Welcome back to the D2Z Podcast with your host, Brandon Amoroso. Today, we're joined by Patrick Pazos, the new Sales Manager of DRINKS.com and Electriq, to discuss the fascinating intersection of wine and e-commerce.
We start by discussing the huge opportunity that wine producers have in the e-commerce space with Shopify. Patrick sheds light on why it's important for wineries to move away from traditional, legacy technology and embrace the advanced tech stacks and integrations offered by Shopify.
The conversation then moves to the importance of a cohesive Direct-To-Consumer (DTC) system. It's surprising to see that even major, revenue-generating wine producers are still stuck using antiquated systems.
Marketing, or the lack thereof, is a big topic too. We talk about the gap in market research within the wine industry and the potential improvements that can be made. Patrick stresses the crucial need for wineries to establish a direct relationship with their customers for long-term success.
We also explore how businesses can go beyond the website to truly engage with customers. We talk about the vital role of branding and brand positioning in a saturated marketplace.
Closing out our chat, we delve into the future role of AI. We talk about how AI is shaping the marketplace and where it might be particularly beneficial for wineries.
Tune into this episode of the D2Z Podcast for a great conversation on digital strategy, marketing, and e-commerce. Don't forget to hit that subscribe button for more insights and discussions. Enjoy the show!
I'm Brandon Amoroso and this is the D2Z podcast Building and growing your business from a Gen Z perspective. Hey, everyone, thanks for tuning in to D2Z, a podcast about using the Gen Z mindset to grow your business. I'm Gen Z entrepreneur Brandon Amoroso, founder and president of Retention as a Service Agency, electric, and today I'm actually joined by Patrick Pezos, recently as of four days ago newest sales manager of drinkscom and Electric, so really excited to have you on here. We obviously were working with you for a while during your time at Shopify and excited to just chat, chat, chat.Speaker 2:
Yeah, yeah, thanks for having me and excited to be here.Speaker 1:
So before we dive into some of the topics and questions we want to go over today, can you give everybody just a quick sort of background? Tldr on yourself.Speaker 2:
Yeah, yeah. So professionally, I worked in the wine and alcohol industry for about seven years Up in Canada here. I worked with Canada's largest wine import agency and had the opportunity to have, you know, various roles, from, you know, working directly out of winery and seeing what a wine club looks like, to managing our retail business with national grocery chains. Further to that, I joined Shopify, where I worked on our enterprise team in sales, and so I think, based on that, this has been a perfect fit for myself and I'm excited to I'm going to marry the two and get started with drinks.Speaker 1:
With all of your experience working at the winery. What are some of the biggest pain points that you uncovered as the byproduct of your experience with them, or areas for you to move to? I guess.Speaker 2:
I think from my time in the wine industry. I think historically wineries have been slowly to adopt technology. I think there is a bit of a disconnect and there's also a lot of unique needs that a winery needs to surface from having you know on-premise sales to e-commerce to you know on-site restaurant operations. I think there is a unique fit for wineries but historically you know they've been really trained that really the only fit for the winery is to buy, you know vineyard specific technology and that really comes from you know even vineyard software or specific tractors to manage vineyards. But really what I think the opportunity is in the e-commerce space for wineries is the ability to use Shopify to take kind of a best-in-class e-commerce platform and apply it to their business.Speaker 1:
Yeah, I see that mindset in some other industries as well. Like we got a deal from Shopify of somebody in the jewelry space and every single piece of technology that they're currently using was something made specifically for the jewelry industry. And like half of them were already out of business and they were just being supported, like in an ongoing capacity for an undefined period of time. But like the business can even sustain itself because they went and built like a point solution for something and I feel like there's a sort of awakening in those types of industries where we don't have to continue to use the same, like legacy tech that was built just for us. Like we can actually use what Allbirds uses, or like the bigger D2C digitally native brands are leveraging.Speaker 2:
Yeah, I think the biggest problem with kind of legacy technology in the wine industry is just how many different systems wineries would have and I've seen it in previous instances where we've dug into a wineries tech stack is that they have one program for their online retail. They have a different system for managing customer communications, a different system for restaurants, and I think the issue with all those legacy systems is that none of them talk to each other. So you never have this like cohesive customer view. You can't track the customer journey from being on property to go into the restaurants, go into the retail store, to shopping online. There's just seems like a huge disconnect there and I think there's a huge opportunity to bring that all together and build a cohesive system that allows you to easily have a customer overview and profile of who's buying your wine.Speaker 1:
