How do you pick a wine? If you’re like most, you might go by the look of the label or the wine ranking listed on the descriptor card. But neither one really gives you any idea of whether you, personally, will like that wine.
Now there’s a cure for that.
Over the past 5 years there has been a proliferation of online wine clubs. While these are interesting in that they are shifting wine retail from brick and mortar to an online retailer, they are also shaking up how wines are being selected.
Algorithm based wine recommendations
I’ve recently written about how artificial intelligence (AI) is being used in the wine industry to help consumers choose a wine. Some online wine clubs are following a similar vein, using algorithms to determine wine preferences based on a personal taste profile.
New members get started by taking a taste test, answering a few basic questions on their food likes and dislikes. This data is taken and fed into an algorithm to produce personalized wine recommendations. Members are sent the wines to try and also to rank–the more wines you test, the stronger the intelligence gets.
Online wine clubs have proliferated since they initially began appearing around 2010. Different clubs have different styles, some are more formal, others more educational, and some just more fun.
Winc, a Los Angeles based start-up founded in 2011, was one of the first online subscription based clubs offering personalized profiling. The company initially launched as Club W but rebranded in 2016 as they shifted from being just an online marketplace to both sourcing and producing their wine. The company has raised $30.6 million from five funding rounds, the latest being a Series B round for $17.5 million in May 2016.
Tasting Room is another early market entrant, founded in 2009 and then acquired by Lot18, an online retailer of wine and epicurean products, in May 2013. Unlike some other clubs, Tasting Room starts all new users off with a “tasting” of six custom mini-bottles selected based on your personal taste profile. Lot 18 has had five funding rounds, generating $44.5 million, all of which was raised prior to the Tasting Room acquisition.
A newer market entrant is Bright Cellars, originally founded in Boston in 2014, but relocated to Madison Wisconsin to join a start-up accelerator. Bright Cellars operates as a monthly subscription, with members receiving four custom selected bottles each month for a membership fee of $60. The start-up raised $2 million in seed funding in August 2015.
Online wine clubs are shaking up the wine industry not only in moving retail from brick-and-mortar to online stores, but also in the types of wines being bought and their target audience.
Profile-based recommendations are giving consumers confidence to buy more obscure wines, including unknown varietal as well as small production wines that don’t get a lot of shelf space at traditional liquor stores, but are being featured in online wine clubs. Wineries are also using the taste profile information gathered through these clubs to help tailor wines to consumer preferences, helping to make the wines more commercially successful.
These wine clubs are helping to transform the market of wine drinkers from a smaller affluent group to a broader market, particularly focused on millennials. By making wine and wine knowledge more accessible, these clubs are removing barriers that have held many back.