Vinfolio.com

As any wine collector knows, it's difficult to find all of the fine wine you want to buy from a single wine retailer.  As noted before in Buying smartly from wine retailers, you increase your odds of obtaining scarce fine wines by concentrating your purchases because most retailers make some attempt to reward loyal customers with priority access.

Our approach to cultivating loyalty 

In early 2007, Vinfolio created a customer priority program.  Benefits increase with reaching higher annual spending levels ($5,000, $25,000, and $75,000+).  The prime benefit is priority buying access to scarce, allocated, and/or highly rated wines.  These wines are generally highly sought after but given excess demand, I'd always prefer to offer them first to customers who have demonstrated their loyalty to Vinfolio.  So that's what we do -- in a very systematic fashion.

How it works 

For newly puchased wines that fit our criteria for scarcity and high ratings, we literally offer these wines in three successive 24-hour periods to an expanding group of priority customers before releasing any remaining unsold wine to the general public on our website.  Wines that sell out at a given level are simply not presented to the next level.  When signed in on our website, priority customers are recognized and wine available at their benefit level is made available to purchase.

Moreover, the email notification such customers receive that announces newly available wines is personalized to reflect whether the customer already owns a wine being offered and in what quantity (based on the contents of their VinCellar cellar management software account).

Bottom line: If your retailer is not reciprocating your loyalty in some proportionate manner to your spending level, then take your business elsewhere.

Note: This post was inspired by a book excerpt titled "Loyalty is a Two-Way Street" from a new book called Marketing Metaphoria that was written up in a recent article in the Harvard Business School's Working Knowledge email newsletter.

Do the wealthy think we're in a recession?  Yes (see yesterday's Wall Street Journal story, Wealthy See Recession, Poll Says).

Is it affecting their spending on fine wine? No (based on Vinfolio's growing sales volumes as well as those of some other fine wine importers I know).

Why not? Demand for fine wine is determined on a global basis and other parts of the world are still going strong enough to absorb finite supplies.  Moreover, "spending" really only occurs when you consume your wine.  Until then, you are merely converting cash into another asset class, which in this case is likely to grow in value.

The World of Fine Wine magazine' s latest issue (#19) contains a must-read article called "Every one a critic: The future of wine writing."  Mike Steinberger provides a fascinating, state-of-the-market assessment of what he references as the "twilight era" of Parker.  He makes many valid observations about the inroads being made by what are essentially lower-cost (often free) substitutes for professional (fee-paid) wine criticism.  What's going on and how can the professionals respond?

The "good enough" effect enabled by the Internet

Several trends are at work to shrink the size of the "fee-paid" wine criticism market. There's no question that the Internet has provided a platform for talented amateurs via blogs, forums, and community review websites (Note: Vinfolio is introducing community reviews in our upcoming version of VinCellar).  Many of these reviews (although typically free) can be on a par to those of a professional critic's.  Pragmatically, free amateur reviews need only be "good enough" for the reader to substitute for a paid review.  Moreover, if an individual amateur reviewer is prolific enough and/or focuses his reviews on a particular category of wine, regular readers can calibrate their palates in the same way they do with professional reviewers.

What will happen to the fee-paid wine criticism market

Despite increased competition, there will always be a market for fee-paid wine criticism.  Quality in most areas of life is worth paying for and there's no question that the mainstream professional critics are highly talented.  Moreover, the cost of "paying" (typically $75-$125 annually) is relatively modest compared to the cost of a buying mistake.  However, the "business model" of the professional wine critic may need to evolve to maintain their income.

Advice for professional critics

The theme to my advice is to become more aggressive in disseminating one's professional content to combat the rising "noise" levels.  This can be done in a controlled manner while developing new sources of income to the critic.  Here are some ideas to consider:

1. License content to wine websites and online services -  Vinfolio pays annual fees to Steve Tanzer, Allen Meadows, Roy Hersh, and Richard Juhlin for licensing their wine reviews for specific uses within our free VinCellar cellar management software and within our ecommerce site.  Certain access to full text reviews requires a separate paid subscription to the reviewer's site so we can help drive new consumer subscriptions.  As we expand the utility (uses) of a paid subscription beyond the reviewer's own site, I'd argue that we also increase subscription renewal rates.
2. License content to retailers - If consumers are more reluctant to pay, maybe members of the trade who rely upon the reviews to help sell wine will not be.  Right now, the trade must manually cut-and-paste reviews from the professionals' websites (or otherwise enter data) for what may be thousands of items.  These reviews may need to be refreshed if a review is later updated.  If these reviews were available in an automated way via an electronic API, I believe many retailers would pay material annual fees just to obtain the labor savings.
3. Create foreign language editions - Asian markets are emerging as major wine buyers. Why not offer a Chinese language edition?
4. Generate advertising revenue - Sell online advertising to support access to selected free content.
5. Go "on tour" - Wine critics are analogous to rock stars.  Even if the music (content) is free, fans (readers) pay heavily to attend concerts (wine events).

