First- I’ve never heard of them, which I’m sure is a traffic problem. And why the name PIX?
Second- Not sure I understand Pix’s business model: “to pair people with bottles of wine that bring them joy,” “to bring more people to the world of wine”? Looking at their site I certainly don’t see what they do better than any other wine site, other than have a pretty looking interface (that doesn’t seem very functional) and have a large staff.
Seems like they’re caught between being a content provider and a search engine. Like they want to be Wine Spectator and Wine Searcher wrapped into one, but don’t do either very well. Maybe that’s what Pix should have done- purchase Wine Folly (WSpec seems like a big purchase) and Wine Searcher…
Over the last couple of decades wine sites have gotten more narrow or niche focused, this is true for all hobby sites, IMO. Pix seems to be trying a contrarian approach with an overly broad market focus. Eventually, I’m sure a consolidation will be useful for our favorite industry, just not yet.
I read the drop regularly, but my impression was always that pix was geared towards discovery, I had no idea they were offering a wine searcher like service. I was hoping they’d get off the ground and be better for discovery since I think thats still lacking, but vivino seems to have that market cornered since they’re an easy app (even though their suggestions are often bad). I don’t think offering a web based service is going to get many younger consumers, which seemed to be pix’s whole play.
As noted there are a lot of other factors that went into it, but I do agree that there is still a huge marketing problem towards young people. Correct me if I’m wrong, but ‘natural wine’ (whatever that means to you) is the thing that’s made the most progress, but it seems to be rehashing the marketing playbook of craft beer and spirits which are more accessible and accepted. Just because pix was aimed at younger consumers doesn’t mean that it was doing a great job of reaching them - though its a sad state of affairs when tablescapes on tiktok with pretty wine labels do a better job of that without offering any information.
I’d agree that from a marketing standpoint “natural” is the biggest impact in the last decade, especially in marketing to younger consumers.
A couple of thoughts that come to mind. Obviously the syntax is an inspired choice. But a lot of the success is also related to affordability, IMO. Whether one enjoys natural wines or not, many of them(not all) hit price points that are attractive to newer consumers, and many are “fun” or “cool” wines that convey how enjoyable wine can be without needing to be profound, e.g. pet nat.
Pet nat as a style checks all the boxes of what is fun about getting into wine. But I’m not sure that new consumers really need more(or would want more) than a TikTok tablescape. I would guess most younger users trust the people they follow, same as an older user will buy George Clooney’s tequila, and go seek out a label from a social media post same as wine enthusiasts 25 years ago walked around with their Advocate reviews(or in Portland shops would get bombed with requests for Matt Kramer’s weekly newspaper recommendation). For more information, you just go to the wineries website.
So the need for tech marketing just isn’t dire.
TBH, in my opinion wine marketing also has an issue with trustworthiness. When it’s monetized, that’s often coming from the producer side and in general bigger producers making more generic wines. It may be how business works, but it really doesn’t seem to be what any enthusiast really wants, much less younger ones. Ultimately, part of any generation building their own identity includes finding new and interesting wines, but that does include the previously mentioned “boots on the ground” effort. At ground zero in the Willamette Valley, I have yet to see a new wine get picked up and broadcast by marketing of any kind before there was a significant awareness of the wine already. Critical review of any kind is almost always more confirmation rather than revelation.
This is spot on w/r/t consumers in their early 20s. Social influencers are the trusted source. The primary difference is in the media (medium?), but I think one big difference is that influencers (cue the poopooers) are typically paid for their posts, whilst TWA etc. aren’t. But that goes to the “value” of the content/opinion, not the impact.
Wine tech startup successes are rare because the market is small. Market size is one of the core things that investors look at to decide if an investment is worth exploring. A second major factor that scare investors away is the lack of past major successes. Strike two for wine tech.
Yes there are a few successful wine related tech businesses. Drizly (booze focused delivery) supposedly sold for a huge amount to Uber. And Vivino has raised $200mm+ and is valued well north of $500mm. What else?
Two of the most successful, most commonly cited other companies are CellarTracker and Wine-Searcher (and I use both every day). These have been around for decades, are fine, proven small businesses, and excellent products. And after 20 years have not demonstrated anything like the massive revenue growth that venture capitalists demand. The W-S team seems to be trying to build a bigger business on top of their search and news platforms, and maybe they’ll get there.
To me, Wine Tech seems like an area that draws in enthusiasts (i.e. wine lovers) but is fundamentally limited by market size.
I didn’t know that Pix existed until today - but looking at their site, it feels like they are trying to capture the Vivino market.
Having attempted to startup an idea in a different area of tech, one of the big reasons I didn’t move forward with it was a lack of monetization opportunities. From what I can tell from the article, Pix’s monetization appeared to be affiliate revenue.
I don’t think VC has anything against wine. I think SV VCs are finally coming down the earth and scrutinizing how a company is going to survive. Having a staff count of 20 probably didn’t help either.
I do wonder how they would have ended up if the SCOUS heard Sarasota Wine Market v. Schmitt and then ruled in favor of more liberalized alcohol shipping laws.
