To Bordeaux and Back
Last week my VinX co-founder (Gil Picovsky) and I went to sell ice to eskimos. Well, actually, we were in Bordeaux introducing our new concept for how to sell wine and engage wine lovers. Before I tell you how it went — a little background for folks just tuning in now to my story.
In 2012 I started a winery (Jezreel Valley Winery, if you are not already familiar). More recently, I started VinX, a digital platform to help bring wineries and consumers closer together after a 20+ year career in tech driven entrepreneurship. Wine has been on my mind for much longer, as something to be enjoyed (when done right) and as a central ingredient in the spiritual life of my own faith and many others.
I live in Israel, at the Northern edge of the Jezreel Valley, and 2000 years ago we were at the top of our game as wine producers, with our wine exported all over the Roman empire. But for over 1000 years wine making almost grew to a complete halt here, because of the expulsion of the Jewish community and later Mohammed’s interpretation of God’s will being to prohibit the consumption of any alcohol.
In the intervening millennium another region rose to prominence in wine making — Bordeaux. Just saying the name of the French region to anyone slightly familiar with wine will focus the conversation. Bordeaux established itself hundreds of years ago as the center of fine wine — and to this day, with all the incredible wines being made all over the world, Bordeaux remains the spiritual center.
Bordeaux, like many centers, gained a reputation for being rigid, conventional, “old-fashioned.” There are expressions like “old world wine.” The current classification system in place for Bordeaux wineries has been in place since 1855!
The economic ecosystem of many Bordeaux wineries is highly structured. The “top” 300 wineries are part of the en primeur system, for selling wine while still in barrel (the inspiration for the thinking behind VinX). The en primeur process is highly regulated, and steeped in hundreds of years of tradition. There are only ~400 “Negociants”, who actually buy the wine offered during the en primeur process. And these are assisted by an event smaller group of “Courtiers,” who are essentially brokers and escrow agents, making sure that Negociants get the wine they paid for and that the wineries receive their money. Courtiers are paid 2% for their services, Negociants are masters of their own business models, but typically will have 10–20% gross margins.
Again, for the top ~300 wineries, ALL the wine is sold while in barrel to the Negociants. Those wineries do not have any direct connection to consumers. At all. In 2018!
Now back to our trip last week. We were coming on a mission of preaching innovation, positive disruption, and bleeding edge financial technologies, to a place where essentially the business model (and product) has not changed for hundreds of years. We had no expectations, other than to learn. Which we did. A lot. And opposite to my fears (nu, the French have a bad reputation), the folks we met with were warm, friendly, engaged and making introductions for us on the spot.
But wait — it gets better! The reception to our business concepts was overwhelmingly positive. Even at the “highest” echelons of the Bordeaux wine community. There is a general feeling that the time is ripe for change. The systems and selling methods that made sense in 1818 are not necessarily suitable for 2018…
Also, the systems set up 200 years ago do not reward the “rising stars.” There is a recognition that one cannot rest completely on past glory — the top wineries realize they are competing on a global stage, and sometimes with their neighbors just a few kilometers away for the attention of wine lovers around the globe.
I came as a insider — both because of the introductions but also because I was immediately able to make a connection as a winery owner. There was a recognition I am not coming from the outside saying things are broken — I am one of them, and we were able to speak as brothers and sisters of the global wine family.
This definitely will not be our last trip to Bordeaux as VinX — looking forward to helping one of the oldest wine regions in the world move forward and embrace the 21st century. Wine lovers the world over and the wineries will be the better for it.
