This story starts many years ago when I first met my wife. She wasn’t a wine drinker, but decided to join me in one of my passions. I remember my excitement as I dashed to the wine cooler to get something special for our first bottle together. The next evening, when I casually grabbed a bottle from my everyday stash, she asked me why I wasn’t getting the wine from the same place. “That’s where I keep the best bottles,” I responded, “these are the ones I drink as everyday wine.” Then she said it…
“Why do you ever drink anything beside the good bottles? What’s the point of everyday wine?”
That was the day my wine world came crashing down. I had been making a monthly pilgrimage to my big wine retailer of choice armed with lists of best buys. Scouring the shelves, I scraped together cases of decent tasting, I hoped, $15 bottles of everyday wine.
And I don’t think I was alone. Later, I learned that roughly 80% of wine sales in the USA were at bottle prices of less than $15. I was worshipping at that everyday wine altar with the rest of the wine pilgrims. But why, I had to ask myself. And that started my journey to find a better than everyday wine alternative.
Reason #1 that we buy everyday wine — the price
At the time, the bottles from my excessive number of wine clubs cost in the range of $40 to $60 dollars. My most recent wine club offer came in at a lofty $80 a bottle. Even with a club discount of 10% to 20%, that’s an expensive bottle to open for just a glass of wine.
Then came Coravin. A way to extract wine from a bottle without opening it permanently. Skeptical at first, I soon found myself nonchalantly grabbing a glass from the “best bottles” cooler serene in the knowledge that my cherished wine was protected. Soon my everyday stash disappeared, to the smiling approval of my sweetheart. But my checkbook was less than pleased. The cost of those bottles did add up. And although I was drinking better wine, I was basically drinking the same wines all the time. Delicious yes, but the cellar became pretty predictable.
Reason #2 we buy everyday wine — lack of access
After prohibition, the US government established a 3 tier system for the wine industry. The producers, the wholesalers and the retailers. This system was developed to help bring regulation to the industry, but it did have some unfortunate side effects. It enabled the government to tax the product at every step of the way. Plus, it ensured that the middle tier had a stranglehold on price and supply, which still shapes the wine market today.
When I started researching my alternatives, I learned the hard realities. Beginning with the producers, about 70% of all wine sales are dominated by roughly a dozen mega-brands. Uber consolidators of wine labels that become impressive channel masters. They leverage a couple premium labels to push through their other higher volume wines. And the same is true for distribution, their partners in this lopsided system, with 3 mega-distributors controlling over 50% of wine sales.
Thinking about the massive volumes being controlled by very few players, I saw that simple logistics was a seemingly undeniable force. Even though wholesalers will violently argue that they benefit the small producer of wines, it is just common sense calculus. It takes a lot of wine to fill the shelves for thirsty wine loving Americans. That’s a whole lot easier to do with mega-labels producing tens of thousands of cases than it is by chasing after thousands of wineries that make a couple hundred cases of wine. I get it, there’s only so many hours in a day and business to be done. So while wholesalers do provide an avenue to some smaller winemakers, it’s not how distributors meet the mighty demand for everyday wines.
That was too bad for me, and for wine lovers everywhere, because there has been a tremendous surge in the number of small wineries. As of the latest count, there are around 11,000 wineries in the USA and over 80% make less than 5000 cases of wine annually. And unless these wineries have already established a strong brand on their own, they are unlikely to get much attention from wholesalers.
Then there’s just the basic costs of the wine to consider. That $15 everyday bottle, after retail and distribution uplift, leaves around $3–$5 dollars for the producer. Those are economics that just crush the small, artisan winemakers. Let’s build that bottle of artisan wine. The average price of premium fruit from Sonoma or Napa tops $5 a bottle. Then add in $1-$2 per bottle for oak aging and $2-$3 bottling costs, plus operations, and the math just doesn’t work. When you talk to most artisan winemakers you understand that they are pursuing a passion, not riches. But you’ve gotta eat too.
How do these small wineries go to market? For most, their tasting room and wine club direct to consumer (DTC) business are their primary sales channel. Over the last year DTC wine sales grew over 27%, and for small wineries that growth was over 60%. These winemakers are making the high quality wines that I would have put in the “best bottles” wine cooler. But their challenge is connecting with enough new customers, and handling the logistics of selling at less-than case volumes. They are experts at winemaking, not e-commerce and shipping.
Hope for the better than everyday wine alternative
Two things I noticed did give me some hope. People are becoming more comfortable buying wine online, and the sharing economy is offering new alternatives for many traditional buying models.
Over the period of the pandemic, we all found ourselves relying more on the internet to connect to the things we needed. In our family we tried grocery delivery, meal kits, mobile dog groomers, household essentials, mobile bike repair, take-out delivery, dry cleaning pickup and of course the Amazon delivery van had a reserved parking spot in front of our home. Since then, we’ve found that many of these have become more than stopgap measures. We like them and it’s the new normal.
During this time online wine sales exploded and wine club memberships skyrocketed. Sure, I admit there was a little more wine consumption than normal, but the door was opened to a new way to buy wine. Small wineries have a new and growing distribution channel to use, if they can figure out how.
One of the most challenging aspects for artisan wineries will be the logistics. Traditionally, a part of the distribution channel’s value add is handling the inventory and dealing with shipping. For this they exact a big chunk of the wine’s retail price. One bottle here, another there. That can be a nightmare for a small winery to handle, and shipping costs for small businesses are murder which will push the wine price even higher. Artisan wineries like to keep things simple, and cases of wine are simple. They are easy to handle and the DNA of small wineries somehow links big discounts to case volumes.
That’s where I began to think about the sharing economy as a way to facilitate access to wines from these artisan winemakers. Like an UberPool meets artisan wine. Wineries want to sell cases, so why not team up with friends or even strangers to split a case. People have been doing it ad-hoc for years, but we have the technology today to make it frictionless.
The better than everyday wine alternative is out there
The good news for wine lovers is that we already have several online alternatives to buying retail everyday wine. From wine clubs to daily deal wine sites to curated wine packs to sites gamifying wine buying with promises of upgraded bottles, there is a lot to choose from already. Most of these sites offer pretty good discounts on premium wines.
What I’m not seeing is a real focus on the promotion of smaller artisan wineries and unique varietals. So that’s what a few wine lovers and I here in Sonoma have set out to do. We’re convinced that the internet plus sharing economy concepts can connect wine lovers directly with small, artisan wineries. And by skipping traditional distribution, pass some eye-popping discounts on to the consumer. By cutting out the distribution and retail markups, savings up to 70% are possible. Now that magic $15-$20 sweet spot for everyday wine can get you a premium artisan wine that shows hand-crafted quality and a real sense of place.
Our project to connect small wineries directly with wine buyers was my eventual answer to my wife’s question. Combining winery direct access with sharing economics to offer a better than everyday wine at everyday prices. And here I was thinking that I’d be teaching my wife all about wine many years ago, when it was me that received the most important lesson.