Yeah, and one of the interesting things for me has been the learning about the retailer side of things, because it was relatively familiar with wineries and how they operate but not really retail at all and there's some pretty sizable like retail shops and their tech is terrible. I mean, I spoke to a merchant. They got one location. They're doing about $10 million in sales a year and 9 million of which are done by phone. Like I just can't even imagine doing that. So antiquated and showing them just the really easy capabilities of invoice generation and a platform like Shopify would be saving them so much time and allow them to actually focus on things that are tangible and will not move the needle for their business.Speaker 2:
Yeah, I think to even expand on that, I think, coming from the retail environment, what's missing from a producer or from a brand ownership standpoint is really customer data. With brands selling, call it, 95% of their wines or spirits through retailers, they don't have that opportunity to gather customer data and insights and make informed marketing decisions, and I think being able to get that data from a platform like Shopify is essential to furthering those marketing decisions, not just from a direct-to-consumer standpoint, but also in the off-premise retail space.Speaker 1:
Yeah, I was talking to a winery and they basically create their labels just in a vacuum, like they have no idea what will or will not work. It's sort of just spray and pray and see what quote unquote sticks in retail, versus being able to use a website to test different label variations in the certain markets and then say, ok, yeah, well, this label for Rosé in this particular region is crushing it. So obviously we want to roll this out to retail distribution or go national with it or whatever it may be, but you don't have that capability if you don't have a direct relationship with the customers.Speaker 2:
Yeah, yeah, it gives a huge opportunity, especially for larger producers, to use the e-commerce as that testing ground for innovation, for labels, and really see what sticks. And it's a lower cost way of throwing something at the customers, as opposed to producing 20,000 cases and then hoping something sells.Speaker 1:
Yeah, especially with all the data around under $20 price points. Like you are very much so making your purchasing decision based off of the label. It's not the wine necessarily. As long as quality is above a certain threshold, it really comes down to do. I like this label more than I like the other label.Speaker 2:
Yeah, label and price point from my experience have been something that really works. And I remember my time in the retail industry. There was a wine and it was labeled and marketed as the $17 solution and it quickly, over the course of a year and a half, became the number one selling wine in Ontario because it had a good label, it was simple, relatable and the price point was perfect. And from my time in Alphabet, we spent a ton of time and a lot of thought in price points and how to retail price products, because going up from $19.99 to $21.99, and sometimes knock your sales in half if you miss the price point. So it's always trying to find that balance of getting the right product at the right price point and a label that will fit on the consumers.Speaker 1:
Yeah, I'm trying to balance that. Have that direct relationship with the. Trying to balance that and Manage that when you don't have that direct relationship with the customer is really challenging as well.Speaker 2:
Yeah, and I think you know, speaking to kind of relationships with customers. It's, you know, I reading the Silicon Valley wine reports that came out just a year old now. But you know, one thing that really stuck out is that a lot of wineries have the e-commerce but they don't go deep into that, they're not pulling analytics, they're not connecting that customer journey, they're really missing all the data and insights that could really help their business grow. So I think it's essential for for wineries today to you know, really use that information they can gather from e-commerce and Brandon you know better than I do, but Whether that's, you know, surveys, post-credits or surveys or forms or customer quizzes to really gain insight into, you know what's the customer looking for and what's their flavor profile, what's the price wine like. So really, there's just a ton of data that you can gather From a properly designed website that'll just help inform not just the direct consumer relationship but also the relationship of the customer in retail stores.Speaker 1:
