Wine’s Next Big Thing Is…

Vinted on September 16, 2014 binned in commentary

It seems that every quarter we get predictions about the next big thing in the U.S. wine market. Like most predictions, these are almost always wrong and therefore actually have, at best, neutral value for the wine biz (it could be argued that since they’re almost always incorrect, they have negative value if decisions are made based on them; but since they also have some positive entertainment value, let’s call it a draw).

“Next Big Thing” wine predictions are also almost always predicated on two principles: 1) the idea that the wine buying public is scared of wine, and therefore needs some sort of guidance on what to purchase, and 2) these recommendations must come in the form of grape varieties.

Both are probably wrong, or at least are bad for the wine biz, as I will explain in a moment, and that means that the NBT predictions are missing what’s really going to be the Next Big Thing in wine (okay, so I am making a prediction here… but at least it’s not based on those principles above, okay?!?)…

First, let’s deconstruct the idea that wine’s NBT has to be about a grape variety. Making wine’s NBT about a grape is ultimately bad for the aspirational fine wine market, because when we talk about that NBT, we are almost invariably talking about the next grape that will be popular in the bargain price ranges and therefore doomed to eventually suck donkey bong.

The problem is this: once we tout a particular grape as a consistent, dependable bargain, in short order capitalism ensures that wines made form that grape are no longer a consistent, dependable bargain. Why? Capitalists get greedy, and that’s a predictable fact with quite a bit of Nobel-winning science behind it. In wine, that greed manifests as the overreach/overplanting/overproduction/overmarketing of said grape variety, and the result is that instead of having, say, a 20% chance of finding a dismal wine made form that grape at a low price point, you have more like a 70% chance. I’m looking at you, Shiraz, Moscato, and Merlot…! does anyone want to argue that situation as being good for the wine business (outside of a larger potential pool of sales in stealing customers from beer or some other category)? I’m not holding my breath for any takers on that one.

Next, we’re assuming that a) people don’t know anything about wine, b) cannot be bothered to learn about it, c) just want to enjoy a good glass for the most part, and d) therefore need to have simple variety-specific recommendations to follow to dumb it all down to a manageable level for purchases. The issue here is that only a-c above are true; d does not necessarily follow, and that will increasingly be the case because the Next Big Thing in wine is…

PERSONALIZATION.

You don’t need a crutch like a certain grape variety being “cool” when it’s actually much cooler (from a utility standpoint) to get recommendations that are tailored to your individual tastes. This requires getting over the social stigma of somehow liking the “wrong” wine, which at its heart is marketing BS by parties who have a vested interest in you feeling like an uncultured dolt by picking the “wrong” wine (think some wine mags, some critics, etc.). Thankfully, the future trends of the wine industry seem to be moving in the opposite direction.

Think about it this way: we now live in the age of splintered wine recommendations, and you have more informed (and uninformed!) voices you could follow than ever before when it comes to recommendations. You also have apps like Delectable, which show you what a lot of those tastemakers are drinking and how they feel about it. On the other end of that same curve is the app Wine4.Me, which uses data and science to help you learn your own taste preferences, to the point of actually recommending specific wines based on them, sans expert recommendations and instead using proprietary algorithms.

To me, this is larely a running refrigerator thing, because we don’t notice personalization unless it’s not there, due to its current ubiquity. Seriously, just about everything is trying to personalize to you (for a profit motive on your data, of course), from Amazon buying recommendations based on what you buy, to Netflix and Hulu recommendations based on what you watch, to Google ads based on the terms for which you search… the only time we notice personalization is when some service fails to do it, in which case we get perturbed!

Now, given those trends, do you think the wine recommendation world will be more ivory tower in the future, or less?

Do you think there will be fewer options for helping you personalize your taste experiences, or more?

Do you think wine will be less like every other gustatory field (food/restaurant recommendations, for example), in which the ultimate value is placed on discovering and maximizing experiences that appeal most to your own tastes? Or do you think it will be more like that in the future?

Place your bets, folks. My money is on seeing these tech-enhanced personalization trends further develop, and with wine (eventually) catching up to the trends pushing the cutting (not bleeding anymore, just cutting) edge of many, many other “offline” activities.

Cheers!

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    Comments

  • Michael Brill


    "Do you think wine will be less like every other gustatory field (food/restaurant recommendations, for example), in which the ultimate value is placed on discovering and maximizing experiences that appeal most to your own tastes? Or do you think it will be more like that in the future?"

