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The Wine Industry Needs An Innovative DTC Solution Now

the-wine-industry-needs-an-innovative-dtc-solution-now

I grew up in Santa Rosa in the heart of California wine country. It’s a beautiful, sprawling place with over one hundred thousand acres of planted vines that contribute over $11 billion to the local economy each year.I didn’t think much about the wine industry while growing up there: I’m not from a generational wine family nor did I begin to truly appreciate the industry until I was much older. But, my professional and personal journeys are now wrapped up in those vines: before I was a Shopify employee, I was a Shopify merchant. My brother and I launched aesthete wines in 2016 with a vision to produce the best possible estate grown wines with our winemaker, Jesse Katz.

Everyday, in both my capacity as a wine producer and working at Shopify, I learn something new that gives me an even deeper appreciation for the artisans of the industry: vineyard managers, winemakers, tasting room staff, and sommeliers, to name a few. It’s rewarding, even beautiful, to enjoy a glass of wine, whether it’s our own or a new favorite. Each bottle reveals a coterie of people who make the wine experience possible: staff tending to and growing grapes on vines to then harvesting, fermenting, pressing, and aging those grapes. Winemaking requires patience. It’s a lengthy process all at the mercy of natural elements. Wine producers understand so much: their hands are deep in the dirt to know how the very soil grapevines are grown in can shape the flavor of a wine. Sommeliers untangle the complexities of a wine for buyers and connoisseurs alike. Wine is for the passionate or the casual enjoyer; pairing the perfect vintage with a meal to enhance it or sipping a crisp rosé, looking at the cotton-candy skies while the sun sets. It’s both a community and interior practice.

Wine has been bringing people together for centuries, yet the business part of the industry is slow-moving to evolve. The global pandemic accelerated that with online sales growth by a whopping 131% since 2019. The wine industry has been slower to adopt new technologies. But the force pivot to new ways of selling in the pandemic era allowed for tremendous growth. In lieu of tasting room purchases, wholesale channels of big box retailers, or bars and restaurants, wine merchants and producers had to get creative with how they got their wine into the hands of customers.

We know now that the wine industry is a key focus in direct-to-consumer (DTC) buying. U.S. buyers are keen to get their products this way. By relying on selling directly to buyers through tasting room purchases upon visits at wineries and traditional wine clubs, this narrow way of selling too often requires either a visit or commitment to something on a fixed term. DTC opens up the possibility to get products from across wine regions to buyers in 47 states. 

Selling wine through ecommerce is an incredible step forward in gaining more customers and overall engagement. Buyers today crave experiences and brand affiliation; welcoming a wine brand as part of their personality. Consumers are used to receiving products directly from brands in the mail—there’s an extra layer of excitement when you can receive your favorite bottle of wine right on your doorstep. As conversation around the industry and its buyers and sellers shift—particularly “who” wine is “for” and the changing demographic of buyers—tech will be a big part of that, especially how to get product to customers. The global pandemic highlighted the fragilities of the industry as on-premise sales came to a screeching halt, followed by a fast pivot to options like local pickup and delivery to keep sales going. Now, there are other external forces (climate change, supply chain constraints, inflation, and economic conditions) afflicting this legacy industry. It’s a lot to handle and adapting to new ways of selling is a core challenge on top of all that.

At Shopify, we want the wine industry to not just survive, but thrive—all while focusing on what wine brands do best: creating great wine and sharing it with their customers.

The U.S. wine industry’s relationship with regulations and technology 

Selling wine in the U.S. has some complicating factors. Not only are there still existing century-year-old laws from the Prohibition era in the U.S. dictating wet and dry counties and where one can sell, there are some complicated compliance and tax laws. Wine merchants must adhere to them, and they are often tricky to navigate. These laws have made it—and continue to make—selling online difficult for wine brands. But technological advances in commerce allow wine brands to see a future beyond such a limited, complex scope of counties. Wholesale channels for distribution and sales have been great for many wine brands for a long time but there is a real desire to reach customers directly at their doorsteps through DTC. It’s a different avenue to drive sales and reach customers, and develop brand affinity. 