I could go on but you get the idea.  What would you do if you were a professional critic in this situation?

Buying wine involves a certain degree of trust by the customer in his/her wine retailer. 

A quick definition of "trust"

As succinctly described in The nature of trust from the Slow Leadership blog, "trust" boils down to four key elements:

1. Meeting obligations to protect others' interests (not just your own)
   
2. Acting with honesty and integrity
3. Openness
4. Keeping promises
   

Applying the elements of trust to wine retailers

Here are 10 ways wine retailers can develop that trust and the resulting higher sales derived from it: 

Wine ratings can be a contentious subject and I've already done my own rant on them last year (see How to use wine ratings successfully).  But I wanted to expand further on the last part of that post addressing how retailers use professional ratings.  Here are a few approaches a retailer could use:

1. Show highest ratings selectively - The selective representation of ratings is the norm for retailers.  The goal here is to promote the highest possible ratings but only when above a threshold to encourage buying.  The quality of the source is less important than the number. The actual commentary on the wine may or may not be provided.  A corollary to this approach is that wines with ratings below the threshold are displayed without their low ratings (the theory being that bad ratings are worse than none).
2. Display professional comments without the ratings - The philosophy here is that the descriptions help sell the wine but the ratings might turn people off so hide them from the buyer.
3. Show all ratings, good and bad - This method provides transparency (at least for an identified set of sources). It recognizes that many wine collectors will independently check ratings using their own paid subscriptions to reviewers' sites if none are provided or a rating is missing.  Moreover, as ratings are only one input into a purchase decision, I could easily argue that a poor rating on a wine from a favorite producer creates buying opportunities as price likely reflects less buyer demand.

Deception?

Let's face it.  Methods 1 and 2 are less than totally honest ways of dealing with customers.

Transparency builds trust 

As far as I know, Vinfolio is the only wine retailer who voluntarily offers up all ratings, good or bad, for a reasonably complete set of professional sources.  This transparency enables our customers to make informed purchase decisions without spending extra time looking up reviews and breeds trust in our brand. 

To be fair, taking this approach is easier for us than most retailers because we pay to license all review content from major reviewers such as Stephen Tanzer, Allen Meadows, Roy Hersh, and Richard Juhlin (see today's press release on the addition of Juhlin and our content partners page).  This content is deployed both in our free VinCellar online cellar management software and within our online store.  So whenever we are selling a wine reviewed by one of these parties, the most recent rating from each source is automatically displayed (without censorship!).  See example below:

In addition to our current licensed content partners, Vinfolio also manually adds Robert Parker and Wine Spectator scores wherever possible (and yes, we would be glad to license their content too if we could persuade them to do so).  But the lack of an automated way of mapping their reviews to the wines we are selling means we will always have "holes" for these valuable sources. Finally, Vinfolio also tries to provide its own ratings and reviews whenever there are none from professional sources (or to supplement them).

Bottom line: Which approach to retailers' use of ratings would you prefer as a buyer of wine?  What would you do if you were a retailer and why?

If you could save $50 in shipping costs or $50 on wine purchases but not both, would you instinctively prefer one form of savings over the other? 

Shipping costs are a "hot button" for consumers -- they hate paying them.  Despite saving gas, parking fees, and their time by shopping online for what is typically a much broader selection at cheaper prices, it seems that consumers perceive any shipping charge as a complete waste of money.

But, someone has to pay for shipping.  Fedex and UPS never give it away, even to high volume retailer customers.  The problem with shipping wine is that it's heavy -- 40 lbs a case and more for high-end heavy cabernet bottles or champagne.  While many wine retailers already provide shipping at cost and concentrate their volume with one shipper to negotiate the best discounts on behalf of their customers, it's hard to ship a case of wine cross-country by ground for less than $35-$40.

If the retailer is paying for shipping, then you are probably paying for that benefit in some other way.  There is no "free lunch" in a profit-oriented economy.

