LOTR Wine

Earlier this month, the folks at CB Insights published a report profiling over 50 wine-tech startups making everything from apps to grapeless wine to AI-powered pairing suggestions. Of all the categories covered, e-commerce was dubbed the “most well-funded.”

That’s especially true when it comes to direct-to-consumer wine shipments, and it’s not just CB Insights who thinks so. Silicon Valley Bank’s 2017 SVB Wine Report, which surveyed over 1,200 wineries, found that 61 percent of wine revenue was direct to consumer, compared to 49 percent in 2012. Direct-to-consumer wine shipments reached $2.33 billion (almost 4 percent of all wine sales) in 2016; in November 2017, shipments rose 26 percent, to $417 million.

For smaller wineries, this growth is a much-needed business boost that’s happening for a few different reasons. Laws around shipping wine across state borders are changing (see below), allowing smaller wineries the chance to sell to previously unreachable consumers. There’s also the fact that most consumers are simply willing to pay more for the convenience of having something delivered, whether it’s pizza, Christmas presents, or one’s monthly wine supply. And while SVB expects zero growth for the rest of the wine sector in 2018, direct-to-consumer shipments aren’t included in that prediction.

In other words, it’s a good time to get into the direct-to-consumer wine business, and there’s a growing number of companies out there as evidence:

One interesting concept is Last Bottle Wine. Focused on fine wine, the Napa Valley-based company offers one wine each day, carefully picked from one of the area’s wineries. Customers get free shipping credits for referrals, and if you happen to purchase the literal last bottle of a particular wine, you get a $25 credit.

Garagiste dubs itself “the original email offer wine company.” Daily offers are sent out via a mailing list, and customers can order bottles that get shipped out on one of the site’s two annual shipping dates. That particular model has been copied by many retailers over time, and will probably continue to be.

Vinomofo works directly with wine producers all over the world and offers deals on them through its members-only service. The Aussie company also offer “secret deals,” where the identity of the wine and producer are kept hush hush. It keeps what it calls a “no bowties no BS” approach to wine culture, and will include that flavor in its U.S. launch, slated to happen very soon.

GetWineOnline is the TJ Maxx of wine, meaning that it has an insanely large selection of decently priced wines—so long as you’re willing to sift through a lot of stuff you don’t want to find your perfect deal. Along those lines, Total Wine, which is an extensive brick-and-mortar chain, has built out its e-commerce site in recent years and ships wine in select states, and any bar accessory you ever needed to all 50 states.

Finally, Lot 18 is an online marketplace for wine that carries all manner of brands and prices, and you don’t need a subscription to order. While the site claims to cater to more discerning tastes, the folks behind it clearly like a bit of fun, hence the Lord of the Rings-themed wine currently on offer. (For non-Gandalf fans, there are similar offerings with SNL and The Walking Dead themes.)

The biggest potential hindrance in this space is the insanely complex world of shipping across state lines, also known as “interstate wine shipping.” While I’d like to spend another 500 words detailing the history of this practice, as well as its many different players, I’ll leave all that to the words of this expert. Suffice to say, laws around where wineries can ship have been steadily, if somewhat slowly, changing, though a few lingering states are still trying to crack down on internet wine shopping.

Regulatory and licensing issues won’t go away overnight, or even next year. That’s unlikely, however, to slow growth in the direct-to-consumer wine delivery market. If this past year’s interest from both consumer and investors is anything to go by, 2018 could prove itself a very big year for small wine businesses.

 

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