Tag Archives: Forbes

Total Wine and the Amazon of Liquor

Amber LeBeau in General, Shopping for Wine

Published on January 23, 2019

Followers of the SpitBucket Facebook page know that I’ve been closely watching the Tennessee Wine & Spirits Retailers Association vs. Blair Supreme Court case. It just wrapped up oral arguments on January 16th.

Photo by Miosotis Jade. Uploaded to Wikimedia Commons under CC-BY-SA-4.0

It’s been my hope that the Supreme Court would issue a broad ruling that would expand on 2005’s Granholm v. Heald, opening up online sales of wine across state lines. Few things frustrate me more than trying to locate a wine that none of my local shops carry. If I could buy freely online from out of state retailers, that wouldn’t be an issue.

This was a large reason why I also donated and signed onto Wine Freedom’s Friend of the Court Brief for Byrd.

As oral arguments were finishing, it wasn’t long before analysis from in court observers trickled out. While it seems likely that the Court is going to strike down Tennessee’s residency requirement for retailers (which is at the heart of the case), legal experts like Sean O’Leary, the Irish Liquor Lawyer, predicts that the ruling is going be narrow and not tackle the broader issue of consumer freedom.

And that likely will be because of one of my former employers–Total Wine & More.

The Amazon of Liquor?

I have no particular knowledge about Total Wine & More’s involvement in Tennessee or the Supreme Court case apart from what has been publically reported. When I worked there, I was only a sales floor associate, wine class educator and new store trainer. Essentially just a worker bee, if you will.

But even with my very limited insight, there was one Supreme Court exchange that O’Leary related to Forbes contributor Liza B. Zimmerman that jumped out to me.

O’Leary also thinks that the scope of the case has also remained narrow as the attorney for Total Wine—a large enough chain that interstate shipping is not key to their profit model—refused the invitation to go towards a discussion of direct-to-consumer sales. He adds that “Justice Gorusch challenged him and said ‘But isn’t the next business model just to try and operate as the Amazon of liquor? ‘ ”

In response, O’Leary says that “Total Wine’s attorney indicated that his client wanted to operate as a bricks-and mortar [store] and wants to be subject to Tennessee’s laws.” The long-term goal for the chain would be to “not to be discriminated against.” — Liza B. Zimmerman, Forbes.com 1/20/2019

Sidestepping or Something Else?

This “Amazon of Liquor” exchange has been featured in multiple reports on the case. It is often coupled with surprise at Total Wine’s demuring from aggressively fighting for online consumer channels. The initial response seems to be that Total Wine was sidestepping the issue.

The New York Times even noted Justice Elena Kagan’s skepticism to the answer of Total Wine’s attorney that those broader issues could be debated another day.

“Well,” she said, “we’re leaving a lot of things for another day, but they all seem to be demanded by the principles that you’re asking us to adopt.” Elena Kagan, as reported by Adam Liptak of The New York Times, 1/26/2019

While I’m disheartened at the likelihood of a narrow ruling, Total Wine’s stance doesn’t surprise me in the slightest. That’s because the mythos of Total Wine having eyes on being the “Amazon of Liquor” is way off course.

In fact, their entire business model is actually seriously threatened by a broad ruling opening up online sales.

Face-To-Face Contact

Many wine lovers don’t know about David & Karen Dunphy’s 16 x 20 Wines. They only make a few hundred cases and have limited distribution.
Total Wine trains their associates to listen for clues so they can add-on bottles from small producers like this.
So if they hear that a customer enjoys Paul Hobbs’ winemaking, they may suggest the Dunphy’s wine.

Again, these are just the observations of a former worker bee. But from my past experience, the strength of Total’s business model doesn’t translate well to online sales. Total Wine only succeeds if people physically walk into their stores and interact with their associates.

Total Wine’s model is built around three pillars–low prices, large selection and customer service. They utilize the first two pillars to get people into the store. Then they rely on their staffing to deliver on that third pillar of service.

Associates are trained from day one to work on building relationships with customers, listening to their likes and dislikes. They are instructed to use that feedback to “build the basket”. This is essentially recommending new wines that the customer may not have had yet and to keep adding bottles.

If someone comes in looking for a particular wine, the goal is that they don’t leave with just that one wine. Hopefully, they will have at least 2-3 more bottles of something new to try as well.

Often these extra bottles will be small producers and limited releases that Total Wine seeks out to bolster their selection. It’s the associate job to listen to the customer and make strong recommendations of wines they’ll like. The hope (and key to Total’s success) is that the customer returns looking for these new wines.

But That’s Hard to Do With Online Sales

Total Wine’s best leverage of their large selection is by having customers fall in love with wines that they can’t find easily elsewhere. That’s not likely going to happen without face-to-face contact and relationship building by their staff.

While I don’t have any concrete data, I strongly suspect that people who go to a website for a particular wine likely only buy that one wine. Anecdotally, this was often how the online orders received at the stores I worked at played out. As an associate, these “in-store pick up” and later Instacart delivery orders were sources of endless frustration since our ability to build relationships with these customers was near non-existent.