The online shopping study summarized in an excellent post titled "New Industry Standard this Holiday Season?" on the Rethink Wine Blog seems to conclude that online retailers believe that they stimulate more sales with shipping-related promotions than a straightforward sale. My own experience in using Amazon's Prime shipping service confirms this as my Amazon spending soared once I signed up (even though it cost $79/year).

Bottom line:  Which option would you prefer, free shipping or wine discounts?  Can the economics of a service like Amazon Prime work in the wine industry given relatively low gross margins, high shipping weights, and nightmarish interstate shipping laws?

If you've ever come across a wine you'd like to buy when reading an online tasting note, blog post, or article, you now have a one-step way to quickly check Vinfolio's wine store inventory using our new browser toolbar add-on for Internet Explorer 7 or Firefox 2.  Click here to read more (and to access a link to install it into your browser toolbar).

Remember, even if we don't have the wine you're searching for in inventory, you can click a "Get quote" button which submits a no-obligation request for us to try to locate the wine for you and respond with price and quantity available.

In addition, clicking a wine name within our wine store brings up a "detail page" with other useful information, including the U.S. retail average price (derived from data supplied by Winesearcher.com) and the latest auction price data drawn from Vinfolio's Wine Price File.

Acker Merrall Condit's PR firm sent out an email yesterday (which I've replicated below) that is offering an entire cellar (see "The Man with the Golden Cellar" catalog), claimed to be among the world's top 3, for a mere $20 million. 

I've discussed the trend towards the purchasing of "instant cellars" in prior posts (see Sold for $1.05 million! and "Instant" wine cellars vs. developing a wine advisory relationship) but the sheer audacity of this proposal is to be admired.  In this case, which is Acker's first attempt to sell an entire collection, Acker's CEO John Kapon says (on page 11 of the catalog) that he is doing so because he considers "this collection to be a work of art" and that there should be a chance to keep it together.  He also acknowledges it might create some buzz (he's right).

While it would be a major exercise to perform a "sum of the parts" valuation of the component wines in the auction, I suspect the $20 million figure reflects a healthy premium to any such analysis give the reference to "a work of art."  However, I would also not be surprised if a wealthy Asian buyer emerges and pays the tab.  After all, it would sure save a lot of time and effort, not to mention generate instant credibility in the wine collecting world.  The credible alternative of selling the wine via an auction also focuses the mind of any buyer to act by the October 17th deadline or the opportunity will be lost forever.

Contents of the October 4, 2007 Email Sent by Acker's PR Firm

The bull market for fine wines shows no sign of retrenchment. The London International Vintage Exchange Index - an index of the top 100 investable wines - rose 42% in 2007-- trading at its highest level since its inception in 2000. Prices on the most sought-after vintages shot-up by 90% this past year, and new investors from Russia, China and the rest of Asia, are clamoring to get into the game in even bigger ways.

Now, for $20 million, a single investor can instantly become one of the world's undisputed top collectors-overnight.

Beginning October 5 through the 17th, the New York-based wine retailer Acker Merrall Condit (host of the world's largest-ever wine auction in 2006, which grossed $24.4 million) is looking to break new ground this year by offering a single buyer the opportunity to acquire one of the world's masterpiece wine collections in its entirety. Impeccably curated over decades and ranked as one of the world's top-three collections, it aggregates a portfolio of 1,500 of the best-of-the-best wine lots (roughly 12,000 bottles) that closely track the Liv-ex Index.

If no single investor steps up by October 17, the collection will be sold at a blockbuster auction attended by Wall Street high-rollers and international investors at New York's internationally acclaimed, Le Bernadin restaurant on October 19 and 20. Absentee bidding is expected from around the world via web and speaker phone.

John Kapon, president and CEO of Acker Merrall Condit, says that many of the investors he meets love to collect wines and to share a bottle with colleagues and friends. Aside from the high-yield on their investment, fine wine is a potent business tool, helping to cultivate and cement key relationships. "This collection is so extraordinary, the wines so rare, that it couldn't be recreated over a single lifetime. It's truly one-of-a-kind, like a Picasso."

John Kapon is available to discuss all details of the collection and auction. Let me know if you're interested in speaking with him.

Thanks for your consideration.

Why do wine collectors lose their economic wits and overpay for wine sold at auction that can be purchased for much less from reputable retailers?  They're literally throwing money away.

