Innovative Wine Businesses

As is the case with every industry, clever business people with big ideas and great connections often find ways to accelerate industry growth and take a cut of the market for themselves.  These entrepreneurs figure out an angle on how to get their own piece of the pie by targeting the consumer market. The wine world is no exception.

While you may not know the names of these companies, you have likely heard of a few of their wines. This post covers the different approaches these innovators are taking: Bronco Wine Company, Cameron Hughes Wine, Latitude Beverage Company, and Oriel Wines.

Method 1: Reach the most consumers by making cheap wine widely available

Two-Buck Chuck (Charles Shaw Wine)

You may not know the name Bronco Wine Company but I’ll bet you a year’s salary you know their biggest brand–Charles Shaw (a.k.a. Two-Buck Chuck). Did you also know that Bronco Wine Company has over fifty other brands, too? According to Wikipedia (the only web-presence the company maintains), Bronco Wine Company is the fourth-largest wine producer in the US with total annual sales of approximately 20 million cases.

Bronco is a 30-year old wine company that has had some troubles along the way, but it’s never easy for the pioneers; CEO Fred Franzia (no relation to the wine in the box) has successfully executed his vision of bringing wine to the masses. (See earlier comment about you knowing the name of their #1 brand.) They did it by buying grape and wine overruns from existing wineries and repackaging them. They did it by buying 35,000+ acres of grape-growing land in California and making their own wines in less-expensive areas than the Napa Valley. They did it by specializing in distribution and getting their wine into grocery stores like Trader Joe’s and other national chains.

Bronco can safely claim they did a tremendous amount to contribute to the explosion of wine-consumption in the US because at $2 a bottle, it’s a risk-free experiment for nearly everyone and since most consumers don’t know good wine from bad they’re happy drinking the two-buck bottles. Some people refer to Two-buck Chuck as a gateway wine–it introduces people to wine and when they’re ready for something more adventurous, they’ll step up and start buying better wines. I don’t know what percentage of the Charles Shaw audience are upgraders, but I’ll bet brands like Yellow Tail and Coppola are thrilled they do.

Method 2: Diversify in different methods of selling oversupply and partner with others to help do it

Cameron Hughes Wines - Lot Series

Cameron Hughes Wines – Lot Series

Another innovative company aiming to bring more value to the consumer market is Cameron Hughes Wines. They’ve diversified their approach to include purchasing oversupply and backblending some of it into their Rock Ridge series while maintaining the integrity of the better wines in their Lot Series. When they find good winemaker partners, they create ongoing relationships for their Flying Winemaker Series, even going so far as to choose one uber-partner for their Evergreen Series.

Cameron Hughes also cultivated strong distribution channels with major retailers maintaining great brand loyalty like Costco, Cost Plus World Market, and Safeway. These are stores where consumers aren’t looking for fine wines, but good quality wines at a good value and Cameron Hughes thinks they can build lifelong consumer loyalty for their brands through these distribution channels. If the quality is there, and the prices are fair, I’ll bet they keep growing at a record pace.

Method 3: Specialize in high-end oversupply and only source the best varietals from their best regions

90+ Cellars Malbec

90+ Cellars Malbec

Latitude Beverage Company is an example of an innovative business which sees that the fine wine market is declining and that there’s more growth opportunity in bringing good quality wine to the mass consumer market. They’re doing it in two different ways under two unique labels–90+ Cellars and Ku De Ta Wines.

90+ Cellars is just like Cameron Hughes’ Lot Series except that the wines Latitude Beverage purchases come with a ratings pedigree. While we don’t necessarily advocate buying wines based on their ratings (because everyone’s personal taste is different), we think only selecting wines that are well-structured enough to earn a 90+ rating in the first place is a great place to start. When you purchase a 90+ Cellars wine, you’re getting premium quality at value pricing–a great way to win over sophisticated wine buyers on a budget.

Ku De Ta Wines, Rioja

Ku De Ta Wines, Rioja

Ku De Ta is more like Cameron Hughes’ Flying Winemaker Series in that they’ve hand-selected varietals from the regions where they perform best. When you want to produce consistently high-quality wines, why buy your grapes from a region that doesn’t have the best terroir to support superior winemaking? Why buy your Cabernet grapes from anywhere other than the Napa Valley? Why buy your Malbec from anywhere other than Mendoza? You get the point. I can’t tell if they make their own wines or if they contract with winemakers (probably the latter), but it’s almost irrelevant because winemaking that starts with the best grapes and that respects the varietal’s characteristics produces wonderful wines.

Method 4: Leverage winemaker contacts to produce the best line of wines from around the world

Oriel Wines

Oriel Wines

Among myriad platitudes there are two popular truisms in the business world that help companies focus: “know your strengths” and “stick to your core competencies, outsource the rest.” Oriel Wines understands focus and knows their own strengths don’t lie in vineyard equipment and property operations, but in evaluating wines and winemakers for greatness. Oriel has created partnerships with the world’s finest winemakers from the best regions and hand-selected varietals to be crafted into world-class wines. They then bottle these wines and distribute them under the single brand, Oriel.

The difference between Oriel and Cameron Hughes in this area is that Oriel is specialized. Specialists tend to excel at their niche and often can bring exceptional quality to their work. Oriel has managed to do this and still sell their wines at consumer-friendly prices, and they consistently get top ratings on their wines, too. With a range of pricing from $15 – $75 per bottle, Oriel knows that consumers who get to know their brand through one of its well-priced selections will become a loyal brand follower and continue to discover a world of wines as their wine experience and appetite for more extraordinary wines grows.

Bottom line: If you buy wines that are priced according to innovative business practices (as opposed to local real estate prices and ratings-driven demand), odds are good you’re getting better quality wine for your money–who doesn’t want that?

Posted on by Arianna Armstrong in How to Buy Wine at Good Prices

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