Social media: The wine industry’s new word of mouth

Tuesday September 06 2016 by Sharon Nagel

With over half of the global population now connected to the internet, social media has carved out a prime position for itself in the world of modern communications. In 2016, some 2.31 billion people worldwide use platforms such as Facebook, Twitter, Instagram and YouTube, a penetration rate that the fairly traditional wine industry cannot ignore and which it can fully benefit from. Dr Liz Thach MW, professor of management and wine business at Sonoma University in California and co-author of an award-winning book on social media, provides Vitisphere with insight into how different media work internationally and where opportunities for development lie.

Your book analyses new communication platforms for digital marketing – could you give some examples?

We have done research all over the world on the wine industry, looking at communication or social media platforms. One of the new ones that’s very popular in the US for example is Snapchat. There are also media that are very popular in China but aren’t used by the rest of the world. One example is Wechat or Weixin. WhatsApp tends to be more prevalent in Europe and in the US Facebook and FB messenger. Different communications platforms are used in different countries.

 

Which of these platforms is the most widely used and/or effective?

We did an analysis of 11 major wine countries and what was used by consumers and number one across the board is Facebook. Twitter came second. Reading people’s blogs was third and then Youtube came fourth with videos and Instagram number five. One that surprised us is Trip Advisor. We weren’t expecting this. There is a lot of information on Trip Advisor about wineries and other consumers read that information and decide whether they go to those wineries and purchase wine or not. Social media is consumer generated. It is also a two-way communications media.

 

Is there an inextricable connection between social media and ecommerce?

Yes, in fact that was one of the studies we did. We were looking to see if wineries that used social media had higher revenues than wineries that didn’t. We discovered that definitely they do. The more social media platforms they were using, the higher the revenues in ecommerce. We also found that some of it was driving people to tasting rooms, cellar doors. People read about a winery online and then would go and visit a winery because of that.

 

Do you think the wine industry has fully embraced the opportunities offered by social media?

There’s definitely lots of room for development. The wine industry has a tendency to be a little more traditional compared to other consumer categories. There are obviously exceptions to this.

 

Where do you see room for development?

Generally in ecommerce, setting up their websites so that they can sell more wine online. And also using social media tools such as YouTube and Facebook to drive people to their websites. The country that is most advanced in online wine sales is China and they are mainly doing that through a lot of little retail shops which will deliver the wine to people’s houses in major cities at a very inexpensive price, about the equivalent of one dollar. So because it is so inexpensive to have wine delivered to your house, more people do it. In the US, it still costs about 10 dollars to have wine delivered so people are going to choose the cheaper option and buy a bottle in the store itself. In the US, the cost is a barrier to the development of online wine sales, and of course regulations are too. Each State has its own law. In France, you also don’t see a lot of people having wine delivered to their house. The infrastructures are not yet in place to allow the spread of online wine sales. Companies are now investing in transportation solutions such as Uber and self-driving devices. Nevertheless, Amazon in the US is now selling wine but they’re still charging 10 dollars for delivery which is quite expensive if you buy a 9 dollar bottle of wine! People therefore only tend to buy expensive wines in this way. Only about 4% of wine is bought online across the globe, which is a small percentage. In China, the number is around 10%, so in some countries the figure is much lower than the 4% average.

 

Do you see major differences in use of social media both by producers and consumers from one country to another?

Different countries use different platforms. China has different platforms to the rest of the world because of government restrictions. We didn’t include China in our study of eleven countries because of this. Of the 11 countries, though, Facebook is predominant. There are also major differences in penetration rates of social media for wine in different countries.

 

Which countries are the most advanced in terms of use of social media?

China, mainly because they have so many people online. They also have a huge population of nearly 1.4 billion, compared with 330 million people in the US. In our study, Australia was quite high up on the list, Germany and the UK too. I just returned from Italy and the Italian wine industry is now really starting to do a lot of social media.

 

Would you say there is a connection between internet use in general and how much it is used for wine?

Absolutely.

 

What was the most surprising insight to come out of research for the book?

Some of the platforms surprised us. We weren’t expecting to see the prominence of Instagram, which is definitely growing, and also YouTube. We looked at the wine videos and some of them are really funny, even from countries like India. We found it quite surprising that there were a lot of funny videos made by wineries.

 

Is it fair to say that some wineries are using social media to get around advertising restrictions in their home countries?

Well, they certainly aren’t in the US. We have very clear rules and a couple of wineries have been fined for their use of social media to advertise in the wrong way. In the US there is a federal agency that monitors wine advertising on social media. 

 

Can you give some examples of successful social media strategies?

One of the wineries that I found successful is an old established Californian winery called Jordan. They had a reputation for being a little stuffy and traditional and then they hired a social media expert who specialises in YouTube videos. There is also a new president at the winery who supported this. The social media expert created a series of really funny videos with music and dancing and funny stories. These go viral and this has created a lot of goodwill and interest in the winery.

 

What are the pitfalls of social media companies should avoid?

The legal issues in their own country. They really need to investigate that. Also, it’s really important on social media to respond to your consumer. If somebody is out there saying good things about you, you need to thank them, and if they are saying bad things you thank them for the feedback and tell them you’re working to change this. You always need to respond. You need to hire someone. Social media is a new job so you need to hire someone or at least work with a consulting firm, because consumers will be talking about you even if you’re not doing anything. If you don’t react to comments, it can hurt your reputation. The worst thing to do is to be defensive and angry.

 

Since the advent of social media, how do you think use by consumers and producers has evolved?

It’s a learning curve, people have to learn how to use it. One big word in social media is authenticity. You want to reach out to people but you don’t want to blatantly trumpet your brand. It needs to be a two-way conversation that is authentic and honest. You also need to be consistent. You cannot set it up and walk away and not look at it for a month. Social media advertising has now become very sophisticated. Platforms like Facebook and Twitter are now selling advertising services and they’re making money out of this. Using techniques like data mining, they can target the kind of consumer that you are speaking to. Online advertising has become very sophisticated using adwords and so forth. Finally, analytics are used to analyse all of the consumers that come to your social media sites and interact with you. It can give you insight, for instance, into demographics, perhaps those that you hadn’t thought about. Social media has therefore created a whole new skill set that savvy wineries really should be paying attention to.

 

Do they also have to be wealthy wineries to be able to afford to pay for all these new skills?

Not necessarily because social media is much less expensive than traditional advertising. Yes, the large corporations like Gallo and Constellation have whole departments devoted to social media and e-commerce. But smaller structures can also appoint someone maybe half time, or hire an intern or a consultant and pay a monthly fee.

 

Is this the new word of mouth or are physical sources of information still more important?

Social media is the new word of mouth. People will of course still have conversations and exchange information on wine in person, but they will also do it online, on Facebook, Instagram or Twitter. They may produce a video during a winery visit and post it so that their friends can watch it. They create their own little circle of friends online or Facebook group – these are the people they trust, and they trust their recommendations.

 

What are likely to be the most significant innovations/changes in the future?

Things change so fast it’s difficult to predict far ahead. Particularly, the communications platforms are changing: a few years ago, no-one had heard of Instagram, now it’s very prominent. Wineries therefore need to stay abreast and keep up to date with the platforms, and obviously with the regulations regarding them in their country. There will be new platforms, and I don’t know what they’ll be like. The other issue is the whole connection with e-commerce. There are more and more people buying online so the wine industry needs to address the transportation issue and keep its eyes open regarding this issue. We need to see innovation in this area so that e-commerce can develop, at a reasonable cost to the consumer.

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