Possible reasons for overpaying at auctions

1. Excellent provenance is worth paying a premium to obtain but how much of a premium?  Would you pay 20% more?  100% more?  The premium may vary based on how long a period the wine has been "protected" (see an earlier post called The wine authenticity premium).
2. The desire to "win" overtakes rationale behavior.  Drinking during the auction itself (which can be encouraged) doesn't help maintain clear thinking either.
3. You miscalculate the per-bottle price being paid because your bid needs to factor in the quantity of bottles in the lot, fixed bidding increments, and buyer's premiums.
   
4. The stated "uniqueness" of the lot helps you rationalize paying more to get it.  Perhaps you're not aware of where else you can buy the same wine from a reputable source.  The same people who sell their collections through auction houses often prefer the market pricing, privacy, and speed of selling their collection outright to a retailer or other member of the wine trade.

Example of recent Zachys Stormby celler auction of Yquem

On September 28, 2007, Zachys held its auction of Dr. Nils Stormby's cellar.  The catalog documents the provenance of the wine and it's about as good as it gets.  Still, the prices paid by collectors were significantly higher than estimates, with the large Yquem section of the sale achieving two to three times its estimates (see Decanter story "Yquem collection goes for US$2m at Zachys Sale").

Yesterday, I received an email from the Antique Wine Company (AWC) in London, pointing out that their enormous selection of 1,372 bottles of Yquem was far more attractively priced in comparison to the prices paid at the Zachys auction (with numerous examples of vintages such as 1916, 1929, 1953, and even 1967 where AWC prices were about half or less).   Stephen Williams, the Managing Director of AWC, called me today in response to my inquiry and cited certain examples, such as the 1929 Yquem, where AWC's bottles were more pristine than Zachys' photos and condition descriptions.

Bottom line: Wine collectors should check retail sources in advance of bidding at auction to understand market alternatives and/or tap a more convenient (immediate) purchasing method.  If you missed out on any Stormby Yquem lots, it's not too late to get the same wines - just give AWC a call (especially for older vintages) or ask your favorite fine wine retailer.  For older vintages, you should also ask about provenance and to see condition photos.

The press has been filled with stories about counterfeit wine in the past few months.  Any solution for absolute authentication needs to start with the wine producer for obvious reasons.  But for a solution to be workable for the trade and consumers, a simple method for them to verify the wine's authenticity is needed.  A security seal called Prooftag (adopted by Blankiet Estates and some Burgundy/Bordeaux producers) meets this test whereas Kodak's offering (adopted by Colgin, Vineyard 29 and Staglin, see press release) does not.

Overview of Prooftag technology

Prooftag is tamper-evident strip (about 1 cm wide and 5 cms long) which is applied to run from the foil capsule onto the bottle.  The technology works on a three dimensional signature called bubble tags that are made from a clear resin which create bubbles in unique (random) patterns during a hardening process.  Read more about why these tags are impossible to reproduce.

Tags also have a unique number assigned and both are then scanned with optical readers when created (by the manufacturer, French company Novatec) and recorded in a central database. 

The key advantage of Prooftag - Easy verification

There are 3 levels of "controls" to verify tags.   The first level is based on a quick visual inspection.  See example to right where the top image is an original strip and the lower one has been tampered with.  The strip might also be ripped.

The second level of control requires using the identifier on the tag to retrieve the unique bubble pattern image from the company's database.  Simply visit this authentication page, and enter the identifier (click here for the animated tutorial).  According to the company, over 99.95% of people tested can complete a visual authentication in a few seconds.

For the trade, optical readers that use an algorithm to calculate a signature for each bubble tag (analogous to how fingerprint readers work) can then be connected to the company portal for electronic authentication.

Possible issues with Prooftag's solution

I presume simply peeling off the strip (even if it remained unripped) would create the damage shown in the second image above (although I didn't see this scenario proactively addressed on the company site).

What about the long-term "stickiness" of the label in varying cellar conditions?  If for some reason the Prooftag came off accidentally, it could render the bottle valueless.  It seems likely this use case has also been considered.

Potential flaws in Kodak solution?

Kodak's system is based on applying invisible markers to printing inks, paper, and other packaging elements.  But these invisible markers are only readable with proprietary handheld readers.  Putting aside the low probability of an individual collector ever buying a reader, trade members might still do so if they care about selling authentic bottles.  The problem is when Vinfolio inquired about obtaining a reader for this purpose, we were told that they're available only to customers!  Huh? This virtually defeats the benefit of marking the bottles at all.  

