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Wine clubs try drinking games to draw new members

Saturday, 17 Aug 2013 | 11:00 AM ET
YinYang | E+ | Getty Images

Wine clubs are trying to ditch their serious reputation.

A bevy of new wine clubs aim to make participation more entertaining than just receiving a few bottles in the mail—using personality quizzes, interactive videos and sports-tournament-like brackets to tease out preferences and teach members about wine in the process. But with the wrong picks, they can still be a budget drain.

"Most wine clubs are based on a model that launched in the '80s. They all send everyone the same wine … red or white isn't enough of a choice," said Jay Sung, CEO of Lot18, which in May introduced the wine club Tasting Room.

Tasting Room uses a $10 starter kit of six mini bottles—four red and two white—to determine members' taste profile and decide which wines to send in the first $85 kit. Rating those wines refines the selection for future shipments, which cost $149 plus shipping, he said.

Vinely, a California start-up, generates a similar taste profile but starts with a tasting party where members sample and rate six wines, for a fee that varies by the number of guests. Subsequent monthly shipments cost $97. For each shipment, J.W. Marriott Hotels & Resorts' new JWM Wine Club sends members four sample-sized bottles, of which they can choose two to receive in full size for $150.

WineBattles.com makes the experience more competitive with its Battle of the Month Club. Members opt in for a competition bracket of a particular varietal, sampling two bottles at a time and voting for their favorite to proceed to the next round. They select among red, white or sparkling wines and three price ranges: $20 to $35 per bottle, $35 to $50, or $50 to $75.

"The idea is at the end of that, say, pinot noir battle, someone has a better idea of what balance means," said Mike O'Brien, CEO of Wine Battles. "You walk away with more knowledge of what you like."

Such clubs can be a smart pick, industry experts say.

"They move the ball forward on understanding, and not just drinking," said Jerald O'Kennard, director of the Beverage Testing Institute. Sampling and evolving choices can eliminate a typical wine club risk—you won't like the bottles—and thus increase the value proposition.

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Experts say it's no surprise that more companies are leaping into the wine club business. Wineries' direct sales to consumers rose 10 percent last year from 2011, to $1.46 billion, according to industry tracker Wines & Vines.

"Probably half of that is wine clubs," said editor Jim Gordon.

Investment firm Silicon Valley Bank expects direct-to-consumer wine sales to grow 13 percent this year, outpacing overall wine sales growth, which could fall between 4 percent and 8 percent.

Many of the new clubs send members selections from smaller wineries, which are more interested in forming such partnerships. Wholesalers increasingly focus on large wineries with enough output for national distribution, said Rob McMillan, founder of Silicon Valley Bank's wine division.

"That has left the small guys more on the sideline than ever," he said.

But that also means people should be careful about checking reviews, pricing and policies before enrolling in a club, as they're bound to get a lot of wines they've never seen at their local wine shop.

"It's gone way beyond, trust us, we'll send you some nice stuff," said O'Kennard of the Beverage Testing Institute. Clubs may offer private labels and closeouts, which can be hit or miss, he said.

The clubs say they choose wines judiciously.

"We're trying 60 to 80 to pick eight for a battle," O'Brien said. "We're helping you select among good already." Both Wine Battles and Tasting Room say members can cancel anytime, and receive replacements or refunds if they don't like a bottle.

Clubs at a favorite winery or a local retailer might be the better deal for some oenophiles, however, according to John Gillespie, president of the industry group Wine Market Council.

Up-front tastes help ensure you like the product before buying, he said, adding that "you've got a degree of confidence." Clubs may also be arranged more like loyalty clubs, with regular discounts rather than monthly shipments—a boon for less-frequent imbibers.

By CNBC.com's Kelli B. Grant. Follow her on Twitter @KelliGrant.

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