    Uh, Less. http://www.wine-economics.org/aawe/wp-content/upl
    The conclusion: most people are crap wine tasters and there is no such thing as personal taste consistency in the wild. This is why wine is not the same as every other gustatory food… and why wine reviews have been so resistant to any form of collective intelligence. I can unknowingly the same hamburger in 5 different contexts and I will in all likelihood rate it quite similarly. Not true with wine. That fact invalidates almost any effort to use sensory response as the primary personalization tool (beyond the basic categorization of wine into the 8-10 commonplace styles).

    What matters far more is *expectation*. Personalization will happen, but it'll be around context and setting expectations rather than some false precision that falls to the frailties of human physiology.

    • 1WineDude


      Michael, read the last two paragraphs of that study. There are significant limitations and it doors not prove that wine is somehow different from, say, high end restaurant food.

      • Michael Brill


        The last two paragraphs say:

        #1 The test group was young male professionals [er, Millennials]
        #2 "In the real world… relationships… are extremely complex… the wine we so enjoyed with our partner at a beautiful vacation setting may taste different when we taste it at home."

        That's pretty solidly in the "I rest my case" zone, no?

        Look at it another way… a typical 30 year old will have eaten roughly 30,000 meals in their life. Same 30 year old who drinks 2 bottles/week has drunk 900 bottles of wine. That's 3% along the experience curve. Taking wine advice from that person is like getting a restaurant recommendation from a 11 month old.

        I'm open to any other theories of why wine is still a nightmare to buy for almost everyone… this is the best explanation I've seen and it pretty clearly lays out the argument that context is king.

        • 1WineDude


          Michael, we have very different definitions of definitive studies, then. The last two paragraphs also indicate the study suffers from several limitations of sample group, sample size, a know lack of correlation between blind studies and in the wild buying behavior, and a focus on one variety (Syrah) from one country (Australia). If you generalize too much on the suggestions – not conclusions – of that study, that’s your gamble.

          • Michael Brill


            Alas, if there weren't scads of other research studies showing the inability of non-experts *and* experts alike to consistently evaluate wines and yet more studies showing how normative wine evaluation is then I'd be a bit more skeptical of this study. Kind of like global warming… how many studies does one need to see – warts and all – to believe?

            • 1WineDude


              Michael, now that makes more sense :-)

  • doug wilder


    " Taking wine advice from that person is like getting a restaurant recommendation from a 11 month old."

    Michael, please send a roll of paper towels. Coffee just shot out of my nose when I read this :)

  • Kyle Schlachter


    Joe, I think Coca-Cola caught on to this with its "Share a Coke" campaign…

    • 1WineDude


      Kyle, you forgot the smile part…

    • Bob Henry


      Kyle,

      See this article:

      Excerpts from the Wall Street Journal "Marketplace" Section
      (September 25, 2014, Page Unknown):

      "'Share a Coke' Credited With a Pop in Sales;
      Marketing Campaign That Put First Names on Bottles Reversed Downward Slide"

      Link: http://online.wsj.com/articles/share-a-coke-credi

      By Mike Esterl
      Staff Reporter

      Coca-Cola Co.'s carbonated soft-drink sales in the U.S. have risen more than 2% after the world's most-famous beverage brand began labeling Coke, Diet Coke and Coke Zero this summer with names of individuals, from Aaron to Sarah to Zach.

      The labels — which also included warm-and-fuzzy terms like "Friends,'' "BFF,'' and "Family'' — were launched in the U.S. in June.

      The idea was to get consumers to buy personalized bottles and cans not just for themselves but also for friends and family. The "Share a Coke'' campaign has been such a hit that, for at least a few months, it reversed a decadelong decline in U.S. Coke consumption. That has provided a welcome lift for the beverage giant, which is trying to combat concerns over obesity and artificial sweeteners by hiking its global advertising budget by $1 billion over the next three years, up from $3.3 billion in 2013.

      The simple marketing campaign was always intended to be temporary, and the cans and bottles are now fading from store shelves as Coke switches back to its traditional labels. . . .

      After falling 11 years in a row, Coke's U.S. soft-drink volumes rose 0.4% for the 12 weeks through August from the same period a year ago, according to Wells Fargo, which cited Nielsen store-scanner data. Sales rose 2.5% in dollar terms. Over the same time period, soda volume and dollar sales remained negative at rivals PepsiCo Inc. and Dr Pepper Snapple Group Inc.