The other obvious flaw with the entire Kodak approach is that it does nothing to stop a counterfeiter from refilling a bottle with something else (unless the markers are in the foil capsule and it is not resused after a bottle contents are replaced).

Bottom line: Wine producers deciding between these and other anti-counterfeiting options need to consider how the trade and consumers will interact with the technology.

P.S. Here's a link to the Decanter.com article which prompted this post.

How long should it take for wine purchased on pre-arrival coming from Europe to be received by your retailer?

A recent thread on the Mark Squires Bulletin Board on eRobertParker.com titled No longer a fan of Premier Cru attracted over 100 posts and I was struck how many times this issue was raised, often in the context of wines long since released such as 2003 Bordeaux.

Factors affecting timing

• In stock status at supplier at time of retailer's purchase (is it a supplier pre-arrival too?)
• Payment to supplier by retailer (no wine is released for pick-up until payment)
  
• Collection of purchase by retailer's logistics partner (should be within 1-2 weeks of payment)
• Frequency of container shipments (typically every 4-6 weeks)
• Time "on the water" (typically 30 days to California from Europe)
• Time to process the container contents upon arrival (10 days max)

Other than Bordeaux futures purchased at the outset of a new campaign (which should be 18-24 months max), most pre-arrival purchases should arrive within 3-6 months from Europe.

Why it might take longer than 3-6 months

1. Known period before supplier receives wine - If the wine was not in stock at the supplier when purchased, your retailer should be told the estimated time before the wine is available for pick-up (trade sources expect to be asked this question in this situation).
2. Did your retailer have a written invoice confirming his supply before selling the wine to you? If your retailer was speculating by offering wine for sale that he would try to "backfill" later once he'd sold it to you, then you're dealing with the wrong retailer.  This circumstance would also explain extended delays for wine long since released  (such as 2003 Bordeaux) as the pricing of supply could have moved against the retailer since he sold you the wine.  The longer he defers fulfilling your order, the longer he defers recognition of his loss.
3. Supplier defaults - The supplier may not have honored his written commitment to your retailer (or may be experiencing his own delays receiving the wine from his source).  There are a variety of reasons this could happen but as the customer, it shouldn't be your problem even if the wine ends up needing to be sourced elsewhere at a loss to your retailer.  However, depending on the scarcity of the wine, it might add a few months to the delivery period.  Any period beyond a few months is not reasonable absent a specific explanation of what happened.

Bottom line: If you're experiencing longer delays than 3-6 months and are not provided with specific reasons, then you can assume your retailer's slow payment is at fault as everything else is fairly predictable.  If you agree with my hypothesis, you should at least consider whether you're comfortable with being a creditor to your retailer when the evidence indicates a "stretched" financial condition.  The longer the delivery delays, the more concerned you should be.

Related posts on pre-arrivals

1. Why buying pre-arrival wine makes sense
2. Wine futures and pre-arrivals: what's the difference?
   

Whether to buy wine on sale depends on why the wine is “on sale” and whether the final price is really “below market.”  Here’s a quick guide to when the retailer’s rationale for a markdown makes sense for the consumer and when it doesn’t:

Deal

1. The retailer has a small quantity of a well regarded wine left that he wants to clear.  This is a common occurrence but don’t expect to get a full case or even six bottles.
2. The retailer obtained a volume discount and is passing along the savings.  Note that many fine wines are hard for the retailer to purchase “in volume” so the higher end you go and the smaller the wine’s production, the less likely this is to occur.
3. The wine is selling too slowly at its initial price so the retailer is cutting the price to recycle his capital into faster moving items
4. Fine wine with cosmetic damages to labels or capsules may be discounted as their resale value by the collector has been negatively affected but that doesn’t matter if you plan to drink it.
   

Not a deal

1. Everything at the retailer is “on sale” all the time.  Usually this means the “initial price” is a sham and the sale price is often comparable to normal prices elsewhere.  This marketing approach plays on consumers’ desire for getting a bargain even when it isn’t one.
2. The wine is past its prime, increasing the risk that its taste is negatively affected.
3. The wine is just poor quality with a low price that reflects it.
4. Identified bottle conditions indicate potential damage to the wine itself (as opposed to cosmetic flaws).
   

