Fragmented Wine Market in NYC

But this does raise another question for me. If you consolidated the portfolios of 100 of those importer/distributors into 5 big companies, would that work better?
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This is why Southern entered the New York market.
 
originally posted by .sasha:
And if this is also true in the parallel wine universe, then why isn't this an opportunity for the artisanal banker? :-)
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Oh, you know it would be, but it is the one-wine problem. Deal is too small for the vig to matter!
 
originally posted by SFJoe:

And how many of those companies are there? Maybe each restaurant/retail shop just talks to 20 of the tiny ones and we shouldn't expect as much overlap in stock from place to place. That could be pretty cool.
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That actually hasn't happened, and I think it is interesting to consider the reasons why it hasn't. Because that's right, that is what you would think might happen.
 
originally posted by SFJoe:
Maybe each restaurant/retail shop just talks to 20 of the tiny ones and we shouldn't expect as much overlap in stock from place to place. That could be pretty cool.
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but then your Sat night diner from [name favourite adjacent state] would not be able to find the wine they looked up in the Spectator, on the list. That would be horrible.
 
originally posted by SFJoe:
originally posted by fatboy:


isn't it the oldest story in history that it all looks done and said to the closed mind?
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If you have a binary cast of mind, probably.

But ten more guys going to the Dive probably aren't going to turn up 10 more Guy Bossards. And I bet there aren't undiscovered Chaves in Hermitage with hundreds of years of history.

The returns have diminished to zip in some regions. So people have to look elsewhere, at least you hope so. Alternatively, people bring in crappy producers from the same old places. You can find some pretty bad wine from the Jura in NY these days without looking too hard.

But I still wonder how many reps someone with a small program wants to see in a month.
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I wouldn't worry about these people. They are doing something they love and probably getting good compensation for it, at least better than what some of us schnooks have to do for a living. And there are only so many stellar producers in an area and those undiscovered areas are becoming harder and harder to locate. Eventually there will be blood, but the wine market is still growing so maybe a rising tide lifts everything and there are enough hipsters out there who want to drink all the cool weird stuff?
 
originally posted by MarkS:
originally posted by SFJoe:
originally posted by fatboy:


isn't it the oldest story in history that it all looks done and said to the closed mind?
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If you have a binary cast of mind, probably.

But ten more guys going to the Dive probably aren't going to turn up 10 more Guy Bossards. And I bet there aren't undiscovered Chaves in Hermitage with hundreds of years of history.

The returns have diminished to zip in some regions. So people have to look elsewhere, at least you hope so. Alternatively, people bring in crappy producers from the same old places. You can find some pretty bad wine from the Jura in NY these days without looking too hard.

But I still wonder how many reps someone with a small program wants to see in a month.
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I wouldn't worry about these people. They are doing something they love and probably getting good compensation for it, at least better than what some of us schnooks have to do for a living. And there are only so many stellar producers in an area and those undiscovered areas are becoming harder and harder to locate. Eventually there will be blood, but the wine market is still growing so maybe a rising tide lifts everything and there are enough hipsters out there who want to drink all the cool weird stuff?
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I'd also add it's the allure of the exclusive that keeps a lot of these folks in business.
 
originally posted by fatboy:
david ridgway
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This guy?
Ridgway_retouched_background_downsized.jpg
I googled, but all I came up with were people who look like pictures from Dressner's blog.
 
It's also worth clarifying that the piece I wrote was not about whether or not a new importer could find quality wines to import. What I addressed was market access, sustainability, and legal setting.

I actually have no doubt whatsoever that new importers can find quality wines to import.
 
originally posted by SFJoe:
originally posted by Kay Bixler:


Consolidation would certainly turn our beloved hippy wine into a numbers game and a fast race to the bottom.
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Well, at some point, sure. But one pallet of wine won't feed the sales rep, either (unless she is also the producer, perhaps?). So there is probably some optimal scale for the 3-tier market and small producers, where the reps have a few things to talk about, give enough attention to each wine, but still move enough stuff to pay the rent. I wouldn't send CRB to Southern.
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Kermit Lynch and Jose Pastor (among others) are with Southern in the WA market. Weird to think that I buy Ganevat from Southern.
 
originally posted by Brian C:
originally posted by SFJoe:
originally posted by Kay Bixler:


