One of the nice things about having so many high quality wine blogs around is that on occasion people write articles that I was going to write, and simply save me the trouble. I had been sketching in my mind an article about the phenomenon of Flash Sale wine web sites — you know, those sites that sell closeout wines in limited quantities for deep deep discounts — but Jeff over at Good Grape wrote a very nice piece about them yesterday that says most of what I was interested in saying.
Jeff contends that a shakeout of these sites is coming, and points to the acquisition of Woot! by Amazon.Com last week as a harbinger of greater consolidation and/or lots of fallout in this space.
I agree that such a shakeout is inevitable, but I disagree with Jeff about when. From everyone I’ve talked to, the amount of excess wine inventory on the market is truly massive. The consolidation in distributors in this country (from 7000 to 700 in the last 20 years according to Barbara Insel of Stonebridge Research Group) combined with the drop in demand for wine over $40 means that there are thousands of smaller wineries with millions of cases of expensive wine out there that most retailers, restaurants and distributors aren’t touching with a ten foot pole.
These wines will need to get sold somewhere, as they can’t just sit around. They not only have to get out of the way for the next vintages that need to sit in the warehouse, they need to be turned into cash to pay for labor for the harvest, barrels for the next vintage, and all the other cash intensive aspects of keeping a winery going. For more detail, see my article: The Coming Carnage in the California Wine Industry.
How much inventory is out there? No one knows the complete answer, but I think it’s plenty enough to easily support another year or two of these deep discounters, who will continue to proliferate (I know of two more waiting in the wings about to launch) until, as Jeff says, they start going “poof” just like the wine.
Until then, there are some amazing deals to be had by anyone who has the means to be buying wine in this economy.
Here’s the list of the deep discounters / closeout artists / flash sales for wine that I know of:
Read Jeff’s article.