June 8, 2008

wine as commodity


The relatively small, southern French province of Languedoc produces more wine than the entire State of California. Thousands and thousands and thousands of vineyards. Italy alone boasts 500,000 vineyards, and 50,000 individual wine brands. That's roughly one vineyard for every one hundred people!

This is one of the great things about wine is, of course. There's so much choice out there, that once you get the wine bug, you easily can spend the rest of your life sampling thousands of them, and never get even close to sampling them all.

But on the other side of the coin, this makes your job as a wine producer VERY TOUGH. If for example, you have all your money sunk into an Italian wine farm, Congratulations, you've got half a million other Italians in the same boat as you. That's a pretty crowded boat, to say the least.

The other day I showed the above cartoon to the owner of a large American wine importer."What a lovely grain of sand you are. Too bad you're lying on the beach."

My thesis that came out of that conversation: Wine has become a commodity. But most people in the wine trade are too self-absorbed with their own wine schtick to acknowledge the fact. OTHER PEOPLE'S WINE may already be a commodity, but NOT OUR WINE, no no no no... Our wine is SPECIAL, yes yes yes yes...

If you want to remove the "commodity factor" from your wine, you first have to admit that yes, you too are also selling a commodity. And then work from there.

To quote a phrase I probably use far too often: "We're not in the wine business. We're in the decommodification business."

So how does one "decommodify" wine? I have no idea. If I knew, I'd be a billionaire.

But what HAS worked well for me so far, is to stop thinking so much about the product- the grapes, the vineyards, the terroir, the hummingbirds gathering nectar in the early morning sun yak yak yak. Instead, I find it far more useful to be interested in the actual people drinking it. Who are they? What do they need? What's their schtick? What works for them?

What's true in life is also true in marketing: If you want to be boring, talk about yourself. If you want to be interesting, talk about other people.

Posted by hugh macleod at June 8, 2008 11:42 AM | TrackBack

Great Post - very true...

"Instead, I find it far more useful to be interested in the actual people drinking it. What do they need? What's their schtick? What works for them?"


Posted by: Catherine at June 8, 2008 1:03 PM

It's that part about how people don't remember what you do or what you say so much as they remember how you make them feel. And if you want to catch a mouse, make a noise like a cheese ...

Posted by: Dave at June 8, 2008 2:20 PM

Commodity or Social Object?

Posted by: Paul Fabretti at June 8, 2008 2:51 PM

Hugh, interesting and thought provoking post as usual. There's actually a lot of parallels to be drawn with the software industry and MS in particular. Like the wine industry people in software talk about how great their shovel is and all the fanatastic components that make up this - but all too often we forget about the intended purpose of the customer or consumer which is about "digging a hole" - that's the right size and right fit for them. Wine's similar - and so I think I agree with Paul F above. The commodity - is the shovel but the social object is the hole. For marketers decommodification therefore comes from understanding more about the social object.

Posted by: Ben Tamblyn at June 8, 2008 3:11 PM

If Gary Vaynerchuk had a vineyard and a wine label, I'd drink his wine. I know him. I'd want to drink the wine of someone that passionate about wine and about people.

Posted by: Paul at June 8, 2008 5:40 PM

The narrative that a product fills in your life...something or other

Posted by: John Wesley at June 9, 2008 3:25 AM

Paul's got it! "So how does one "decommodify" wine?" You know how, Hugh. It happened with the Blue Monster. Sorry to be all high on the "Tipping Point" vibe, but you and Malcolm Gladwell should really have a conversation.

With the Blue Monster, a "connector" type saw it and shared it with MS peeps, and your social object took off. The Blue Monster social object connected with the Stormhoek social object, and MSers went gaga for the wine. It was "theirs". It was associated with a social object they identified with (Blue Monster). And it was associated with you. All by word of mouth and personal endorsements. Their enthusiasm begat enthusiasm, etc.

With market saturation and commodities, insight as to what's good and what sucks is difficult to fathom. But a friend, or someone you trust, or someone you admire, or someone you think is "cool" - they endorse something, and you'll take the next step and try it. You've experience with their tastes, you think it's similar to yours (or you'd like it to be). So you try the new thing.

You're a Connector, Hugh. And you're also a Maven. But you're not a Salesperson. The good news is, you know plenty of such creatures.

Posted by: CheekierMeSly at June 9, 2008 6:50 AM

Hugh, have you seen Fishhoek from the global wine behemoth Constellation? Is this their take on challenging Stormhoek in certain regions? Your post takes on even more relevance when you consider the power the global wine companies can wield

Love the work, enjoy the states!

Posted by: Richard at June 9, 2008 10:31 AM

Grapes are a commodity. Grapes grown on the grapevine on my back patio are not a commodity.

