From Plonk to cult wines – exploring the myths and misconceptions about the bulk wine.
The history of selling and buying wine in bulk is about as old as the history of the wine itself. For centuries the role of the negociants in Europe was a transparent and highly regarded imperative for the purchasing, blending, aging and bottling of wines. This often includes the greatest Grand Crus of Bordeaux and Burgundies well into the mid-20th century. With the advent of new wine sales channels and emerging global markets the bulk wine market is once again more visible and tangible to many people in, or interested in entering, the wine industry.
The most common misconception about the bulk wine business I find from students in my wine business classes is that that the products available are exclusively, or even primarily, large quantities of modest to marginal quality wine. In short, the term “bulk wine” is almost synonymous with “plonk.” In fact, the international bulk wine marketplace is rife with a diverse range of products from the ubiquitous, inexpensive products that are essential for developing and maintaining many international value brands to high-end micro quantities of world class products, and anywhere in between.
Why would any winery in their right mind sell off the top quality product as bulk wine? Reasons include quickly turning excess inventory into working capital, production that exceeds sales forecasts, wines that may not meet the parameters of a high blend, and even wines produced by a smaller or medium sized winery that holds a production permit and can make, then profitably sell off, excess production on a regular basis and at very attractive prices. I have been a part of transactions for amazing barrel fermented Chardonnays and fantastic red wines form the highest quality appellations and AVAs. Recently I found a significant quantity of literally world-class product that was custom crushed for a client that reneged on the contract. The wine had been fully paid for and the wine I was able to pick it up for pennies on the dollar.
Of the most popular marketing options available, and made more viable with today’s online and wine club sales, is the concept of offering special lots of wine with short-term availability that are sold on a first-come-first-served basis to a loyal customer mailing list, or via a specialty wine club, retail store, restaurant or web site. Many independent and chain retailers also take advantage of these shorter-term opportunities by creating a private label and find it a very profitable addition to their product range.
There are many examples of well-known super- and ultra-premium brands that got their start leveraging opportunities in the bulk wine market. And creating a long-term brand with bulk wines comes with its own set of risks, primarily the task of sourcing the appropriate specifications and standards of the material to sustain a brand over time. These brands live and die according to the dynamics of supply and demand in the grape and retail wine market thus careful business planning and establishing deep sourcing options are essential to mitigate the risk and reap the potential rewards.
Succeeding in developing a product with bulk wine requires a great deal of skill and the patience to ferret through hundreds of samples and make careful selections. The bulk wine market offers an enticing, quick to a market alternative to more vertically integrated and long term traditional wine production models. Taking advantage of the opportunities requires connections to the wines, many available only through the “whisper market” and the networking of buyers and sellers at bulk wine conferences and market fairs. It is a fascinating, dynamic and essential segment of the wine industry and anyone interested in starting a new brand, ideating a new product or learning more about the industry will find it a rich source for an amazing variety of wines and opportunities.
This article is contributed by Tim Hinnai MW. Meet Tim Hinnai MW at IBWSS Conference to learn and explore on the myths and misconceptions of the Bulk wine industry. Tim will also lead the wine and spirits blending laboratory at the IBWS show.
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