When you buy a bottle of wine at a restaurant for $60, that same bottle probably costs $30 in a liquor store and $20 at a wholesaler. But how do you know you’re getting the best value when you buy a $30 bottle, anyhow? “The growth of the Internet wine business has enlightened wine drinkers with price transparency and access to wines from around the world, all at a fraction of what buyers are used to paying,” says Rob Imeson, CEO and Founder of Splash Wines, in a phone interview. Splash Wines is part of a growing trend in online wine clubs dedicated to giving consumers the ability to buy great wine at similar costs to what you would pay at the vineyard. You can also return the wine if you’re unhappy with the product. Best of all, you can do all of this from your couch. Online wine sales have risen 600% since 2006, to an estimated $6 billion in 2014. A Global Wine report from Rabobank predicts wine e-commerce will grow 12% per annum for the next four years, outpacing growth in retail stores 3x.
Not All Wine Clubs Created Equal
Traditionally, wine is marked up by distributors and then again by retail stores and restaurants. These middle man markups are, inevitably, passed down to consumers. Sites like wine-searcher.com and winezap.com provide side-by-side price comparisons for thousands of wine bottles making it difficult for businesses to charge savvy buyers inflated prices, explaining the growth in popularity in buying wine online. But not all wine clubs are created equal.
Some wine clubs use back-loaded auto ship programs. The Wall Street Journal Wine Club, or WSJwine, for example, is promoting a case of 15 holiday wines for just $69.99, a savings of $170 from their actual worth. However, customers are re-billed at $149.99, more than double the discounted introductory deal, if they don’t cancel their membership to WSJwine by the second shipment. These sorts of deals may be alluring at first sight, but are often referred to as the ‘dark underbelly’ of the wine club industry and are clearly marketing ploys that prioritize high margins at the expense of a short customer lifespan.
Splash Wines is trying to change how consumers view wine clubs with a bold disclosure: they apply a 15% markup on wines across the board, and are the only wine club to disclosure their pricing structure to consumers. “Our 15% margin policy is a cornerstone we are proud of because it shows customers that they are paying the true value of the wine whether it’s a $100 bottle or an $8 bottle,” explains Imeson, as he compares Splash Wines to industry peers. Like Costco, Splash Wines deals with bulk quantities. In doing so they offer free shipping on 15-bottle cases. This places focus on generating profits from repeat customers. “Our model is to make 15% on a customer that returns for multiple shipments rather than make 50% margin on a customer that will unsubscribe after the second shipment.”
Helping Average Consumers Pick Great Wine
An estimated 40% of Americans are wine drinkers. But most people simply don’t have the expertise to make an informed [wine] purchase. For years, boutique wine shops bridged this gap by offering professional help at the counter, with the cost of this service built into each bottle. Now, companies like Plonk Wine Club offer a similar service, digitally. “Plonk distinguishes itself by offering buyers the option of letting us, the experts, do the wine picking. We take the guess work out of the equation,” explains Etty Lewensztain, the Owner of Plonk.
Before placing orders, customers filter their selection online by choosing wines based on variety (red and white) or grape variety (cabernet, pinot, sauv blanc). This curation process allows Plonk to determine each individual’s preference and suggest a suitable wine. Plonk’s selection features wines from vineyards that are under the radar and don’t get much attention elsewhere. In our interview, Lewensztain spoke about the significance of a vineyard’s practice, “Wine that is grown organically and without external intervention possesses purity, vitality and is a direct expression of the vineyard site. This, in turn, creates a unique taste experience for the end consumer.” Plonk’s proposition offers all wine drinkers access to “hidden gems” that would otherwise remain under wraps.
Gone Are the Days of Shopping for Wine in the Dark
Choosing the right online wine retailer will depend on what you prioritize. Value seekers will be fascinated by Splash Wines’ pricing. Over 1500 Groupon shoppers have rewarded Splash with a 92% approval rating, the highest for any wine offer on the daily deals company website. The less experienced shoppers or those seeking boutique bottles may require Plonk’s personalized service, which has landed the wine club in “The Top 5 Best Wine Clubs” on to wineclubreviews.net. If you’re looking to buy wine this holiday season try these new-age offerings.