Maybe wine made from grapes that I know, because I've been reading a blog about them for the past many months, so I've been building up anticipation of what the wine that's made from them is likely to be like, is not a commodity?

(Are people who will read a wine blog for as long as it takes to get from vine to wine a commodity?)

Posted by: Brooks Moses at June 9, 2008 10:43 AM

>There's so much choice out there, that once you get the wine bug, you easily can spend the rest of your life sampling thousands of them, and never get even close to sampling them all.

Why does this remind me of blogs?

Aha - the business of decommodification.

Thanks for the thoughtful post.


Posted by: Matt Wardman at June 9, 2008 1:22 PM

It is true that most people in the wine trade don't realize they are selling a commodity. When is the last time you tasted a wine that wasn't stomped by a wonderful little family? Nearly all wine is marketed this way. Most wine businesses do not have the option of actually decommodifying, because they are making a commodity product. What you call the decommodification business is really just a different marketing angle. The truth of the matter is that there really are some small farmers in the world growing and making something beyond a commodity- an agricultural product. Just because a product is traded on the commodity market, e.g., corn, pork, orange juice, doesn't mean that there aren't great farmers producing an authentic, delicious product that is quite distinctive.

Posted by: Anthony Nicalo at June 9, 2008 1:31 PM

There are a few decommodified companies out there: Starbucks - Italian cafe experience pulled coffee out of commodity status.
Sumo Salad in Australia: sure I can get salad anywhere but they have salads no one else has.
Certain cooking ingredients - special flours, sugars, salts.

We have a bookshop chain here in Melbourne called Readings who use service and bookseller knowledge to pull themselves out of commodity. If you say you like X author then they'll know what other books you may like. Try getting that at Borders.

Posted by: Mathew Ferguson at June 9, 2008 7:17 PM

but is wine a commodity? At one level - "house wine" - maybe it is. But surely if consumers routinely reject a $3 bottle of Merlot and buy a $25 bottle instead, hasn't the wine market already been largely "decommodified"?

Posted by: peter at June 10, 2008 8:25 AM

Speaking of wine, what do you gather from the Yellow Tail story? It seems they are really enjoying the benefits of their marketing angle which for me is, "People drink wine, period." No pretenses, no cookie-cutter crap. I think it's brilliant compared to a lot of brands out there.

Most people including myself cannot distinguish the difference between wines. Well, at the very least, I know white wine from red wine. So when someone tells me to drink their wine, heck, why not?

As someone said before, Stormhoek might just be the next Yellow Tail.

Posted by: Edric Chen at June 11, 2008 12:42 AM

Is customization a way to decommodify?

I am looking for ways to customize math learning. There are no reasons, anymore, to have it THAT standardized.

In particular, I am now searching for a way to help small groups produce their own "mini-curricula" based on common, but customizable, frameworks. Interestingly, pretty much all "collaborative book creation" ways I found so far produce a convergent, singular, voted-on product that can later be copied and distributed like, well, a book (which is a commodity of sorts). A wiki, for example, squeezes everybody's different takes on a subject into one "latest, best so far" version. This is a problem, really.

I don't know if my brainstorming made sense to you, but what you drew and wrote started it, so there!

Posted by: MariaD at June 11, 2008 9:01 AM

Decommodification. Bingo. This is not a new concept (ask the people making disk drives for example.) But a very very important concept. We're trying. Thanks Hugh.

Posted by: el jefe at June 13, 2008 1:42 AM

You know something is NOT a commodity when they're willing to go out of their way to get it when a perfectly acceptable substitute can be had for cheaper / less friction.

@Paul 'purpose of the customer or consumer which is about "digging a hole"'

but it's not even really about digging a hole if you think about it. It's about planting a beatiful tree, or getting at a broken sprinkler head. And then if you extrapolate further, it's not even really about those things either- it's about wanting beatiful scenery in your backyard >> peace & comfort >> on and on...

This is definitely an important insight. It's why Yellowtail has done so well - they dispensed with all the wine snobbery and did situational assessment vs. feature assessment. Clayton Christensen's book "Innovator's Soluation" has some more great examples if you're interested in this type of thinking.

bottomline: if you strike a nerve with your audience and they'll go out of their way to buy your stuff, you're not a commodity. Figuring out how to achieve that is always the challenge.


Posted by: Sean Tierney at June 13, 2008 5:09 PM

Wow thats a clever picture... I would love to use it in my facebook application HappyWishes ;-)

Posted by: Senthil at June 13, 2008 9:40 PM

I have been in a quest to find the most great tasting wines out there. I have tried wines recommendation in http://vino.com, but nothing seems to satisfy my palate. Any additional recommendations?

Posted by: rae at June 20, 2008 1:49 AM