As one of the major players in value wine, owning Charles Shaw (aka “Two Buck Chuck”), Bronco Wine Co.’s new CEO, Dom Engels, believes that the wine industry needs more innovation and focus on creating new entry points for younger consumers. From packaging to labels, Dom discusses how he’s navigating Bronco through the turbulence of a shrinking market for value wine from both the cost and innovation side.  

Detailed Show Notes: 

Bronco - Top 15 winery, owner of Charles Shaw (aka “Two Buck Chuck”)

• Has its own CA distribution
• House of >200 brands
• Large winery in Modesto, bottling in Napa, a boutique winery in Santa Rosa
• Owns ~40k acres, ~30k acres vineyards, but farming <10k today
• Owns Bivio, a logistics company

Charles Shaw

• No created by Bronco, acquired by Fred Franzia (co-founder of Bronco)
• Was a successful, premium, luxury Napa brand, 1st vintage 1978
• Went bankrupt in the 90s, Bronco bought the trademark in 1999
• 1st product in 2022 - $1.99 for good quality wine
• Low pricing enabled by low margins and Fred Franzia’s “genius” in bulk wine trading
• Partnership w/ Trader Joe’s through shared belief in creating accessibility and substantial cultural overlap

Believes the industry needs more good entry-level wines to get younger generations a start in wine

• The ethnic makeup of younger people is not the same as that of older generations
• “Not your father’s Cadillac” - young tend to rebel against what their parents did
• 11,400 wineries in the US create a diffuse set of interests, a lack of clear messaging (e.g., craftsmanship, agriculture) to separate wine from alcohol
• Accessibility could be driven by the right packages (including formats) and labels; good labels drive trial, good liquid drives repeat sales
• Significant marketing spend is difficult due to low margins
• Industry covers the right price points (e.g., Charles Shaw $3.49 in CA), but needs other elements, not a lot of great innovation or marketing at low price points (some pockets of innovation, e.g., XXL focus on high ABV)
• Need more transparency - ingredients, nutrition, ownership, provenance - Bronco is adding more back stories to brands

Enhancing social interactions is important; e.g., Jack Daniels’ ad that getting together with other people is healthy too

• New Bronco company motto, “better times at every table,” similar to Pernod Ricard’s “conviviality”

Believes dislocation of restaurant price vs retail is a core driver of wine industry decline, $14 IPA and $25 cocktails make people drink less

Navigating lower volumes requires being more efficient, sees opportunity in winemaking (most capacity utilization at wineries now <50%), distribution (reduce inventory), and retail

Likely too many brands in the US and too much shelf space in retail

Mothballing a lot of vineyards due to oversupply

• Can’t bring back in 1 year, but can in 2-3
• Cut buds down so vines don’t produce fruit
• Still requires some maintenance costs
• Vineyards in less optimal areas are to be pulled first, and he does not believe there will be an overcorrection

Competing in value vs international

• Can’t compete on labor
• Need to compete on quality, provenance, and taste
• Even tariffs won’t solve the cost gap
• EU subsidies help democratize wine

Tariff impacts

• Some input cost increases (e.g., China for glass)
• A good thing overall for the US industry, which will lead to more US wine being consumed
• Likely no structural change

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In an oversupplied market with rising costs, being a winegrape grower is probably the hardest it has ever been. Natalie Collins, President of the California Association of Winegrape Growers, breaks down the cost of winegrape growing in CA, the challenges in the marketplace, and the policy dynamics in the US, CA, and EU that continue to exacerbate the challenges for CA’s winegrape growers. 

Detailed Show Notes: 

CA Winegrape Growers - based in Sacramento, lobbies at the state and federal level

• CA has ~5,900 winegrape growers and 550k planted acres

Key cost drivers of winegrape growing

• #1 labor, ~45-50% of budget (30-45% CA interior, 45-65% CA coast); doubled in the last 10 years, driven by:
• High min wage ($16.50; most pay $18-30/hr) → increases take entire pay curve up, not just bottom
• 2016 labor law change reducing hours before overtime pay → reduced farmworker take-home pay (OR provides an overtime tax credit to employers)
• #2 regulatory compliance (water, air, worker health, safety), ~10% budget
• Cal State SLO study on lettuce growers - compliance costs ~$1,600/acre (1,366% increase since 2006, 637% since 2022)
• #3 land - CA has some of the highest land prices in the US 
• #4 crop protection/fertility tools
• Farming costs ~$4k/acre Central Valley, $6-8k/acre Paso Robles, $8-10k/acre Sonoma, ~$10-17k/acre Napa

Grape pricing not rising w/ input costs - Central Valley ~$500-600/ton, Central Coast ~$1-2k/ton

• Bulk wine from Chile is cheap, and the US can’t compete on price

The annual CA Winegrape Crush Report shows pricing for all varieties by district

• No US federal support vs EU
• EU subsidizes at every level (growing, marketing, production)
• >e2B/year in direct and local support, enabling cheap wine production
• Crisis distillation - buy surplus wine to convert to alcohol (e.g., hand sanitizer)
• Vineyard removal and vineyard planting subsidies
• Aggressive marketing support (France investing $5B to support wine exports to the US w/ new tariffs)

US wines can have up to 25% foreign wine blended in and be labeled as US wine

2023-2024 - CA left ~300k tons/year on the vines; 2025 ~50% of vineyards don’t have a contract for the 2025 harvest; industry calling for another 50k acres to be removed (60k removed since 2022); all regions pulling out or mothballing/minimally farming vines

Tariff impacts (May 2025)- input costs increase, but can be positive for CA winegrape growers

• 2019 tariffs saw domestic wine increase its share by 10% vs EU wines
• Canada is actively removing US wines from shelves in retaliation; the US exports 10% of its wines, 40% to Canada

Deportations - creating fear, people are afraid to leave their homes for fear of their families getting separated

Seasonal labor is not big, 90% vineyards are mechanically harvested; H2A temporary workers (mostly from Mexico, all-in cost ~$30/hr, often more productive, cannot be paid more than domestic workers)

Economic impact of CA wine - 422k CA employees / 1.1M across US, $73B CA economic impact / $175B/year US

All agriculture is struggling in CA, replacement crops for grapes not easy (some almonds, pistachios, cherries); costs ~$30-70k/acre to plant a vineyard

Duty Drawback - a federal tax refund program meant to encourage exports

• If a winery exports wines, then imports them back, it gets 99% of import fees (including the Federal Excise Tax of $1.07/gallon) refunded
• If importing ~$3/gallon bulk wine, can save ~30%
• Mostly used by the top 5 wine companies
• 2024 - 38M gallons bulk imported (70M in 2022) vs ~70M gallons left on the vine in 2023

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Having met at the UC Davis Wine Executive Program, Kia Behnia, CEO, and Mason Earles, CTO, founded Scout to replicate the best sensor in the vineyard, “the farmer’s eye.” Leveraging off-the-shelf hardware, Scout uses AI to process images taken from a tractor to automate vineyard mapping, vine counting, yield forecasting, virus identification, and more. From managing vineyard assets to implementing precision agriculture to improve quality, Scout is harnessing the power of AI to optimize vineyard management.

