Online wine sales have become more popular than direct purchases for the first time ever, according to a recent report by Wine Intelligence, with one-in-five wine drinkers shopping online. Market estimates put the size of the Australian online wine market at about $500 million with annual growth at 20 per cent. While the numbers are up, many online wine channels drive prices down, and the returns to the winery in a heavily discounted environment are meagre. From the Producer is a wine buying portal which aims to change the face of online selling for local producers. Essentially cutting out the middleman, the website hands selling power back to the wine (as well as cheese, olive oil, cured meat) producers through a free, easy to use platform driven by self-promotion. Emilie Reynolds spoke to John Cameron, From the Producer founder, to see how the project is faring one year on and get an idea about where the future is headed.
FOR THE PRODUCER
The premise behind From the Producer is all about offering direct access between customers and producers. Its founder, John Cameron, admits it began with his own desire to make local produce more accessible.
“I was motived by self-interest,” Cameron said. “I love my food and wine and appreciate the skill that goes into making a great wine or cheese. If somebody has the knowledge, talent and inspiration to make a great wine, I want that person to be able to make a living doing just that – so that I can have the pleasure of consuming the fruits of their labour!”
Cameron said he would often visit local farmer’s markets, where owners would explain how hard it is to establish relationships with supermarket chains.
“It is becoming increasingly difficult for small producers to get started and make a living at what they do,” Cameron said. “It is not efficient for large retailers to deal with small producers and it is the large retailers that dominate the market.”
Hit with a brainwave and a genuine desire to help these people out, Cameron used his knowledge of software development to craft a solution.
Far from a wine industry expert, Cameron’s background is in the IT business. He previously fronted a project that lead to the world’s first fully automated trading system for the Australian Stock Exchange and now runs his own IT consultancy firm, Cameron Edge.
“My idea was to use technology to provide an automated, and therefore low cost – preferably free, sales channel that any producer can use to make contact with and potentially sell to customers,” Cameron said. “If you can make something that people like and are prepared to pay for, then you should be able to concentrate on what you do best and make a living at it.”
The website is free to use, self-sufficient and completely automated. Cameron stresses that he just created the technology and the sales and marketing aspect is up to the producers.
“The website is driven by the producers themselves and their customers,” Cameron said. “The cost of running it is essentially just the cost of hosting a website.”
Creating the website in the first place cost a reasonable amount of time and money, which Cameron fronted himself.
“Now that it is up and running the ongoing costs are negligible,” he explains. “It does not rely on making money to exist.”
SETTING UP SHOP
From the Producer was fully functional before it was endorsed by the Winemakers’ Federation of Australia (WFA). Cameron met Tony D’Aloisio, the WFA president, on the board of a computer software company and “jumped at the opportunity” to share his idea.
“I asked Tony what he thought of the website, and he invited me to pitch to the WFA,” Cameron said. “Some winemakers were pretty sceptical at first, but once they understood that this was about helping smaller producers sell more wine they were quite supportive.”
While Cameron needed a way to check supplier bona fides, the WFA suggested opening the website to members of the organisation, a move that prompted rumours the initiative was a member’s push for the WFA.
“It was just a good opportunity,” Cameron said. “I didn’t receive any funding from the WFA, but the organisation helped me get the website off the ground with a bunch of good producers supporting it from the beginning.”
D’Aloisio said the WFA has been pleased to work with Cameron to introduce a new channel of retailing. “Being part of From the Producer during its pilot has been a way of assisting smaller wineries and young winemakers in particular gain consumer access when they otherwise might not have had a retail distribution network, shelf space or a cellar door of their own,” D’Aloisio said.
A YEAR ON
Cameron said the website is beginning to gain traction as more consumers become aware of what it’s all about. “Once people understand this is not just another online wine site run for profit at the expense of producers and their customers, they tend to want to help spreading the word,” he said.
“Producers have a role to play by mentioning From the Producer in their own marketing. So far we have not seen much of that but it is early days. Producers are still getting their heads around how they can best take advantage of the website.”
At this stage, Cameron said the website has around 1000 subscribers and sells a few thousand dollars’ worth of wine each month, a figure which continues to rise.
“It is another sales channel,” Cameron said. “Not a very big one right now, but potentially a very important one.”
Cameron concedes that the ‘high street retailer’ is always going to be a very important sales channel for producers, but the online market provides an opportunity for producers themselves to have the lion’s share of sales.
“Online sales through From the Producer are truly ‘direct’… from the producer, direct to the customer with nobody in-between.”
Cameron admits there have been mistakes along the way, but said From the Producer is a learning experience and a platform which won’t be disappearing any time soon.
“There’s no guide book for this project,” Cameron explains. “The nice thing is, we have plenty of time to find our own way.”
FROM THE PRODUCERS
Cameron said around 60 producers have jumped on board the initiative, eager to test drive the future in online wine sales.
Ian Firth, Fowles Wine customer service manager, said his team fully supported the website and saw it as a great avenue for wineries to market their wine.
“All of the profits go straight back to the winery, which is a great concept,” Firth said. “It has the potential to broaden audience reach on a platform which is the fastest growing area in wine retail.”
Firth said with no margin, the winery has total control over the cost and can run promotions through From the Producer.
“John Cameron is doing this for the wineries,” Firth said. “He clearly has our best interest at heart and is using his skills in IT to support the wine industry because he believes in it.”
Corrina Wright, Oliver’s Taranga winemaker, said the idea reminded her of a farmer’s market for wines.
“I like the concept of people being able to access producers direct,” Wright said. “I also think that John Cameron, who developed the idea and designed the website, completely at his own cost, and who takes no cut from wine sales, is a bit of a legend.”
Wright said the format is easy to use for both consumer and producers, but improvements could be made in the promotion of the website.
“It has the potential to stand next to the larger corporate wine sales websites,” she said. “Perhaps the website doesn’t look as pretty – but all of the profits go straight to the producer themselves, which has to be a good thing.”
While Wright said she has so far only sold about five dozen bottles of wine, she is happy to be supporting an initiative aimed at helping the industry.
“There’s no skin off your nose as there is no cost,” Wright said. “It provides another avenue for sales and the more wineries that are represented on the site, the better it will do Google-wise, which will drive more traffic to the site and the wineries in turn.”
As well as providing direct sales for producers, Cameron said the website has a few tools to ensure a competitive price point.
Automatically scanning other online wine outlets, From the Producer can adjust the price of wine to match other discounted rates if the seller chooses.
“From the Producer does some automated marketing that does not cost anything – such as the automated newsletter which is built from an automated scan of well-known wine blogs for mentions of producers listed and updating prices each night to Google and other leading feeds.”
ONWARDS AND UPWARDS
The first step for the future has been lifting the restrictions on who can get involved, according to Cameron.
“With the full support of WFA, we have opened From the Producer up to many more wineries,” he said. “In order to participate producers need only show that they are members of their recognised regional industry association. Ultimately, every legitimate Australian wine producer should be represented on From the Producer.”
Apart from opening the website up to the masses, Cameron said a new reward scheme will see a greater transparency between consumer and seller.
“This will allow producers to share with their customers the savings they make from selling direct,” Cameron said. “We also plan to build on the reviewing capability of the site. Customers can review the wine they have bought – similar to a Trip Advisor style model. In addition to customer reviews we want to encourage professional reviews of wines listed on From the Producer.”
Cameron said the future of the website will be based around the concept of building a community.
“It is what the world is all about right now,” he said. “We’re trying to build a community where buyers and sellers are communicating with each other, because that’s a really powerful model.”
This post has been adapted from an article first published in the June 2015 Grapegrower & Winemaker magazine.
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