites in addition to or instead of the more traditional printed brochures and regional association Web sites that they would have used even a few years ago.  They have the advantages (and disadvantages) of crowd-sourced opinions, combining the perception of incorruptibility with the idiosyncracies of uncurated information.  But their net impact is tremendous, and is only likely to grow.

It's possible that we're starting to see some specialization between the two sites, which have essentially identical interfaces and market niches.  I know that I tend to think of Yelp as specializing in dining, and TripAdvisor as specializing in travel.  But a quick look at a few local restaurants suggests that TripAdvisor may be making significant inroads here as well.  Artisan shows 30 TripAdvisor reviews so far in 2012, but only 20 Yelp reviews (2011 and earlier shows 311 reviews on Yelp and 198 on TripAdvisor).  Il Cortile shows 16 reviews on TripAdvisor in 2012 (compared to just 40 before) and 17 on Yelp (compared to 123 before).  And Thomas Hill Organics shows 25 reviews on TripAdvisor (compared to 48 before) and 35 on Yelp (compared to 180 before).  Even if TripAdvisor still trails Yelp slightly in the restaurant world, it's clear that its trend is positive.

I know that lots of wineries have claimed and edited their profiles on Yelp, and many have also chosen to advertise with them, perhaps encouraged by the aggressive advertising sales push that many wineries, including Tablas Creek, received last year.  I don't see the same level of engagement with TripAdvisor.

Our experience suggests that neglecting TripAdvisor is a mistake.