Why the wine industry needs disruption by start-ups like Palate Club

The wine industry is facing some seemingly insurmountable challenges. As an industry traditionally resistant to change it is finding itself squeezed on all sides, particularly in the light of COVID-19. This is why start-ups like Palate Club are more important than ever to the industry’s continued survival.

Even before we faced the looming shadow of a COVID-19 recession the wine industry was facing some significant challenges. A combination of factors from oversupply problems to stiff competition from craft beer & spirits has made it more difficult than ever for wine producers to sell their product at a fair price. COVID-19 has exacerbated these existing trends and may finally be the kick the industry needs to try something new.  For these reasons and more, there has never been a better moment for wine subscription service Palate Club to make its mark.

An industry in dire need of disruption

The wine industry faces a number of significant pain points in 2020. The key drivers pre-COVID were competition and contracting routes to market. The wine sector has become increasingly crowded and this has led to a lot of internal competition, made worse by the increasing popularity of craft beers and luxury spirits among younger demographics.

The wine industry has had few counters to this. Wine is a complicated beverage and it is notoriously difficult to ensure that you will actually enjoy the $30 bottle of French Pinot Noir. For many consumers, particularly young ones, an $8 bottle of craft beer is the safer bet.

This problem is a very real example of the general complacency of the wine industry. Tastings have helped but they bring their own challenges. The fact is that the industry has been too opaque and reliant upon the prestige of certain wines for far too long. This is something that Palate Club is working hard to change.

A better way to find wines

The key draw, and challenge, of wine is its complexity. There are a variety of tasting notes and it is actually very difficult to consistently pick wines that you know you will enjoy. The wine industry has not helped by ensuring that marketing and reviews are often confusing, opaque, or the victim of “points inflation”. This all means that it is hard for consumers to make the right choice.

The way Palate Club gets around this is game changing. each of Palate Club’s wines is selected by one of the company’s talented sommeliers. Then instead of relying on crowd-sourced reviews, ala Amazon, Palate Club produces personalized wine recommendations.

The process is not dissimilar from the one that Netflix uses to recommend new TV shows. When users first join the service they are presented with a wine quiz designed to determine their baseline palate. Then as customers make purchases, or use the wine subscription, they will enter what they liked about that bottle, which helps the algorithm make better suggestions in the future.

Solving the delivery challenge

This neatly solves one problem for wine drinkers but there remains one key pain point. Existing wine delivery solutions in the U.S. are unfit for purpose. Deliveries are notoriously slow and the available inventory is often very sub-par compared to what you could find in a local wine cellar.

Palate Club’s wine delivery app solves all these problems. The company has partnered with some of the major distributors in the U.S. ensuring speedy fulfillment of any deliveries. In addition the Palate Club sommeliers have taken pains to select only the best wines.  This means that customers can be assured that any wine they buy has the Palate Club seal of approval.

This is important to producers as well. One of the big challenges of COVID-19 is that it effectively removed restaurants and bars as a route to market for wine producers. This has the potential to hit them hard, especially given the dire state of online wine delivery. Palate Club offers quality producers the opportunity to access premium customers who are interested in recurring wine purchases.

Palate Club demonstrates why wine companies need to look back to the consumer

Many of the challenges and problems faced by the wine industry today are borne of complacency. There has long been a certain feeling in the general wine industry that their product should speak for itself and that the customer will always be there. The last few years, combined with COVID-19, have demonstrated this to be a false assumption.

As with any industry the needs of the customer are what defines it. The wine industry needs to spend more resources on solving the pain points of its customers, rather than on questionable marketing strategies, and Palate Club is the first real step in that direction in a long time. 

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