Big data is changing the way we think, or more accurately, it is changing the way computers can think. The power of number-crunching and algorithm learning technologies cannot be underestimated, and their potential impact on businesses across the board are limited only it seems by the creativity and imagination of innovators. These tech pioneers are often challenging years of established wisdom in their fields as their data tackles industry assumptions to uncover truths hidden in the numbers.
One strong example of this can be seen in the wine industry: a field normally defined by its adherence to tradition. Yet even among the vineyards, change is in the air. The plucky start up Palate Club (which aims to personalize the wine buying process) has shared the first findings of their taste matching algorithm, and the results promise future shake ups for the American wine industry in particular.
The drive for data in the search for efficiency
The internet is hungry for data. Free services sell our data to companies for advertising and marketing targeting. You can even pay to send your genetic data to companies who will then get paid again to pass it along to pharmaceutical companies. All this is part of the gold rush of data mining: the search for answers, and especially efficiency, through large scale data collection and interpretation.
While no sector has been spared the use of data, it has had major impacts in several key industries of the modern economy. These come as no surprise to anyone following the use of big data and algorithm learning, but give us a good example of the transformative potential of information use in the modern era.
In the Energy Sector for example, ‘smart grids’ may pave the way for future energy planning. They tackle a unique problem of the modern era where variable power sources meet variable power use, powerful data provides a way to track, plan and even manage the increasingly complex field in real time. This is the type of efficiency that makes everyone win, which unsurprisingly is a big theme in data use, even as you scale it down to the level of specialization of Palate Club’s wines.
There are other uses that more directly impact our lives however, and since we are talking about data, it is doing so in very measurable ways. For example in the Healthcare sector, undeniably important for just about everyone in society, data is lowering costs and raising standards for service. Yet mostly these innovations are born out of a desire to do what is already being done…just better. Some industries however are seeing data use which transcends the traditional and changes the very way consumers and producers engage.
Dawn of the data disruptors
Technology is constantly changing and often brings disruption in its wake. From the industrial revolution to the internet age, the advent of new tech often spells change for existing physical, cultural or even economic institutions. These changes however take place over time, mini revolutions which change one aspect of our lives at a time until we find ourselves in a whole new world. Through increasing digital transformations we can see these changes happening at lightning speeds all around us.
One of the most stunning paradigm shifts has focused around music, with data driven streaming software like Pandora or Spotify now the norm. These services have radically altered the way music is produced, marketed and consumed, in some cases even eliminating the need for record labels and high cost tours. While these have obviously reduced inefficiencies in the sector, they are primarily driven by a different source of strength: giving control back to the consumers.
Music is something each person experiences differently. Not just what we like, but even what we hear, can change from person to person. As a result, trying to determine what consumers will like is a futile task from the start, and trying to force them into buying something can even be counterproductive. Spotify and similar services changed all that, delivering to each consumer according to his or her taste, preference and even mood: changing the way we think about and interact with music in the process.
They use the user’s data to solve a fundamental problem inherent in the industry, perhaps then we should not be so surprised to find the same thing happening in the wine industry.
Palate Club’s adventures in algorithms and wine
Based out of the Bay Area, Palate Club combines two distinctly Californian trends: wine and tech. While they might be confused for a wine delivery service (they certainly offer the possibility) or a wine e-commerce platform, the fundamental innovation they bring is their taste matching algorithm. Like music streaming platforms, the algorithm learns from, and adapts to, the preferences of its consumers.
The process starts with a complex analysis of every bottle they sell (less than 5% of those they agree to taste) by trained sommeliers who distinguish up to 200 different data points per bottle. Every bottle you drink, you rate (blindly, to avoid bias) on their app, which then begins to gather information on your specific taste preferences, and recommends new ones for purchase or delivery. The start-up works directly with wineries across the globe to get a rich and diverse selection of bottles, and the algorithm makes sure the ones you get are ones you will like.
Just like with music, this is a ‘simple’ (the tech behind it is not) solution to the complex problem of finding good wine adapted to your taste. Choice is further complicated in the changing industry. The wine sector is plagued by large scale wineries with big marketing budgets, unreliable reviews and ratings, and far too many options. Furthermore, wine is also incredibly subjective. While there are objective differences between bottles, what each customer will enjoy depends on dozens of personal factors. Clearly there is room for Palate Club’s innovative application of data analysis and prediction technology.
And the results are starting to come in.
Initial data provides surprises for an industry unused to change
The wine industry, especially in America, is dominated by traditions; not just those relating to the production, but also the assessment, sale and marketing of wines. Some of the wine terms we will use will be as unfamiliar to tech-savvy readers as the tech terms have been for our wine connoisseurs, but we’ll do our best to keep both happy. Because in the combination of the two, we are starting to see some real surprises come out of the first round of data out of Palate Club.
Robert Parker helped create and define the modern wine industry through his incredible cultural reach and influence. Unfortunately this includes biasing just about everyone towards a very specific subset of wine characteristics, to the extent that even producers changed their methods to match his rating system’s criterion. The heavy, oaky, full bodied wines that age ‘well’ get the best ratings, and so the industry has shifted towards them.
Yet the data reveals that this bias is anything but systematic in taste, these ‘American’ or Napa-style wines are performing no better, and often worse, than more ‘European’ style bottles with savors reminiscent of mediteranean riojas. White wines wisdom has also devalued fresher, more acidic wines which customers seem to enjoy just as much as the traditional oaky profile. While these insights are unlikely to change Parker’s rating system, the data is already revealing that the biases within the industry are actively harming its ability to deliver what customers want.
A hint of what is to come as data continues to dominate
Clearly Palate Club is on the right track as their first round of research on their consumer’s behaviour and preferences reveals. As they acquire more consumers and ratings they are likely to be able to refine this further, providing even more insights to an industry desperate for change. Regardless of their level of disruption however, it is clear they are already delivering a service unlike any other in their field.
The use of data through their taste matching algorithm is an innovative move that promises change. But what it delivers most clearly is a tailored and personalized customer experience. Like Spotify before it, by bringing data into a subjective field, they are able to ensure that each person receives wines better suited for their personal preferences.
This is but one example of the fundamental value of data in any industry, from energy to construction, or yes, even wine. The ability to collect, process and analyze massive quantities of data gives companies an unparalleled capacity to optimize and personalize. While this may indeed lead to lower costs and higher profits, the ultimate winners are the consumers, upon who the burden of inefficiencies will no longer fall. Whether in automating the management of their home’s electricity, or buying with one push a perfect bottle of wine to open up at the end of a long day.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
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