Detailed Show Notes: 

Mason’s background - UC Davis Professor, Apple, AI & agriculture

Kia’s background for Scout - owns the Neotempo wine brand, worked at Splunk, the “data for everything” company

The official company name is Agricultural Scout, dba Scout, the website is agscout.ai, so it can be called any of those names

Founded in 2022, initially more hardware-based, but pivoted to an intelligence company using off-the-shelf hardware

The goal is to “replicate the farmer’s eye” with an AI-based solution using cameras, tractors, and Scout cloud and mobile app (which can be used offline); the brain is centered around a phone

US only today (~50-100 clients, 300 blocks, 2M vines, processed 56M photos), going international in 2026

4 main use cases currently: 

• Automate vine count, inventory, and mapping of vines - 4x faster than people could do
• Estimate crop performance - both vigor and fruit
• Yield forecasting - can use every step in the growing season to forecast yield with historical performance and weather forecasts
• Health performance and vine mapping - leveraging AI for virus detection

3 types of clients

• Estate wineries
• Vineyard management companies (“VMC”)
• Real estate investors or owners to track vineyards

Benefits include: 

• $400-1,200 savings/acre
• Productivity gains through managing more acres with fewer people, identifying low-performing vines, and the program tells farmers where to sample
• Remote monitoring of faraway vineyards
• Early season yield forecasting
• Disease management - virus can cause $170k/acre damage over 3-5 years, costs $40/PCR test, the goal is to keep virus <15% not to lose the whole block, has a 7,000 photo database on vine disease

Bench Vineyards discovered 1 acre of missing vines out of 24 acres and filled them in

Pricing is a subscription model, $150-180/acre per scan

• Volume discounts >50 acres
• Neighborhood and AVA discounts
• Starter - 2 scan package (for inventory and virus)
• Professional - 6 scan package
• Typical customer starts w/ 2 and upgrades to 6
• Monarch promotion, customers get 1 free scan
• Up front hardware costs ~$3,000

New product in beta in July 2025 - ChatGPT Scout for vineyards

Marketing mostly through word of mouth, industry trade shows, and webinars have been effective, as has partnership with Monarch (already tech enthusiasts)

Barriers to purchase are often due to farming budgets built around labor

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From 200 mph electric cars to 20 mph electric tractors, Praveen Penmetsa, CEO of Monarch Tractor, leveraged his passion and expertise in vehicles, robotics, and batteries to develop the first smart, electric tractor. Making farmers more profitable and efficient first, and then sustainable, are the core tenets that drive Monarch’s business. Praveen discusses the core benefits of using an electric tractor and how it works with farmers to take advantage of government incentives, making farming more efficient and cost-effective.  

Detailed Show Notes: 

Praveen’s background: mechanical engineering, loves fast cars, worked on electric vehicles, robots, and battery systems

Founded Monarch in 2018, the company is currently the only company selling smart, electric tractors

Now on four continents, with most sales in the US, pilots internationally

Solution is a smart electric tractor with an app and piloting autonomous driving

• Fits in 5’ rows
• Runtime 10-14 hrs for pushing, 8-11 hrs for mowing, 4-6 hrs for heavy operations; takes ~6 hours to charge

Core markets - vineyards #1, dairy #2, orchards, horse ranches

Core benefits

• Save $7-12/hr on diesel savings
• Remote service and support, day and night - can submit a service ticket on the machine and get help remotely
• Product gets better over time with SW updates (e.g., released the ‘row follow’ feature)
• Can power other things, be used like a generator (e.g., night lights for harvest)
• Easier to train operators (smart screen vs 20 manual controls)
• Environmental impacts - reduces carbon emissions
• With increasing automation (mowing is 1st operation), more labor savings

Autonomous driving has guidelines by CA OSHA (need signs that the autonomous tractor is running and no people in the block), but there are no legal guidelines in other places

Pricing

• $90k baseline price + options + subscriptions
• Gov’t incentives can make it cheaper than a diesel tractor, 20-70% savings
• Monarch helps apply for subsidies, including charging infrastructure and solar installation
• Subscription charge for connectivity and SW has various levels; some charges can be offset by incentives with carbon offset reporting (e.g., Dannon gives dairy farmers incentive payments for the carbon offsets)

ROI driven by tractor usage, payback ~2 years; has an ROI calculator on the website; needs to be cheaper and more efficient before sustainability elements come into play

Most farmers want autonomy to reduce labor costs

Sells through a direct sales team and dealers

Marketing driven by non-electric tractors today, podcasts are helpful, social media, and demos have been very effective

• Social media, primarily Facebook and LinkedIn for owners, Google SEO, and local dealer support
• Demos are essential; most farmers want to try before they buy

Partnering with other companies to use their technology inside, also partnered with AgScout to leverage AI for vineyards

Barriers to purchase primarily worry about service and support, and wanting more autonomy for labor savings

Continuously update both HW and SW on machines, some tractors now close to 4,000 hours of operation (vs. standard tractors need to be replaced after 4-6k hours)

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Drawing on her background in winemaking and Silicon Valley, Ashley Leonard, Founder and CEO of InnoVint, has developed a modern platform that tracks everything from the vineyard to the bottle. From getting granular with COGS to automating TTB compliance, InnoVint gets the winery out of spreadsheets and into a modern, cloud-based, mobile-centric system. This system is designed to accomplish InnoVint’s mission: Helping wineries run better businesses.

Detailed Show Notes: 

InnoVint overview - mobile-driven winemaking platform, tracks and manages all winemaking options, and automates compliance

• >600 winery clients (~80% of wineries still using Excel)
• 92% of clients in North America, 8% International
• Mission: helping wineries run better businesses

TTB requires reporting for producers >500 cases

4 products

• Grow - vineyard tracking platform from the winemaker’s lens; phenology dates, yield estimates, applications, harvest scheduling, historical trends
• Make - winemaking from fruit reception to bottling; work enablement platform with digital work orders
• Finance - tracks all costs associated with making wine, final COGS; the finance team applies overheads
• Supply (2025 launch) - case goods management, inventory tracking, integrates with DTC platforms & distributors, has allocations as a planning tool

Has open APIs; integrates with TankNet and VinWizard for winery automation, receives data back for actions taken; integrates with quality control labs (e.g., ETS) and can take action more quickly

Core benefits

• Key differentiator: profitability per SKU and true COGS/product (w/o InnoVint, calculated once per year)
• Efficiency, working smarter, better decision making, and more transparency
• Reporting to be able to manage quality
• Some wineries use data to track carbon footprint (e.g., water use, weight of glass)
• Reduces the risk of an audit

Compliance reporting (e.g., TTB 5120, export reports) - Gloria Ferrer went from 3 people over 2 days to 15 minutes for 1 person

Larger wineries tend to have more tangible benefits

• Domaine Chandon saved $75k annually by making the workflow paperless
• Patz & Hall saving 40 hours/month

Onboarding

• 5-step self-serve process (vineyard sources, lots, volume, vessels, current inventory) takes a couple of days for small wineries
• Premium package for larger wineries includes team training, and full data migration takes 2-8 weeks

Pricing - SaaS model

• Scales based on size (production) and complexity (# of locations) of the winery
• Not user or usage-based
• Implementation ~$1-2k
• Subscription starts at $2,400/year for a boutique winery for Make

Marketing - “has tried it all”, tries to add value to the end user

• Does a lot of speaking engagements/webinars on being a healthy winery
• Manages The Punchdown, a free digital community that is a peer-to-peer exchange
• Referrals from clients are the most effective marketing
• Launched the State of the Wine Business Health Report (2024) - surveyed with >500 participants
• To reach wineries that don’t go to conferences - LinkedIn/social, co-marketing, financial webinars
• Paid advertising sometimes works, but it's not a top lead generator

Barrier to purchase - resistance to change, case studies help overcome (e.g., Domaine Carneros saw what Chandon was doing and bought the product)

The product roadmap includes Supply module, AI applications, and embedded tools

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Making wine in California, France, and even Serbia, consulting winemaker Julien Fayard has a broad view of the winemaking world. His constant monitoring, evaluation, and investment in winemaking technology benefit both his own and his clients’ wineries. Julien offers insight into winemaking technology on both sides of the Atlantic, as well as some of the specific technologies he utilizes. 

