Beginning a series on the Future of Retail, we chat with Dave Parker, CEO of Benchmark Wine Group, on how he segments the retail wine market, the unique issues of rare wine, and emerging trends in the space. Listen in to learn about what regions are selling well, the importance of email marketing, a mobile-first mindset, and many other topics that will shape wine retail for the coming decade.
2021 Year-End Episode Live on Clubhouse - Mark your calendars for December 9th at 12 pm Pacific time!
Detailed Show Notes:
- Dave’s background
- Was in high tech, bought a vineyard to be in the wine business originally
- 1998 - started Brentwood Wine Company in Oregon, the internet’s 1st online auction house (had challenges as Oregon requires ownership of product before auctioning it)
- 2002 -He started Benchmark Wine Group in California - CA allows someone to hold both retail and wholesale licenses
- Wine Retail Landscape
- Popular Wines - sold in grocery stores, consumers want something to have with dinner
- Fine Wine - mostly current releases sold, buyers knowledge of wine and have brand loyalty
- Rare Wine (where Benchmark specializes) is not generally available, either back vintages of fine wine or ultra scarce products sold only to allocation lists. The wines need to be able to age and often cost $100+/bottle.
- Collectors and investors have deep knowledge of the wines, understand how they appreciate in value, and how well they age, but are also concerned about condition and authenticity
- Rare Wine Trends
- Used to be classified Bordeaux dominated the market
- Burgundy has emerged and appreciated in value
- Champagne has also solidified its spot
- During US-EU wine tariffs on many EU wines (25%) - Champagne and Italy increased in demand (did not have tariffs)
- Rhone and Spanish wines emerging over time
- Largest rare wine markets in the US
- CA and Tri-State area (NY, NJ, CT)
- FL, TX, and IL are also large
- Collectors in every state in the country
- Sustainability becoming an essential topic across all consumer categories
- Benchmark Wine Group - focuses on the rare wine market
- Largest selection of rare wines, ~13,000 wines with ~100,000 bottles at any given time (~70-80% of wines come from private collections)
- Provenance Guarantee - meticulous on how wines are inspected, and Benchmark handles all the transportation
- Have on-staff sommeliers and salespeople to work with clients
- Margins look more like a distributor than a retailer - have to take more risk around the ability to sell the wines and more specialized labor for inspection
- Can ship to 45 states - transactions take place in CA, buyer technically ships wines to themselves
- Benchmark vs. auction houses
- Benchmark advantages - price certainty, immediate payment, prices often on the high end of auction prices
- Auction disadvantages - no guarantee of sale, sale and payment could take months
- Rare wine pricing
- Also owns the Wine Market Journal - expert source for auction information, data from 1986, provides a baseline for selling price
- Tracks sales from some large retailers
- Wine-Searcher shows asking prices vs. selling prices
- Technology & wine retail
- Emerging trends - leveraging AI for label scanning and wine recommendations
- In-person tastings to come back but still have virtual and hybrid experiences
- Benchmark does “Raid Your Cellar” - where a sommelier talks to a winemaker
- NYC Wine Spectator’s Wine Experience in 2021 - hybrid event - Masterclass instructors were sometimes in person, sometimes remote
- Email marketing
- Will continue to be the most efficient and effective
- More than one email/day from a retailer can be overwhelming
- Benchmark does some email segmentation to reduce “spam”
- Segment by region - e.g., only get emails for Bordeaux, Burgundy, etc.
- Segment by wine age - e.g., only last 20 years of wines, not older vintages
- Rare wine collectors older (mostly Gen X, Baby Boomers) - still prefer email
- Some younger customers (Millennials) prefer instant messaging, text
- Use of mobile is more important than native apps (don’t provide that much more functionality vs. mobile designed websites)
- Vivino - sits in-between retailer and consumer, creates a 4th or 5th tier
- Wine Scores
- Critical the higher up the price curve you go - provides a guide for consumers
- Adds credibility to producers
- Affirmation for a particular wine for a specific vintage
- Consumer reviews (e.g., CellarTracker, Vivino) can be used for more recent tastings vs. professional reviewers
- Potential for market disruption
- Consolidation likely to continue - Total Wine, Costco - continue to build out more nationwide reach
- Technology - wine world catching up with the rest of the world
- Small retailers - need to compete with more personalized service, which can leverage tools to be virtual now
- Delivery to door, sometimes in hours or minutes in some states
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