Final price check worthwhile

Ultimately, if you’re inclined to buy an “on sale” item, you might wish to go online and check one of the wine price comparison sites like Winesearcher.com to see how the pricing stacks up with alternatives.  You should also weigh the value of factors such as shipping costs, any wine guarantee offered, and the reliability of the retailer in your decisionmaking process.

Bottom line: Take advantage of the right sale opportunities to extend your buying power.  

P.S.    Here’s a link to Vinfolio’s sale items which are almost all in the category of “well regarded wine with small quantities available.”

The Wine Spectator's Peter Meltzer addresses this topic quite well in a recent post in his Collecting Q&A online column (read it before continuing -- it's brief).

While auction houses tell you that you're buying "as is" and one could argue that the detailed disclosure of every fill level, label tear and other bottle condition is meant for you to factor this information (and any risk it may imply) into your bid amount, Peter's right that auction houses are empowered to make exceptions to preserve buyer relationships.  A lesser known fact is that their contractual agreement with the seller enables them to pass any liability incurred from accepting such a return back to the seller.

Every major auction house sales contract that I've seen has a "rescission of sale" clause.  This enables the auction house, usually in its "sole judgment", to accept a customer return for a variety of issues (including quality) and rescind the sale (meaning the seller doesn't get paid or reimburses the auction house if he's already been paid).  Whether the auction house actually bothers an important seller client for what may be a small adjustment is another matter but they have the recourse to do so.

On a related topic, you might enjoy reading an earlier post from 2006 called "Returning faulty wine to retailers."

P.S.    The photo is of a 1976 La Tache that you would not want to have received.... 

Buying wine on pre-arrival often gets a bad rap as in a June 5, 2007 article appearing on Wine Spectator Online titled "Pre-arrival wine purchases are only for patient people."

Definition of Pre-arrival

"Pre-arrival" is a term used to describe wine offered for sale prior to its arrival at your retailer.  Why would your retailer do this?  Because faster sellthrough of inventory creates a better return on capital which in turn keeps consumer prices lower.

Pre-arrivals can be created when a retailer buys wine from any source if the retailer chooses to begin selling before the wine has arrived.  Sourcing from a local distributor or directly from a producer (e.g., a Napa winery) simply means a shorter wait (a few days to a few weeks) than if the retailer sourced the wine directly in Europe (which could take 3-6 months or longer).

Reasons to buy pre-arrivals

1. Snooze, you lose - It's common industry practice for highly sought-after wines to be sold as pre-arrivals.  If you wait, you may not be able to buy the wine later at similar price levels (or at all).
2. Lower prices - There are various reasons contributing to lower prices such as (a) better retailer capital utilization and (b) the fact that there are often fewer parties (and mark-ups) involved in the supply chain.
3. If you're cellaring the wine anyway - For most collectors, much of what they buy on pre-arrival is not for immediate consumption and will be cellared.  Therefore, whether the wine arrives in one week or six months is generally less important than securing the wine at a good price.
   

Areas of confusion

1. Futures vs. Pre-arrivals - The term "futures" is analogous to "pre-arrival" but is normally associated only with new releases.  See a prior post (Wine futures and pre-arrivals: what's the difference?) for a full explanation.
2. Type of wine - Pre-arrivals may apply equally to newly released wine or a 20-year old vintage.  For example, Vinfolio routinely sources both newly released and older vintage wine in Europe and sells all of them on a pre-arrival basis.
3. Free retailer use of your money - Most people I speak to about pre-arrivals bring this point up.  There is no such retailer benefit (at least for a reputable retailer).  Speaking for Vinfolio, our standard is to pay all international sources within 15 days of making our purchase commitment (and sometimes we do so immediately to secure a parcel others are competing to buy).  Payment is clearly required before foreign sources will release wine to our logistics partners.  The sooner it is released the sooner our customers get it.  Receiving their wine, in turn, tends to generate further orders.