Detailed Show Notes: 

Julien’s background: French, came to the US in 2006 and worked for Phillipe Melka, started his consulting practice in 2013, built two wineries and manages three others; mostly Napa (~85%), but also makes wine from Sonoma, Sierra Foothills, Provence, Bordeaux, and Serbia

Uses trial & error to evaluate new winemaking technology

Usually, a trigger that causes each tech adoption

Hears about new tech from travel and conversations with other wineries and tech companies

French tech is mostly involved with wine contact (e.g., yeast, oak treatment), the US is mostly logistics, mechanization, automation of labor, and CA is slow to mechanize vineyard work

Monitors the slowly evolving knowledge base in winemaking - most tech innovations are slight derivatives of existing knowledge (e.g., sulfur automation)

To buy into a new tech: other people using it, company viability (and ability to scale), practicality of solution (e.g., barrel door for fermentation did not take into consideration time and the challenge to move between barrels)

ROI calculation includes cost savings, risk assessments, and quantity or quality improvements

Generally does not implement things that could move costs more than 10-20%

The most significant variable cost driver is when volume drops (e.g., waste, accidents, filtering, bulking out wine) - each tank is ~$100k of wine

Fruition Sciences did a lot of sap flow analysis, but never got mass adoption

Well monitoring technology is happening, and may be required soon

Communications modules for sensors are getting much cheaper, enabling more tech

Vinwizard (NZ) - wall winery automation

• Started with pumpover automation (temp, speed)
• Can control to avoid peak energy hours
• Can set times for tanks to make temp-sensitive additions easier
• Alarms for glycol system outages
• Arkenstone was 1st Napa winery to adopt, learned from them, a solution more complete than TankNet
• Min ~$50k cost

Innovint - winery SW management system

• Creates all work orders, does costing, compliance, and traceability
• Clients, CPAs, and compliance can see everything
• A communication tool, very user-friendly

Sentia - hand wine analyzer (VA, malic, alcohol, SO2)

• $2k/machine
• <$1/use for strips
• Uses a solid chemical reaction
• “Fragile” tech, 1 in 30 results is way off, researching this with a Phd
• Tried bungs with sensors, but requires a tech breakthrough to work

Oenofrance - a system for faster oak extraction

• Put oak blocks (closest to staves) under pressure to extract oak flavors faster
• $40k in oak to $4k (renting tech)
• Costs ~$80-90k to buy machine

Excited about new destemmers, probes for monitoring wines (for “modern natural wine,” in-ground amphora aging)

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Exactly five years ago, Robert and Peter published the first episode of XChateau! To help us reflect on how the wine market has changed in the last five years, XChateau’s most frequent guests, Amanda McCrossin and Charlie Fu, return to discuss the changes in wine influencing and social media, the wine market upheaval occurring now, wine marketing done right, and wine drinking trends. 

Detailed Show Notes: 

Changes to being an influencer

• AM: did not think TikTok would be big for wine in 2020, built it up in 2021, and created more “snackable content” (<90 sec videos), reaches wider audience (late 20s to boomers, more female) on TikTok
• Influencers are changing, and many get burnt out (including Robert)
• Influencer growth today - e.g., Olivia Tiedemann (@oliviatied) went from 0→4M followers on IG in 2 years, raw, skilled, edgy style caught people’s attention, used collabs to keep growing

Social media evolution

• Things are more video-heavy today vs. the static content of 5 years ago
• Not a lot of male creators (tend to be older, more “academic”), female creators are much better at wine education
• YouTube skews more male, TikTok more female
• Males tend to consume more long-form content, while females tend to consume more short-form content
• IG likes higher production quality, TikTok more “authentic” videos, IG upped video content length to 3 mins
• Rednote (Little Red Book) - a popular Chinese app for local food & beverage recs, particularly in Asian dominated communities

Wine market upheaval

• PY: Anti-health messaging is hitting wine more than other alcohol, reversing the trend of the last 30 years, fueled by the “French Paradox” research on positive heart benefits of the Mediterranean diet
• Premiumization is somewhat continuing - the top 1% are maintaining the high-end market, while others are trading down
• AM: “Wine isn’t cool,” wine is not great at being in pop culture today
• PY: Taylor Swift helping things like Sauv Blanc, but she’s not out talking about wine (AM)
• AM: Wine needs an Alix Earle (@alix_earle) w/ a glass of wine or maybe more medium-sized influencers (100-500k followers)
• CF: Health kick is a major trend impacting alcohol consumption, fewer people at restaurants ordering wine (at least in LA), people pushing NA options
• AM: people not interested in the <$10/bottle category (except things like Kirkland wines), want $30+ bottles but need to sell the wine as there is so much choice
• AM: Wine needs to revamp its merchandising to reach more people (e.g., more by style than varietal)
• CF: High-end wines getting cheaper and more available; when top wine prices fall, alternatives also crash
• AM: No such thing as brand loyalty anymore, NDA wines big for Wine Access (private label w/o being about to say the source)

Wine marketing done well

• CF: Winemakers from Burgundy (e.g., Dujac) are out there a lot more, increasing the popularity of the entire region
• PY: Doing more experiences both at the winery and on the road
• AM: Clean wine movement (e.g., Avaline) has some negatives, but is positive in terms of giving more transparency (what many consumers want these days)
• RV: ingredient and nutritional labeling on the bottle is better than just available on the website; PY: NA wines have full nutritional panels, which could help promote wine’s good sides

Wine drinking trends

• AM: Sauv Blanc is America’s grape right now, theory: women think it’s a healthier option due to its lighter, crisp style
• CF: people not drinking as broadly, but more hyper-focused due to so much available information (e.g., William Kelley and Burgundy); fewer people drinking natural wine

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Spraying for powdery mildew can be ~25% of the cost of farming a vineyard and be one of the key elements of a grower’s carbon footprint. Sarah Placella, Founder and CEO of Root Applied Sciences, has taken her deep research in microbes and created a data-driven solution to monitor the air for mildew and spray only when needed. Root can cut ~5 sprays per season, and growers have an average 5x ROI using the system.  

Detailed Show Notes: 

Root Applied Sciences (“Root”) - airborne pathogen monitoring for farmers, like an “early warning system”

• Founded in 2018, 1st work with/ growers in 2021
• Powdery mildew (“PM”) is a big problem for vineyards in CA (March - August)
• Currently only markets to vineyards, done work with/ strawberries, leafy greens, can do anything with/ DNA and small insects
• Napa, Sonoma, Central Coast today

HW enabled SaaS model - Root owns and maintains devices

• Device in the field, just above the canopy
• Send data (battery status, device status, temp, humidity) to the cloud over LTEM connection
• SW to see the data
• The grower collects samples from devices 2x/week and sends them to the lab
• Growers can share data with/ each other

Has an automated prototype in process

• Will not need a grower to collect and send samples
• Fundraising “seed” round for an automated system

~25% of operational costs are spent managing PM

• 6-16 pesticide applications/season
• Conventional growers have fewer applications, but spend more for each one
• Organic may be spraying every week
• PM takes 7-10 days to enter plants. See 2 peaks of PM before growers can see it, once PM exists, it's hard to control
• Root can cut 20-80% of sprays (~5 sprays/season), lengthens spray intervals when low risk
• ~$100/acre spray cost per application, ~$300/acre if need to spray by hand (e.g., steep slopes)
• 2024 - saw PM on Mar 29 in Carneros, growers planned 1st spray 4/16, moved up 1st spray to 4/2; cut sprays and more clean fruit
• Root data enables more biological sprays (have shorter efficacy windows, are more environmentally friendly, and data gives more confidence to try them)