I’m going to throw out a curve ball thought. thinking about it a little. what is it that separates alcohol sales over most other consumer goods sales? the fact that you can’t purchase alcohol over the internet except from a licensed retailer or producer in the case of wine. yes you can buy wine online, but from a retailer like K&L, vivino (I dont know anyone who has though) or from total wine and have it delivered. but you can’t from amazon. I know someone who works in management high up at a alcohol retailer. He says amazon is spending huge amounts of money to try and get the people in DC to change the laws so they can sell any and all types of alcohol and tobacco products. in my mind, this is the largest barrier for and VC to be able to monetize their “investment” if you will.
Maybe I’m old school. but I like going to wine stores to look around, see whats new and get a few new ideas from the wine people who know me, know what I drink and see if they can recommend something new to try, and the retailers who do tastings in stores (which came to a massive halt when the virus thing hit us) is a real big customer service thing in my mind. so for an old school product, old school purchasing methods, for me and others I know, is still and will continue to be the way. lets face it, how many online car buying sites have tried to “take over” the way new and used cars are sold? but still, everyone prefers to kick the tires and a car dealer. different but the same?
That’s the wine market. Wine Tech is going to be a small fraction of that. Generously let’s say it’s 5%. $3.5 billion. And a wildly successful company could maybe sew up 10% - $350 million at maturity. Yes that’s a great business but represents an extreme best case that has never happened before. The overall market size of $3.5 billion is far too small for most VCs to pay attention.
Then, where’s the money? They want to insert themselves as a service and take a margin? Is that sustainable? Won’t their users quickly learn retailers and wineries they like and can buy without paying a middleman?
Then, if it’s about discovering small producers, how does that scale. They may send cherry pickers off to some small production gems getting them quickly bought up, then the rest of their customers looking for those wines will be disappointed. Over and over and over. Haven’t we seen that before, even with larger production wines getting a WS100 rec or whatever? To the producers, having a single wine of their production cherry picked away from their regular customer base, in one way or another, is a double-edged sword. It can weaken the goodwill they’ve built up with consumers by a favorite wine not being available for a year. Many will move on to a new discovery and not come back. If no significant number of those one-time customers become long-term customers, the wine was just a commodity. So, if the service keeps their users loyal to the service, they aren’t helping the wineries. If they lose their customers by successfully turning them on to favorite wines, they need to count on high user turn-over. If they don’t do a good job turning users onto exciting wines, their users will just fade away. All this while asserting themselves onto other businesses’ business models and demanding a cut.
Imagine having a tasting room and mailing list and some distribution. You project how much of each wine to produce to equate to a year’s sales of that wine. Then imagine being sold out of one of those wines in a month and having 11 months of tasting room customers, distributors, etc asking you for that wine.
The flip side of that is having a big account pledging to buy some scaled-up production margin of a wine. So, you find sources, buy extra fermenters and barrels and so forth, make all that extra wine. Then, by the time the wine is released (18 or more months after the agreement), they say “Oh, we decided we don’t need those 1000 cases after all.” Fun stuff. And common. The point there is the risk in not conservatively growing production volume as a small producer.
I didn’t know about BevMo. But BevMo, Wine.com and Vivino all have something in common - their primary business model is selling wine. I could see new players coming into the market with some kind of better retail play to try to get hold of the market. Amazon for Wine kind of thing. And maybe that’s how Wine.com and Vivino already pitch themselves. Retail is by definition a big part of the money flow of the $70 billion US spend on wine. But Tech-oriented plays are always going to be a teensy fraction of that.
it’s fundamentally more than that - every state regulates all matters of alcohol manufacture, distribution and sale. the typical paradigm is some version of a 3-tier system (or multiple tiers in general). and every state is different. until / unless the constitution is amended, that won’t change. shipping may get easier / more normal. but you’ll still have many separate and mostly small companies as the backbone of the entire industry. professionally, i think about this a lot, to say the least.
i’ll tread lightly here as i’m curious what others think about all of this, but the inherent nature of this product category adds a level of complexity not found in other consumer products. and that complexity is now built into the industry itself.
Yea, the regulatory and related industry structure in wine definitely are inhibitors to new companies coming along and aggregating a lot of the financial flows.
I’ve been thinking about other industries with similar regulatory complexity, and structural barriers to new entrants. One I know a little about is health care. It is probably even more complicated and byzantine. And yet massive amounts of investment capital flows into the sector. Why? Because it’s measured in $ trillions not $ billions. Hard to break through but even small success is massively valuable.
I do growth stage tech investments and can tell you that consumer/CPG is a tough place to play generally and even more so in a highly regulated/fragmented space like alcohol. That doesn’t mean there aren’t big winners but most are in mass production/high SAM beverage categories. The winners you see tend to be proven non-wine models that happen to have wine as the product or subject matter.
Every time I look at a wine-related startup outside of software or marketplace-related models, I have a hard time getting excited about the actual business model relative to everything else out there to invest in. There’s always a romantic marketing aspect to them but the core business strategy isn’t usually that sound.
Areas I see attracting more capital in the next few years are lifestyle wine storage rollups and institutionalized fine wine investing (unfortunately).