Posted: Jan 06, 2019
Selling high-quality wines directly to consumers is a booming business in the U.S.
But it’s not just niche producers from Napa and Sonoma that are in on the game—a handful of companies are making it possible for U.S. consumers to buy wines from the most prestigious regions of the world too.
Last year, growth of direct-to-consumer shipments of wine produced in the U.S. continued to be brisker than the overall market, rising 15.5% from a year earlier to nearly US$2.7 billion, industry researchers Sovos, and Wines & Vines said in a report earlier this year.
Meanwhile, U.S. wine sales rose 6% in the 12 months through November, to US$4.3 billion, Wines & Vines reported, citing data from market research firm bw166.
Similar direct-to-consumer statistics aren’t available for wines imported from elsewhere around the globe, but outlets like Caveau in Portland, Oregon, which specializes in wines from Burgundy and Champagne, or Seattle-based Garagiste, which combs the world for wines made by small-grower producers, often organic, are creating a niche.
VinConnect is a 7-year-old company that connects U.S. consumers directly to about 40 wineries in the best regions of Europe.
Kevin Sidders, a former 20-year Silicon Valley investment banker, who had been on as many as 15-to-20 mailing lists at a time for West Coast producers, hit on the idea for VinConnect after missing his one chance a year to buy the store’s annual allocation of six bottles of Domaine du Pégau Châteauneuf-du-Pape, his favorite.
“The wine came to the retail store and left before I got there,” Sidders says.
Today VinConnect is a largely behind-the-scenes conduit between established producers like Pégau in the France’s Rhône Valley, Clos de Tart in Burgundy, and Massolino in Piedmont, Italy—acting as a direct-to-U.S. consumer supplier and marketing department.
“We help find them find customers and build their lists, do all of the logistics of bringing wine in and making the deliveries,” Sidders says. “Everybody in Napa has their own group that does this, but wineries in Europe don’t.”
From a customer perspective, “it feels exactly the same as being on a mailing list in Napa,” he says.
Direct-to-consumer channels can be through wine clubs, tasting rooms, and online sales, as well as mailing lists. All wineries in Napa use these channels in one way or another, with some of the tinier producers, like the so-called first growths of Napa, including Screaming Eagle and Harlan Estate, relying almost exclusively on mailing lists.
One of the more recent entrants to the group connecting U.S. wine lovers to Europe’s fine wines is BurgDirect, founded by Jeff Rubin, a Silicon Valley software executive, and Bill Hebert, a former patent attorney.
As its name implies, BurgDirect focuses on Burgundy, but only from upscale producers creating wine from the finest premier cru and grand cru vineyards, often from houses that produce in relatively small quantities—even by Burgundy standards.
These are bottles, Rubin says, that may show up in a local wine shop, but not predictably. That’s partly because a small producer may make hundreds of cases of wine a year, not thousands, and most haven’t imported to the U.S. in large quantities.
“To find small winemakers making tiny quantities of fairly good stuff, and not priced like those who market it on a different model, is very exciting, but unfortunately it means it’s really, really scarce,” Rubin says. “Sometimes it doesn’t come to the U.S. at all, or not much, and if you live in a smaller city, finding it at all can be very difficult.”
BurgDirect launched in the fall, offering customers Burgundies from about 10 producers. Many are making wines from classic, renowned vineyards in Côte de Nuits or Côte de Beaune, like Gevrey-Chambertin or Pommard.
Prices average about US$110 a bottle for a six-pack from a single producer, although the firm sells Domaine François Lamarche’s La Grand Rue for about $500 a bottle. La Grand Rue is a “teeny, tiny” monopole—meaning a vineyard owned by one producer—in Vosne-Romanée that’s sandwiched between the famed La Romanée and Romanée Conti and La Tâche vineyards.
“It isn’t our goal to undercut the market on price,” Rubin says. Although it may work out a little bit that way, he says the real goal is to guarantee access to wines from premium vineyards, and to make them easy to get. “All of that stuff is the problem we are trying to solve,” he says.
An advantage is customers are assured they are getting what they pay for, a particularly critical issue in Burgundy, where fakes abound. “The closer you are to the seller, to the source of supply, you can guarantee its authenticity and legitimacy,” Rubin says.
Vin Connect takes a different approach, focusing “on wineries in the U.S. market for a long time, with decades of great stories and great reviews, where there’s an embedded high-end customer base.”
While some of the producers sell wines for US$25 a bottle, the average is US$75 to US$80, with some, such as Clos de Tart’s single-vineyard Burgundy, selling for US$599 for a bottle, or US$2,500 for a double magnum.
All told, the company has about 5,400 on its mailing lists, with the largest list at about 1,300 members, Sidders says.
These customers aren’t buying because VinConnect recommends the wines, but because they know the wines already, like Sidders knew Pégau. These are customers who are “invested in the people, the brand,” he says. “It’s really about the relationship more than the transaction.”
By Abby Schultz
January 2, 2019
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