drinks distributors

Why showing you care for the community makes good business sense

Isn’t that a bit like saying “they do a lot of work for charity, but they don’t like to talk about it”?

It is, but if you want to be seen as a good business it’s not necessarily showing off, it just makes a lot of sense. We’re also not just talking about raising money for good causes here, but the economic impact your company is having on the local community around you, and if you’re big enough, regionally and nationally too. If you’re changing things for the better then don’t keep it to yourself.

But why are we talking about this now?

Well, it’s a particularly relevant message for the drinks industry and wine sector to take seriously. Not a week goes by without some sort of negative medical report coming out claiming how dangerous it is to drink alcohol on a regular basis. Yes, you might have the odd study that extols the positives of the occasional drink, but the overriding message is booze is bad and, by association, so are the companies that make and sell it. If that means adding more taxes, duty and hurdles that make life difficult for all those companies, then who cares? If it means paying more for a pint or a bottle of wine, that’s the penance you have to pay for indulging in such an unhealthy activity.

 

“Tesco now claims that out of every £1 spent by customers, 73p goes back to farmers and suppliers across the UK, 11p is paid to Tesco colleagues in wages and 3p is paid to the government in tax to pay for public services like the NHS.”

 

This has gone down hill all of a sudden.

Bear with me. It’s why we have seen our trade bodies, particularly the Wine & Spirit Trade Association, make the business and economic case to the government as to why another duty raise does not make financial sense, rather than try to make any sort of health arguments. It’s a strategy that has worked. Particularly since it has employed third party consultants, Ernst & Young, to make the business case for it.

What are those headline WSTA figures again?

Yes, they’re worth bookmarking and using at any given opportunity. The UK’s wine and spirits industry supports 554,000 jobs, contributes £50bn per annum in economic activity, including £17.5bn to the public purse, split £9.5bn from the wine industry and £8.2bn for the spirits sector. If you look at the wine industry on its own then it employs 172,000 people directly and 105,000 in the connecting supply chain. All of whom help contribute £19.9bn in economic activity, including sales worth £6.7bn in shops and supermarkets and £4.2bn through pubs, bars and restaurants.

Anything else?

The WSTA’s campaign to convince the Treasury to freeze alcohol duty finally paid off when the Chancellor did exactly that in last November’s Budget. It was then able to prove its long held claim that a freeze on duty would actually raise the amount going into the Treasury when in April the HMRC announced that in the four months between December 2017 to April 2018 revenues from wine and spirit duties were up £67m, or 2%, at £3.291bn and the yearly impact would be a £140m rise. See how powerful it is when the figures do the talking for you?

What else have you noticed?

Let’s look at how individual businesses are using economic impact reports to present themselves in a better light. Probably the best current example is Tesco. It was not so long ago that at its height of popularity it came out with the fateful statement that £1 in £8 was being spent in one of its stores. It was meant to show how successful and popular the chain was with the Great British public. But it soon backfired and was used to demonstrate, by competitors and critics alike, how dominant and powerful it had become. Traits the average British shopper saw as the business equivalent of scratching fingernails down a blackboard. The new Tesco, under chief executive Dave Lewis, is a very different beast and it is now using its size, scale and influence not to show off, but make the economic argument of how effective and important it is both nationally, but particularly to local struggling communities.

Sounds like you’ve been drinking too much Tesco cola.

No, I’ve just been studying its recent Value in Your Town report. It again uses the £1 analogy, but crucially it does so in a very different way. It now claims that out of every £1 spent by Tesco customers, 73p goes back to farmers and suppliers from across the UK, 11p is paid to Tesco colleagues in wages and 3p is paid to the government in tax to pay for public services like the NHS. Every £1 of direct economic activity at Tesco was also claimed to generate an additional £5.46 in value to the UK economy as a whole. It has noticeably divided the country by parliamentary constituency therefore allowing every MP and resident in those postcodes to see what impact Tesco has had there. Now admittedly these are Tesco’s own figures and they might have small businesses, suppliers and local c-stores throwing their cornflakes at the wall, but if you look at the bigger picture it's a very astute move from a retailer that is still trying to regain the confidence of the general shopper and its investors. It is also painting the rest of the FMCG, grocery sector in a good light so it probably won’t be long before we see similar reports from other retailers.