Yeah, and I think Right now, e-commerce for wineries is sort of just like oh yeah, let's, let's throw it up there, like there's no real. For the most part there's no concentrated effort around how to grow it or how scale it or how to optimize it. It's like, oh yeah, like we know we should have this, so let's just throw it up there. But the bulk of the focus is still on the tasting room and then Selling through distributors, not necessarily cultivating that online connection. But I mean, when I went to Napa was in June, the tasting room experience was was really great and can't be like matched online. But the difference between the tasting room experience and what you experience online with that same winery is Like a night and day difference. You're going from like a 10 out of 10, 11 out of 10, to like barely even adequate e-commerce experience. And like when we were there, you know you're doing the wine tastings, like you're having a couple of glasses of wine and you're you're feeling pretty good and they're selling you this and that and like, yeah, you make that purchase at that one time when you're there for most people you don't go to Napa Every week like it's a, especially if we want to talk about international wineries. Like you don't go to Bordeaux every every year, you go maybe once in a lifetime. And then how do you like then take that customer and keep them when they're never going to be coming back to the tasting room? And I thought that was the biggest gap each because I went to that winery, I bought some wine from them. I'll probably never hear from them again. Now there's no like a logical path next forward where it's like here's an email and SMS like strategy that we have in place to turn Brandon into a repeat buyer or to have him get into the club program or whatever it may be. There's, there's so much opportunity for Lifetime value like creation that is currently being missed out on and I guess a consumer you're still consuming. So then you just go to the retail store and you pick another random bottle that you don't really have any true affinity for or connection with the brand.Speaker 2:
So I Think there's so much opportunity there. I think, some of the insights from that reports. Reading it today, where you know only five percent of wineries Currently use SMS as a way to, you know, communicate with their customers and you know, again, better than I do, the open rates, the Reply rates, the way to generate revenue from SMS is just incrementally higher than email marketing and it's something like a really easy, quick way that you know wineries can, you know, generate that lifetime value, whether it's Automating an email 20 days after purchase and hey, hope you enjoyed our winery, like, hope you enjoyed your wine. You know, knowing that most wine that is purchased is consumed within 30 days, it's a really easy opportunity to remind the customer that you're still there and connect with them. But I think the other disconnect too is and this is probably more of a kind of macroeconomic headwind for the wine industry itself is that the, the wine industry, the major consumer, or wine, is kind of in that 50 plus category and wineries need to do a good job of attracting, you know, the Gen Z is the millennials, the digital natives and the people who are going to be shopping online, and it's connecting where the customer is. It's, you know, being on tiktok, instagram, getting a product in front of the customer that way. I don't think just having you know website is enough anymore. And if you want to attract those younger demographics to your winery, it's having to connect with them in different ways and that's typically through social.Speaker 1:
Yeah, I think that's a really, really like sort of jarring realization for the wine industry is that the Under 30s and under 40s are not drinking wine like the the 40 plus is. I think maybe part of it has to do with purchasing power, but another part of it is and education Competition. Like there's so many alternatives in both the alcohol category but in the non out category, and then that's not even getting into like CBD and cannabis, which, on a per like serving basis, cannabis is significantly cheaper than alcohol is. And you have these really cool like Digitally native brands that are starting, that are attracting that like because let's be, let's be realistic here Like sure, like the drink age in the US is 21, but you're like these new brands, whether it's like happy dad, like seltzer or whatever it may be, like they're capturing the attention of, like the tiktok group that's in that 16 to 22 age range, and they're buying it because of Everything except for the actual product. Like they're buying it because of the creator, they're buying it because of the brand, they're buying it because of the messaging and they're buying it because of what it stands for or represents. And you don't have the Same thing around like a like wine. It's just not. It hasn't made that move yet, and so a lot of the winers that we speak to now are like how do we connect with that younger demographic in audience? Yeah 21 to 30 year old range.Speaker 2:
Yeah, no, it's. I think it's a challenge for every winery. It was a challenge for us is how do we bring in the younger demographic and how do we can like, how do we expand the occasion of wine like further than a dinner party or further than like Rosie on a patio, right? So it's finding a product that fits a new occasion and I'm really selling to that. But it's definitely something that the wine industry has challenges with right now. And I question for you, and something I've noticed in the industry is I saw, like a really big colleague, bifurcation of prices in wines. So you know cheap wine, cell and luxury wines for the better are actually doing incredibly well. You know wondering your thoughts on how do you connect you know that luxury brand and luxury tasting room experience to. You know the direct to consumer routes and from what I'm seeing, it's typically allocations and scarcity is the biggest tactic in selling luxury wines. But I'm curious what your thoughts are on. You know how do you grow that higher end. Call it like $50 plus. You know wine category.Speaker 1:
