Today, Uber and Airbnb are notable for turning ordinary people into entrepreneurs. But this process started 70 years ago when a 36-year-old saleswoman called Brownie Wise came up with the idea of creating a network of housewives in Florida who would invite their friends and neighbours to their homes where they could handle, and buy, a set of plastic storage bowls.
These novel Tupperware products had only been launched a couple of years earlier, and Wise soon proved that she could sell more of them in private homes than the company founder, Earl Silas Tupper, was managing through traditional forms of distribution. Tupper employed Wise, and together they introduced what is now known as ‘party plan’ selling to the world.
While Tupperware parties were gaining international fame, a similar wine-selling operation attracted much less notice. Even today, when the company name Pieroth is mentioned outside its homeland of Germany, the faces of some of the most experienced industry professionals often look as blank as if the subject had been a wine region of Albania. Over the last 60 years, however, this discreet, 300-year-old family-owned firm has built a multi-million dollar global business based on party plan sales.
The first wine party plan
The modern history of Pieroth began in 1926 when Philipp Ferdinand Pieroth began to sell his wine by the bottle directly to consumers, rather than in barrels to merchants. In 1953, his eldest son, Elmar Pieroth, started to offer “personal wine tasting in the customer‘s own home.” Subsidiaries were opened in the UK and Switzerland in 1958 and 1959, followed, two years later by Denmark. Over the following decade, the operations expanded to France, Austria and Japan, while the 1970s brought Hong Kong, Australia, the US and Canada. Since then, Pieroth has opened offices in Ireland, Poland, Czech Republic, New Zealand, Taiwan and China.
While the focus of the business remains on German still and sparkling wines, packaged in the distinctive blue bottles that were first introduced in 1976, customers are also offered a range of own-label and branded wines from other countries. In Australia, for example, the 130 wines offered by Pieroth consultants include a Chateauneuf du Pape called Chateau de la Gardine.
Today, the home-selling operation is responsible for approximately half of the €415m ($640m) turnover of WIV, the umbrella company for all of the company’s wine businesses. Other operations include one of Japan’s most successful wholesale distributors – trading as Pieroth – and the UK importer, Hallgarten. The UK, US and Australian on-line business, Naked Wines, was also a WIV subsidiary until its sale two years ago for £70m ($92.6m) to Majestic Wine Warehouses.
Customers – and consultants, as the commission-paid sales representatives are known – are often recruited at consumer events where they are given the chance to sample the company’s wines and buy vouchers for tastings. In the UK, Pieroth’s 90-minute tastings are priced from £39.00 ($51.00) for four people on a weekday before 17:00, to a ‘6-Person Premium Tasting’ at £149.00 ($197.00). Australian customers are offered the single option of an A$139.00 ($105.00) tasting.
While the company evidently has many happy customers who have been buying its wines for 15 years or more, it now has to meet the challenge of an environment where consumer views of its wines and service are in the public domain. The 59 reviews on Trustpilot.com, for example, give the UK business a three-star ‘average’ rating. Positive comments include “Personal tasting with Judith Johnson are (sic) always professional and a highly relaxing and wonderful experience, she has always found a wine that I love and seems to know my taste before I do” and “Dougy… has a relaxed manner that means you don’t feel pressured into buying”. On the other hand, another customer called Angela said “If you want to buy some average wine at high price by the case then go ahead… the chap that came around was pleasant enough and did not apply huge pressure to buy, but once he realised we had no interest in purchasing, he could not get out of the door fast enough.”
Pieroth responds to all positive and negative comments. Its relatively high prices – judging from the reviews, consumers pay an average of £16.00 ($21.19) per bottle, in a market where the average price is just £5.56 ($7.36)– are acknowledged. “We don’t hide the fact that our wines are slightly more expensive than some other companies, but trying them all before you choose your favourites is a great way to spend an hour or two!” Unhappy customers like Angela are offered complete refunds.
If few wine other distributors chose to follow the Pieroth example during its first half century or so, more recently, a number of companies in the US have embraced the notion of direct selling, although to keep within the law, representatives can’t sell wine, but can only take orders, which are fulfilled by the winery.
The rise of the wine ambassador
The best-known of these are Traveling Vineyard and Wineshop At Home. The former business was launched in 2001 in Massachusetts and, after a change of ownership in 2010, has built a reputation for its down-to-earth approach. The CEO, Rick Libby, likes to be described as ”Chief Grapestomper and Head Cheerleader” while the people who do the actual selling are “Wine Guides.”
