First published in Wine Business International, May 2009
There is small stretch of green near the Berry Bros and Rudd wine store in London, a tiny private garden in the centre of St James’ Square, surrounded by elegant Georgian houses and a handful of private member’s clubs, peaceful despite being only two minutes from the Ritz and the advertising hoardings of Piccadilly Circus. It was here, in 1999, that three employees of Berry’s – ecommerce manager Martin Brown, and marketing strategists Nicolle Croft and Karen Gerard – were trying to come up with ways to get in on the internet bubble that was raging through the city at the time.
‘It was the height of the dotcom rush,’ says Croft, ‘and we wanted to be a part of it. We looked at a number of different ideas, but it was really wine that we knew about.’ They brainstormed the thing that would most change their lives as wine merchants.
They decided upon a search engine where all wine prices from different merchants would be clearly displayed, ending tedious searches through different wine lists, and the possibility of being charged over-the-odds for hard to find bottles. With help from a technical friend, they launched on a shoestring with their own money. The first version of the site was based on a Microsoft Access database and initially a few hundred merchants sent their data over on spreadsheets, which was then uploaded manually. The site was accessible without charge to whoever wanted it – mainly, initially, other members of the trade who were comparing prices, but increasingly specialists, wine collectors and consumers. Today, data is captured directly using ‘spider’ technology, where websites are crawled at least twice a week and up-to-date wines and prices transmitted directly to the Wine Searcher website.
Nearly ten years on, Wine Searcher is the most used wine search engine in the world, with 9 million visits per year. It works with 9,100 merchants world-wide and has over 3.2 million wines on its books, from over 60 different countries. To list your wines, you must be a retailer, but sources range from wineries with only six wines to supermarkets and brokers with 60,000. Enquiries over the last 12 months have come from 211 countries, 13,117 cities and 6 continents. The site has 650,000 visitors per month, with 36 million searches done in 2007, and 50 million page views.
And it is Bordeaux that drives the site, dominating the searches and the through-sales to merchants. Chateau Margaux alone has around 37,000 searches per month, and Latour around 27,000. It is hard to disagree with managing director Adon Kumar when he says it’s the, ‘Google of wine.’
But unlike Google, the growth of Wine Searcher has been slow. Even today, despite all the impressive figures, turnover in 2007 was just US$2 million. You get the feeling that the potential is huge, but that it has not been easy to convert the numbers into a successful bottom line. It was only in 2007 that they moved into offices instead of having staff working from home – prompted by a relocation from London to New Zealand, where founder Brown was born.
There are now 10 full time staff based in Aukland offices. These include a qualified sommelier, a viticulturalist, and four WSET qualified wine experts. One member of staff is dedicated full-time to buying key words on Google, ensuring they are listed highly in relevant searches (to give an idea of how important this is, about 15% of turnover goes into this one somewhat repetitive task). One year ago, the position of managing director was formed, and Kumar joined from previous roles in large IT consultancies.
The idea of wine search engines has become commonplace. The main competitors in the US are Wine Zap and Snooth. The Robert Parker website has exclusivity with a company called WineAlert. Each has a slightly different business model. Wine Zap takes a percentage of all sales initiated through the site, Wine Alert charges a quarterly subscription for listing, and Snooth is a social networking wine site that generates personalised wine recommendations and makes money through advertising. Wine Searcher, in contrast, remains free to list and free to use. What it does instead is generate income through added value and ancillary services. Featured merchants are given the option to have a free listing, or to upgrade to be a site sponsor for US$3,500 annually (or, of course, to be removed, although they assure that this option have never been exercised). Users have the similar choice to either access the site for free, or to upgrade to ProUser status for US$29.95.
One difficulty initially for Wine Searcher was establishing the target audience. On the one hand, they saw themselves as consumer champions, bringing transparency to wine prices. But there was little money to be made out of consumers because the philosophy of the internet is free services – and they knew that the majority of their users would be those within the wine trade. ‘And at least initially,’ Croft continued, ‘we had to allow all merchants to list their wines for free, because without their details, we had no product.’
Another was establishing reliability of data. One Bordeaux negociant spoke of his frustration with trying to sell wine to overseas merchants who say, ‘Well I’ve seen that wine 20% cheaper on Wine Searcher’, without having checked if the stock is really available, and in what quantity, and with what provenance. The information on Wine Searcher is only as good as the original data – and not all merchants keep their websites up to date. But Kumar says they work hard to assure quality, ‘We are totally independent, and get constant user feedback. So if merchants offer wines that do not exist, or have problems with delivery, we will be told. We mystery shop our merchants, and if we get complaints we log it, and if the problems continues, they are taken off.’ Forums on other sites, such as eRobertParker, are also constantly monitored so that any complaints can be logged.
Another clear problem – that remains today – is the reach. The site is highly skewed to the US and UK, with 85% of merchants being based in US, followed by 10% in UK, and 5% in the rest of the world. Asia in an emerging market that needs to be far better represented, and the company is actively crawling websites from the region to get wine information. ‘The problem of course is language,’ says Kumar, ‘but if it’s in English, we are getting the info from them.’
