Building a wine subscription model

By Jo Gilbert

Published: 25 October, 2021

The traditional wine club has gone online and re-emerged as a strong subscription proposition for businesses of all shapes and sizes, as Jo Gilbert reports from Harpers’ SITT panel discussion.

The wine club has come quite a way from the day of mail-order deliveries. As Nik Darlington, Graft Wine Company marketing director and host of our London SITT panel discussion said during the session, long gone are the days of the old format, where 12.75cl bottles arrived with card printouts and clunky ring-binders.

Though essentially this is still the DNA of the wine club, the new format has evolved to fully embrace digital capabilities, with additional online content including live and on-demand tutorials, masterclasses and newsletters, adding an immersive element to the experience, and bringing business models closer in line with Netflix or Spotify.

“The wine club is in rude health at the very top of the tree; and at the very bottom, every single year, there are more and more usually quite technological companies coming into the field of clubs and subscriptions,” Darlington said.

Two relative newcomers to the business were represented at the wine club-focused session, offering proof that many entrants to the market are SMEs, and not necessarily juggernauts with major backing like Laithwaites, Virgin or Naked Wines.

Among the latest to try its hand at the subscription model is Vagabond Wines. For MD Stephen Finch, the company’s newly launched app and subscription model is an extension of the business’ already sophisticated and ever-expanding hybrid approach, encompassing shop, wine bar and urban winery across nine sites.

“As far as I know, we’re the only fully contactless wine bar with machines where you can press a button on your phone and wine comes out. Plus, we’re getting data in a completely unobtrusive and passive way, unlike Vivino, where you have to proactively record the wine. We currently have 22,000 downloads and active users.”

Data capture is a key tenet of the subscription model. While Vagabond is now further leveraging its existing data via the app to build its subscription business, others are coming from a standing start.

The Wine List was founded by subscription entrepreneur Josh Lachkovic four years ago, after he decided to turn his hand to wine after growing businesses in vinyl and coffee.

In the absence of wine-specific data, and with no physical presence, the business was built via partnership marketing with brands and also referral marketing, which accounts for around 25% of customers.

“We also produce lots of content across Instagram and YouTube, and the newsletter goes out to about 15,000 subscribers. Five or six years ago, Facebook and Instagram advertising was about a 10th of the cost today. There has been a huge growth of these platforms since around 2010. We also keep up communication. From day one, every single person on our team contacts at least one of our customers every single week by phone. The purpose being to understand what their life is like, how wine fits in and what they want to learn about wine,” Lachkovic explained.

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Costly approach

It’s a tough sell. Building a subscription model now is expensive and even more costly to stop customers from jumping ship. For Vagabond, linking machine to app meant building proprietary software from scratch.

For the independent merchants around the country, however, most have hundreds, if not thousands, of data points via their customers which could be harnessed within ecommerce models.

What is clear is that subscription services have to have a unique and compelling offer.

For The Wine List, this is an education-focused model which likes to surprise and challenge its users. “People might say ‘I only like Malbec’. We say, actually, lots of people only like Malbec until they try other weird and wonderful grapes from around the world,” Lachkovic said.

Vagabond, meanwhile, has zeroed in on personalisation, and is launching its model with smaller formats of 10cl in order to cater to changing tastes. “Everyone’s had this frustration where you get a box, always a 75cl bottle, which doesn’t really jive with our demographic’s lifestyle. You might get some good ones and some mediocre ones. So, we can leverage data: that’s a great thing about Vagabond, we have a lot of really good data.”

For both, offering compelling and unique content is key.

“When we think about subscription companies, we think about Hello Fresh. We don’t think of Netflix, or Amazon Prime or utility companies, even though all their business models are subscriptions as well. For Netflix, they have to constantly create a new stream of content every single day just to keep you spending £10 a month….We produce quite long-form video content on a weekly basis. We have WhatsApp groups of our customers where we’re feeding this information to them on a daily basis. Once we’ve got the customer, we need to spend far more time keeping them,” Lachkovic said.

The need for high production values was another lesson from lockdown, added Finch: “The current watch-words are ‘short-form content’ and ‘high production value’. We’ve been conditioned with Instagram to expect really sophisticated lighting and editing. It’s something the industry needs to sharpen up on. It’s the way to really engage people outside of your four walls.”

“For me, that North Star is Spotify,” Finch continued. “That is the last thing I will cancel, after even food. I’m happy to give them my data because they are giving me [so much value] in the discovery of new music. That is what I’m trying to achieve with our service.”

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