Questions to ask your retailer

1. When is the pre-arrival expected?  How often are the retailer's estimates wrong?  Vinfolio provides timing estimates for every pre-arrival wine in our online wine store.  There are some factors the retailer cannot completely control which is why they're only estimates.  If you absolutely need wine by a fixed date, either avoid a pre-arrival purchase or ask your retailer when the wine is arriving before your buy (and give yourself some extra room for delays).
2. Does the retailer have a written invoice confirming its own purchase from the supplier?  There are retailers who broker wine they don't own (and don't have on reserve with a supplier) on the theory they can backfill the supply based on orders received.  When they can't, your order tends to get cancelled.
3. Are you notified proactively by the retailer upon the wine's arrival or is the responsibility yours to remember to chase them?  Vinfolio emails customers automatically when wine is received in our warehouse.  Customers may also check order status online or call/email our Customer Service department any time.  For many other retailers, the onus is on the consumer to manage their records and remember to chase the retailer until their wine is delivered.  Note: Vinfolio's free online VinCellar software is designed to handle tracking pre-arrivals from any retailer as part of its capabilities.
4. What's the retailer's history of failing to deliver and what are you offered as compensation in such a circumstance?  If the market value of a wine has appreciated since you ordered it, getting your money back is an inadequate remedy for the retailer's failure to deliver.  While we have not had to invoke it, Vinfolio has a published policy described in our terms (listed on our site) which includes a 125% refund.  

Conclusions

Pre-arrivals generally serve the collector well but understanding how they work helps set appropriate expectations.  As the Wine Spectator Online reporter discovered, where you buy your pre-arrival also makes a big difference to your experience.  For advice in that realm read my prior post, "Criteria for selecting a good wine retailer".

Yesterday's article, "Are ratings pointless?", in the San Francisco Chronicle provided an in-depth analysis of the 100-point wine rating scale.  The short answer to their rhetorical question is "no" but let me explain how I think about the use of ratings and the key underlying factor driving consumer interest in them.

Why wine consumers want ratings - Reviewer "triage" is a proxy for their own effort

The sheer volume of fine wine produced annually overwhelms the individual consumer's ability to determine what to buy based on his or her personal preferences.  By leveraging the time of reviewers with respected credentials, the resulting ratings and wine descriptions provide an invaluable service by helping prioritize buying decisions within a finite budget.  The consumer's goal is spend his or her money wisely and to achieve maximum drinking pleasure while avoiding outright buying "mistakes."

Determining which rating sources to trust 

Rating sources don't have to be preeminent professional reviewers like Robert Parker, Stephen Tanzer, or Allen Meadows.  As my post of only two days ago highlighted (see What influences your wine purchase decisions?), "wine-knowledgeable" friends are the most frequently mentioned source of influence (72%) followed by wine retail staff members (61%).  The consumer only needs to perceive the rating source as having a good probability of having made an accurate assessment.  This probability assessment or "trust index" is essentially the result of a personal calibration process between the individual consumer's subsequent experiences with wines reviewed by a given source and the level of agreement between the consumer's opinion and the source's.  That's why friends and retail store staff "compete" well against professional reviewers.

Personal taste ultimately trumps professional ratings

The same post I referred to earlier also notes that 87% of consumers agreed with the statement "I trust my own taste more than I do the wine critics."  While there are "score chasers" out there who seem to fall into the other 13% bucket, this extremely high agreement rate indicated that most consumers use wine ratings as a mere input to their purchase decision process.

Use of professional ratings by retailers

Most retailers selectively present only the highest rating, from whatever source they can find, to provide a positive buying rationale to a consumer. This has always irritated me as the source may not be one I "trust" most for the type of wine in question, and even if it were, more information, including divergent opinions from other trusted sources enable me to make a more informed purchase decision. 

That's why Vinfolio shows multiple rating sources whenever we can find them such as the example shown on the right for a $200+ bottle of Kistler pinot noir.  Even if you trust the Wine Advocate, the wine divergence of views on this wine (from Burghound, Tanzer's International Wine Cellar, and the Wine Spectator) will interest you.  Upon reading the text reviews (achieved by clicking on each box when on our site), you may choose to discount selected opinions or not. 

Your opinion

Please feel free to add your own comments on how to use wine ratings successfully.

When I launched The Wine Collector blog back in late October 2006, I stated that one thing I would not do is write wine recommendations and reviews in my blog.  Doug Wilder, our Director of California Acquisitions and Sales, was already writing about California and other domestic wine in his Free Run Juice blog and in his free weekly wineletter, The Wilder Side of California. 

Now, I'm pleased to announce that we recently launched the Vinfolio Staff Picks blog where our collective team of wine experts will tell you about their personal favorites on a regular basis and why they like them.  Generally speaking, the wines covered will mostly be international wines to balance out the coverage which Doug provides on the domestic side.  In addition to reviews and recommendations, the Staff Picks blog will cover other topics relating to drinking wine and having fun.  Laura Conway, our Editorial Manager, will be the blog's facilitator (that's her photo on the right).

