May 7 2006
Every time I think that wine will forever be shackled by the boundaries of its antiquity, I’m given hope by folks that are taking a new look at a different way of doing things.
And, with the news ablaze for the last year on wine shipping laws and the tyranny of the distributors, it’s interesting to see business models take shape.
One of the significant challenges in the industry is the preponderance of wineries that are starting and developing coupled with the consolidation of distributors.
Something has to give, right?
Usually, it’s the small wineries that struggle to find a market for their products—not because their product isn’t good, but because they lack the financial mite to earn sell-thru from distribution.
I’ve recently run across a spat of of business models from companies looking to alleviate the the distance between a consumer looking for boutique wines and the small winery trying to get started and build an audience.
I’ve written about Crushpad Wine before. I really like their business model and find the process fascinating. Overall, I have doubts about their ability to scale the business when most of the wines have a suggested retail value well past the $20 range—which means the quality is definitely going into the bottle (and their list of vineyards backs that up).
But, they aren’t doing any favors to the enthusiast winemakers (their audience, for the most part) that have to find a place to sell the stuff when they have absolutely no reputation to fall back on. I owe this to Crushpad having to develop size to drive costs down, but just the same, with quality in wine at such a great level, it would be nice to see them bring in some quality bulk wine for blending and to help bring costs down, overall.
The market for sub-$15 bottles is XXXXX big, while the market for greater than $20 bottles is only XXX big, as an example.
In my humble opinion, those outside of the wine industry have no idea that wine is sold in bulk like a commodity, and as such, those coming in to Crushpad wanting to create a label are more interested in quality then vineyard designation—even if that means using bulk wine.
But, to their credit, Crushpad has put together a program that takes care of absolutely everything and all a fledgling wine brand has to do is help sell the vino. Their commerce package includes everything from soup to nuts—the wine development, the brand development, the compliance for packaging and the fulfillment. All you have to do, as kind of a winemaker, or at least as the guy writing the checks, is drive demand.
If a winery is not so hot at driving demand, they might want to check out a new web-based offering called Radcru.com
From the Radcru press release:
How RadCru works
Each day, RadCru works with our winery sellers to select one specialwine deal and offer it to RadCru’s members and the general public foran entire 24 hour period. To heighten anticipation, RadCru membersnever know what special wine will be offered until it goes live eachday. Each day’s wine offer is made available to the general public at12:00 am and is sold until 11:59 pm the following night or until thewine offer sells out. Once a wine offer has ended and the buyer haspaid the winery, that day’s winery ships the product to each buyer.Selling on RadCru is easy and profitable.
"RadCru has a strong understanding of the challenges many smallwineries face in showcasing their wines to the general market. Our goalis to provide small wineries with valuable exposure, strong sales andrevenue and a reliable platform to consistently reach out to winelovers through this innovative sales channel," said Jeff Playter,Director of Marketing, RadCru LLC. "RadCru focuses on unleashing justone great wine each day. By keeping it simple and offering hard to findboutique wines at great prices, we believe there is a huge marketopportunity here.”
I’ll leave the snarky comments alone, but I’m sure most PR professionals would encourage the client to find a customer to vouch that, "RadCru has a strong understanding of the challenges many small wineries face ..." INSTEAD OF the Director of Sales ... nonetheless, this is an easy business for Radcru.com, they just have to aggregate customers and the winery does all of the work.
The last model, and, perhaps, the most enduring, is that of the ReThink Wine site from Inertia Beverage. It’s really a no brainer—go to small, boutique wineries and help them get off the ground technologically with the only thing more important then an accounting program—a web site. An any entrepreneur will tell you—it’s better to have a customer then a place for journal entries if you’re just starting out. Once the winery is off the ground with the site, Inertia gives them a couple of avenues for sales—one being slotting in the Inertia Beverage trade site where restaurants can buy direct and the other being commerce enablement whereby they pass through a customer to the winery site for fulfillment of the wine.
Ultimately, the winner in this is the customer—so long as we’re able to keep on top of tall he different places to buy wine. Though, today, it’s easier to buy wine from a local store, I think we probably said the same thing about books 10 years ago. Internet commerce and its permutations are here to stay and, perhaps, its greatest yet-to-be-tapped opportunity to create a sustaining impact might be in the wine business.
On Friday it was "Long Live Mexico." Today, it’s "Long Live Small Wineries"
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