What does it mean for us lesser mortals?

These are all good examples to take lessons from. We might not be able to produce an all singing, dancing economic analysis study - just ask David Davis how hard they are to come by. But we all know our customers, and what benefits and services we are providing them. So rather than fill your website and social media feed with all the medals you have won, and pats on the back you have got, concentrate on what impact your business is having, be it in the local community or with your customers and their consumers. Tell the world about those and that’s where you’ll make the biggest impact.

Why we need more than just 15 minutes of fame

That's being a bit greedy isn't it? Why would you want to be famous in the first place?

I don't mean people staring at you in the street famous. I mean working out what it is you want to be famous for in the eyes of your customers, be it the trade or your target consumer. That's a very different kind of fame and it will increasingly determine how successful you are at what you do.

Really, why?

It's a bit like taking your company's values statement that sits pride of place on the wall in reception and turning it into something that really matters. Not to you, but your customer. What is it about you that makes them want to work with you, buy your products and come back for more? It's a harder question to answer than you think, particularly in such a homogenised industry as wine, where essentially everyone is just buying and selling different variations of the same thing - 75cls of wine in a bottle.

But surely every business is different based on the people in it?

They are, but it does not mean the end product or service they are offering is anything distinctly different from a whole number of other like-minded companies. Which brings us back to working out what it is you are really famous for. You can't just say you are dedicated to finding, supplying and selling the best quality wine in the world. There are directories full of companies all claiming to do the same thing.

So what's the answer?

That's clearly going to be different for every business. Look around your competitive set and you will quickly be able to identify what they do best, or better than you. What is it about them that gives them an edge? What would they say makes you unique and different? If you can't answer that, then you've got a problem. Look around different sectors and the most successful companies are the ones that have got a clear business strategy, image and identity. Take Naked Wines. It's all about its Angels supporting winemakers around the world. The Wine Society. A not-for-profit wine club made possible by the collective support of its paid up members. 67 Pall Mall. A private club for professionals who are passionate about wine. John Lewis, a department store you can trust to never sell you a product that is cheaper elsewhere.

But surely there is not an infinite number of ways to buy and sell wine?

If you can't find one then you're in the wrong business. Particularly now that competition is fiercer than it ever has been. Smartphones have put the buying power in the hands of the consumer and your decades of good, loyal service to the wine buying public now stands for nothing if your products come up more expensive on Vivino or Wine Searcher.

So who are the winners and losers in all this?

Potentially it's particularly bad news for the big generic businesses that claim to be all things to all folk. Like our major retailers and national drinks distributors. It means they are effectively all doing the same job - supplying wine from all over the world. Where the only differences between them comes down, in the case of a retailer, to the price or the quality of their private label. Or for national distributors how easy it is to place an order, how flexible they are on delivery slots, and what sort of support, training and trips they offer. They can stand out by being the biggest, with the buying power to supply wines at a lower price. Or they can diversify and specialise in new emerging regions, but then there are independent companies who are already doing that.

So what are they doing?

It's interesting to see how Bibendum is making quality, interesting content as one of its key points of difference. Already famous for its market-leading consumer and trade insights, it is now producing a premium quality e-book, Fine Lees, with customer and producer profiles and magazine quality content. It is also producing a regular podcast, Bibendum Radio, featuring members of its own team, producers and customers to push quality information out alongside the wines.

What else is going on?

We can learn a lot from what is going on in the hospitality and travel sectors. Here businesses that are essentially service providers, be it the food, drink, hotel room or airline seat they offer, are 100% focused on making themselves into brands that are relevant to what their customers want. If you have the money why do you choose one airline over another? Or book yourself into a certain hotel chain? It's the same with restaurants, bars and pubs. Noble Rot became famous amongst its customers for its off-beat, left field magazine, before channelling the concept of the magazine into a restaurant of the same name. Martin Williams, founder of M Restaurants, is quite clear he is all about building a brand, not a chain. A brand famous for providing excellence in service and hospitality that can take those credentials and the community it has created around them into other sectors, be it travel, fashion or whatever. It's what M is famous for that counts, not how many outlets it has.