Stifling innovation and choice in this rich, historical industry doesn’t do any favors to anyone. Wine has long evolved from minimal and handcrafted—an everyday addition to any table—to an elite treasure to collect. It’s the type of beverage secrets are whispered over; the one with fond memories and experiences attached to it. The bottle you bring as an offering. Wine is as effervescent as it is gracious. 

There are folks who see the spectacular range of wineselling in the industry, leading this charge to support quality, diversity, and integrity in the practice. Winemaker Dave Phinney, formerly of the Prisoner Wine Group, has played a major role in the shift we’re seeing play in wine brands becoming digitally native and marketing-led by coupling more eye-catching, non-traditional labels. We love seeing this because we believe entrepreneurs are brave and should be supported on these journeys. There are so many new projects, startups, and marketplaces where wine can thrive. It’s just scratching the surface of what’s possible.

Amid all of the legitimate concerns wine brands have around current compliance and regulation rules, along with taxation and patchwork tech solutions that can bring more debt and less clarity, there are other crucial external forces threatening the industry right now. Rising global temperatures and climate change have impacted our industry to the point of altered states and land devastation. Wildfires in California are rising at an alarming rate. Annual fire season is now a major source of anxiety for all producers on the West Coast. Like many other industries, a constrained supply chain is impacting winemakers. This isn’t just affecting rising packaging and shipping costs, even though those are massively felt across the industry, we’re also facing a glass shortage, something I’ve personally seen with my wine brand. Deeply braided into this is the economic reality of inflation from pandemic recovery. Everyone in wine from small batch producers to big brands are impacted by this existential, economic tornado. It’s no wonder so many small business owners in the industry are reconsidering their trade or getting out altogether.

This seems bleak, but it doesn’t have to be. This industry battles known and unforeseen adversities consistently, and adding tech solutions to help alleviate them might seem too good to be true. 

As a wine producer, I do understand the specific challenges our industry is facing. I’ve listened to many other wine producers echo my own concerns and some I hadn’t even thought of. And so have many others at Shopify. Which is why we’ve worked on a solution that empowers wine entrepreneurs and big wine brands alike with Shopify for Wine.

Why we made Shopify for Wine

Community is at the heart of Shopify. Businesses begin because they fulfill a need in a community or add to its richness. The wine community in the U.S.—and around the world—is as vast as ever. Shopify for Wine will help wine producers and retailers rapidly modernize; unlocking growth while simplifying industry complexities like sales tax and compliance when selling online, furthering their ability to be innovative and experimental with how they serve and engage both new and existing customers.  We live and breathe the journey with our merchants. Their success is our success and why our ecosystem is so impactful. Our mission has always been to make commerce better for everyone, to help people everywhere choose themselves, and achieve economic independence, and that is especially true and important in the wine industry. 

The wine industry is adopting new technological paths of selling, like on social media, or with NFTs, even B2B. Change, while sometimes daunting, is inherently good for growth; change is great to unlock new possibilities and opportunities. Shopify for Wine is meant for online, in-person; to be an all-in-one place to manage your business the way you need to.

We’re building for the long term—taking our merchant’s business challenges seriously. There’s so much opportunity to create a better working and selling world for wine brands; one that embraces technological change with ease because, hopefully, we make it easy for those merchants. 

Wine is an industry of craftsmanship, history, and tradition, driven all the way down into the very roots of the vines grapes grow on. Technology doesn’t need to complicate that. Regulations and compliance, while important, don’t need to be added stressors to that, too. Shopify for Wine can help simplify everything so that wine producers can focus on making premier products. To help you become the best digital brand possible. 

We take care of the rest.

This originally appeared on Shopify Plus and is made available here to cast a wider net of discovery.

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