Without building relationships, learning customer’s tastes and being able to “build the basket”, Total Wine’s strength as a major retail player is significantly reduced.

In fact (and, again, I have no special insight here), I would wager that the management of Total Wine actually dreads the idea of an “Amazon of Liquor”. Because such an entity would be their fiercest competitor and neutralize most of their strengths.

Low Prices

Since I can’t buy freely online, right now I use WineSearcher.com to get a general idea of how competitive the pricing is of the retailers in my market.

Take out your phone and look for a particular wine on WineSearcher.com. Not only can you easily find the average retail price but you can shop around to find the retailer with the lowest price. That’s not always going to be the same retailer or even one that is local.

If you open up the floodgate for more online sales, retailers will be competing with more than just their local market in pricing. While that’s great for consumers, that’s not great for retailers like Total Wine who aim to have the lowest price in their market.

Large Selection

The typical Total Wine store leverages their large retail footprint to carry thousands upon thousands of wines. This is often far more than their local competitors. But that’s only a pittance of the amount of wine that could be available if consumers could shop freely online.

There are only so many skus that a physical retail store can carry. Total Wine might be the “big dog” now in markets. But online sales tosses that calling card out the window.

More like the Argonauts of Liquor

With online sales potentially neutralizing the strength of low prices and large selection, retailers like Total Wine would have to up their game to get people to shop in stores with more in-store education classes and tasting events.

Far from desiring to be the Amazon of Liquor, the Supreme Court testimony of Total Wine shows that they are more like Jason and the Argonauts trying to carefully navigate away from Themiscyra.

Right now things are going really good for Total Wine. Over the last 20 years, they’ve seen explosive growth with nearly 200 stores in 22 states.

Their business model of low prices and large selections makes their brick-and-mortar stores destinations for consumers. The relationship building and customer service of their staff keep those consumers coming back. But that all begins with customers physically shopping in stores.

This is the irony in Tennessee Wine & Spirits Retailers Association vs. Blair.

Total Wine clearly wants to win the case, keeping their Knoxville location and opening up more stores. However, winning with a broad ruling could be worse for them than losing.

Many local retailers and governments try to keep Total Wine out by clinging to protectionist and discriminatory laws. They think these laws hurt Total Wine and will slow their growth. Yet it is the antithesis of these laws–allowing more consumer freedom–that would deliver the hardest blow to Total Wine.

In many ways, protectionist laws actually end up protecting Total Wine.

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Beaver State Bubbly

Amber LeBeau in General, Wine Knowledge, Wine regions

Published on January 19, 2018

I’m a bit of a bubble fiend. I love drinking sparkling wine. I love talking about it.

Easily at least half of the wine reviews I post here are about bubbles and when I get new sparkling related wine books like Bursting Bubbles, I eagerly devour them.

Living in the Pacific Northwest, I’ve watched with excitement the growth of the Oregon sparkling wine industry that Forbes.com contributor Joseph V. Micallef highlighted in a recent post.

The founding father of Oregon Bubbles is Rollin Soles who started Argyle Winery in Dundee in 1987. His venture had a lot of all-star firepower backing it with Australian winemaking legend Brian Croser (the 2004 Decanter Man of the Year) and Christian Bizot, then owner of the Champagne House Bollinger.

In 2001, Argyle became part of Lion Nathan corporation with their US branch spinning off in 2012 to become Distinguished Vineyards. Now Argyle is part of a portfolio of brands that includes MacRostie, Wither Hills and The Counselor. In 2013, Soles stepped away from the winery to focus on his brand ROCO that he founded with his wife, Corby Stonebraker-Soles.

While I’ve enjoyed Argyle since Soles left, I must confess that I haven’t been as wowed by the winery’s offerings in recent years. Part of it could be the increase in competition as wine shops have been bringing in more sub $25 Crémants from Alsace, Burgundy and the Loire that way over deliver on value. While years ago, Argyle’s basic brut at $20 stood out from the pack, now it is just middle of the road with even sparkling wines from New Mexico like Gruet and Jacqueline Leonne delivering delicious value in the under $15 category. Still, the 1998 Argyle Extended Triage remains one of my all time favorite wines.

But times change and winemakers move on, which is why I was very excited to try Soles’ new ‘RMS’ sparkling wine project at The Herbfarm’s holiday dinner series “The Holly & The Ivy”. While it didn’t reach the level of that 98 Extended Triage, the 2014 RMS Brut did remind me of all the things I missed about Argyle.

Not a bad way to start off a 9 course meal.

Around 66% Pinot noir with the remainder Chardonnay, the wine had high intensity aromatics of spiced pear wrapped in a toasty pastry crust. Those notes carried through to a creamy but powerful mouthfeel not that dissimilar to Charles Heidsieck. It also reminded me of Pol Roger where the weighty flavors are balanced by fresh citrus notes and racy minerality that give lift to the wine. An incredibly well-made sparkler that would probably continue to age even in the bottle under cork. It is certainly well worth the $65 winery price.

What Makes Oregon Bubbles Special?