And finally?

It's why we are seeing so many specialist subscription services starting up. It's where brands are going to be famous. The space available for brands, both big and small, on supermarket shelves is decreasing by the month as they look to build customer loyalty through their own private labels. So instead brands are looking to go direct to their target customers by building up their own subscription models. Just look at the success of Harry's, the US shave club, that is now raking in sales in the UK for its through your door regular supply of razors and cream. It became so successful that Unilever bought it for $1bn. If Harry's can become famous for such an unexciting product as razors, then there has to be enormous potential still for all those businesses, and individuals, who can become genuinely, uniquely famous for the wines they make but increasingly about how they market it, sell it, deliver it and get people coming back for more.

Why consumers want more than low prices to keep them loyal

You sure? Don't believe everything your retail consultant mates tell you.

Well, clearly we all like a good deal and it's always going to be an important part of any buying decision, but if you keep going back to your customer base with just another discount, followed by another, then people will stop buying and disengage with the offers you are sending out. Take Gap. If you sign up to its customer newsletter, you will receive an email every day offering some sort of discount. Customers wait for the 40% or 50% offer to come along before ever spending anything, and even then the numbers drop away quite quickly.

But surely it all comes down to price in the end?

You would be surprised. In a retail industry dominated by the everyday low pricing strategies of the German discounters, price has become less powerful on its own as a way of keeping your customers loyal. Shoppers now expect your prices to be as low as they can. To keep them loyal you have to offer them something else. It's why the majority of retail loyalty cards are no longer just about generating points to get direct discounts. They've subtly changed in recent years to be much more about how a specific retailer can help customers in other areas of their everyday spending.

How do you mean?

Just look at the loyalty schemes you are a part of. Tesco Clubcard, for example, offers you vouchers to spend in restaurants, a trip to the cinema, family days out and other experiences to enjoy. It's not just a way to get money off your next grocery bill. Sainsbury's noticeably gave up its own loyalty programme in favour of Nectar that allows you to spend your points across a number of services or non-competing retailers.

You got any figures to back all this up?

Absolutely. Recent research by Forrester shows that 59% of people want something extra other than price discounts from a loyalty scheme. They want rewards and services not available to others. Get that offer right and 69% of loyalty members will spend more with you and recommend your products and services to their peers. But it's not just about what they get, but how they get it. Fifty six per cent of loyalty customers see good service, like a dedicated customer line, or delivery benefits, as key to that relationship.

Interesting. What else?

Arguably the most disruptive influence on how we all now subconsciously judge a retailer's loyalty offer has come with Amazon Prime. Being an Amazon Prime member does not give you any more money off its products. No, it is all about making your life easier. Ordering products with just one click. Faster, more flexible ways to pay for your goods and then how, where and when you have them delivered. The chance to watch more films, access exclusive programmes (even Jeremy Clarkson), download your favourite music and then share it with friends and family. Being an Amazon Prime member is more of a lifestyle choice than simply a glorified alternative to collecting Green Shield stamps. As those retail consultants say, the trick is to be a loyalty company, not a company with a loyalty programme.

Yes, but the wine industry relies enormously on discounting to get people to buy more wine.

It does and has got into a right pickle as a result. It has created generation after generation of wine drinkers who think price first when deciding what wine to buy. It's why there are so few brands to connect with consumers on anything but a transactional level. But it does not need to be this way. Look at how smaller wine merchants or connected restaurants are becoming so successful. They rely far less on the prices they are charging, or their money off promotions to build a consumer base, but instead get a far more meaningful connection with tastings, events, dinners or winemaker talks.

But how do we make wine promotions more meaningful?