      "A Coke can or bottle is the most iconic design in the world and the fact you can impact that with your name has a huge curiosity and wow factor,'' said Dean Crutchfield, an independent branding consultant.

  • Rick


    Very interesting, Joe. I agree with you that the personalization of wines could possibly be the next big thing. It certainly worked for Apple Computer. Remember when the color monitors came out in the early 90's? it broke from the tradition of the off white bland and boring PC monitor cases. The genius Steve Jobs idea worked very very well. The marketing of wines is certainly looking for a new and fresh direction. How these new ideas will implemented will be the challenge.

  • Bob Henry


    With the Dude's indulgence on reproducing these "long-ish" articles drawing upon neuroscience . . .

    PART ONE OF TWO

    From The New York Times
    (January 5, 2008):

    "Raising a Wine's Price Improves Its Taste, Study Suggests”
    http://www.nytimes.com/2008/01/15/world/americas/

    [No byline]

    Apparently, raising the price really does make the wine taste better.

    At least that seems to be the result of a taste test. The part of the brain that reacts to a pleasant experience responded more strongly to pricey wines than cheap ones – even when tasters were given the same vintage in disguise.

    Antonio Rangel and colleagues at California Institute of Technology thought the perception that higher price means higher quality could influence people, so they decided to test the idea.

    They asked 20 people to sample wine while undergoing functional MRIs of their brain activity. The subjects were told they were tasting five different cabernet sauvignons sold at different prices.

    However, there were actually only three wines sampled, two being offered twice, marked with different prices.

    A $90 wine was provided marked with its real price and again marked $10, while another was presented at its real price of $5 and also marked $45.

    The testers' brains showed more pleasure at the higher price than the lower one, even for the same wine, Rangel reports in the online edition this week of Proceedings of the National Academy of Sciences.

    In other words, changes in the price of the wine changed the actual pleasure experienced by the drinkers, the researchers reported.

    On the other hand, when tasters did not know any price comparisons, they rated the $5 wine as better than any of the others sampled.

    "We were shocked," Rangel said by telephone. "I think it was because the flavor was stronger and our subjects were not very experienced."

    SEE RELATED PART TWO OF TWO.

  • Bob Henry


    With the Dude's indulgence on reproducing these "long-ish" articles drawing upon neuroscience . . .

    PART ONE OF TWO

    From The New York Times
    (January 5, 2008):

    "Raising a Wine's Price Improves Its Taste, Study Suggests”
    http://www.nytimes.com/2008/01/15/world/americas/

    [No byline]

    Apparently, raising the price really does make the wine taste better.

    At least that seems to be the result of a taste test. The part of the brain that reacts to a pleasant experience responded more strongly to pricey wines than cheap ones – even when tasters were given the same vintage in disguise.

    Antonio Rangel and colleagues at California Institute of Technology thought the perception that higher price means higher quality could influence people, so they decided to test the idea.

    They asked 20 people to sample wine while undergoing functional MRIs of their brain activity. The subjects were told they were tasting five different cabernet sauvignons sold at different prices.

    However, there were actually only three wines sampled, two being offered twice, marked with different prices.

    A $90 wine was provided marked with its real price and again marked $10, while another was presented at its real price of $5 and also marked $45.

    The testers' brains showed more pleasure at the higher price than the lower one, even for the same wine, Rangel reports in the online edition this week of Proceedings of the National Academy of Sciences.

    In other words, changes in the price of the wine changed the actual pleasure experienced by the drinkers, the researchers reported.

    On the other hand, when tasters did not know any price comparisons, they rated the $5 wine as better than any of the others sampled.

    "We were shocked," Rangel said by telephone. "I think it was because the flavor was stronger and our subjects were not very experienced."

    SEE RELATED PART TWO OF TWO.

  • Bob Henry


    PART TWO OF TWO . . .

    From National Geographic News
    (January 15, 2008):

    "Raising Prices Enhances Wine Sales"
    http://news.nationalgeographic.com/news/pf/927137

    By Randolph E. Schmid
    Associated Press Science Writer

    Apparently expensive wine really does taste better — even when it's actually cheap.