Yeah, well, I think I think there's a pretty big gap. Like there's your under $20 bottles, maybe under 30. And then there's avid wine collectors who don't back away from $100 plus bottles, really, like I mean you look at like a Harlem estate or some of these properties, you're looking at $500 plus bottles, even like $1,000 plus bottles, and it's more than it's almost an asset than necessarily a consumable, even though, yeah, like it'll it'll be, it'll be consumed at some point, most likely, but it's almost being turned into like art or a collectible or something of that nature. And so you're appealing to a totally different like audience and I don't think the zero to 20 wine drinkers will necessarily ever make it to like this sort of $500 plus bottle purchaser where, if I'm a brand and I'm in that like $100 price point I don't know how many people are actually there per se, like I think there's a lot of. You know you're sort of high end. You have these members clubs in Napa. They're thousands of dollars a year. It's the exclusivity. You're getting your six bottles, your 12 bottles, whatever it may be, and there's real value in that, especially with the fact that there's a waiting list. I mean you quite literally have to wait. So they have this, whether it's fake or real. I'd say it's 50 50, depending on if it's fake or real, but you know which ones are fake and which ones are real. I mean, I've been on the snuck one on waiting lists since I was like 14, because I knew I was never going to get it. So maybe when I'm like 40, I'll finally get off the damn list. But or maybe they'll hear one of my podcasts and come me a deal. But you have that side of the coin and then you have I don't know, like an opus one where they're expensive. But I think they actually give a bad rep to wine because it's just mass produced. Like $300 bottle of wine and like that to me is not exciting at all or interesting. And if I was a consumer and I'm like, well, the $50 bottle versus this $300 bottle, like I'm not seeing, I'm not seeing the value add there, and so I think there's there's that sort of middle of the market which I would not want to be in. If I was a producer, Like I'd say, maybe like the 120 or under, or 500 or above, I don't want to be a $250 bottle of wine.Speaker 2:
Yeah, no, I agree, and I think the challenge for a lot of California wineries is keeping that authenticity. You know you have states in Italy and France where they have, you know, 30 acres of vineyards and that's all they've ever produced. And you know the prices can justify $800 a bottle because they have that tradition and that authenticity. But it's hard to get that to a consumer. When you start doubling, tripling, quadrupling your production quantities, you lose that authenticity or the you know the terroir of the wine. Because you're continually making more and more of it, it's hard to understand where that comes from and typically comes from another vineyard or another. You know producer. So yeah, I think that's the challenge for wineries is maintaining that authenticity in a luxury market.Speaker 1:
I think now is never a better time, though, to be able to educate, because you have all these different sort of channels that you can do it through, whether it's TikTok or Instagram or email SMS. Like you, you can get the story out there in the why behind. Like, your bottle is so much different than the rest, but unless you've been to where it's actually produced, like I've seen the difference between how a $20 bottle gets made and a $500 bottle, and it is wildly different. I mean, you're basically dealing with Amazon basics versus, like, some sort of very high end, like crafted by hand good and you can taste it in the quality, sure, but so much more of it is around the, the history, the story, and it's just not currently, I don't think a great job is being done telling that story online, which is the best place to do so, in my opinion.Speaker 2:
Yeah, yeah, I agree, I think the best wines in the world have those you know stories and that authenticity connected to it A lot of its history. But you know, especially for these new luxury brands that are coming out, it's all about, you know, protecting that story with the consumer and how do you kind of communicate that quality back? Yeah, Another thing I love to chat about and one of the trends that I saw along the wine industry was kind of calling it this like better for you category, so starting to pop up on shelves here in Canada, but almost putting nutritional information on the labels and communicating to customers hey, we're low sugar, we have, you know, low salt bites. Trying to be that kind of natural brand or almost that better for you brand. Curious, if you've seen that at all. You know, in the dress.Speaker 1:
