Gone in a flash
Growing crop of websites offer deep wine discounts — but you'll have to act fast
Photos by Peter DaSilva / New York Times
Jason Seeber, aka Agent Red of the website The Wine Spies, stands near a pile of empty wine boxes from a couple days of sales in Santa Rosa. The Wine Spies uses two characters, Agent Red and Agent White, to track down wines to be purchased at discounted prices.
What do you consider a bargain in wine? Ten percent off? Twenty? How about 40? That was the discount that Wines Til Sold Out offered recently on 2006 Chateau Angelus, a top Bordeaux that was being sold for nearly $100 off its original price of about $250.
David Studdert, creator of the website wine.woot, catalogs bottles of wine he selected for discounted sales on his site, at his office in Sonoma.
Prices that seem too low to be true are typical of the dozen or so flash wine sale sites that have popped up over the past two years. The sites offer limited amounts of wines at discounts that are shockingly steep but highly temporary.
Typically each sale lasts for no more than a day or two before the sand in the hourglass runs out.
"The deals are usually screaming," said Jim Barnyak, a Seattle financial manager and frequent shopper of such sites. "Deals that any wine store can't come close to touching."
Early each morning, Barnyak checks for emails alerting him to the next hot sale. "Sometimes you have to respond within 15 minutes to get the really good bargain."
In just a few years, the flash wine market has grown to about $100 million in annual sales, about 25 percent of the overall online wine market, according to an estimate by the wine industry consulting firm VinTank. Whether it can sustain that gangbuster pace is far from clear. Many industry veterans predict that the glut will dry up in the next year or so and that winemakers will be straightening their clothes and glancing around to see if anyone noticed that they'd participated in anything so undignified as deep discounting.
But out of desperation can come opportunity. Some in the wine industry say that flash sites may outlive the surplus that brought them into existence and prove themselves useful in other ways. The sites have "brought new customers into the space, and boosted their comfort level in buying wine online," said Michael Greenlee of the Napa-based wine consultancy Amedeo.
A welcome pressure valve for the industry, flash sales have allowed wineries, particularly at the middle and higher end, to unload huge numbers of bottles in staggeringly short times, albeit at drastically reduced prices. Not long ago, WineAccess blew out the better part of 700 cases -- 8,400 bottles -- of 2006 Keenan Merlot in under 24 hours. The profits on such sales may be small or nonexistent, but at least they give the wineries cash to pay for the next vintage's barrels and grapes.
Even in the depths of the recession, though, many in the industry were powerfully averse to slashing prices.
Jack Stuart, the winemaker for Benessere Vineyards in Napa Valley, recalled that, after he had sold some wine through a flash site, the owner of the site talked about establishing a long-term relationship.
"I sort of laughed to myself, thinking 'This is not a sustainable business model,' " he said. "There's no way we could afford to sell a significant proportion of our production this way."
Most flash sites operate under one of two models. Some are retailers, negotiating tremendous discounts, buying the wines either directly from the winery or through wholesalers, and then fulfilling the orders themselves. Vaynerchuk's Cinderella Wine is in this category, as is Wines Til Sold Out.
The other model for a flash site is the marketing agent that sells wine but never takes possession of it, leaving the hassles of shipping legalities and order fulfillment to the wineries. These sites, like wine.woot and Lot 18, specialize in "hand-selling" bottles, in part by educating consumers about the wineries.
Matt Licklider, a founder of the Lioco winery in California, which has vineyards in Sonoma County, was skeptical about flash sites, but recently gave wine.woot a try. He liked the experience, particularly the time he spent interacting with consumers on the site's chat board.
The Santa Rosa-based Wine Spies has a hybrid model, offering both a marketing and retail component, as well as a gimmick. The site casts sales as "missions" in which two characters known as Agent Red and Agent White are charged with tracking down wines. Along the way, the site provides quite a bit of information, including lengthy winemaker interviews. Discounts of at least 20 percent are part of the business model, said Jason Seeber, aka Agent Red, but are not the sole point of the site.
"That discount is meant really to entice people who might otherwise hesitate to buy a wine they don't know," he said. "If we're selling this wine at 25 percent off with a very detailed review and a comprehensive interview with the winemaker and we really tell the story of the wine in a very accurate way, all those things are going to lower the barrier to entry." The Wine Spies has experienced annual double-digit growth since its debut in 2007, Seeber said. Besides helping to reach more customers in less time, flash sites that specialize in marketing can also provide the kind of direct connection that can be hard for winemakers to come by. "Outside of direct-to-consumer sales, wineries are pretty much ignorant as to who's buying their wine," said Paul Mabray, the chief strategy officer of VinTank. "They sell it to the wholesaler, retailer or restaurant instead of the actual consumer, so their guess is as good as any who's actually buying it."
Other flash sites are evolving to build relationships with customers beyond their monitors. Eric Bolen, a marketing consultant for WineAccess, has recently started offering "private sales" of exclusive wines to their best customers. "We then deliver all the names to the winery, who then sends them a handwritten note inviting them in for a special private tasting," he said. Likewise, Greenlee of Amedeo said that he is working with One King's Lane, a discount home-decor site that recently added wine to its portfolio, to package wines with experiences like vineyard tours and meals at the winery.
"The wineries are interested in keeping the relationship with customers beyond the sale," he said. Greenlee added that such package deals might be a way to reach new customers beyond the hard-core consumers who are, he said, the primary users of sites like wineaccess.com.
Whatever the future holds, the fate of online wine retail will no doubt be dynamic. "It'll be fun to see who's got the chops to do different things off the platform they've created," Vaynerchuk said. "To see who just ends up being a flash and who ends up being a flash in the pan."