Director at Vivino
The executive is a Director at Vivino, the online wine marketplace. He also personally runs a small winery that sells in both traditional off and on-prem channels and DTC. Prior to joining the wine industry, he spent 13 years scaling consumer marketplaces at eBay and StubHub.Read moreView Profile Page
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I'm curious to understand more about the direct-to-consumer wine space. Could you give us a bit of your background at Vivino?
I came to Vivino from 13 years of building up scale on the marketplace there. I came in through an undefined role, but I had worked with Chris before, who was the CEO at the time, and quickly focused all my attention on supply. The Vivino marketplace had essentially not taken on new suppliers since April of 2018—about a year and a half. They added no more supply because Chris came on. It was like, we're trying to build a marketplace, but we got duct tape on this thing. Let's button it up a bit, and then we can re-go. My focus over the first 10 months was exclusively on supply. We were adding producers and retail partners around the world for us to sell in 17 markets. When I think about marketplace and operations, that would be the top of the funnel for me. That's where I aimed upfront. In the past 15 or 12 months, it's been more of a focus on, now that we've got the supply, how do we operationalize it. How do we make sure we're creating a profitable business now that we have valuable merchant partners who are getting the right wines to our customers at the right time. We looked at the end-to-end process from the time you hit buy to delivery, finding those friction points and tuning that process. We're still working a lot with our biggest merchants and suppliers around the world, but right now, I'm executing one of our core priorities for the year, which is focusing on what we call perfect order. Making sure every order exceeds the expectations of the buyers.
So making sure it’s delivered on time, making sure the wine quality is good, all that kind of stuff?
Exactly, I have a tagline, the right wine, on time, every time is exactly the focus of it.
Makes sense. What is your outlook for direct to consumer in the wine industry over the next five years? How do you think about that opportunity?
I don't know if you're aware, but I'm also in a unique position in the sense that I own a small winery with my brother and our winemaker, based in Virginia. My understanding of the industry is from both sides, from the producer side and the marketplace side, so this experience is a combination of Vivino and personal. I'm sure you're aware of what happened in the DTC space as COVID started. For us, as a small minimal-intervention producer based in Virginia, we'd been to market for a few years. We were building out the brand itself, and then COVID hit. We use VinoShipper as our backend ecomm system for my little winery, and overnight we went from 15% DTC to 50% DTC. It just went crazy. On the Vivino side, all hell broke loose just as much. We ended up more than doubling our sales, and I consider a lot of them to be DTC. But the broader point is that the DTC market in the US is much bigger than it is in the rest of the world. Are you thinking US or international?
The US is my main focus right now.
Before COVID, I believe DTC was around 10% to 13% for wineries, and it easily doubled during COVID. I think it's interesting that now we're coming out of it, and the question is, what do we see now? We've seen a bit of a slowdown of the growth; it's still growing but it’s not as explosive. People are going out to eat, not just sitting on their couch and drinking a case of wine every night because they're locked at home. There's a slowdown of that growth, but it does continue to grow. As a producer, ultimately, I want nothing more than to go straight DTC. You don't have to deal with the three-tier system. You don't have to worry about distributors, and you have a personal connection with your customer. I think DTC, exponentially over the next five to 10 years, will continue to build. I think the pullback and the movement to community and those types of things during COVID are real, and I expect people will want to support local, support somebody they know. And with the law changes, I think the markets are more open for producers over the US.
If we were to look out a few years, do you expect DTC penetration to be higher than where it is today? Or do you expect some flowback to be more at the pre-COVID levels?
I think it depends on what exactly you mean by DTC. In a traditional sense, you've got three-tier, I sell my wine through my distributor, and DTC would be that I, as the producer, have Jay's wines dot com, and you buy, and I have a winery that you visit.
I’m thinking about anything that falls outside of the normal three-tier on- or off-premise sale. Whatever doesn't go through the distributors. Do you believe the volume going through the three-tier distribution model as a percent of the total market is higher or lower five years from now?
I think it’s lower.
Is that because people continue shifting to either online sites or buying direct from the winery?
I think it's a combination of those two things plus a consumer desire for experiences. If you have a real personal connection with me as a producer, you're certainly going to try and buy more from me. You've got wineries building out on this experience piece; it's not just a wine club anymore; it's a neat sort of adventure where you've got music over the weekends and cottages on-site and tours with the winemaker and the on-staff somm (sommelier). I think more so because of that, you will continue to see the growth, and it's nontraditional, right? With ecomm, I think you will also continue to see the growth there, just because of what COVID did for ecomm. It's a question; it depends on what type of a consumer you are. If you're uneducated or if you're a master somm, if you're the type that goes to Google and searches "I want to buy wine," you'll go to whoever's paying for it, and you'll go through that channel. But if you're informed or curious to be informed, a platform like Vivino does an incredible job.
Who are the best ecommerce players in the wine space?
Big question. Let me ask you this, as a buyer, as a producer, as a retailer?