Please check it out and subscribe via your RSS reader using the Subscribe link on the blog's home page.  You can also see all of our RSS feeds (and subscribe by email if you prefer) by visiting Vinfolio's master RSS page. 

Note: I just noticed that the new Staff Picks blog is not yet on the master RSS page but we'll get that fixed quickly.

Wine clubs, those subscription-oriented wine-buying programs offered by wineries and others to broaden your taste horizons are usually defined by the following basic characteristics:

1. Monthly or quarterly shipment frequency
   
2. Fixed price for a specific number of bottles, usually with a predetermined contractual commitment
   
3. A thematic element for each club which defines the type of wine you'll receive
4. All subscribers to a given club get the same wines (or drawn from the same limited subset of wines)
   

Flaws in the traditional wine club model

1. Targeted at more novice wine enthusiasts - To keep the price per shipment down, the vast majority of wine clubs select relatively inexpensive wine as subscribers tend to have less wine knowledge and are therefore more price sensitive.
2. Pricing structure is not transparent - There's an inherent conflict in the pricing structure because you sign up to pay a fixed price for some number of bottles.  The club operator, however, wants to minimize his costs so he can make a profit.  The component bottle prices in your shipment are never provided.
3. "One size fits all" - Other than generic criteria associated with what types of wine fall within the typically broad parameters of your selected wine club, you get the same wines as everyone else who signs up.  Buying the same wines in volume is how most operators make their money.  The need to have enough of the same wines often precludes smaller, boutique wines from being obtained.
4. Wine "dumping ground" - Wineries may package wine that isn't selling to move through the club as it's a "guaranteed" channel.
5. Inflexible - It's hard to skip a shipment without cancelling (which may not even be possible).
6. Weather conditions when shipping wine ignored - Extreme temperatures, hot or cold, can cook or freeze the wine in your shipment.  Operators should not blindly ship wine on the appointed schedule regardless of weather but most do.
   
7. Notice of forthcoming shipment not provided - Wine must be signed for by an adult.  If no adult is home, the wine shipment will sit for one or more days in a non-climate-controlled delivery truck or warehouse.
8. Customer service generates cancellations - Operators seem to believe that reminding subscribers of their forthcoming shipments or providing other notices just stimulates cancellations so they minimize such interactions.

Vinfolio's personal wine clubs

When Vinfolio decided to offer its version of wine clubs, we sought to address the flaws above.  Our fundamental premise is that a wine club is simply a more efficient means for many consumers to receive personalized advice on what to buy.  While our customers may call their Executive Wine Specialist (EWS) for individual recommendations at any time, they may be too busy to do so.  So capturing their detailed individual preferences for their EWS to use in hand-picking their wine, and pre-agreeing to a flexible schedule of shipments is simply more convenient and saves them time. 

In short, we view wine clubs as merely a customer's preferred or supplemental method of buying wine from our retail business where each and every order is tailored to an individual's preferences, where our entire inventory is available to select from, and where the shipping/delivery options are sensitive to weather conditions or the temporary inability to receive a shipment (for whatever reason).

Key elements of Vinfolio's personal wine clubs

1. Suitable for all knowledge levels - Our program is designed to serve all wine knowledge levels from novices to experts.
2. Complete customization - Customer's club choice is amplified by any specific preferences desired.  E.g., mix of red and white wine, price range per bottle, preferred (or disliked) producers, varietal preferences (or dislikes), etc.
3. Unique wines per customer from large inventory - Customer's assigned EWS hand-picks wine drawn from Vinfolio's complete retail wine inventory of almost 2,000 wines before each shipment which meet the criteria.  
4. Transparent pricing model - The price of a shipment is simply the total of published retail prices of each wine selected (constrained by price range per bottle specified) plus shipping costs.
5. Vinfolio's "finer" customer service - One week prior to a shipment, we email a reminder so the customer has plenty of time to modify preferences, skip a shipment, request a different ship date, ask for the wine to be added to free storage for later shipment, or cancel altogether.  Weather holds are automatically applied if conditions do not permit the safe shipment of your wine (just as we do with all retail purchases)
   
6. VinCellar integration - All items purchased are automatically added to the customer's VinCellar online cellar management software account (also standard for any retail purchase).

If Vinfolio's redefined, personalized approach to wine clubs appeals to you, learn more.  It's really just a more structured way to build your wine collection and to try wines you might not otherwise buy.