But since the arrival of Kumar, a clear direction seems to be emerging. For a start, the company has been quietly collecting data for the past ten years that can be potentially highly lucrative. There is the traditional method of charging monthly access to their database – which they already do, ‘under strict conditions.’ But they also have valuable market data that they have only really begun to exploit. Most of this is regarding consumer behaviour and sales data. For example, in Bordeaux, where properties are often removed from the commercial realities because of negociants, a wine property could pay for a breakdown of their market – where their wines are sold, where they are most searched for, what is their average price, and a rough idea of how much of any wine is left on the market. This is a small step from what happens today, when chateaux browse Wine Searcher themselves for stockist information that their negociants never want to part with.
Another sign of success is that merchants continue to be willing and happy to spend money for visibility on the site – and stay loyal to it. Berry Bros, by no coincidence the first retailer to join up, is still a sponsor; with Charlie Bennet, today’s ecommerce manager, very clear of the benefits. ‘In terms of return on investment, it is probably the most active piece of advertising that we do, as we are matching specific wines to specific requests, so our conversion rate is very high. We get about 2,500 visitors a month through Wine Searcher. Last week, for example, a banner ad was displayed over 3,000 times, we had six emails for orders, and 700 people looked at our details page.’
And the financial crisis has been good for business – since the start of the credit crunch, traffic has increased because everyone is comparing prices and looking for bargains. ‘It has helped it become more relevant for consumers directly,’ said Kumar. ‘And as one of our US sponsors says, ‘In good times, people want to drink wine, in bad times they need to.’’ Sponsorship has also increased, ‘because retailers are willing to pay to raise their profile, because they know that instead of buying wine in a restaurant, more consumers will be looking to drink it at home.’ To capitalise on this, from January 2009, the company is introducing a postcode search in the US, for customers to find wines that are located near to them. Again to increase consumer benefit, they will be rating merchants from mid-2009, not peer-to-peer as with e-bay, but an internal rating based on feedback from customers, range of wines, and mystery shopping. Search results will also be delivered to PDAs, Blackberries, and other mobile devices.
‘Quietly a lot of people know about Wine Searcher, without any advertising beyond Google,’ says Croft. ‘But the tipping point is arriving when we move up into the mainstream.’
Turnover for 2008 expected US$2 million, a 20% growth in value from 2007. The business model is that it is a free search engine, like Google, with revenue streams instead coming in a variety of ways:
1) ProVersion. This package, aimed at professionals and frequent users, costs US$29.95 per year. Most significantly, all merchants are visible (compared to the free version when only sponsor merchants are displayed). There are also various modifications that can be performed – merchants can be excluded, you can be notified about specific wines when they come online, you can make notes on merchants and you can make use of free classified advertising if you need it (to list your wine cellar for sale via a classified ad, for example). There are 10,000 Pro Version Users, bringing in approximately US$300,000 per year.
2) Sponsorships, which cost US$3,500 per annum flat fee. US merchants are the main sponsors, they get a banner ad, then get the search engine result for free users, plus are bolded in the paid for results. They can also send users straight to their shopping carts. Currently 400 sponsors , bringing in approximately US$1.4 million per year. And it pays to sponsor – the site had 6.3 million clickthrus off to merchants last year, and 4 million of these went to sponsors.
3) Wine Valuation Service for private collectors or cellar managers. Clients can specify if they want a valuation for a specific country, or worldwide. They use the database of 3 million bottles to give min/max/average price of each wine. They may be valuing it for insurance purposes, or for inheritance, or for a sale. US$750 per valuation. + 50c per line item.
4) Market Intelligence Service. The price of this is graded (from US$750) depending on the service. It may be that a merchant could ask ‘I have 200 wines of my system’, how do my prices compare with others in the marketplace?’
5) Advertising. Wine-related companies, such as WineBid in the US, or Reidel glassware, take advertising out on the site. Wine Searcher guarantees to all advertisers one million page impressions per month.
Most Popular searches for French wines in 2007
Around 25,000 searches for Bordeaux every month. 18,000 next is Burgundy. Searches are also responsive to what Parker or Robinson say.
Margaux 630,229 (year) 37,072 (average per month)
Romanee Conti 487,756 (year) 28, 692 (average per month)
Latour 465,342 (year) 27,373 (average per month)
Yquem 430,021 (year) 25,295 (average per month)
Petrus 428,660 (year) 25,215 (average per month)
Mouton Rothschild 413,641 (year) 24,332 (average per month)
Perignon 385,035 (year) 22,649
Haut Brion 379,945 (year) 22,350
Wine-Searcher can answer questions like:
Where can I buy 1990 Cheval Blanc, and at what price?
What Domaine Romanee Conti vintages are available in; Europe, USA, or anywhere?
Which 1958 vintage wines are selling now?
What are the wine regions/appellations in France?
Which New York wine stores are on the Internet?
Where can I browse a comprehensive list of grape varieties?