Consolidation would certainly turn our beloved hippy wine into a numbers game and a fast race to the bottom.
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Well, at some point, sure. But one pallet of wine won't feed the sales rep, either (unless she is also the producer, perhaps?). So there is probably some optimal scale for the 3-tier market and small producers, where the reps have a few things to talk about, give enough attention to each wine, but still move enough stuff to pay the rent. I wouldn't send CRB to Southern.
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Kermit Lynch and Jose Pastor (among others) are with Southern in the WA market. Weird to think that I buy Ganevat from Southern.
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And the Vintner Group/Country Vintner distributes Rosenthal in a couple of states after having bought the companies that were originally charged with the distribution of the wines.
 
so how much does pricing vary on wine X, given all these extra legs in the distribution process?
To be honest, I have not nailed down a clear pattern yet. Perhaps too many intervening factors, geographical, etc.? But I've paid less for a bottle of wine distributed in a nearby state than I would have at an importer's own boutique shop, that's for sure.
 
From afar in VA, I get the impression that that's why Seven Fifty has taken off in NY. It certainly would be time consuming to read every importer's book, but you could theoretically know every wine that is available to you without having to take appointments. Again, I don't actually know the specifics of a wine buyer's relationship with the service, but I'd assume it cuts down on the need to take appointments with reps for importers you are already know you like. Theoretically that could allow you the time to entertain at least an initial appointment with a new face.

I would guess that one of the largest problems/barriers for shops and restaurants who want to deal with so many importers would be handling deliveries and/or meeting minimums, if they have them. Perhaps the answer is to offer a consolidated warehousing and delivery service - someone notify the artisanal banker. This adds to the cost of doing business, but perhaps being able to receive an order from 10 importers as if it were one would be worth it for all involved.

It's worth mentioning that I think this may be a uniquely NY problem, with a few possible exceptions. I get the impression that in most other states, consolidation already exists on a small, comfortable scale. Kermit Lynch, LDM, etc. don't self-distribute in every state (wouldn't be worth it), but they act as national importers for their producers. They end up finding someone to distribute on their behalf outside of NY or CA (K. Lynch). In some cases, as Brian mentioned, it is a large national consolidator of sorts, but at least here in VA, they tend pair up with like-minded small importers.
 
In a best case scenario, a large company would continue to operate as an umbrella over smaller portfolios, with concentrated areas of expertise and relationships with growers/clients rich in subject matter.
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This sounds like Darroze and armagnac.
 
I saw Zul/Luca M last weekend and at least one hipster Italian wine mover is not solely looking to move wine to NYC but also to countries that are not served by Kermit and LDM. One wonders whether Pascal/Patrick/Arnaud (or Arianna/Bartolo/Giuseppe) might be more willing to make an appointment with someone moving wines to nonUS markets rather than another Brooklyn hipster.
 
originally posted by SFJoe:
The big organizations can't innovate their way out of a paper bag. Some of them keep their internal R&D going so they have someone to evaluate the external stuff that they have to buy because the internal guys can't come up with anything.
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Too true - and you said this more succinctly than I have previously.
 
originally posted by slaton:
originally posted by SFJoe:
The big organizations can't innovate their way out of a paper bag. Some of them keep their internal R&D going so they have someone to evaluate the external stuff that they have to buy because the internal guys can't come up with anything.
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Too true - and you said this more succinctly than I have previously.
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And then there's Lilly.
 
Although no one has told me what the right number of wines per rep should be, or how you calculate it.

I haz sad.
 
originally posted by SFJoe:
Although no one has told me what the right number of wines per rep should be, or how you calculate it.

I haz sad.
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Well, there are divergent examples that you could compare, if you would like. If you would like to purchase 2007 Classed Growth Bordeaux Rouge already in bottle, there are a small amount of distributors who handle that kind of product. Those that do have wide offerings of that kind of wine. And then there is the auction market. But if instead you would like to purchase a 2007 Etna Rosso, you will find many different distributors that carry only one producer each. And there is nothing in the auction market. So that becomes a very different type of buying relationship if you are developing a list with a wide selection of the genre.

On the one hand you are talking to 3 companies, on the other you are talking to 30. In one case it is much easier to get a wide range of samples to taste side by side. In the other that is basically impossible. In one case you schedule 5 appointments a year, in the other you schedule 10 or more a week. Delivery minimums are easy to meet with grouped orders on one hand, possibly difficult on the other.

There are identifiable real world case studies that could be examined.
 
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