THE HAMMER FALLS ON BUYING WINE ON-LINE
Wine.com was one of the largest on-line merchants in the U S A ( On-line wine sales in Canada are only possible in each province or territory, since inter-provincial wine shipments are highly regulated and permitted only by wineries.)
Wine com. Invested in a huge selection and maintained a significant inventory even when sales were down.
Prices were reasonable and the wide choice attracted many buyers also, but the company was allowed to ship to certain states. Others blocked inter-state shipments, mainly due to resistance of regional distributors who spent large amounts lobbying both state- and federal governments. Some claim the U.S. alcohol beverage market is controlled by five very large and financially powerful distributors. This is clearly not a healthy situation. More importantly, one must remember that buying wine is not akin to buying a book, or clothing. Wine remains something people want to see, obtain information about and possibly taste before making a purchase decision.
A knowledgeable and caring sales person can sell a lot of wine if he/she approached a customer with respect and genuine concern. A wine enthusiast will be buying more expensive products if well advised and convinced that the purchase is a good buy- value seems to be front and center concern of wine enthusiasts.
When wine.com went bankrupt and bankruptcy administrators decided to stage an auction, the expectations were great. The auction was supposed to be the biggest ever. A million bottles of wine were on hand, including a 1921 Chateau d’Yquem and 1928 Chateau Lafite-Rothschild.
Sales were supposed to raise $ 11. million to cover debts and attract 6000. When the day came, however, only 300 people showed up. It was clear people were looking for bargains and not interested in bidding up lots, sight unseen and/or not tasted.
People buying on auctions are rarely interested in bidding on lots of ordinary wines like Beaujolais, St Veran, Anjou, Australian Rieslings or Chardonnays or Shiraz. They look for rare wines generally not available in stores or wines auctioned for charitable purposes. In this auction dealers got the best deals sometimes paying 10 cents on the dollar for perfectly fine ordinary wines and will be able to sell at discount prices quickly and profitably.
The company was formed in 1994 and expanded quickly by acquisitions, but not through “ organic “ sales growth! Several major US companies had invested and expected huge returns.
The reality is that wine like groceries must be seen, felt and appreciated. How many times do you go to a true market and buy foodstuffs that you had no intention of buying, or even knew you wanted, because you and fall in love instantaneously. Wine and food can never be reduced to purely commercial merchandise!
Article contributed by Hrayr Berberoglu, a Professor Emeritus of Hospitality and Tourism Management specializing in Food and Beverage. Books by H. Berberoglu