How technology is transforming bulk wine in to a market, not production-driven industry
By Richard Siddle
At its most basic there is not a lot of complexity about the classic bulk wine market. A producer has a quantity of wine to sell, and retailers, suppliers and distributors are looking for wine to buy. If the wine is at the right price and style then deals can be done quite straightforwardly.
It is essentially what, at heart, the VINEX model is trying to achieve. On the one hand producers have the chance to list volumes of wine they have available to sell at a specific price point. On the other side of the fence buyers, be they third parties, end retailers, distributors or brokers can also put up sourcing requests for wine. Be it it by grape variety, or country of origin, or both.
Matches can be made and deals done. But with a unique difference. All of these transactions, right up to the point of payment and delivery, can be done anonymously. That’s where the complexity - and technology - comes in.
Or in the case of VINEX proprietary software that allows it to securely manage online relationships in a way not widely possible before. At least certainly not for the more traditional bulk wine industry where, in the past, a deal might have been struck over a beer at a trade conference rather than with the aid of technology.
Technology is driving change in all areas of our personal and business lives. From the Ubers we all now readily book as soon as we get off a plane in a new city, to the apps we use to book the flight in the first place.
Market driven
It is also making the whole business of selling and buying wine a lot more sophisticated, and crucially, far more market and consumer driven. Which is not always good news for producers with large quantities of wine to sell.
In fact, it could be argued that technology is changing the rules of engagement between buyers and sellers of wine.
In the past producers held all the cards. Providing you were in part of the world making grapes that retailers and distributors have historically wanted to buy, then all that could go wrong was how much wine you had to sell, depending on the size of the harvest. There was always going to be enough buyers to buy your wine. Particularly with more of the world opening up to drinking wine and demanding more volumes to sell.
Buyers were being dictated to not just by the size of a country’s harvest and the subsequent change in price based on supply and demand of that vintage. But they were also at the whim of exchange rates and if the price point of the wine you wanted to buy from a specific country went up, then that was the price you were going to have to pay.
Smart vineyards
But those dynamics are now being thrown up in the air by technology and data. Pinot Grigio no longer just comes from Italy or Malbec from Argentina. Vastly improved viticultural techniques and the use of technology to better understands soils, typography and climate means certain grapes have become super varietals, capable of being grown right across the world.
Now the buyer has far more cards to play. If Pinot Grigio, for example, is too expensive in Italy then why not go to Australia and source it from there instead? If currency or harvests dictate then you can switch that supply to Moldova or Bulgaria. Providing you know where to go, have the contacts and the ability to change fast, then the world is now a much bigger place to operate in.
Technology is also helping buyers, distributors and retailers to be far more precise about the actual styles of wine their customers and consumers actually want to buy. This can only make buying decisions become even more accurate and far more market and consumer driven than ever before.
Buyers in control
By doing the data analysis of what consumers are buying and why, suppliers, retailers and distributors can now buy the wines that are actually going to sell. Rather than fill their shelves with what is available to buy, at the best price possible.
Yes, there could be a glut of Chilean Merlot at only a few centres a litre, but if there is not the consumer demand to buy it then buyers are going to become far less likely to stock it.
All of which has big ramifications for the traditional bulk wine market. Just because you are operating in the most demand area for grapes and wine now, does not mean you will be three, five or 10 years down the line.
Big Data is having a bigger, more influential role to play in the bulk wine market. The buyers who are able to look at what the market is doing and base their purchasing decision on that are going to be the ones setting the agenda, not the producers with millions of litres of wine to sell at the lowest prices.
Using Big Data
Data analysis and bulk wine are going to increasingly become bedfellows in the months and years to come. The more wine consumer data that is produced by online apps such as Vivino and Amazon, then the more opportunity there is for astute buyers and producers alike to use that data to make and buy the wines that consumers want to buy.
It is interesting that the world’s biggest wine price comparison site, Wine Searcher, has this month announced it is to widen its service to crunch its data and provide bespoke reports for producers and retailers about how consumers are using its site to search and find about wines they want.
Other services, such as Enoyltics, are looking to work with big wine data providers like Vivino, to offer the wine industry a completely different perspective on the wine supply chain. From consumer first - not the vineyard.
In the past it was quite standard for a bulk wine producer to work towards the “if you build it, they will come” model for making and selling wine. Not anymore. It is the consumer and these technology-driven apps that are “building” the market and it is going to be up to producers and wineries to “follow” rather than expect buyers to dance to their tune.