Again it is all about knowing who you are selling your wine too and pushing the right offer to the most suitable customer. Don't just send out a mailer with the same promotions to all your registered customers. Spend the time to break down your lists and then target specific customer groups with the wines they are most likely to buy. Most of all make your offers mobile, and digitally savvy enough that they can be used on smartphones. It might sound like common sense, but too often merchants, retailers or restaurants push the same offers to all customers and wonder why they are not picked up.

So what's the answer?

Well, ideally we would not be thinking about promotions at all. But all the other steps you can take to gain the trust, build the loyalty of your customers. How can you reward them in a way that makes them feel better? It could be providing them with more information about what you sell in ways they can relate to. It might be offering them better delivery options, incentives for recommending their wines to their friends. How you are going to use their data to get them more wines they like, be it online, in-store or a combination of the two. But in the end it all comes down to balance. We all like a good offer, but now we want it to come with bells, whistles and other personal benefits.

* This article was first published as part of the Grapevine views, insights and analysis newsletter produced for the London Wine Fair.  

Why everyday pricing is no longer possible or expected by consumers

You’ve been reading too many wine supermarket press releases.

I doubt that. I think they’ve stopped sending them out. But just look at the numbers. We as a nation are now prepared, if not happy, to buy an average bottle of wine that is closer to £6 than £5 for the first time. OK that move to £5.56 at the turn of the year might be all down to inflationary pressures, including the 15% drop in value of sterling, but it means the average bottle price is up 19p a bottle in the last two years, and that's not even factoring in the latest duty hike in March.

 

But surely price is always the first thing any wine buyer looks at - for trade and consumer?

It certainly used to be, and is still a hugely significant deciding factor, but our overall relationship with “price” per se is changing. At least it has since June 23, 2016. That decision to leave the EU also set in motion a series of economic pressures that have resulted in grocery inflation now sitting at 3.2% and overall inflation not far behind at a four-year high of 2.9%. The impact of that on the average shopper is the equivalent of having to do an extra seven shops a year or £133 per household, says Kantar Worldpanel. So, yes, on the one hand consumers are still very sensitive about the individual price of any given product on the shelf. But when we realise prices are going up across the board (butter by 20p, tinned salmon up 14%, plus similar hikes on clothing, energy, or even computer games) then it’s the collective impact that becomes the issue, rather than the individual cost of a bottle of wine. 

OK, tell me more?

You only have to look at the national newspaper headlines over the last fortnight to see how our collective attitude towards “price” is having to change due to Brexit. For the first time families will have felt the direct backlash of a weak pound by having to pay more for their annual holiday and seen how far your pound goes when travelling abroad.

This is all getting a bit political. Thought we were here to talk about wine.

Bear with me. You don’t need to spend too much time on social media to see how divisive the whole Brexit issue has become. But equally we know as a country we voted to leave the EU, better or worse. A fact demonstrated in a YouGov poll last week that found three out of five people who voted to leave regard "significant damage to the British economy to be a price worth paying" for Brexit. What’s more 39% of the nearly 5,000 people surveyed said it would be worth losing their job, or having a family member lose theirs, in order to leave the EU. So if prices are going up then that’s a cost we are prepared to pay.

That’s all very interesting but what does it mean for us all in the wine trade?

Well, it’s important we understand the consumer we are trying to sell to and there’s no doubting we are all living and working in a very different retail environment to just over a year ago. But there are also long standing factors at play here, regardless of Brexit. We have talked before about having to serve the post-recession consumer that has never been more price aware or sensitive. But at the same time you only have to look at the boom in Prosecco to see how even price conscious consumers are happy to treat themselves - on a regular basis.

If that’s the case why are Aldi and Lidl continuing to do so well?

They are indeed, but look closely at their figures and it’s not just all about saving money that has made Aldi and Lidl the darlings of the high street. It has had great success with its premium own-label wines and has found selling wine at £15 plus a bottle has all been part of its strategy to attract more middle class shoppers through its doors.And the multiples?It’s also where the big supermarkets are succeeding. It is their collective sales of premium own-label, up 13.9%, that is driving the grocery market compared to branded growth of just 0.9%. The fact supermarket own brand lines now have a record 51% share of grocery spend shows how we have all become value conscious consumers.