In his Forbes post, Micallef quotes Tony Soter on how the “sweet spot” of Oregon’s cool-but-not-too-cool climate gives its an advantage over both warmer California and cooler Champagne.

“[In Oregon you have] … a generosity of fruit that is expressive of the grape varieties (Pinot Noir and Chardonnay) reaching a high level of maturity while still maintaining an admirable level of acidity, finesse and elegance critical to sparkling wine. [While] … in California, the weather is too warm, forcing a premature picking to minimize excessive alcohol at the expense of the nuance and delicacy of fully developed grapes.” — Tony Soter, as quoted on Forbes.com January 19th, 2018

Far from being an “Oregon-homer”, Soter’s opinion on the differences between Oregon and California’s terroir is backed by his 30 plus years of experience working at some of the best names in California wine like Chappellet, Araujo, Shafer, Spottswoode and Dalle Valle.

The stats on Oregon’s favorable “goldilocks position” also bares out according to Hugh Johnson and Jancis Robinson’s Wine Atlas. While Champagne sits along the 49th parallel and averages a daily growing season temperature of 58.4°F, Napa Valley (home of Schramsberg, Domaine Chandon, Mumm Napa, etc) sits on the 38th parallel averaging growing season temperatures of 66.8°F. The Willamette Valley is nestled right in the middle of that on the 45th parallel with average growing season temps of 60.6°F.

In addition to losing acidity, if you wait too long to harvest your grapes in warm climates you risk “baking out” the more delicate and complex flavors. This produces over ripe and dried fruit notes that the French call ‘sur maturité’. For many California sparkling wine producers, its a Catch-22.

Harvests in California for sparkling wine regularly taking place in early August while in Oregon it doesn’t start till September. In Champagne, which wine authors like Robert Walters in Bursting Bubbles claim often harvest too early and too unripe, harvest typically begins late August and early September. Many high quality grower producers in Champagne harvest later into September.

The timing of harvest is key because you want ample acidity for sparkling wine production which you can risk losing if the grapes hang too long on the vine. But at the same time unripe grapes can give bland and uninteresting flavors. Tom Stevenson and Essi Avellan note in their Christie’s World Encyclopedia of Champagne & Sparkling Wine that having ripe grapes is absolutely essential for high quality sparkling wine.

Photo by Gary Halvorson, Oregon State Archives. Released on Wikimedia Commons under Oregon Historical County Records Guide public use

In the Willamette Valley, daytime highs in July in the low 80s (°F) can drop to the low 50s (°F) at night.

Like Washington State, Oregon also benefits from having drastic diurnal temperature variations during the growing season where temperatures can drop at night 30-40 degrees from day time highs, letting the vine literally “chill out” and retain fresh acidity.

This extends the growing season, allowing the grapes to hang longer on the vine, developing riper flavors while still maintaining that vital acidity.

Oregon Sparkling Wine Producers to Seek Out

Micallef notes that there is around 40 producers making sparkling wine in Oregon. While most of the production is small and limited to sales at the winery’s tasting room or wine club, there are some producers with ambitious aims.

One that is mentioned in the Forbes article is Radiant Sparkling Wine Company that was founded in McMinnville by Andrew Davis, a protege of Rollin Soles. After 8 years at Argyle, Davis founded his company to serve essentially as a mobile méthode champenoise facility, traveling to wineries with his sparkling wine equipment and technical know-how to help winemakers turn their base wines into bubbles.

Among the wineries that Davis has worked with includes Adelsheim, Anne Amie, Brooks, Ponzi, Raptor Ridge, Sokol Blosser, Stoller, Trisaetum and Willamette Valley Vineyards. In 2017, Davis helped create over 20,000 cases of Oregon sparkling wine to add to the 25,000 cases that Argyle produces yearly.

The Stoller rose sparkler more than held its own in a line-up of impressive bubbles.

One of these wines that I’ve recently had the opportunity to try was the Stoller 2014 Legacy LaRue’s Brut Rosé. The 25% Chardonnay and 75% Pinot noir base saw 10 months aging in neutral French oak before bottling and secondary fermentation. The wine spent 2 years on the lees prior to disgorgement with around 275 cases produced.

The LaRue rosé had a beautiful medium plus intensity nose of fresh cherry and strawberries. But what most intrigued me was the tinge of citrus blood orange that framed the red fruit notes. On the palate, the wine added another depth of flavor with some spicy and mineral notes.

I had this wine only about a couple weeks after I had the Louis Roederer 2011 Brut Rosé that I described in my post Cristal Clarity. We had another bottle of the Roederer rose opened with the Stoller and it was quite impressive how the Stoller showed in comparison. While it was more on the delicate and minerally side versus the fruitier Roederer, the Stoller clearly won out with much more vivid aromatics and longer finish that didn’t fade as fast as the Roederer. Considering that the Stoller LaRue is $65 while the Roederer is around $70 and you have some substantial value.

For a relatively young sparkling wine industry that just reached 30 years, the future looks exciting for wine geeks wanting to explore Oregon bubbles.