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Become a Great Wine Taster

Lesson 9 of 21

How Wine is Shipped & Sold

 

Become a Great Wine Taster

Lesson 9 of 21

How Wine is Shipped & Sold

 

Lesson Info

How Wine is Shipped & Sold

Now we've got a ship it and sell it that this is maybe even the harder work. Okay, So same example of the Napa cab. Let's say let's say for the sake of this example we're gonna sell it entirely in America. And when you sell in America, you have to use what's called the three tier system. Um, remember Prohibition Volstead Act. Thanks 19 into 1920. And then there was Prohibition until the 21st Amendment in 1933 and when we came out of Prohibition on the sale of alcohol was regulated in a way that really it gave birth to what is now known as the three tier system. So the tears are you buy wine from a retailer. The retailer bought it from a wholesaler. The wholesaler bought it from either the producer or the importer, so he buys from producer. There's three. If you bison importer now you're up to four. Well, none of those people would be in that business unless they were in the business to make money right. No one just passes it through so it gets more expensive all the way to the retail s...

helf or the restaurant and so we're gonna look at that. So the three tier system is a given and you know, there are. There's a great amount of energy being put in trying to dismantle that, um, I don't see that happening. I mean that I mean, it would be great for consumers. It would be amazing. Um, I think that the distribution here is such a powerful and meaningful tear that I don't see them going away any time soon. One of the little advantages we are seeing is that direct shipping of wine from vintners and places like California, Oregon, Washington to consumers is being allowed in more and more states. It's still very regulated in terms of quantity and and how it goes. Um, but that's that's the one little glimmer of hope that consumers have to avoiding what I'm about to show you. So let's say we're ready to sell it to the wholesaler, and we've spent 22 50 to make it. We're not done spending money, actually, to sell this one is gonna is gonna take some time and take some cash. So how do we mark it up? Well, a general rule in the industry is just multiplied by two. So if it costs us 20 to 50 what? Sell it for 45? Do we feel good about that? You get feel OK about that. I mean, right now it feels like we got 20 bucks on the hip, but I'm gonna show you That's not face. So but this for the sake of the example. Okay, so we're gonna do, you know, industry standard? Let's sell for 45 bucks. Okay, so we sell it to the wholesaler and wholesaler X has costs. The holes there is gonna pick it up in your warehouse, and they have to ship it somewhere. That has a cost. And they have Teoh have to have their own people to deal with it. And they have to have their own warehouse than they have to have their own delivery trucks. They have to pay themselves. So typically they'll also mark. Not also they will be at this tier, marking it by 1.51 point five times. Um, so are $45 bottle is now 67 50. So we sold it to the wholesaler. The wholesaler goes to the wine shop for the restaurant that says Hey, I've got no bets Cabernet and it's 67 50 and you know, whatever other hype machine goes with it. So you feel good about at the business owner buying this one for 67 bucks, and let's say that they dio so they buy it. And what are they gonna market up? Well, they have the same concerns, right? They have a shop. They have people. They have lights, save bills. So they also market up 1.5 times. So now the little bottle that costs 22 50 is on the shelf for 100 bucks, right? That's that's not nothing. Um, and it's also interesting to look at. What seems a little interesting is you went from 67 50 to 100 bucks, the the guy who buys it and probably sells it within a month. He's starting with 30 to 50 on his hip. Where is the producer is starting with 22 50 on his hip, right? So it's the economic start to get a little skewed that multiples do that. So let's assume he didn't sell it to wine shop that you sold to a restaurant, and their market tends to be times three, and I neither. I don't abhor that or applaud it just it is what it is. Restaurants have have different and real costs, and having spent a lot of time with them, I happily chat through them all with you. Um, whether times three is fair or not is debatable, but for sure there are real costs there. And so it's gonna cost you 200 bucks if you buy it on the white list. But let's save it's imported. Let's say we made our wine in France, right? Same set of economic circumstances. Well, now you have to add yet another tier. And there are, of course, exceptions. Like sometimes the importer is now the wholesaler and so on and so forth. But for a long time it's functioned as such. And still, I think the majority of one that's imported to America functions this way. So you add yet another layer, and that's of the importer, who was also generally at 1.5% or times 1.5. And so, the producer tells the importer who sells to the wholesaler sells to the retailer who sells to you. So now we went from 22 to 45 times. The importers mark up times the whole seller's market times the retailer's mark up. And now what was 100 bucks on the shop is actually 152 books on the shop shelf, which is crazy. And, of course, and these air these air general percentages that generally expected, accepted. And if something is very, very high volume, like Yellowtail or something, just pick it. Um, that the 1.5 times is likely going to be a smaller, smaller number because you're making so much of it, Um, on the other side of the coin, if it's something that's very, very rare and highly allocated, it might actually be times two or times three. So very quickly it gets really expensive in the last piece. Now that you see how it costs on the shelf, let's go back to us, Right? So we made this wine and Mrs Actual. This is really applicable to today because this is super easy to get in the wine business. Everybody's getting in. The wine business these days is there is a well, we'll come to that a sec, actually, but everybody is getting in the wine business these days and recall we haven't even paid for any of our other expenses. All we did was make that thing and hope it went right out the door. But it didn't go right out the door. It went. It went onto a truck and went to our warehouse. And we can farm that out to We don't have to have the warehouse. We can use a central warehouse and many here in California. Lots of people warehouse