Archive for the 'business of wine' Category

The box wine Mark Cuban spent $1 million on

box wine mark cuban Box wine made an appearance on ABC’s Shark Tank last Friday. And like blood in the water, this startup had the sharks in a feeding frenzy with all five sharks bidding (or trying to bid).

Before wine enthusiasts get too excited, it’s worth noting that the beverage is more wine-arita than winery. Let’s break it down. Called Beatbox wines, it comes in a box styled as a beatbox. Nice! Two 5-liter boxes sell on their site for $64.99, which comes out to the equivalent of about $5 a bottle. So they’ve got the value pricing covered. And now, the content: this “wine-based” beverage with 11.1% alcohol comes in several flavors including Blue Razzberry Lemonade and Cranberry Limeade. Oh, and these serving instrux: “Try BeatBox on its own, with a mixer, in a cocktail, or as frozen BeatBoxicles!”

Billionaire Mark Cuban put it best on the show: “You’re not selling wine. You’re selling fun.”

Kevin O’Leary tasted it and proclaimed, “This tastes like S**t!” And then he bid on a slice of the company.

But it was Cuban who came out ahead, giving the Austin-based entrepreneurs five times the amount of money they were seeking for a third of the company’s equity–at a 50% higher valuation than they were seeking.

Given the myriad laws governing wine retail and distributing, here’s hoping that BeatBox doesn’t give Mark Cuban a $1 million hangover.

See the whole episode on Hulu Plus or read a blow-by-blow over on BI.

Club W raises $9.5 million

wine venture funding 213x300 Club W, a wine club that sells private label wine directly to consumers, has raised $9.5 million in its latest round of funding. The company, led by CEO Xander Oxman, had previously raised $3.1 million in a seed round. The WSJ reports that Bessemer Venture Partners led this round; the previous round was led by Crosscut Ventures. The WSJ did not state the company’s valuation at either round.

Part of the Club W pitch includes calling themselves a “global winery” that cuts out all the tiers of the wine biz, including winery, importer, wholesaler, and retailer to offer wines at about $13 each (three a month for $39). Wines have names such as “So this happened…” and “Alchymist noir red blend.” Their web site does not state how they have cracked the perennial wine shipping nut though if the LA-based company is acting as a bonded winery and a licensed importer, the number of states they could ship to could run into the dozens.

In the recent wine venture capital beat, Club W has now soaked up the most funding. Coravin, which stuck its needle into the biotech community, is second. Vivino, the wine app based in Denmark, is running third. Silicon Valley’s Delectable, which closed a $3 million round in May, is fourth.

Lot 18 raised the most venture capital for a wine business post-recession at $44 million. But the company has had layoffs and abandoned the “flash sale” model. In other private equity news, The Wine Advocate sold an controlling stake for reportedly $15 million in late 2012.

Faiveley buys Billaud-Simon in Chablis

billaud simon chablis1 Domaine Faiveley of Burgundy has announced the acquisition of Billaud-Simon for their first vineyard purchase in Chablis. The 50-acre estate includes 4 acres of Grand Cru sites in Vaudésir, Les Clos, Les Preuses and Blanchots. They also have 22 acres of premier cru sites. Domaine Faiveley now has 350 acres in Burgundy.

I have always liked Billaud-Simon’s wines, so it is sad to see the end of an era. However, Erwan Faiveley (who chatted with us a few years ago), has really steered S.S. Faiveley in a good direction since taking the helm. So I will look forward to seeing the results of this acquisition.

Find Billaud-Simon Chablis at retail

Wine economics: How much does that bottle cost?

economics wine Have you ever wondered about wine economics–what are the costs of a bottle of wine? While the industry, made up mostly of private companies, often keeps margins shrouded in mystery, I spoke with one vintner who broke down the price of barrels, corks, grapes as well as the three tiers for me. And since that vintner was Bo Barrett of Chateau Montelena and Barrett & Barrett, he offers perspective on a range of (higher-end) wines. I also dig up some info on lower-end wines.

Margins are something that always pique the interest of consumers. So check out the piece over on wine-searcher.com and let us know your thoughts.

Who will be the Elon Musk of the wine industry?

tesla model s

Elon Musk is an innovator–probably everyone who’s picked up the business pages recently knows that. Not that I’ve ever driven a Tesla, but I am a huge fan of everything he’s doing. While the gigafactory, the hyperloop and the electronic car that goes 0 – 60 in 5.6 seconds may have gotten most of the attention, he’s also taking on a lot of entrenched interests.

First and foremost is how cars get sold in America. States regulate the sale Read more…

No, NYC doesn’t have too many wine shops

nyc wine store

Crain’s New York ran a piece over the weekend pointing to a 14% rise in wine shops in NYC since 2010. Will the proliferation of shops “bottle up profit” they wondered?

The short answer is: no.

There’s a huge thirst for wine in America right now and especially in New York City. The city has some terrific shops and, throwing in the knowledge and offerings at the city’s restaurants and wine bars, it is today the best wine destination on the planet (here’s looking at you, Paris). Sure, the existing 1,368 wine shops can serve the city’s residents and tourists. But a growing market that’s relatively protected (grocery stores can’t sell wine) will probably mean more stores in the coming years.

Today, there are discounters and full-service shops. There are ones focusing in small estate wines and others with lots of well-known brands. There are shops with particular slants such as selling wines made by women, wines from California or Chile, wines from a single importer, shops that sell wine by occasion or food pairing rather than region, or shops that have tastings every day of the week.

Not all of them will succeed. But the more the merrier. While some of the unsuccessful approaches may be reoriented in another four years, I’d venture to say that, barring economic collapse or a shift to allow chains or wine in grocery stores, the number of wine shops will be higher still, by a similar measure as over the last four years.

One thing that could improve the finances of these small shops (chains are not allowed in NY), is if they could also sell craft beer. That happens in Connecticut and levels of social unrest are not higher as a result. In places like Illinois or New Jersey, wine shops can even sell gourmet comestibles, such as cheese. Imagine!

Map of my favorite NYC wine shops

Sommeliers can be “surprisingly” highly paid

Bloomberg TV has a quick hit on five “surprisingly high-paying jobs.” Number five on their list is a “master sommelier,” who, they say, citing nobody in particular, can earn “up to $125,000 a year.”

But keep putting the nose to the limestone, somms: the piece says phone sex operators can earn $160k.

Would Amazon Drones give a lift to wine?

amazon drone Jeff Bezos had some crazy talk for Charlie Rose at the end of a 60 Minutes segment: Amazon is working to deliver some items in 30 minutes or less via unmanned, aerial drones.

It’s not April Fool’s Day; Amazon tweeted a link to a picture of the “octocopter” delivery vehicle and published this futuristic video on YouTube. Bezos did concede to Charlie Rose that the plan, possibly 4-5 years off, “requires more safety testing and FAA approvals.”

If Amazon drones were approved, this delivery method would have enormous implications. But since we’re a wine blog, we’ll focus on the wine angle here: getting wine in 30 minutes would give a lift to your Friday night. And since the Octocopter delivers to GPS coordinates, it could conceivably track your phone and deliver your whole picnic right to where you are. Hopefully, there will also be a robotic sommelier to pop and pour.

Or is it so futuristic, unworkably weather- and regulation-dependent, that the main triumph is just to give a lot of buzz (without rotors) during the busiest shopping time of the year?


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