Other benefits of Root

• Clean fruit - faster fermentation (5 days faster), higher quality, possible increase in yields
• Environmental (less sprays, tractor use) - less diesel use, lower soil compaction; for 1 grower, 1 spray is a 13% reduction in carbon footprint
• Farmworker health - fewer chemicals in the air

Pricing

• $3,000/season/monitoring station all-in
• Avg grower has 4 stations, 1 every ~30-50 acres
• Precision growers or rolling hills, 1 station every ~10 acres

~5x ROI

Barriers to adoption

• Risk aversion
• No access to a carrier to send samples
• Grape prices down (budgets)
• More adaptive sprays can make operational scheduling harder for vineyard management companies

Other PM solutions

• “Spray and pray” (~90% of growers) - calendar-based system
• Weather-based tools don’t work well and may be impacted by climate change
• Spore trapping tools (e.g., spinning rods, roto rods) have sticky material that reduces sample size and efficacy, UV light exposure degrades PM
• Image-based analysis (new) - lots of data to send, samples ~2L air/min vs 400L air/min Root, does not specify type of PM present (~40 types)

Product roadmap - more power efficiency, integrating a solar panel

Has done work with/ downy mildew, botrytis, vine mealybug, and can detect them, but does not add a lot of value

Excited about growth in microbial mildewcides (biologicals)

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With over 1,000 kosher wines from across all major winegrowing regions, Royal Wine is the largest importer (and producer and distributor) of kosher wine in the world. Gabe Geller, Director of PR & Wine Education, discusses the market for kosher wine, how and where it is made, and how Orthodox Jews hear about them.

Detailed Show Notes: 

Gabe’s background, at Royal Wine >9 years, wine industry for 16 years (retail, consulting, marketing)

Royal Wine - world’s leading importer, producer, distributor of kosher wine

• In US, carries >1,000 kosher wines from every major wine producing region
• Owns Kedem, Herzog, and other brands

Can’t taste kosher wine, similar to other wines

• Produced only by Sabbath observant Jews
• No non-kosher ingredients or processing agents (e.g. - fining agents)
• Has kosher certification on the bottle
• Mevushal (“boiled”) - for some kosher wines, uses flash pasteurization which is also used by some non-kosher wineries; tend to taste more approachable initially, but ages longer

Israel #1 producer of kosher wine (~5M cases), USA (~350k cases; mostly Herzog), France (~350k cases across many wineries)

Kosher wine market

• Observant Jews drink kosher wine year-round
• Jews use wine in almost every religious ceremony, considered the “holy beverage”
• Passover 1st night dinner (Seder), every adult is required to drink 4 cups of wine (can by any kosher wine or grape juice), each cup symbolizes 1 way God saved Jews from slavery
• Jews who don’t do kosher normally will for Seder
• 40% of kosher wine in the US is purchased for Passover (used to be 60%, declining as more quality kosher wines available, so more is being bought year-round)
• Top markets - Israel, US (NY/NJ #1, FL, CA - CA Jews drink less wine than East Coast Jews), France

In top kosher markets, large retailers (e.g. - Total Wine) will have a kosher selection, some kosher wine stores, and online retailers (e.g. - Wine.com) also carry kosher

Of the 15.7M Jewish people (2023), only a small portion keep kosher

Some kosher wines sold to the general market (e.g. - Bartenura Moscato #1 imported Moscato the past 15 years, most don’t know it’s kosher; Jeunesse semi-dry wines have a distinct consumer appeal)

Israeli politics / Gaza war have lead to people buying more to support Israel

Marketing to the Orthodox community

• Identify sects with stricter mevushal rules (e.g. - 101F vs 105F) and promote specific brands that meet those
• Print advertising big (English, Yiddish), many do not use as much internet, none on Sabbath, take in news via print
• Whatsapp #1 social media for Orthodox Jews (or Telegram)

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Though one of the oldest wine-growing regions in the world, Israel is still exploring its potential after Muslim rule after World War I. Victor Schoenfeld, Head Winemaker, and Walter Whyte, VP of Sales for Yarden Imports, explain how Golan Heights Winery has set the bar for the quality of Israeli wine and spreads its wines globally, both within the Jewish community and beyond.  

Detailed Show Notes: 

Victor Schoenfeld - CA native, went to UC Davis, recruited to Golan Heights Winery in 1991

Walter Whyte - managed officers’ clubs in the military and learned about wine

Golan Heights Winery (“GH”) background

• Founded 1983 to export wine of high quality
• 26% exported today (production to increase 30%, primarily for export)
• NE Israel, Syrian border, 33rd parallel (like San Diego)
• Volcanic plateau, Mediterranean climate, high elevation (1,200-4,000 ft)
• 19 varietals, known for traditional method sparkling, Yarden Cabernet
• Zelma Long, former consultant
• Price points range from $15 (Mt Hermon) - Yarden Cab ($50) - $80+ - $1,000 (Cru Elite)
• Manage 40% of vineyards (to increase), rest on long-term contracts
• 500 vineyard blocks, harvested & vinified separately
• Has two propagation vineyards and a nursery

Israeli wine history

• Journal of Science (2023) - identified two winegrape domestication events 11,000 years ago - Caucasus (Georgia) and Western Asia (Israel)
• Discovered ~30 ancient wine artifacts
• Golan Heights is the coolest climate region in Israel
• Muslim rule 738 - WWI - old varieties died out

Israeli war impacts

• Minimal grape growing impacts (1 missile fell on vineyard), but emotionally challenging
• Support in the US for Israeli wine, reduction in sales in Europe after Oct 7, 2023 events

Israeli wine market

• GH demand > supply in Israel
• Per capita consumption is low; a large segment does not drink due to religion
• The food scene has exploded in the last 20 years, but many restaurants do not serve Israeli wine
• Top 5 markets - US, Canada, Europe, Far East (Japan)
• Top US markets - NY, NJ, CT, FL, TX, IL, CA
• Historically, wines went to religious markets, expanding into secular
• internationally marketed as high quality, not as kosher; Angelo Gaja distributes in Italy

Differentiating GH

• “Oldest new world winery in existence”
• Marketing messages: World-class wine, kosher, then from Israel
• High elevation, volcanic soils on 33rd parallel (Etna is 37th)

Marketing

• Grass roots, get people to taste the wine
• Active in Jewish organizations, ads in Jewish publications, tasting events sponsored by Jewish groups
• Strong presence in Kosher wine stores

All GH wines are kosher

• 2 types - Mevushal (cooked/pasteurized) - required for some, esp Kosher restaurants (catering, weddings, bar mitzvahs); Non-mevushal
• Many wineries do both
• Everything used in winemaking needs to be certified kosher (e.g., yeast)
• Can’t use things like isinglass
• GH's whole facility is kosher
• “Could double business if made mevushal,” but will not to maintain quality

Food and wine pairing is not typical. Traditional Middle Eastern cuisine, “mezze,” has a lot of different flavors at once

Passover dinner is coursed, and every adult must drink four glasses of wine (or grape juice)

Yarden Cru Elite - $2,000 per pair

• 265 pairs related, including NFT, sold directly from winery
• Celebrate the 40th anniversary with collectors
• Cabernet Sauvignon, single vineyard, single block, two single barrels
• Launched at an Israeli restaurant in Singapore

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Tracking vine trunk movements down to the 0.5-micron level, Phytech is leveraging technology to optimize vine irrigation. Cody Ashurst, Director of Vineyards, and Lex Palmer, Marketing Manager, discuss how their solution optimizes and automates irrigation today and how it can be extended to optimize fertilization, harvest dates, and much more. 