So in a nutshell?

We might all in an ideal world like to still have our cake and eat it, otherwise known as everyday low pricing. But in these unforeseen pre-Brexit days, we are now far more understanding that unforeseen economic and political factors mean we are going to have pay a bit more for our daily bread - including an above average bottle of wine.

This is part of Grapevine newsletter that I produce on a fortnightly basis for the London Wine Fair. You can subscribe to receive a free copy here.

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Running stores could be the next big thing for wine suppliers and producers

Come again? Wouldn’t that be robbing Peter to pay Paul?

Well, that depends on who the Peter and Paul are in the equation. If you mean are we going to be seeing a Matthew Clark or Gallo-themed wine shop on the high street any time soon then probably not. At least not for now. But behind the scenes careful thought is being given as to how wine distributors and producers can get closer to the market by being part of either their own retail operations or working alongside partners in the industry.

How do you mean?

A lot of this activity is taking place already, but under the guise of wine vans and pop-up bars at food and drink festivals, and sporting events around the country. Not a week goes by without news of another wine business running their own pop-up. Be it a wine generic like Vins de Bordeaux running its recent Bordeaux Butterfly Bar at London’s Broadgate Circus. We've even seen big high street names like Aldi and Tesco run their own wine-themed retail pop-up shops. Get it right and you can become a consumer and tourist attraction in your own right. Take Campo Viejo’s well established annual Spanish fiesta and its recent five-day wine and food experience, ‘Fiesta de Color’ near London Waterloo. 

What about wine distributors?

Going direct to the consumer is already big business for some major wine distributors. Conviviality even has its own division, Conviviality Trading, that looks after its own events and sampling campaigns. Its Peppermint businesses, for example, is a dedicated outdoor bar event operator managing over 40 events a year. The Wondering Wine Company, which started life at Bibendum, its also now covering 40 plus consumer and sporting events a year selling Conviviality drinks through its fleet of vintage vans and has had a go at running its own pop-up retail store.

What else?

As traditional wine importers become brand developers and owners in their own right then running their own retail - or event - concept is a great way to first trial, develop and then seed those brands with consumers. Copestick Murray, which usually has to rely on its retail partners to sell its wines, is currently promoting its iHeart wine range with a summer tour of festivals and events in its new branded camper van. Buckingham Schenk is running a pop up bar for the Viñalba Argentine wine brand in London this October. Look hard enough and there are plenty of other examples of wine importers doing the same.

So where’s the high street retail angle?

Ah, good question. Yes, the vast majority of this activity has currently been targeted campaigns, mainly at outdoor events, for short periods of time. Restaurants might have evolved out of pop-ups, but wine merchants or retails stores haven’t. But that could well change as distributors look to take more control of their destiny. They might be in charge of sourcing their own wine, but they have no control over how their wines are sold.

OK, sounds interesting.

Major drinks distributors are already providing lots of commercial support to help bars and restaurant groups build their wines sales and manage their drinks lists. It would not be a big leap of faith to turn that support into funding a restaurant, bar or wine merchant to open a retail site (or two, or three) where they would have a lion share of the wines being sold there.

Are you just making this up?

Heaven forbid! But you only have to do a bit of lateral thinking to look at the amount of time being spent by traditional wine distributors on setting up these pop-up bars and events to make you question what the ultimate objective is here. Particularly when you could argue such initiatives are a big distraction from the day job of servicing their customers and getting the right wines to them on time.

So what is going on?

All of this pop-up and events activity is doing one thing. Bringing wine businesses and producers in direct contact with consumers. It is cutting out the middle man. It is allowing them for the first time to get their hands on real, raw consumer data it can use to better understand the business they are in. They don’t have to rely purely on Nielsen, CGA or IRI sales data. They can see and hear with their own eyes and ears how consumers behave when buying not just any wine, but their wine. That’s worth trudging around muddy fields in the summer for. Or better still having a retail store you have a stake in and let the sales data do the work for you.