Armed with a colourful boxful of wine accouterments and occasional servings of Halloween candy to match with wine, the Guides are rewarded with 35% commission on all the sales they make. Based on revenue of $500.00 per tasting (the average figure between November 2014 and October 2015) Guides are expected to take home $100.00.
Wineshop At Home began its existence in 1995 as a business founded by John and Melissa Lynch called 1-800-wineshop. After progressing from a telephone-based business to on-line sales of its “handcrafted artisan wines,”’ in 2003 it began to organise tastings in private homes.
Run by Melissa Lynch, the operation built up a consumer base of 350,000 customers over the following seven years, with the help of 40,000 “independent representatives.” Eight thousand high-spending “VIPs” were included in that customer number.
In 2010, the Lynchs sold the company to their fellow shareholders but two years later, Melissa Lynch was tempted back into setting up a new home-selling business. The man who wooed her was Jean-Charles Boisset, the innovative owner of a broad portfolio of Californian and French wine brands, including Raymond Vineyards, De Loach, Buena Vista, Bouchard Ainé, Domaine de la Vougeraie and Fortant de France.
From the outset, Boisset’s “Ambassador” programme had one major difference to the ones proposed by Pieroth, Traveling Vineyards and Wineshop At Home. Where all these businesses rely on private labels for most, if not all of their wines, Lynch’s new operation would be based around widely available brands.
This raised two major issues, as Lynch acknowledges. “When I first came on board, it was clear that we didn’t want to compete with our existing retail customers and we needed [to charge] enough to pay the sales people,” he says. The solution lay in offering wines that were exclusive to the programme: “For example, we have five wines under the Raymond portfolio that are not available elsewhere. The message is that we are extension of the winery tasting room – offering an opportunity to buy smaller-production wines.”
Lynch explains that the ambassadors offer a range of 80 to 100 wines: “a small proportion of the entire Boisset portfolio,” The exceptions to the program-exclusive rule tend to be highly priced ‘collector’ wines such as the $350.00 Surrealist.
Comparing the new business with her previous one, Lynch says that being associated with real brands provides “depth and authenticity. That’s why I came over here. The challenges of convincing people about the quality of the wines don’t exist here – that’s our difference.”
Over the five years since the launch of the Boisset Collection Ambassador Program, 1,200 ambassadors have been recruited, along with 30,000 to 40,000 customers and 4,000 club members who receive regular shipments of wine. “Seventy percent of our ambassadors are women, and there’s a real mixture,” says Lynch. “There are career women and soccer moms. They are often looking for ways to make some extra income, but also for ways to socialise – we have some working as couples. And they want to learn about wine.”
Education is key to the Boisset business. “We have a ton of training materials,” Lynch explains. “There’s a combination of on-line and in-person training, and leaders who will help you hold your first tastings.”
Every week, there is a “Tuesday call” with a single topic the ambassadors can learn about. “This could be about wine, or about how to build the network, or how to get people comfortable at a tasting,” says Lynch. “We try to make it varied.”
Exploiting the company’s production facilities, there are also four-day retreats in Napa where ambassadors spend time with the winemakers. The most successful ambassadors – those who generate sales of more than $50,000.00 – have the chance to travel to Boisset’s birthplace in Burgundy and meet his parents.
Lynch emphasises that the ambassadors are all operating virtual businesses with their own websites. “We run them, and they all look the same,” she says, “but ot’s personal service powered by technology. Retention is always challenging, so we take on a lot of the direct marketing to keep them engaged. It is all about the experience. So there are monthly newsletters, and opportunities to taste on-line with Jean-Charles. And we’re running events across the country they can attend.”
As Lynch says, there are plenty of other wineries who might like to start home selling operations, “and many probably will”, but few will have two of Boisset’s strengths. “We had to create a pretty sophisticated back end to support the ambassadors and doing that would be a challenge for many other producers,.” she says. More importantly, there is the range of brands and wines on offer. “You notice more and more that people want flexibility,” notes Lynch. “They get bored buying wine from the same winery. Our customers can pick and choose between all the properties.”
The long term prospects for wine ambassadors and consultants who can help people make those choices look a lot brighter than those of most Uber drivers. After all, wouldn’t most of us prefer to enjoy a wine tasting with a human being than a robot?