Detailed Show Notes: 

Phytech - a global SaaS company that optimizes agricultural irrigation

• Technology includes dendrometers, irrigation pressure switches, soil moisture probes, and frost & weather stations
• Crops include nuts (biggest), citrus, pears, getting into row crops
• Vineyard solution primarily West Coast / CA, pursuing Portugal, Spain, Italy, Chile, Mexico, Texas

Dendrometer - digital devices mounted onto vine or tree, measures expansion and contraction of plant trunks at the 0.5-micron level (70 microns = 1 human hair)

Vineyard solution includes a dendrometer, soil probe, website, and mobile app with wireless comms and data loggers connected via cellular, satellite, or wifi

• The solution can be adjusted based on the type of farming (e.g., quality or quantity), rootstocks, clones, soil types
• Tracks trunk size and soil moisture to signal irrigation needs
• Optional: pump/value control for irrigation
• Can schedule up to 2 weeks of irrigation
• Can monitor fertilizer inputs (cost of fertilizer up 600% last 5 years)

Benefits:

• Don’t promise water savings, but see up to 60% less water use
• Improve quality by knowing when veraison happens and when vines stop growing or are stalling
• Optimize fertilizer, diesel, and electric pump costs
• Reduce labor for irrigation if automated
• The system logs data, enabling knowledge transfer when people leave
• Case study: High-end Napa vintner got WE94 points 1st vintage, then used Phytech in a heat wave year and got WE97 w/ tailored post-veraison irrigation; other growers had a 30% loss, the winery had a 3% loss
• Case study: one ranch was expecting a 50% loss, but down to 3% with irrigation changes

Pricing - depends on # of sites in a block

• There is a small upfront fee for installation
• Monthly SaaS fee (~$50-80/acre/year), includes maintenance
• Weather station ~$700/year (vs ~$3,500 to buy)

Case studies (videos on website)

• Ultra premium Napa winery Neotempo
• Larger Mendocino grower Bonterra 

Marketing most through word of mouth/referrals

• Digital media, video testimonials, trade shows & panels
• Video in digital media has been the most valuable
• Connecting 1:1 is very helpful
• Phytech is more holistic than other solutions

The most significant barrier to adoption is technophobia

The subscription-based model eliminates “tech graveyard” growers have

Product roadmap

• Predictive brix/pH model (growers input brix, system tracks weather, vine response) to predict harvest date by block
• GDD (growing degree days) monitoring tracking temperature and humidity in the field at the block level
• AI Advisor to look at past data and current practices and enable recommendations

Other exciting innovations - Autonomous spraying and tractors (Guss, Monarch), optical arrays for vine health (Scout), microalgae for soil health (MyLand)

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After struggling with tracking vineyard data firsthand, Shawn DeMartino, CEO and Founder of Sentinel, decided to create a solution with his partner. Enabling vine by vine mapping and data collection that could stand the test of time enables vineyard managers to increase the lifespan of a vineyard, manage viruses, and effectively create a “medical record” for each individual vine.  

Detailed Show Notes: 

Shawn’s background - winemaking, viticulture, now general management

Sentinel was a Covid project that became real, software that collects individual vine information over time

• “Patient medical system of record for vines”
• The solution includes a mobile app, desktop platform, and high-accuracy GPS (receivers that clip onto phones)
• Maps all the vines in the field
• Configurable data collection forms
• Available in 5 countries currently

Mapping the vineyard

• Create a 3D model with lat/long and elevation
• Basics (variety, clone), images, comments, discrete statuses (e.g., life stage, virus status)
• The vineyard mgmt team populates data, can walk up the vines and record
• Work with/ Sentinel to put in bulk metadata (e.g., block info, varietal)
• A client mapped 100 acres in 1 week

Work order function

• E.g., irrigation can be recorded
• Roguing, planting, and grafted statuses can auto-update when the work order is completed

Core benefits

• Extend the life of the vineyards
• Virus/disease management, see the program more clearly, identify asymptomatic vines in hot spots (case study: ~10% of vines asymptomatic) 
• Optimize pick areas (through mapping flavor profiles)

Pricing

• Mostly software, hardware costs small
• Annual subscription based on acres, not users (<1% of farming cost)
• Biggest growers ~$2k/year

ROI example: client roguing 1% of vines/year w/ growing virus problem, Sentinel enabled them to get ahead of the problem in 1 year

Marketing mostly organic search

• Articles and podcasts helped
• Last 18 mo, mostly word of mouth
• Referral program: The referrer gets a bottle of Krug

Barriers to adoption

• Worries about time requirements; the goal is to collect data when already in the field
• Worries about less flexibility to manage vineyard; full customization of data enables more flexibility
• Next on the product roadmap - continue to flesh out more work order functionality

Other tech Shawn is interested in

• Winery management platforms (e.g., Innovint)
• Soil moisture probes for irrigation

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With the recent launch of a new $300 retail icon wine, Boulder, Kaiken continues to explore the potential for luxury wines from Argentina. Building on the last 15 years of Kaiken's other icon wine, Mai, Anita Correas, Commercial Director, and Gustavo Hormann, Director of Winemaking, discuss the global market for luxury Argentinian wines, how they approach launching them, and the brand-building impacts for the Kaiken brand. 

Detailed Show Notes: 

Kaiken background

• Founded in 2002 by Aurelio Montes (Chile)
• "Kaiken" is the name of a wild goose that crosses between Chile & Argentina
• Exports to 60 countries
• Winery in Vistalba, Mendoza (28ha), vineyards in Agrelo (60ha) & Los Chacayes, Uco Valley (150ha)
• 60% on-premise
• Frances Mallmann restaurant at the winery

Recently launched new luxury tier/icon wine - "Boulder"

• $300 retail price, 3,700 bottles
• Developed over the last 10 years
• Unique 3ha block in Los Chacayes due to overflow of Arroyo Grande, full of big rocks/boulders
• Malbec (64%), Cabernet Franc (28%), Petit Verdot (8%)

Boulder launch plan

• Launched in Buenos Aires, Hong Kong, Korea, Brazil (São Paulo, Argentina's #2 export country), US
• Brazil's event had a more direct impact on sales
• Mostly press/trade events that are smaller, in-person
• Likely less on-premise than Kaiken overall, more hand-selling to collectors and Michelin Star restaurants
• VR w/ Google Glass to see the vineyard up close and go inside the soil has gotten positive feedback, but it is more expensive than a regular video (required 3 days of video shoots and a special camera)

Mai - prior icon wine

• $100 retail price, 12,000 bottles
• Launched in 2009 from a 120-year-old vineyard
• Marketing more "maintenance" now
• 2021 - redesigned packaging, got 98 pts and Top 100 from Suckling
• Primarily sold in Argentina, then UK, US, Brazil, Japan

70% of Argentinean wine is consumed domestically, delaying the need for exports

• Average export ~40% higher price than Chile (export-focused market, ½ the population, 2x wine production vs Argentina)
• More high-end wineries in Argentina vs ~5 in Chile

>$100 market for Argentine wine - "not a huge market"

• Big domestic market - much of Mai, Boulder sold domestically
• Consumers looking at super high-end often do not look at the country of origin but more at the concept of the wine
• Value Prop for Argentine luxury wine - not influenced by oceans, high altitude, dessert wines, driven by the Andes