    The part of the brain that reacts to pleasant experiences responded more strongly to wines believed to cost more than to cheap ones — according to research published this week — even when tasters were given the same vintage in disguise.

    UNDUE INFLUENCE

    Antonio Rangel and colleagues at the California Institute of Technology thought the perception that higher price means higher quality could influence people, so they decided to test the idea.

    They asked 20 people to sample wine while undergoing functional MRIs of their brain activity. The subjects were told they were tasting five different Cabernet Sauvignons sold at different prices.

    However, there were actually only three wines sampled, two being offered twice, marked with different prices.

    A 90-U.S.-dollar wine was marked with its real price and again marked 10 U.S. dollars, while another bottle of wine was presented at its real price of 5 U.S. dollars a bottle and also marked 45 U.S. dollars.

    The testers' brains showed more pleasure at the higher price than the lower one, even for the same wine, Rangel reports in this week's online edition of Proceedings of the National Academy of Sciences.

    EXPECTATIONS PLAY INTO PLEASURE

    In other words, changes in the price of the wine changed the actual pleasure experienced by the drinkers, the researchers reported.

    On the other hand, when tasters didn't know any price comparisons, they rated the $5 wine as better than any of the others sampled.

    "We were shocked," Rangel said in a telephone interview. "I think it was because the flavor was stronger and our subjects were not very experienced."

    He added that wine professionals would probably be able to differentiate the better wine — "one would hope."

    "Our results suggest that the brain might compute experienced pleasantness in a much more sophisticated manner that involves integrating the actual sensory properties of the substance being consumed with the expectations about how good it should be," the researchers reported.

    NEXT STEP: PAIN

    Rangel now wants to see if people perceive pain differently, depending on their expectations. He hopes to administer mild electric shocks to subjects and measure their reaction when told a shock was going to be stronger or weaker.

    "We are trying to understand how the brain encodes experiences and what variables can manipulate this," he said. "It helps us understand what it means to be human."

    The research was funded by the National Science Foundation and the Gordon and Betty Moore Foundation.

  • Bob Henry


    Oops!

    The above article is actually an expanded text version of the Antonio Rangel study.

  • Bob Henry


    With the Dude's indulgence on reproducing these "long-ish" articles drawing upon neuroscience . . .

    PART TWO OF TWO

    From CNET News
    (January 14, 2008)

    "Study: $90 Wine Tastes Better Than the Same Wine at $10"
    http://www.news.com/8301-13580_3-9849949-39.html

    [See article for accompanying exhibits]

    Posted by Stephen Shankland

    In a study that could make marketing managers and salespeople rub their hands with glee, scientists have used brain-scanning technology to shed new light on the old adage, "You get what you pay for."

    Researchers from the California Institute of Technology and Stanford's business school have directly seen that the sensation of pleasantness that people experience when tasting wine is linked directly to its price. And that's true even when, unbeknownst to the test subjects, it's exactly the same Cabernet Sauvignon with a dramatically different price tag.

    Specifically, the researchers found that with the higher priced wines, more blood and oxygen is sent to a part of the brain called the medial orbitofrontal cortex, whose activity reflects pleasure. Brain scanning using a method called functional magnetic resonance imaging (FMRI) showed evidence for the researchers' hypothesis that "changes in the price of a product can influence neural computations associated with experienced pleasantness," they said.

    The study, by Hilke Plassmann, John O'Doherty, Baba Shiv, and Antonio Rangel, was published this week in the Proceedings of the National Academy of Sciences.

    This chart shows that people ranked taste of a $45 wine higher than the same wine priced at $5, and the same for a different wine marked $90 and $10.

    The research, along with other studies the authors allude to, are putting a serious dent in economists' notions that experienced pleasantness of a product is based on its intrinsic qualities.

    "Contrary to the basic assumptions of economics, several studies have provided behavioral evidence that marketing actions can successfully affect experienced pleasantness by manipulating nonintrinsic attributes of goods. For example, knowledge of a beer's ingredients and brand can affect reported taste quality, and the reported enjoyment of a film is influenced by expectations about its quality," the researchers said. "Even more intriguingly, changing the price at which an energy drink is purchased can influence the ability to solve puzzles

    • 1WineDude


      Guys, I wouldn’t disagree with these findings, but I don’t think they negate the idea that if you don’t like the taste of blueberry in wine, then that constitutes a personal taste preference, for example.

