I’m currently working with a collective of farmers in North Wales on their latest venture – Welsh Farm Wines. Researching for the farmers has surprised me – I never knew there were so very many oenophiles out there. Developing a winning business model and doing the rounds at wine trade fairs as part of the fact finding, you’d be amazed at the descriptions of ‘mouth feel’ and correct ways to pronounce Merlot - Mere-LOW.
My favourite wine punditry I’ve heard in recent weeks includes: The oaked Chardonnay reminds the tongue of subtle hints of dew laden grass while the 2021 Napa Valley Cabernet disturbs the palate with whispers of leprechaun breath.
Wine is the drink of civilization, romance and friendship, yet it’s fascinating to see the scale of an online marketplace, full-blown e-commerce supported by omni-channel marketing - Yapp, Averys and The Sampler all offer insights as to how to launch a new business into a crowded market. But there’s no getting around wine snobbery, central to the premise of wine appreciation that in order to fully understand and enjoy the experience of sniffing and sipping fermented grape juice, one must have a cache of special knowledge to which mere ordinary people do not have access.
At stands at the wine fairs I’ve attended (such hardship is this research!), wine snobs sit judgmentally as they present a glass to you, expecting you to sniff the cork, watching intently as its contents are decanted and poured, swirl the liquid centrifugally in the glass holding it up to the light, lower it under your nose, close your eyes, take a sip, pause in contemplation, open your eyes, and declare that’s complex on the nose, with barnyard, and raspberry on the mid-palate, and a medium-long, thistle finish. I’ve developed this as my standard mantra, admired for my taste and acumen.
The dogmatic wine snob commands centre stage of cultural fanaticism. They leave you feeling bewildered and inclined to drink beer. I was advised, it not warned, that books are no substitute for experience by Hendrick McHemmingway, aged 86, wearing a tightly checked dark suit offset by a loud paisley cravat. My research has taken me on a historical tour though the Bible, classical literature (the word symposium is a corruption of a Greek term meaning ‘drinking party’), and frequent visits to Majestic Wines. There I met Trevor, a wine guru but equally canny shopper, stocking up on the 12 for 10 offers.
He enlightened me that it was in 1855, on the occasion of the Exposition Universelle de Paris, that Napoleon III enlisted his country’s wine merchants to put together a system of ranking and categorisation for its finest Bordeaux wines. The result, the Bordeaux Wine Official Classification, was hierarchical and utterly idiosyncratic. The advent of classification system, with its Premier Crus (first growths) and exalted Châteaux, equipped wine-lovers with a common set of standards to be upheld, absorbed, dissected, and showboated.
Looking at demand and pricing was illuminating too. As a national average, each of us drinks a bottle of wine a day, with average price less than £10 a bottle, and most often less that £5. The dark doorway to the soul of humanity, we drink lots of cheap wines risking our health and sanity in the altruistic desire to stay off the beer.
But I’m really into the farmers’ cooperative and at meeting last week in Dolwyddelan I’m knocking at a farmhouse door, to be greeted by a warm, physical handshake, a beaming smile and friendly greeting from Dyfan: Would you like a drink of my wine? and I stepped in. He’s always looking for a victim said his wife. Right, I’ll be back in a minute. He disappeared into his large pantry at the end of the kitchen and came back with a bottle of rose liquid.
This is my rhubarb he said, tipping out two good measures. I took a sip and then a good swallow and gasped as the liquid blazed a fiery trail down to my stomach. It’s strong stuff I said breathlessly, but the taste was very pleasant indeed. He watched approvingly as I took another sip. I drained the glass and this time the wine didn't burn so much on its way down but seemed to send glowing tendrils creeping along my limbs.
Delicious. He refilled the glasses. When we had finished the second glass he jumped to his feet and trotted to the pantry to emerge with another bottle, this time of a colourless liquid. Elderflower, he said smiling. When I tasted it, I was amazed at the delicate flavour, the bubbles sparkling and dancing on my tongue. Terrific, just like champagne. I never thought home-made farm wines could taste like this. I sipped appreciatively and I hadn’t got more than halfway through it before my host was clattering and chinking inside his pantry again, emerging with a bottle of a blood red wine.
Try that! Dyfan gasped proudly and I rolled the first mouthful around with my eyes half closed. Blackberry, one of the best I’ve done. Leaning back in the chair, I took another generous mouthful. It was warming with and an elusive hint of brambles. I could almost see the heavy-hanging clusters of succulent, blackberries glistening on the hedgerows in the sunshine.
The mellowness of the image matched my mood. I can’t make my mind up which is the best I said But we haven’t started yet! he said, shambling over to the pantry and reappearing laden with an armful of bottles, different colours. What a charming man! My research was going very well! Wide eyed and impassioned, he rambled at length over the niceties of fermentation, flavour and bouquet. I sat spell bound listening. And drinking.
We tried parsley, gooseberry, beetroot and crab apple. Incredibly he had some stuff made from turnips, which was exquisite. Everything slowed and became meaningless. Eventually it was time to go, and I left with a bottle in each pocket – trousers and coat – including elderflower, of course.