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Why own label makes increasing sense for shoppers and retailers

You and your own label. Why are we returning to this now?
 

I’m not being rude, but it’s all about the economy, stupid. Yes, own label, private brands, exclusive labels, call it what you will, have been enormously important for supermarkets and retailers over the last 30 years. The big difference now is that private label is not just being driven by retailers, but consumers are increasingly changing their shopping habits and voluntarily deserting household brands for a cheaper own label alternative. Average household budgets are being squeezed. Families are having to live with lower than inflation salary rises and increased utility bills and are becoming ever more knowledgeable about how they can cut their basic food and drink bills. Starting with switching more to own label.

Where’s the proof for that?

Everywhere. Analyse the latest end of year trading statements for the major grocers and whilst their headline growth figures are nothing compared to what they were 10 years ago, where they are all doing particularly well is their increase in own-label sales. Tesco’s overall sales might be up 1.9% but they are being driven by a 6% increase in own label. Morrisons says its new ‘The Best’ premium own label line is behind its recent return to form. If you drill down in to individual categories, like wine, then the growth in own label is even more marked. 

 

Any specific figures? 

Recent research from Retail Economic shows that 48% of consumers would switch even more to own label if weekly food shopping bills go up by 3%. Kantar Worldpanel has average food bills up by 2.3% on this last time last year and some analysts are predicting average 8% price rises for products from the EU over the next two years.

 

So what’s fuelling this? 

Well, a number of factors are at play here. Firstly, the fact own label has been a stable part of our dinner table for the last 30 years means we are all quite comfortable with the idea of buying retailer own brands. Particularly now there are such well defined economy, mid-price and premium ranges to suit all needs and tastes. Then there is the discounter factor. The vast majority of shoppers, regardless of their background, are now familiar with the Aldi and Lidl offer. Ranges that are almost exclusively dominated by own label. Discounter brands benchmarked to be as good if not better than their branded alternatives. They have helped raise the bar of what we now expect from own label. And the fact their respective sales growths (Aldi 18.3% and Lidl 17.8%) far outstrip what the multiples are doing will drive the push to own label even more. What’s more major retailers are now far more confident about taking out even the best selling brands (noticeably Sainsbury’s) as they increasingly believe their customers don't mind.  

 

Anything else? 

The other major driving factor is price. We might not have left the EU yet, but already food and drink prices are going up and with sterling showing no sign of improving they’re likely to go up further still. So it’s only to be expected that the average shopper will turn more to those retailers that have spent the last 20 years continuously telling us they are there to make our lives easier - and cheaper. They have gone out of their way to be part of our lives way beyond our kitchen table. Trust us, they say, to find you the best value holiday, look after your household and car insurance, offer you the best rate credit card or loan deals. If you are prepared to have effectively an own label bank account then any negative perception of a retailer brand is over. If food and drink prices go up further still post-Brexit, then we will expect our retailers to look after us and protect our family spending. Because that’s what they tell us they’re there to do. 

Is this just a supermarket phenomenon? 

Not at all. Yes, they will benefit the most, but shoppers we are now quite happy accepting or even voluntarily choosing the own label equivalent in all areas of our life. Providing we think it is good quality and good value. It is opening the door for national and local wine specialists to develop their own ranges like never before. Step forward the new “Majestic Loves” £5.99 range. Similarly the on-trade now has the opportunity to really cash in on own label from pubs, through to wine bars, or Michelin-star restaurants.

 

What are brands doing?
Not a lot. There isn’t much they can do faced with the overall economic picture. Instead they are switching their promotional strategy away from big expensive above the line advertising campaigns to more targeted, consumer specific, online and social media campaigns where they can build that individual relationship with their core audience. The big trouble for the major household brands isthat option is not really open to them. So they’re having go toe to toe with the major retailers just to get any of the shelf space that used to be theirs by right. The big winner in all this? The consumer. So when you’ve finished the day job, cash in and get your hands on your favourite retailer’s privates. 