Yeah, it's always been mind boggling to me, frankly, that you don't need to have nutrition facts on a bottle of wine. It will. I mean it'd be pretty ugly, honestly, like I don't know if I want it on the bottle of wine, but maybe accessible somewhere else. Because I enjoy the front and back label and like the design and creativity that goes into that. I don't necessarily want half of it to be taken up with your standard. Whoever the governing body is if it's the FDA or the USDA, whoever does the nutrition nutritional facts labels but for me Like. That's why I really don't like some of the over engineered California wines Like um gosh, why am I blanking on this? It's like one of your standard. Maybe it might be far near. No, famous famous, yeah, Camus doesn't sit well with me. Like people love it, I don't enjoy it because it's it tastes a little bit too artificial for me, and so my my suspicion though this is not in any way confirmed is that it's probably very much so like lab, engineered and oriented with different sugar additives or whatever. Whatever that process looks like. I mean I I went to one or two wineries where they were showing how you can, like, increase or reduce the sugar level. Basically, you basically make wine in a chemistry lab if you really wanted to. Yeah.Speaker 2:
You find your again with data. You find your target market, your demographic, your taste profile and you almost engineer um you know a drink that is going to kind of match that consumer's taste profile.Speaker 1:
Yeah, like I'm not drinking a Pothic red because it's like drinking dessert basically, but I don't actually know how much sugar is in it. So I'm all for like seeing what's in the bottle and I prefer drier red wines. And I think there's a movement towards glow alch and no alch as well. So I think the showing the nutrition facts makes sense and you see it popping up like way more, whether it's vegan or organic or low sulfite, no sulfite wines. And, um, I didn't even know some of the wineries in France that I have been enjoying for a while, or already no sulfite, or they were dry farming, like I learned that Harlem estate is almost entirely dry farming, um, but then it's so funny because then you go to another winery and they're like oh, dry farming, like never, like we, we never do that. So, um, I think it's cool when it goes. It's another marketing angle as well too.Speaker 2:
So, yeah, no, I think it's. Uh, it's interesting. There's definitely room for both, uh, you know schools of thought in the wine industry and that's the beauty of it is there's endless opportunities to to taste different things and different styles. But I guess a question for you, and and being on kind of the forefront of this with drinks is where do you see AI going in the um, you know winery space and how can wineries take advantage of that with kind of direct to consumer offerings?Speaker 1:
Yeah, I think label generation is the most, um, obvious one for me because of how, like, how much of a factor it is in the buying process for a consumer. Is the label? So in like a? In a completely hypothetical world, you would have and this is how it happens on a lot of the marketplaces with the private label juice and just a bunch of different random labels, but it's all actually the same wine, Like you could have sort of your core set of varietals, whether it's Keonti, I don't know, Cabernet, whatever and it's just unlabeled, like sitting in a warehouse somewhere, and then on the website you basically have like labels that are being created by AI in real time for whoever that customer is. Because if I like dogs and I go to a website and I see a fancy like label with a dog like I'll be more likely to buy that than than a label of a cat and then like to sort of print on demand on the bottle, off you go. Um, I feel like that is where AI is heading in the in the label category. Ai is heading in the label creation department. Maybe you log into something and you're like I need to target 35 year old woman in Texas, and then it spits out five different label variations for you based off of whatever Um. I feel like that is how AI could potentially help in in that front. And then I was actually doing a a call um with, like a marketing research firm and we're talking about AI in general, and I think where AI could really help wineries is in Ecom. Enablement, Like they don't need to go learn and actually become experts in e-commerce, they just need to go tell this AI tool Like hey, I want a modern website that evokes X, Y and Z, yeah, and so that in like voila, there you go, you have your, your Shopify storefront all ready to go, and then maybe you log into a platform like claveo and it downloads all that info that you have from the website already and automatically creates for you Welcome emails, abandon card emails, post purchase emails and you, you just saved yourself countless hours and money because AI is there to at least get you 90% of the way there. I feel like that's just where it's going in general. You will have to check it at least at this point. Like you, you're not just going to allow it to send an email to your, to your, to your customer list, but it can basically do everything for you up until the actual endpoint where you have to look at it and say, oh, let's make these slight tweaks, or let's do this and that, Uh, but it's basically like marketing on steroids, because you don't actually have to do any of the grunt work to to to figure it out, and I'm sure there's a bunch of information around, like data extraction, that you could, that you could take from it as well.Speaker 2:
