The Future of Wine Is Numbers

Big Data, Small Data, Data Manipulation, Statistics and Analytics have given the industry key insights and is likely to become even more important going forward

“Over time, looking at wine from a quantitative point of view has become respected and even somewhat ‘sexy.’”

I’m not sure “sexy” is the right word, but Karl Storchmann, quoted above and editor of the Journal of Wine Economics has a good point about the respect that quantitative efforts in the wine industry are given.

Storchmann’s thoughts on wine economics and data are given voice is an excellent interview in VinePair carried out by Julia Larson. To offer more context and, again, quoting from the VinePair article:

“Storchmann serves as a clinical professor of economics at New York University, but much of his current work is dedicated to statistical analysis of the wine industry. The title “wine economist” is a modern term coined in the last decade or so thanks to scholars like Storchmann, who realized the potential for the wine industry to be analyzed within this scope.”

One thing the Journal of Wine Economics has not been is timid. Over the years we’ve seen the Journal take on a number of controversial topics including the validity of the 100 point rating system, the reliability of “experts”, the utility of descriptors in wine reviews, the current quality status of the wines from the historic 1976 Paris Tasting and much more.

The Journal does not get the kind of readership it should primarily because its academic perspective often results in difficult reading. With the exception of trained economists and statisticians, most people can’t decipher many of the formulas that show up in the articles. This is both the nature of academics, but also a problem with academic publications. The Journal and the wine industry would benefit from a simpler to read and understand abstract of each article with conclusions clearly stated.

But I want to return to Storchmann’s contention that more respect has come for a quantitative approach to understanding wine. The reason for this, I think, is the excellent work being done in this space.

Take for example the recent 2021 DTC Impact Report created by WineDirrect and Enolytics. This comprehensive examination of the winery DTC market in America takes advantage of Enolytics’ remarkable data mining and analytical talents and WineDirect’s access to millions of winery transactions. It provides a comprehensive look at which DTC channels are in ascent, who the buyers are, what is being purchased from wineries, what kind of money is at stake and, importantly, what wineries ought to be focusing upon.

Put another way, here is a quantitative analysis of wine industry activity that can be digested by anyone in the industry and without a degree in economics or statistics.

The wine industry is filled with good statistical data and reporting. I’m thinking of the annual Silicon Valley Bank State of the Industry Report, the Rabobank Alcool Ecommerce Playbook, and the ShipCompliant/Wines and Vines Analytics DTC Shipping Report. But there is an area that has not been mined for insights using data and Storchmann identifies it in his interview.

“In the U.S., alcoholic beverages are heavily regulated. I am astounded that there is almost no research on the U.S. three-tier system and its economic impact.”

He’s right. Particularly among those that claim the Three-tier system has immense utility, there is almost nothing backing up the assertion. We have little in the way of data that looks at the added cost of requiring producers to use wholesalers rather than selling straight to retailers. We have little or no data that examines the cost to producers, retailers and consumers of being barred from receiving interstate shipments of alcohol from retailers. This last issue is more important than folks think. It is entirely possible that the amount of wine being shipped direct from retailers to consumers is more than the $4 billion in wine being shipped from wineries to consumers. But no reliable study of this practice exists.

Data, Big Data, Data Manipulation and Data-Driven Marketing are all surely critical to the future of the wine industry and seem likely to form the basis of decisions made by wine businesses large and small. What we have is a good start. But I suspect more and better is on its way.