News Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.
Until recently, most of these wines were marketed through three traditional channels: wineries sold to, wholesalers (distributors or importers) who in turn were the exclusive source for and retail wine shops.
With the acceptance of the internet as a basic means for many individuals to communicate, socialize and shop, this rigid and government mandated and regulated three-tier distribution system is being challenged at every level. The sale of wine directly to consumers is beginning to proliferate as never before. Pressure on traditional brick-and-mortar neighborhood wine shops has never been greater.
This internet-based pressure comes in many shapes and sizes. I’ve categorized these new business models into four categories.
- Wine clubs have been around as snail mail offerings for decades; internet subscriptions have grown geometrically in the last five years (e.g., Wall Street Journal Wine Club).
- Small- to medium-sized wineries are embracing the internet as a means to better reach out to consumers and sell their wines directly to their e-mail lists of present and future loyal customers. Choose your own adventure when considering these wineries.
- Traditional online retail websites have had a difficult time sorting out the vast regulations mandated by the three-tier system, but most have survived. A number of web-based sites have attempted to intrude on this space, including the dominant player in all things consumer-related – Amazon – but none have been able to master (circumvent) this system. Score one for old-school product distribution.
- A number of retailers and marketers have created “flash sales” sites, appealing to consumers focused on The Deal, above all. These sites’ business model is to a) send periodic emails to customers while b) offering small quantities of wine c) at steep discounts and d) for a limited time – a perpetual Black Friday from the convenience of your computer or mobile device.
Let’s focus here. Flash sales sites are based on two models: brick-and-mortar retail wine shops that have created alternative, web-based sales channels to offer their existing inventory at discounted prices and marketers without traditional retail licenses that have created websites that serve as a conduit for producers and distributors to sell their wines.
Using technology, both have revolutionized the way wines are being sold. Most significantly, they are skirting the draconian three-tier distribution system by marketing directly to consumers. And the impact of these sites has been growing at compound rates.
A typical sales pitch: We have secured a very limited supply of Three Tier Buster, a 90-point-rated red wine blend available exclusively to e-mail subscribers for the next 24 hours or until sold out. Retail price: $50. Lowest published price: $39.99. Act now for $23.99, a 48 percent discount; minimum purchase is three bottles (free shipping on four bottles).
How does this appeal to those in the food chain?
- Consumers: It’s the thrill of The Deal, an opportunity to purchase “highly rated wine” at a steep discount that retail shops rarely offer.
- Producers and distributors: Flash sales sites provide an opportunity to sell wine through a new channel while building their mailing list. The wines may be current popular offerings, excess inventory or previous vintage leftovers.
- Retailers: A new competitor and a threat to in-store sales. However, several have joined the enemy. Virtual stores have popped up to supplement their brick-and-mortar footprint. In our area, www.RyeBrookWines.com is very popular.
Several current popular sites are worth visiting: www.WinesTillSoldOut.com
(backed by a brick-and-mortar retailer), with wines sourced by Westchester importer Serge Doré Selections; www.ReverseWineSnob.com (Internet marketer only); www.Last BottleWines.com (BMR); www.WineShopper.com (BMR); www.SommSelect.com (IMO); and www.WineAccess.com (IMO). One of the quirkiest sites is www.Garagiste.com (IMO). Check out its eclectic marketing approach.
Will flash sites become a flash-in-the-pan industry, an of-the-moment novelty that is here today and gone tomorrow? Or will they survive simply because consumers are always chasing a “great deal”?
Nick Antonaccio is a 45-year Pleasantville resident. For over 25 years, he has conducted wine tastings and lectures. Nick is a member and program director of the Wine Media Guild of wine journalists. He also offers personalized wine tastings and wine travel services. Nick’s credo: continuous experimenting results in instinctive behavior. You can reach him at email@example.com or on Twitter @sharingwine.