* This article was first published as part of the Grapevine publication I produce for the London Wine Fair. 

 

 

Will wine ranges soon be picked by Big Brother algorithms and bots?

You’ve been reading your Steve Jobs book again? What’s all this about robots and wine?

If you are traditionalist and like to think of wine suppliers and buyers carefully working together tocurate lists and negotiate prices based on their years of experience and tasting skills, then look away now. Computers are already automatically determining ranges and prices of goods in wine and other categories based on equally carefully crafted algorthims. Just look at Amazon. It is not employing members of staff to trawl the aisles of Aldi and Asda to look at their ranges and work out how much, say, their own wines need to be to keep up with the competition. It is using carefully programmed algorithms to trawl the internet, compare prices and change automatically up to half of all the prices on its site every day. There is no need for a Master of Wine or wine buyer with decades of experience to assess sales pattern trends using that model, the algorithm will do that for you. 

 

You’re right it all sounds very Big Brother. 

We may not realise it but carefully constructed algorithms are dictating many of the decisions we make on a daily basis. Take the movies you are shown to watch on Netflix. That is based on all your previous searches and are said to result in 60% of the films you watch. Data scientists are even being used by Hollywood to decide which films to make. It’s why Wall Street now employs some 2,000 physicists to keep ahead of the algorithms managing the millions of transactions taking place every day on global stock and currency exchanges. Algorithms that can close a deal a milli second faster than another really are worth their weight in gold.  

 

But are algorithms dictating what wines we are buying and selling?

Yes, and they will do so to a greater extent in the future. You might be working in a company that already has algorithms and bots helping to manage what you do. Particularly if you are involved in ecommerce or using wine recommendation apps. Vivino has just introduced Vivino Market that is using a range of machine learning algorithms to scan the 20 million consumer reviews, 65 million ratings, and 10 million wines it now has on the platform, to give any of its 23 million users a personalised wine recommendation in less than a second. 

 

That’s a potential game changer? 

Absolutely and what is particularly worrying for the traditional wine trade is that Vivino is not a wine business. It has from day one been focused on collecting enough data about highly marketable, well heeled consumers to drive a Big Data-fuelled business, one that is now highly attractive to third parties to access. “We had to grow our community first in order to leverage the power of our data,” says founder Heini Zachariassen. An increasing number of other algorithm-based apps and websites have all been set up in the hope of taking their cut from the marketing power of the average wine drinker.  

 

This is too much for me. I can’t keep up...

Sorry, but you have very little choice. There is no place for luddites in modern business. Many of the software tools we innocently use on our smartphones, laptops and desktop computer are jam packed with bots and algorithms effectively controlling what we see and do. Our social media feeds are full of them, which is why we all get to see the same daft videos of cats and dogs on Facebook.

 

Any other examples?
Well, brands, retailers and social media platforms like Facebook and Snapchat are increasingly using artificial intelligence and chatbots to engage with users. Beauty brands are now able to “talk” customers through trying different types of make up to selfies posted on a smartphone. If a website takes you through a series of conversational steps to book a table, buy a plane seat, change your password, or order a case of wine then you have probably been interacting with a chatbot to do so.

 

What else can they do?
The most advanced chatbots are being used by brands on messaging apps, like the new Facebook or eBay Shopbot service, to not just “chat” to users, but are capable of learning from each interaction so that they appear even more authentic and personal to the next user. Chatbots are increasingly being used to improve our experience of e-commerce by placing orders knowing what we have previously bought, contacting us throughout the delivery process and then following up to find out what we thought of what we have just bought. Soon bad customer service will be for any transaction where we don’t feel like we’ve had our hand held all the way through the process. Even if by a robot. 

 

What else can we expect

Well, here’s one for you. Facebook is working on new augmented reality technology that could allow us to type, hands-free, up to 100 words a minute just by using our brain waves. All it would involve is for us to wear a device that can read our thought patterns and then write them out for us. I can assure you this article has not been written by a robot...by a robot.