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Innovation: How to Price it, Deliver it, and Transform Business

02/12/2014 09:33 am ET | Updated Apr 12, 2014

02102014_innovation

I recently discovered an innovative new product that demonstrates brilliant pricing and marketing.  I just had to share it with you and how to apply such innovative success to your business.

What Was So Cool?
During an evening out with friends, we sat in the lounge waiting for our table.  A gentleman asked us if we wanted a drink or glass of wine. I inquired about what wines they offered by the glass? After a brief discussion about what wines we liked, he smiled and returned to the table. Simon was his name and he is the Sommelier at the James Beard Award winning restaurant, Rasika in Washington DC.  Simon poured us a taste of a 1985 Beaucastel. But how could they offer such amazing wine by the half-glass? Once oxygen hits the opened bottle, the wine will start to deteriorate. Simon introduced us to an innovative new product called Coravin.

How Does It Work?
Coravin allows you to access wine without opening the cork. Visit Coravin.com to see a video with more detail. But, the long and short is that the device is about the size of a large wine opener. It has a hollow needle and the unit contains a capsule filled with Argon gas. You push the needle through the wine bottle's foil and natural cork, and then press the button. The Coravin injects the inert, argon gas into the bottle, and out comes the wine. The argon gas fills the void from the poured win, and the natural elasticity of cork lets it instantly reseal after the needle is removed. Oxygen never touches the wine in the bottle, so the remaining wine is the same as it was before the pour. Numerous tests have shown that the best experts cannot tell the difference in wines opened after more than a year.

A New World of Possibilities
I spoke with Greg Lambrecht, the founder and inventor of Coravin while he was in France visiting wineries who are huge supporters of Coravin.  Greg shared with me "What I really wanted was to be able to thoroughly experience wine. I could taste eight wines in one night, while consuming less than a glass or two of wine. I could taste different expressions of the same grape from around the world. I could truly discover wine.  I could see how wine would evolve over time. "

Critics said consumers would never buy it. However, consumers are buying Coravin at three times the rate of professionals. The company saw enough success that they brought on an expert at accessing beverages by the glass:  Former Keurig CEO Nick Lazaris now serves as CEO of Coravin.

How To Price Innovation
The $299 retail price might scare some, but based on value, it is a bargain. I'm sure they could have priced Coravin lower solely based on material and manufacturing costs. But, Coravin opens up possibilities never before imagined:  You have a glass of red, and your spouse has a glass of white.  Days weeks, or months later, the remaining wine is still in the bottle as if it was never touched.  You share a bottle of wine at dinner, and one of you wants just one more glass (or half glass).  Enter Coravin.

Prior to Coravin, the alternatives were Cruvinet devices that attempted to preserve wine once it is opened. However, once the wine is touched by air, the oxidation process that eventually turns wine to vinegar. Traditional Cruvinet systems first introduced in 1980 would put the wines "on tap" and inject a gas to slow the process. By most accounts, those systems delay the oxidation and give the opened bottle of wine a life extended by a week or two.  Those systems are cumbersome and cost thousands of dollars. It was amazing technology... until Coravin was introduced just last year.

Some might think that Coravin is a device for the rich and famous. Not so fast. Coravin would allow consumers to purchase wine at a variety of levels and taste wines over time to educate themselves. Or, you might go to dinner and you and your partner each have one glass of wine, and take the remaining wine in the unopened bottle home to enjoy at a later date. The possibilities are endless.

How To Deliver & Transform
Do people tell you your idea won't work? Greg Lambrecht was told many times all of the obstacles to his business idea. He was told distributors would hate it. Today, they are his biggest fans since they use Coravin to offer a taste of wines without wasting full bottles.  Others told him you HAD TO remove the cork, and he proved them wrong. Skeptics said that restaurants and the wine industry would not be fans, since it might encourage people to drink a glass instead of a bottle. As it turns out, the wine industry, distributors, and restaurants have all benefited from Coravin, and have become the company's greatest ally and marketing channel.

What You Can Learn
How would you determine the price of such an innovation? Greg and his team priced Coravin based on its value to the market. It is priced below, and provides better results than Cruvinet systems. Finally, once he saw success, he brought in an expert to help him steer the company to success.

The next time you think you can't do it, or someone says they won't pay for it, or that you have to price based on your manufacturing/labor costs, take at look at Coravin.  If you create something innovative that can transform the industry, the critics will quickly be silenced. When you achieve your success, drop me a note and we'll arrange to enjoy a flight of wines together using my recently purchased Coravin.

It's Your Turn
How else could Coravin be used to transform the wine and food industry? What other devices have the potential to disrupt an entire industry?