in American Canyon or in Oakland. And it's a great central pickup place for you know why school over the country and on the East Coast, New Jersey is the place where a lot of wine is warehouse and stored and and so we send our wine there to be warehouse. But we have to pay that fee, and we haven't paid that yet. Remember, we're starting with 22 50 on the hip. That's what it costs us. And that's what you marked it up. So we've got 22 50 but we have to pay warehousing costs. I remember when we made that wine. We made it 24 months ago, 24 months ago, and So you borrowed that money? Very likely. Or money has a cost, right? You know you think Well, if I didn't do this with it, I could do that with it. So what is the cost of that money? And you put it out there and you made this one. And 12 months later, before you've sold anything, you actually have to do it again. Right? So you're you're down the hole again for two vintages and likely right before you sell it, you have to do it again. So you keep putting money out there. Um and so there's a cost of that, then sales and marketing. Like, how do you disseminate the message that za great question and people fly over. I mean, it's what I do. I fly that I traveled more than 200 nights a year on DSO. You're out there and it costs. You know you're not your own home. You're in a hotel and you're not cooking your own food. You're in a restaurant and you've got to move around and you're not in your own car. All these sorts of things, they add up. So that's gonna come out of that 22 52. Um, and then any taxes you have to pay along the way of which there are numerous so very quickly that 50 becomes something very, very small. And look, if you're lucky that the the whole, um partly 10% of retail, actually 10 bucks, not 67 50. So if the, you know the lucky markets, if you end up with 10% of the retail price after you've paid for all that stuff, you're doing well. So you did. You did all this work and sat on this for all this time to make 10 bucks. That's you know, it's a real thing. So the the saying in the wine business is the quickest way to end up with a small fortune is to start with a big one, right? You just go back or is the whole way. Obviously, it works for some people. Um, but that's that's really you know how these things flow? The cost of doing the work. Yeah, Most of these wineries tend to grow their own grapes. Would you say no? No. It's just cheaper for them toe. Or maybe it's a barrier to entry, right? So If you and I want to start today and start this business, you know, we can scraped together enough money to buy a ton of grapes. Or we can try to scrape together half $1,000,000 to buy an acre of land in that valley. So you know, you've got 10 grand, you got half a 1,000, bucks, and then if you actually spend 1/2 1,000, bucks that you have to farm it. So depending on if we choose to do it sustainably organic, that's gonna cost three toe five or six grand a ton or apartment an acre just to farm it. But then you're gonna have pressure, like how many tons of and get out of it to spread that six grand a ton to farm it over it right so very quickly it becomes a very, very, very big investment. And how, exactly, to the determine which grapes are going to make one for? That's a great question. So curious. No, Well, there many answers. I mean, first of all, we've talked about rightness. Let's start from from that point of view, and then let's talk about the commercial point of view. You know what's gonna grow well, where? So the reasoning that we tasted in in the in the last episode last segment works in Germany like it has an affinity for that climate. And in California, everything ripens. And for sure you could You could get Riesling grapes that would have enough sugar to make something of substantial alcohol. But it probably wouldn't have the hang time, the time out on the vine to develop the flavors that would actually make it a good Riesling And where we could objectively say, Yeah, that has a lot of complexity. It has a lot of depth that has a lot of finesse, has a lot of grace, You know, all that has balance. All the things that we can objectively put out there is criteria of a good wine. It wouldn't have that because it's just too warm for it. So you have to start with you know what's gonna do well here. Well, that's 11 thing, so zinfandel might do really well there. But cabernet also might do it really well there. So then there's the next commercial decision, like, you know, do you want to grows in or do you wanna go kabel which is gonna be easier to sell for sure, it's gonna be easy yourself. Cabernet. So you know you might make that make that decision based on what's gonna be easier to sell and thinking about your sales and marketing dollars and more than easy to sell, you'll probably get more money for it. You know, there's a whole slew of two and $300 a fairly cabernets out there. But I don't even know if there's $100 infidel anymore. You know what I mean? Right? Yeah, but but to make it it costs the same can cost the same. This is so hard. Economics, air so much against you. Yet there are wineries opening every year, proliferating all over. Yeah, you can almost used to work that way. It's a romance. It's a lot of people that have done well economically in other areas. That's part of it, and they want to get into it and see what can happen. Um, I think that there's actually a lot of the world yet to be explored, and I think that's good news. So I mean, I've been in the wine business since 97 so not even 20 years. But in that time, like everything's changed, like South Africa's become really meaningful. Chile has gone from being something that I thought was really gross, and they like red bell pepper juice toe actually making world class wines. And Argentina's happened in that time. Austria has happened in that time, Um, so we're actually paying attention to all the margins in France now. It's not just about Bordeaux and Burgundy, you know, jurors, part of the conversation. Um, look what's happened in Italy in that time, you know, It used to just be about Barolo, Barbaresco and what was happening in Tuscany and now, like every corner of the country, has been discovered. And sometimes those new planes. And sometimes that's just finding, you know, like old grapes. Like for Pato. People had no idea what that was. That was a pork dish 10 years ago, and now they understand that's a really delicious red wine from Sicily, right? And so So that's really exciting as there comes more interests, you know, as a consumer, it's great because there has never been more great wine in the world to drink