  • Bob Henry


    ON THE SUBJECT OF LUXURY GOODS PRICING . . .

    Veblen goods – http://en.wikipedia.org/wiki/Veblen_good

    Excerpt: “Some types of luxury goods, such as high-end wines, designer handbags, and luxury cars, are Veblen goods, in that decreasing their prices decreases people's preference for buying them because they are no longer perceived as exclusive or high-status products.”

    Giffen goods – http://en.wikipedia.org/wiki/Giffen_good

    Excerpt: “Some types of premium goods (such as expensive French wines, or celebrity-endorsed perfumes) are sometimes claimed to be Giffen goods. It is claimed that lowering the price of these high status goods can decrease demand because they are no longer perceived as exclusive or high status products.”

  • Rick


    On a side note. I noticed you're competing for a wine blog award. Congratulations! I'm trying to locate where I can send in a vote for your website. Can post a link?

    • 1WineDude


      Rick, thanks but those awards are over for this year.

  • Tim Hanni


    Hey, somebody ought to research the physiological and neurological factors that contribute to our radically different perceptive acuities and aesthetics! Joe – when the hell you coming to lunch??

  • Tim Hanni


    By the way, I DO think that personalization is the NBT and it will only happen by learning and understanding more about the nature of people and perception, not from understanding more about the product or arguing which rating system of descriptive language is better or worse.

    • 1WineDude


      Tim, I’d think that your research would in some ways support the fact that people have preferences, based in no small part to how they perceive wines?

  • Mark


    It's all about perception. Some of the subscription services have only a handful of choices each month-ie if you don't like Pinot Noir, you don't receive it….but that's about it. It's an interesting topic but I don't trust our respective palate's to help here, nor do I trust big data when things are often so unrecognizable

    • 1WineDude


      Mark – not sure what you mean, what aspects are unrecognizable?

  • Mark Cochard


    Dude, Here Is a new start-up app for personalization. Look at the team. http://www.winering.com/

    • 1WineDude


      MW-heavy!

  • Tim Hanni Mw


    hey – is that a commentary about my weight? :-)

    • 1WineDude


      Tim – HA!

  • Tim Hanni


    Since there are a few references to Coke thought it would be fun to share this – it is put up for discussion in my Sonoma State Wine Business class. "but we conducted blind tastings and the perception was…"

    • 1WineDude


      Doh! ;-)

  • @WineCharlatan


    The technology and wine suggestion apps may/will take a large segment of the market towards "personalization" but it too will become bastardized and sub-par normalized by capitalism. The big wine conglomerates will offer $$$ to app owners to nudge the algorithms more heavily in their direction. Or the apps will become integrated into online sales, or even offline through promotion codes, generating commission revenue through which app builders will internally tweak their "proprietary" algorithms to maximize these commissions, thus swaying wine drinkers towards certain brands over others. Eventually both those scenarios will be at play at the same time – earning commissions + quarterly incentives to help brands make sales targets as well as compete with each other for market share inside these apps.

    The next big thing will be the same old thing

    • 1WineDude


      WC – certainly that temptation would be there, but then it'd create an inefficiency, wouldn't it? I.e., the “honest” services would become able to exploit the niche of being honest when other similar services lack disclosure on those matters, etc.

      • @WineCharlatan


        This may be true. Perhaps I've not yet had enough coffee this morning to subdue my cynicism. Or I spend enough time on Google, Twitter, Facebook to see that "honest algorithms" are an easily fabricated illusion. I hope it's the coffee

        • 1WineDude


          Probably both! :-)

  • mywinechannel


    Do you think the wine recommendation world will be more ivory tower in the future, or less?
    this is a great question that before i read this article i made almost the same question to my manager were i work while i was interviewing him. And we both agreed that the wine recommendation is going to be the next big thing in the wine , and it will have a big role on moving costumers from one wine to an other. People are lazy and they trust what some one else can do for them, even when we choose a pleasure ( in this case the wine ) so if the media says pick wine A because is high recommended we will do it

    • 1WineDude


      MWC – the trend in all things including wine is for consumers to become more and more educated about the products that they purchase, due to how quickly and freely information now flows. And the trend with more educated wine consumers seems to be that recommendations are less and less ivory tower. Assuming that the trends trickle down so to speak to more casual consumers over time, then I’d say generally we are heading away from ivory tower style recommendations.

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