But back to the farmers’ cooperative aspiration to launch an on-line wine merchant startup. The research had been intriguing, but how do you put this into context? Whenever I work with folks pitching a new business venture, I use the Business Model Canvas, created by Alex Osterwalder and Yves Pigner, a fantastic tool for visualising and mapping out the key elements of a business.
It's a one-page template with the nine facets of a business. Here's a breakdown of how we applied it to launch an online wine merchant business, to build an organisation that creates, delivers, and captures value for its customers.
1. Customer Segments. Who are your target customers? We identified four ICPs:
Socially and ethically aware consumers who support sustainable environmental based small businesses.
Local restaurants and bars.
Wine enthusiasts.
Gift-givers.
We considered demographics (age, income, location), psychographics (lifestyle, interests), and behaviours (frequency of purchase, preferred varietals).
Takeaway: Key ICP were ethically minded Millennials and Gen X who appreciate organic and biodynamic wines, located in urban areas with higher disposable incomes.
2. Value Proposition. What value do you deliver to your customers? We have five value drivers:
Selection: wide variety of niche, country fruit wines.
Expertise: curated selections, detailed product information, food pairing suggestions.
Convenience: easy online ordering, home delivery.
Price: competitive pricing and loyalty schemes.
Experience: personalised recommendations, wine education content, virtual tastings.
Takeaway: We offer a curated selection of small-batch, sustainable wines with handwritten tasting notes and personalised recommendations.
3. Channels. How do you reach your customers? Our routes to market are:
Website: a user-friendly e-commerce platform for online orders.
Partnerships: collaborations with food bloggers, other related businesses like cheese makers, and local restaurants.
Engagement; platforms like Instagram, Facebook, email marketing via newsletters, promotions, and personalised recommendations, and online advertising with Google Ads.
Takeaway: We were careful to ensure the branding was consistent with our values and not be overly commercially driven.
4. Customer Relationships. What type of relationships do we want with our customers? We have five touchpoints:
Personalised service: use CRM and data analytics to understand buyer persona and behaviour.
Community based: build our own online community.
Loyalty: Exclusive offers, early access to new releases.
Content marketing: educational blogs, videos, and tasting notes.
Wine tours: offer face to face engagement with events and vineyard tours.
Takeaway: KYC - build a strong online community offer knowledge, product offers, engagement, exclusive benefits, and personalised recommendations. We also determined face to face contact by visits to the farm vineyards would create connection – and revenue.
5. Revenue Streams. How do you generate revenue? We identified four:
Transactions: one-time purchases, bulk orders.
Subscriptions: monthly curated boxes.
Memberships: access to exclusive products and launch events.
Affiliate marketing: working with a range of aligned partners serving the same demographic with complimentary products.
Farm shops: each farm had a retail outlet, offering opportunities to engage with the North Wales tourist trade.
Takeaway: Generate revenue through a variety of go-to-market strategies that offer marketing options to engage with customers.
6. Key Resources: What resources are needed to deliver your value proposition? The essential operating elements are:
Inventory: a selection of available, quality wines.
E-commerce platform: website and technology infrastructure (outsourced managed service).
Distribution: outsource to a fulfilment partner.
Customer data: Information about customer preferences and purchase history.
Takeaway: partner all operations to experts with knowledge of e-commerce distribution.
7. Key Activities: What key activities do you need to perform? We identified:
Sourcing, delivery and Inventory management: tracking stock levels aligned to marketing campaigns and delivering from farms to a centralised warehouse in the Conwy Valley.
Marketing and sales: promoting the business and generating leads.
Order fulfilment: outsourced order processing, packing and shipping.
Customer service: responding to inquiries, resolving issues.
Takeaway: Source new and interesting wines, optimise the website for conversions, and provide outstanding customer experience.
8. Key Partnerships: Who are your key partners? The key partners identified for the venture were:
Farmers: suppliers of wine. European farmers were seen as potential future trade partners.
Fulfilment and distribution partners: Logistics partners for storage and shipping.
Technology providers: e-commerce platform, payment gateway, marketing tools.
Marketing agencies: support with digital marketing, content creation etc.
Takeaway: Establish strong relationships in the farmers’ collective, partner for efficient distribution and payment experience, collaborate with wine influencers for marketing.
9. Cost Structure. What are the most important costs in our business? These were as follows:
Cost of wine: the cost of producing wine.
Shipping and fulfilment: costs associated with storage, packaging, and distribution.
Marketing and advertising: expenses related to agency services, marketing, and content creation.
Technology: setup and ongoing costs of website development, hosting, and software.
Salaries and wages: people costs.
Takeaway: The business model has high fixed costs.
Summary
This is a hugely enjoyable project, an exciting product with thoroughly nice people. I’m sticking with them to help launch and grow. It’s been dramatically two-sided learning: for me the work ethic and lifestyle of farmers, the joy of the outdoors. They work unbelievably hard with long hours to make a living and the weather is a huge risk factor; for them, the Business Model Canvas, where you gain a clear understanding of how all the different elements work together for a successful business.
It doesn’t matter if the glass is half empty or half full, there is clearly room for more wine. Few of the entrepreneurs I meet spend sufficient time exploring alternative business models, too often they become blinkered by their initial idea and immediately dig deep into spreadsheets and business plan writing. Life’s too short to drink bad wine, as it is to not have developed an innovative business model, but whatever you do, pour yourself into it.
Comments