How AI Technology is Changing the Wine Industry

6 min read • Jan 03, 2021 • Kayla Voigt

They say the best kind of wine is the one you like.

For Gen-Z and millennials ready to graduate from boxed wine or cheap, mass-produced options, it’s hard to know where to start. The United States alone boasts more than 7,000 wineries to choose from, with nearly half of those in California. And while there are 5 main types of wine—red, white, rosé, sparkling, and dessert—it can be challenging to understand the difference between Pinot Noir, Cabernet Sauvignon, and Merlot for the uninitiated.

That’s exactly why subscription boxes and online merchants like Bright Cellars, Drizly, and Winc use AI-powered recommendation engines designed to take the guesswork out of purchasing wine and beer. Answer a few questions, and you’ve got a box of wine ready to be delivered to your door in a matter of days.

The E-commerce Beverage Industry Is Booming

As the COVID-19 pandemic drives more of our daily lives online, it’s no surprise that e-commerce is booming, even as many wine shops and convenience stores had to close. Shopify, a popular e-commerce platform, saw a 71% increase in new stores in Q2 2020 compared to Q1, and gross merchandise value increased by 119% in the same period.

“The world is changing fast,” Tobi Lütke, Shopify’s CEO, said in a press release. “With the rapid shift to online commerce, massive disruption to conventional employment, and growing conviction that opportunity needs to be more evenly distributed, entrepreneurship has never been more important.”

Online sales of alcohol more than doubled (+234%), with alcohol as the fastest-growing e-commerce category among consumer packaged goods. Americans who wouldn’t consider purchasing online are now taking the plunge, according to Nielsen, who reported the number of buyers purchasing alcohol online had tripled by the month of April.

Alcohol Boom Online Graph

Source: The Nielsen Company 

Those sales echo findings reported by NPR that say American adults say they’re drinking 14% more often, with heavy drinking among women (consuming 4 or more drinks within a few hours) jumping by 41%.

Taste, Not Prestige, Matters to Millennials

Americans are drinking more, but they’re also drinking differently. Specifically, they care more about taste than where a given wine comes from or whether it’s known as a prestigious label.

“People are approaching wine differently than they ever did before,” Kristie Petrullo Campbell, former chief sommelier at 5-star restaurant Jean Georges, told VinePair. “Instead of coming into a restaurant asking for a particular varietal like they did 10, 15 years ago, the typical—often younger—consumer is much more interested in pursuing a flavor profile or taste and is generally approaching the experience of wine consumption in a more personalized, laid-back way.”

Rather than defer to the historical gatekeepers of the wine industry, like sommeliers and wine shop owners, younger wine drinkers turn to the internet. 23% of wine consumers use apps like Vivino, Delectable, and Hello Vino to make their wine-purchasing decisions. They want to know, does it taste good?

While established wine experts worry that using data and algorithms ruins the traditional “poetic” wine experience, it shows no signs of stopping subscription companies looking to capitalize on the trend.

Wine Subscription Boxes Use AI to Match Preferences

Consumers looking for their next wine bottle can now bypass wine stores altogether. A new class of wine subscription boxes has cropped up, using software algorithms similar to Netflix’s rating system that distill individual consumer preferences into a subscription personalized to their tastes.

Popular subscription box Bright Cellars, for example, starts with a quiz asking questions like, “What kind of chocolate would you eat the rest of your life?” and “What’s your favorite juice?” Once the wines are delivered, the service prompts customers to rate the wines, so the more boxes are delivered, the more likely the new wines will be the perfect match.

“We wanted to find an easier and more accessible way for people to get comfortable,” cofounder Richard Yau, who came up with the idea for BrightCellars after taking a wine studies course as an undergrad at MIT, told TechCrunch. “We just realized that not a lot of people have time to take 2 semesters to learn enough about wine to feel like they understand it.”

California-based competitor Winc uses a similar “Palate Profile,” beginning with a questionnaire that asks, “How do you take your coffee?” and “How salty do you like your food?” to build each box. The difference is that while Winc pairs bottles to consumer preferences, they also have their own varietals, changing their winemaking process based on the rating system they’ve created. Since pivoting to running their own vineyards, they’ve grown revenue by 292% in 2019.

“We’re able to kind of reverse-engineer wine production,” c-founder Brian Smith told the LA Times. “We [have] this very direct connection with customers that doesn’t really exist in the wine business.”

Small Businesses Have to Know Their Audience

There’s one thing small businesses can learn from wine subscription boxes, and that’s the power of knowing your audience. “Our typical customer is newer to wine,” Christie Low, Bright Cellars’s director of operations, told VinePair. “They came of drinking age fairly recently and just started eating at nicer places and have the time, interest, and budget to learn more about wine.”

Subscription boxes aren’t a new business model. But when a rating system is built-in to drive more personalized matches, it’s no wonder that so many subscribers are repeat customers. Algorithms—while they’re no replacement for sommeliers—can offer guidance and control over the wine-purchasing process for consumers, taking the stress out of a purchase meant to be enjoyable.

It’s the perfect example of a business model built on customer-centricity. Not only do these businesses know their customer taste preferences inside and out, but they also build regular feedback mechanisms into the box, prompting customers to rate each wine after they drink it. This kind of data-driven model gives real-time feedback on which wines are selling—and which are less popular.

Cheers to that.

Kayla Voigt

Always in search of adventure, Kayla hails from Hopkinton, MA, the start of the Boston Marathon. You can find her at the summit of a mountain or digging in to a big bowl of pasta when she's not writing. Say hi on Instagram @klvoigt.