Yeah, the AI labels are really interesting. Like come from from the industry. You know we would do focus groups and spend a ton of money and have you know, two 300 people evaluate five or six labels and and even with just small, you know 10% differences in a brand. So I think you know what that's going to do is just bring that cost of innovation down and the speeds of market as well. Right, being able to test those labels quickly with with AI or iterate is going to be huge for the industry.Speaker 1:
Yeah, um, one question I had for you is in your time selling Shopify to, uh, quite a few alcohol merchants, what were the biggest roadblocks or impediments? What made them maybe hesitant to take the lead?Speaker 2:
Yeah, I think the biggest hesitation that I saw was that fear of change. A lot of wineries were like, hey, this is how we do things with our wine club, this is how our customers receive emails, this is how our customers pick their wines. There was a huge hesitation to change that and I think that was the biggest barrier to overcome was that fear of change. But really, those wineries that can handle that change, both from a customer standpoint and operationally, are going to realize the benefits of using Shopify. And, yeah, I would say that's, overall, the number one biggest realization is that wineries would come to us and say, hey, this is exactly how my wine club is run. We need to mirror that on Shopify. Without realizing that there's tried and true methods, like recharge, for example, that powers some of the biggest subscriptions on the internet. Without realizing that there's a different way of doing things and it might not necessarily be the way that they do it, but it's a proven method that's been tried and true with retailers that do hundreds of millions of dollars in sales. So I think that was the biggest barrier in the wine industry. It's just that fear of change.Speaker 1:
Yeah, I think that is a common theme. I'm not necessarily sure how to address it in some instances because it's just, it's inevitable. You have to be willing to change and I can see how it could be scary for some, especially the incumbents. Why mess like? If it's not broken, don't fix it. And even though we can sit here and scream as loud as we want that it's broken, if you're still making money, you know you don't necessarily have the urgency behind it and I'm just hopeful that won't be one of those now, maybe that in 20. Or technology, but I guess that's on us to figure it out.Speaker 2:
It is yeah, no, but I think there's a huge opportunity for wineries that can be a leader in that space and take the risk. I think it's less risky now as these solutions are proven by, you know, the biggest e-commerce brands in the world, and I think it's just being able to manage that change and walk wineries through that operational change as well. It is a big thing, but I think there's a lot of growth available for those wineries who can, you know, be on the forefront and adapt and create new markets and go to different channels to find their customers. I think it's just a huge untapped market.Speaker 1:
Thanks for joining me today. I know there's like a thousand other things that we could chat about here. Is there anything else that you wanted to touch on before we wrap things up?Speaker 2:
No, no, I'm just, you know, very excited to get going with drinks and really excited to show the line industry. You know the power of Shopify, you know, really show them a way forward to grow revenue.Speaker 1:
Yeah, the really thing. The thing I'm most excited about is we have some pretty big proof points now, and it feels like an industry, very much so, where you need to see somebody else who's just like you doing it before, like nobody cares what the skincare brands are doing, or the shoe company or whatever like it's all about. I'm a winery. Show me another winery that's leveraging this platform in the same way that I would be, and the same for the retailer as well. Show me another retailer who's using it in the same way that I would be. And we have those. They're large brands as well. So the writing is on the wall. For me, it's just inevitable. It's more of like a matter of time. And so how do we accelerate change in an industry that's essentially set up to not facilitate change? So it's fun. It's a fun challenge.Speaker 2:
It's fine. We've got lots of work ahead of us but it's an exciting challenge. And yeah, I definitely agree. I think you know we've reached that critical mass where the proof points are there. Bigger brands are on board, you know Shopify is on board, you know. I think you know having that drinks app was the first step in Shopify really taking that plunge and getting into the wine industry. And you know it's a testament to how good the technology is, you know, for the alcohol sales tax and compliance and yeah, I just think there's a huge opportunity to bring more people on board. So really excited. Brandon, I'll let you wrap it up, but yeah, I appreciate your time today.Speaker 1:
Yeah, thanks for coming on. As always everybody listening. This is Brandon Amarosa. You can find me at Brandon Amarosacom or electricmarketingcom, and we will see you next time.