Return on Boulder is more than sales, but brand building for Kaiken

Focused on relationships with importers

• Want long-term relationships as they represent the brand globally
• Reach collectors through import partners
• Has affiliated importer in Argentina

Montes relationship

• Was helpful on launch to piggyback on Montes brand
• Now Kaiken is more independent and only shares importers in a few countries (it used to have the same ones)

Kaiken Ultra ($26) awarded Wine Spectator Top 100 (#30, highest Argentine wine)

• Wine drinkers can graduate from Ultra to Mai and others
• Kaiken's focus for each range of wines is to over-deliver for the price point vs linking the wines

Good press in 2024 for Kaiken - #1 New World Winery from Sommelier Awards, Boulder rated best Argentinian red blend by Patricio Tapai (wine critic), Estate Malbec was Wine Spectator's best value wine

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With many macro headwinds for the wine world, Gino Colangelo, founder of Colangelo PR, felt the negative and often poorly fact-checked press around alcohol and health posed an existential threat. Teaming with Karen McNeil of The Wine Bible and fellow PR leader Kimberly Charles, they founded Come Over October, a campaign to create a positive narrative around wine. With freely available media assets and over 120 partners, the movement, in its first stretch, has shown the power of focusing on the positive elements of wine.  

Detailed Show Notes: 

Macro wine challenges include marijuana, Ozempic, and RTDs, but “no alcohol is healthy” messages from WHO and other gov’t organizations potentially pose an existential threat to the industry

Come Over October (“COO”) founding

• Campaign to advocate for wine
• Commission research - 60%+ 21-39-year-olds would change consumption if alcohol health guidelines changed, 60%+ participate in Dry January or Sober October (which equates to 17% of the year)
• Karen McNeil, writer of The Wine Bible, got backlash over post against Dry January and ideated Come Over October
• Kimberly Charles, owner of an SF wine PR firm, joined as co-founder
• Started the company in spring 2024 (Come Together, a Community for Wine) as a mission-driven company to advocate for wine

Fundamental principles

• Had to reach consumers
• No negativity towards other alcoholic beverages
• Involve everyone in the wine world

The goal for success: turning the narrative around wine positive (e.g., more articles on the social benefits of wine)

• Measured by impressions of negative vs. positive articles about wine
• In a battle for hearts and minds vs just getting the facts right

Asked for two things from partners

• Modest check - $1-10k to pay for campaign, website, social media, media asset creation
• Activation - use campaign assets (free to all) to run a COO campaign

Example activations

• Total Wine - in-store signage, direct marketing, social media posts
• Constellation Brands - bought in-store radio ads for 800 Kroger stores under the COO banner (promoting Kim Crawford, Meiomi, & The Prisoner with Karen McNeil doing voiceover) and reversed negative sales trends in stores
• Jackson Family - free tasting, events, cash support for COO

Campaign success metrics

• 120 companies participated
• >1,000 retail stores engaged (e.g., Kroger, Total Wine, Gary’s)
• ~$100k donated media (e.g., Wine Enthusiast, Vinepair, Wine Spectator)

Next Campaign - Spring 2025

• Focus on the food message
• Differentiate wine as food vs alcohol
• Continue togetherness message
• Bring in chefs, restaurants
• Then roll back into October
• Would like to hire a Director to run the company

Health debate

• Loneliness epidemic - 30% of males don’t have close friends
• Wine has a unique ability for positive wellness in bringing people together
• Does the industry need a positive health message/research to turn things around truly? (e.g. - wine → better relationships / friendships → stress reduction → better health)
• 60 Minutes show on The French Paradox (1991) changed the wine world and led to 30+ years of growth
• Not yet seeing health impacts of marijuana usage as it has only been legal recently

Contact info: info@comeoveroctober.com or gcolangelo@colangelopr.com

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With a second year of volume declines, 2024 has been challenging for the wine industry. Digging deeper into what trends are shaping the wine industry’s malaise, Cathy and Chris Huyghe, founders of sales analytics software platform Enolytics, have uncovered important insights into the US DTC wine market, including the decline of women and the divide between the affluent and middle class in wine purchasing. Enolytics has also developed a free service for the industry called EnoInsights, which is worth checking out.  

Detailed Show Notes: 

Enolytics launched b/c no one in wine knew what to do with their data 

• Builds sales analytics software for the wine & spirits industry for both DTC and wholesale depletion data
• Customers primarily small (<$1M DTC revenue) & medium-sized, growing in larger wineries
• US, Canada, Australia - primarily US w/ 80% California

Partnership with WineDirect

• Exchange anonymized data every quarter and analyze it to build reports for the industry
• ~2k wineries in database, ~1k wineries analyzed after removing outliers

2024 DTC trends

• Revenue flat-ish, volumes down significantly
• Women purchasing less (-4%) - overall (-3%), men (-2%); reverses a recent trend of women buying more wine, not generationally different, impacting white (-5%) and rose (-10%) more than red (-2%)
• Affluent areas are doing better (flat revenue, lower volume), middle-class & poorer areas are down more
• Wineries increasing pricing (+5% through Q3 2024), AOV up due to pricing
• VA is doing reasonably well, CA - particularly Napa and Sonoma, hardest hit - they largely depend on tourism (70% of purchases from people outside CA), Central Coast CA is not down as much (70% of purchasers from CA)

Hospitality/visitation declined 7% (# of purchasers) in 2024 (also declined in 2023)

• Impacts wine club sign-ups, with hospitality the main club sign-up engine

Wine club growth -3% (# of members) in last 12 months

• 2020 +7%, 2021 +11%, 2023 -1% (20% attrition through Q3, 28% total; 19% sign-ups), 2024 -2% (19% attrition, 17% sign-ups)
• Club doing best of all major DTC channels - revenue flat, volume down
• Less expensive wineries getting hit more (less affluent customers)
• Customizations up - 20% of shipments, higher revenue per shipment
• Avg club tenure falling
• Best practices - better training of tasting room staff, use data to manage attrition (Enolytics has an algorithm to determine attrition risk; wineries that use it see 20% less attrition than average), use data to target customers to join the wine club (high spenders that are not in the club)

Website sales have the most significant room for growth, -42% since 2022, still up from pre-pandemic

• 2020 +250% in online sales
• Texting, “concierge” services, more targeted telemarketing (highest AOV channel, 6x tasting room; potential to leverage tasting room staff)
• Average winery emails the entire list, gets lots of unsubscribes, recommends hyper-segmentation, creates messages for 100-200 people

Events - same levels as 2022

• Opportunity to take tasting room on the road
• Recommends targeted events with a specific goal
• Go to places where there’s an existing customer base

Cross-channel marketing can be effective, e.g., using DTC data to sell out a restaurant event

Wholesale data partner - VIP - includes “can buy” and “lost” accounts

Regional wine marketing boards (VA, Paso Robles) engaging Enolytics to do studies on DTC data - currently doing baseline analysis and onboarding more wineries, sending quarterly reports

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Having “taught a computer how to taste” and using that data to help winemakers improve their processes, Tastry has turned to leveraging AI and their consumer preferences and wine chemistry databases to help wineries sell wine.  Katerina Axelsson, CEO, and Charles Slocum, Chief Business Officer, discuss Tastry’s Sales Accelerator Ecosystem, which includes the Wine & Consumer Insights Report, which gives wineries, distributors, and retailers tools to help them sell more wine.  

Tastry has provided an example report for listeners. 