Class Description

Do you cower when presented with the wine list? Feel at a loss while walking the wine aisle? You are not alone! Many of us struggle to differentiate between the subtleties of the world’s oldest beverage. But wine is not destined to be difficult! Join Master Sommelier Richard Betts for a fun and informative guide to buying, tasting, and enjoying wine.

Become a Great Wine Taster is your guide to wine varietals, trends, and tastes. You’ll learn Richard’s “wine is a grocery, not a luxury” approach to wine while exploring the differences between regions and the history behind them. Richard will teach a simple method for looking at, smelling, and tasting each wine so you understand the nuances and the provenance of the drink in your glass. You’ll study the important factors and features of winemaking by exploring ideas through related varietals. Richard will discuss:

  • Chardonnay and Sauvignon Blanc – the impact of climate and oak
  • Riesling, Viognier, Gewurztraminer and Zinfandel – balance, sweetness, and alcohol content
  • Pinot Gris / Pinot Grigio, Gruner Veltliner, and Chenin Blanc – important grapes, small subtleties
  • Cabernet Sauvignon and it’s subjects – regional expression of the ubiquitous reds
  • Pinot Noir – temperamental grapes and growing in France, California, Oregon and Australia
  • Tempranillo, Sangiovese and Nebbiolo – wine production in Italy and Spain
  • Syrah/Shiraz, Grenache and friends – blends and winemaker’s intent

You’ll also learn about the unique ways we modify wine, like making it sparkle, heating it, turning it into Port, and so much more! This class will help you get more comfortable with wine, remove much of it’s mystery, and show you how to integrate it into your everyday life.

Pair your appreciation for wine with knowledge in this accessible and educational class. Join Richard for Become a Great Wine Taster and never fumble over wine selection again.

Reviews

a Creativelive Student
 

This course was amazing. As someone who felt really intimidated by wine before, I finished the course feeling a lot more confident and excited to try out my new wine knowledge. Great instructor with great content. Would definitely recommend!

user-ab792c
 

Good course, needs to identify wines to set up tasting. It was fun to do with friends. Perfect to watch in the segments.

Anne
 

Fabulous! I've passed the Introductory Exam for the Court of Master Sommeliers, but, never ginned up (pun intended) the deductive tasting. This did it. There are several of us who purchased this course and are doing out best to re-create the tastings and memorize the map. Thanks so much for the class and for Richard Betts.