Good Grape Wine Company

April 25 2007

Wine Retail Competition:  Coming to a Neighborhood Near You!

Remember in the early to Mid-90s when bagel and coffee shops started popping up on every corner in your town?  It was a phenomenon where you couldn’t really recognize the broader trends until one day it was your turn to pick up bagels for the Friday Breakfast Club at the office and it dawned on you that, yes, there was room for a bagel and coffee shop in your life.

These things have a way of sneaking up on you.

I love reviewing retail trends that are happening in wine—a couple of weeks ago, in a post found here, I wrote about VinoVenue. VinoVenue is a wine tasting bar concept that has aggressive plans to go national, launching from San Francisco.  In that post, I received a comment from a marketer who indicated that VinoVenue was cool, but equally cool was a concept out of Atlanta called “The Grape.”

These are two of several companies planning scaled growth.

I have long thought that a regional or national wine shop had the golden opportunity to gain significant business by going into towns that do not have great wine shops while creating something, anything different.  Indianapolis is one such town.  In fact, most towns not named the state of California, New York, Boston, and Chicago are prime candidates for a genre-breaking wine retail concept. 

This past week I read a trade magazine called Beverage Dynamics, and it looks like the granddaddy of “retail” concepts, Best Cellars, is also eyeing expansion plans.  Best Cellars operates in New York, Boston, D.C. and also has a franchised store in Dallas, TX.  Despite their limited store numbers, their influence has been far more reaching and inclusive to the industry.

Best Cellars has been perhaps the most oft imitated wine shop in America over the course of the last 10 years.

Their main position to market is a highly defined selection of wines—usually 100 or fewer different bottles and most of them under $15 a bottle.  Best Cellars takes the guesswork out of finding a great bottle of wine that won’t break the bank.  But, the real paradigm shift that Best Cellars has caused for small wine shops and restaurant wine lists is how they categorize wine for newcomers and the uninitiated—they use eight broad style descriptors to categorize wine.  No longer does a consumer have to look at a tangle of foreign looking varietals in the Italian section or the German section in order to venture out of a California comfort zone, for example.  Instead, wines are described as, “Big,” “Juicy,” “Lucious,” “Smooth,” and so on.

Perhaps more interesting than their customer-facing market position, which has essentially re-defined how many small wine shops and restaurants categorize wine, is the people they have brought on board to help define and execute their next phase of growth—Dan Dickson as CEO, a veteran of GE and Steve Yacker as VP of Merchandising.  Yacker is an 18 year veteran with stints at Gap and Tommy Hilfiger under his belt.

Generally speaking, you don’t hire big hitters unless you have your eye on the prize.

Unfortunately, the article isn’t online, but below are a few tasty quotes and excerpts from the article.  Read the first paragraph and ask yourself if this is wine related or trying to break the code on the human genome:

From Founder, Joshua Wesson:
“After seven years of operation, we realized it was time to professionalize our management structure and create a platform that could scale the business,” said Wesson.  “At some point, scaling becomes an exercise in applying a formula to reproduce the indicia of success.  That wisdom and those skills weren’t resident among the core group that started the company.  We’ve now downloaded that wisdom and turned it into the formula that is Best Cellars today.”

From the article:
“Best Cellars has also begun to establish intriguing alliances with simpatico brands like Crate and Barrel and JetBlue, though it continues to grope toward how to best leverage these partnerships.”

From Dan Dickson, President and CEO of Best Cellars
“The consumer has to believe that the wines in our store offer the best bang for the buck.  There are a lot of exclusives in Best Cellars, and the credibility behind them is Joshua Wesson:  His credibility is the key point of differentiation between us and everyone else selling value-priced wine.”

I don’t know what the future of wine retailing holds, but I do know that the future is going to be very interesting, particularly with all of the entrants in the field.

Schmear a bagel and watch the spectacle. 

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