Detailed Show Notes: 

Tastry overview - see Ep 157 for a deeper dive

• Tagline - “taught a computer how to taste”
• It has two unique data sets - wine chemistry, US consumer taste preferences
• Helps improve winemaking, predict and react to changing consumer preferences
• Works with wineries, retailers, and distributors

Tastry commercialization history

• 1st 2 years - establish trust with winemakers
• Last year - focus on helping sell wines

Sales Accelerator Ecosystem

• Takes data from 3 areas (winery input metadata, wine chemistry, Tasty validated wine market data) to feed accelerator (AI system)
• Consists of Wine & Consumer Insights (“WCI”) report, Sales Accelerator platform app, & integrations into other platforms (e.g., e-RNDC)
• Has AI search and chat functionality
• Salespeople use data to sell to on/off-premise accounts
• Sometimes, consumer-facing in-retailer displays

WCI - 2-page report to help sell wines

• Used to train salespeople, it can be a leave-behind
• P1 - for the category buyer; P2 - for servers, staff to educate them

WCI Components: 

Top left - bottle shot, label zoom in (helps for retention); name of wine; varietal; appellation; price (what it is actually sold for in the market); wine category (AI curates category to be highest scoring on Tastry score)

Category Score - 200 point scale, 100 is average for the category

• Not a critic score
• >100 is better than the average, <100 less than average in terms of expected performance in its category against the Tastry consumer preference database (e.g., Cupcake Pinot Gris got a 181 score)
• Percentile rank - e.g., 129 = performs 29% above avg
• 10,000s wines in database out of ~160k wines in the US
• Never <15 wines in a category
• Creating a new WCI for more rare and unique wines
• Lower priced wines, terroir matters less; higher prices matter more

Tastry Notes - AI-generated tasting notes, breaks into average and more experienced drinkers

Segmented Consumer Appeal - insights into buyers of wine; if there’s at least an 85% match (roughly equates to Vivino’s 3.9-4.0 score or 88-90 critic score), consumers tend to notice they like the wine and will buy it again

Flavor profile (p1) - e.g., fruitiness, oakiness, sweetness

P2 - flavor profile (major flavors), retail talking points, food pairings - used as a training tool to help people sell wine

Launching a new page for marketing teams to update data

Retailer recommender - has shown +3-12% sales in 90 days

Tastry Pricing - $1,580/year subscription, $370/wine analyzed

How Tastry can help in the current macro environment

• Creating low / no alcohol wines
• Marketing tools (Sales Accelerator) - addressing younger audiences (e.g., pairings with kale salad and frozen pizza rolls)

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With 600 acres, a polo field, a lake dock, and even a zebra and camel onsite, the Folded Hills Winery and Farmstead in Santa Barbara is able to create unique and memorable experiences. Kim Busch, Founder and Co-Owner, and Kylie Enholm, Director of Operations, discuss how they bring this vision to life through the platform of Rhone varietal wines. From hiring for the “hospitality gene” to having a full-time events manager, Folded Hills is creating memories they hope to get people to tell their friends and add to their wine club program. 

Detailed Show Notes

Folded Hills founding - intended to grow and sell grapes, vineyard manager convinced the Busch’s to start a label, Folded Hills ties into family history

• Heritage labels - e.g., Lilly Rose after Lilly Anheuser (grandmother)
• Photo labels (reserves) - mostly from photos the Busch’s took themselves

Folded Hills overview

• 600 total acres for Homestead, Farmstead, private ranch
• Southernmost winery in Central Coast, right off 101
• The urban tasting room in Montecito, Homestead (winery tasting room), and Farmstead at the winery
• Rhone varietals (Grenache, Syrah, Clairette Blanche, Marsanne, Grenache Blanc)
• ~5k cases/year
• 98% DTC, would like to increase wholesale to 10% for more exposure
• Has its own polo field

Visitation

• ~8-10k visitors/year total
• ~2.5k in Montecito (more club members, a “Cheers” vibe), rest at Homestead
• Mainly from Santa Barbara, Ventura, San Diego

Creating memories through events differentiates Folded Hills

• Sparkling rose launch party in Montecito - brought in a mini horse with a unicorn horn
• Launch vinyl nights (Thurs, Sun) in Montecito
• Does 1 large event/month at estate Homestead - e.g., polo games, tailgate contest
• Oktoberfest - beer & wine
• Animal feeding (including zebra, camel)

Prices events to primarily cover expenses (range from $15 - 195 winemaker dinners)

The focus is on creating memories vs selling wine to create word-of-mouth buzz

• Andy’s dad said “making friends is our business.” - he created beer and baseball while owning the St Louis Cardinals

Hospitality differentiation through events and experiences

• Has a full-time events manager
• Enabled by lots of land (600-acre ranch), private lake dock, ATV group tours in the vineyard, animals to feed
• Homestead appeals to families (w/ Farmstead - U-pick fields, animal feeding)
• Hires people w/ the “hospitality gene”

Wine club benefits

• Wine is the biggest draw (“purity” of wines believes does not lead to “stuffy nose” or “headaches”)
• Word of mouth around Folded Hills taking care of club members (access to private lake, private ranch)
• ~10% of club members are local (live w/in 1 hour), next largest group from St Louis (does ~2 events/year, launched brand in St Louis)
• Get 15% off organic produce at Farmstead
• Plan to relaunch farmstays on a adjacent private ranch

Farmstead - “heart of soul” of brand

• Best sellers - animal feed, ice cream, baked goods
• ~30% of visitors go to both Homestead and Farmstead, increasing as tasting room visitors now given free bag of animal feed

Santa Barbara wine region differentiation - diversity, 75 varieties grown; unique climate (transverse mountain range)

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With the health and wellness and moderation trends booming, the non-alcoholic wine market has been growing quickly off a small base. Launched in 2019, the Giesen 0% range has solidified its position as one of the leaders in the NA wine market. Duncan Shouler, Director of Innovation, explains how the 0% range was developed, the critical elements of non-alcoholic wine, the current market conditions, and what it will take for the non-alcoholic wine market to succeed.

Detailed Show Notes: 

Duncan’s background - was in marine biology and shifted to wine ~20 years ago

Giesen - family owned, 40 years old, large winery (crushes ~20k tons/year), a broad range of wines from large scale to single vineyard

Started non-alcoholic (“NA”) range 5 years ago (2019)

• ~17% of production today, growing
• Has a more significant reach and impact on the market vs. regular wines

The creation of the NA range came from a fitness challenge in 2019, when he could not drink alcohol for 1 month and discovered there were no good choices in the NA space. Spinning cone technology (good for quality as it uses lower temps than other processes) also became available in NZ at that time

NA winemaking process - create regular wine, then remove alcohol; for red wine, you need to balance the tannins (need ripe, soft tannins)

More expensive to make - costs 15-20% more

• Need to replace ~25% of volume
• Need to go through spinning cone technology
• Lower cost from no alcohol excise taxes

NA taste - loses some of alcohol’s texture, body, heat

NA wines age similarly to regular wine (except in cans)

NA wine markets - still in growth mode, needs higher quality wines to succeed

• The US is ahead of most markets, and the UK is slower with more traditional drinkers
• Mainland Europe is booming, and NZ is behind
• Most off-premise, some growing pains (e.g., Boisson closed its stores), mostly bought where people buy alcohol
• On-premise still embracing category (Giesen launching super premium range to target on-premise)
• Most large players (e.g., Constellation, Treasury) are looking at NA wine

NA wine drinkers - originally abstainers driving growth, now people substituting wine driving growth from moderation trend; broad market from boomers to legal age Gen Z; 35-60 females largest cohort

Price points aligned with regular wine ($9 low end, up to $18/bottle, some products ~$55/bottle)

Removed alcohol of high quality can be used for other things (e.g., gin, biofuel)

NA wines can have up to 0.5% abv, Giesen wines 0.4-0.5% abv

• You need to consume 5 bottles of NA wine to get 1 glass of 13.5% ABV wine
• .45% abv similar to ripe bananas, some fruit juices, bread
• NA wine should still be kept away from children as it is still a wine experience

Marketing NA wines

• Low calorie is significant; Giesen is low in sugar (drives calories), which plays into the health and wellness trend
• Most effective - social media and influencers - play well with Millennial and older Gen Z’s, essential NA wine growth category
• Older consumers know Giesen from regular wine

Nutritional and ingredient labeling - mandatory for regular wine in the EU; NA is a food product and requires it

• Giesen back labels specific for each wine, the main driver of differences are in sugar content
• Nutritional data has some positive elements (e.g., potassium)
• Large serving size (12 ounces, ~½ bottle) driven by US FDA, looking to change back to a 5-ounce glass

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Having struggled to manage and maintain distribution for her family winery, Cheryl Durzy, CEO of LibDib, decided to start her own distributor. In comes LibDib, a tech-enabled distributor that lets any alcohol producer have distribution in most of the key US markets. Cheryl provides background on the US 3-tier system, the role of a distributor, and how LibDib is helping producers get distribution, enable wine sales, and become a tech platform for other distributors. 

Detailed Show Notes: 

US 3-Tier System

• Put in after prohibition to keep one tier from owning alcohol distribution
• Tiers - producer, distributor, retailer

US distribution heavily consolidated into 3 large ones, lots of smaller specialty distributors vs. many distributors in the 70s/80s

Distributor function

• Helps consolidate suppliers for trade accounts; accounts don’t have resources to manage each supplier separately (e.g., invoices, checks)
• Pay taxes, do compliance
• Logistics (heavy, fragile product)
• Customer service (mistakes, breakage, returns, samples)
• Sometimes act as a winery’s salesforce

Getting a distributor

• 2024 - distributors are shedding brands vs. taking on new ones
• Typically - look for fit w/in a distributor’s portfolio, pick someone with a good reputation
• Distributors will ask - what will be your investment in the market? How often will you be here? Do you have feet on the street?

LibDib - enables wineries to sell themselves, a tech-enabled distributor

• Started as a wholesaler in 2017 (CA, NY), enables distributor for any producer
• The platform enables rich content and e-commerce
• Has license in 9 states, enabled through RNDC in 6 states (e.g., Texas)
• ~1,500 suppliers w/ active accounts, ~700 wineries w/ ~450 actively selling
• Originally focused on spirits, wineries have increased by ~50% in the last few years
• Uses FedEx to send wine, integrated API to track status, negotiated good rates <50% of DTC rates; have cold chain, ice pack options for hot temperatures
• New markets launching late 2024 / early 2025

LibDib use cases

• Get wine to specific accounts in a market
• Enable wine brokers in other states
• Importers sell directly to accounts
• Ship special projects from large wineries that distributors don’t want to touch

Pros/cons of LibDib

• Pro - always have distribution, good communications/customer service, good technology experience for producers and trade accounts
• Cons - no salesforce, need to be a little tech-savvy

Business model

• Markup of 14-18% on sales (vs. 30-35% for most distributors) + producer pays for shipping
• Subscription service (Gold, Silver, Plus) - get lower markups and services (e.g., portfolio management, VIP chain assistance, advertising on platform)
• ~250 subscriptions (of 1,500), mainly on Gold for chain services

RNDC partnership - OnDemand division

• Onboard w/ both RNDC and LibDib, no sales support
• 28% markup, inclusive of shipping
• 6 states, ~400 suppliers
• Most people want to get regular distribution, which can act as a trial for RNDC

Trade account benefits

• ~30k accounts (~50% active), not including RNDC states
• No minimum shipments
• Enables direct contact w/ wineries
• Access to smaller items not available elsewhere

LibTech (launched Jan 2024 in TN)

• RNDC invested in the last round, and LibDib built e-RNDC
• Selling e-commerce platform as SaaS to other distributors

LibDib is developing AI tools for suppliers, early 2025 launch

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As the pioneer of Vitis Vinifera in the Eastern US, Dr. Konstantin Frank is one of the key leaders of the Fingers Lakes region in New York. Meaghan Frank, a fourth-generation vintner, has been leading the charge to evolve its hospitality program to create brand ambassadors for the winery and the region. Its 1886 Wine Experience has won Best Wine Tour by USA Today in the last two years. Meaghan breaks down their hospitality program and its impact on their business. 

Detailed Show Notes: 

Finger Lakes region, NY - 150 wineries (of 400 in NY), NW NY State - 5 hrs from NYC

• Skinny, deep lakes that moderate weather
• Glaciers left diverse soils
• Tourism-driven, seasonal visitors (spring to fall) for lakes, hiking, close to Niagara Falls, Corning Museum of Glass

Dr. Konstantin Frank - PhD in Viticulture from Odesa, Ukraine; a grape scientist; fled to NY during WWII

• 35 years of cold climate grape growing experience when moved to NY
• 1st to plant vinifera in Eastern US
• Planted experiment station in the 1950s - 68 varieties, including Furmit, Pedro Ximenez, and Touriga Nacional) to research what would work best

Dr. K Frank Winery

• 17 vinifera varieties → 40 wines
• 60% wholesale, 40% DTC
• 40 states, 9 export markets (5%, incl Japan, Aruba (lots of NY visitors), UK)
• DTC 60% e-commerce (driven by wine club), 40% hospitality

Hospitality program

• The goal is to create brand ambassadors and loyalty, get the word out about the Finger Lakes
• Inspired by Australian hospitality programs - private, educational
• ~40k visitors/year (#1 PA - 1 hour away, NJ, OH, NY core markets) - all seated, paid
• Pre-pandemic - ~80k visitors/year for free bar tastings
• Moved to an experience-driven program with wine educators, take advantage of lake view

Three experiences:

• Eugenia’s Garden - modeled after great grandmother’s garden, most casual, can do a la carte glasses/bottles/flights; enables people to enjoy the day; targets a younger demographic
• Signature Seated ($15pp) - most popular, educational, 1 hr, 6 wines, 5 different themes that are part of the winery’s story (e.g., traditional sparkling, Riesling pioneer, groundbreaking grapes, red wines)
• The 1886 Wine Experience ($75pp) - only May-Oct, 2-2.5 hrs, led by wine educator, a tour of the vineyard, sparkling and still wine cellars, seated tasting of 4 wines with bites, followed by additional tastings; won best wine tour by USA Today last 2 years; lots of 1st-time visitors book 1886 due to unique nature
• Lessons learned - used to do 6 wine flight w/ bites, which was too many; did themed months (e.g., sparkling) - did not work with mostly tourists
• Differentiators - spend lots of time, has a separate private space for 1886

Wine club evolution

• Used to have people pay upfront for the year - bigger barrier to signing up, always feel like “playing catchup” to ensure value delivered, concentrated work during shipment periods
• Moved to more subscription model - quarterly, 3 wines w/ default package, fully customizable, no upfront fee, 20% discount on wines, and get free tastings (no limit)
• 8% club conversion - the only way to get free tastings now, used to waive w/ 4 bottle purchase
• Locals small portion of the club - pickup option only 10%, PA #1
• Avg tenure 1.5 years, seeing it extend with the new club model

Popular wines

• Hospitality - Rkatsiteli #1, traditional method sparkling
• Wholesale - #1 & #2 - dry & semi-dry Riesling
• Riesling 60% of production, traditional method growing

Increasing issues around climate change - 2023 had the largest spring frost in history, increasing water issues

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