GO
Loading...

Reaping Profits from Excess Wine Inventory

Sometimes opportunity knocks. Other times it requires a few cold calls.

Such is the case for wine distributor Kevin Mehra. Back in 2009, the Boston-based entrepreneur was looking for new wines to sell.

Source: 90+ Cellars

So armed with "Wine Spectator" and "The Wine Advocate", Mehra started cold calling wineries to see if any had extra wine to sell. He was pleasantly surprised.

"We were shocked at how many wineries had excess inventory," Mehra said.

A short time later, Ninety+ Cellars was born. Under the concept, wineries bottle their excess wine, but put a Ninety+ Cellars label on it. Ninety+ then distributes and sells the wine at a discount of 25 percent to 70 percent off the typical source winery price.

Anonymity is the key. Many higher-end wineries don't want to cheapen their brand by lowering the price of their wine. They also don't want to cannibalize sales.

"Why would people buy the source label if they could get the same juice for half or 30 percent off?" Mehra acknowledges.

The "Ninety+" in the company's name refers to the type of wine it looks to acquire. According to the company’s website, wines sold under the Ninety+ brand must have a pedigree of a "90 or higher rating, best buy or gold medal accolades from a respected wine authority or publication."

The "pedigree" designation has led some in the industry to criticize the business model. None of the wines Ninety+ sells have been rated, though all the source labels have received prior accolades for earlier vintages.

Mehra admits he's asking his customers to make a leap of faith.

"There's a real trust factor because we can't tell consumers the source label. It's up to our customers to try the wines and tell us what they think. Wine ratings are simply a criteria, a lifeline, to help guide you through a sea of wine."

Mehra and his staff conduct tasting panels, trying as many as 40 wines a week and say they turn down more than they sell. If a given vintage of a previously highly rated wine isn't up to par, they don't buy it.

Being able to accept or reject a finished product gives Mehra the flexibility needed to help maintain the quality his brand needs to keep a customer’s trust.

"It's a huge advantage to us," he said.

The challenge? Ninety+ Cellars only sells specific "lots" of a limited supply of wine. So while consumers may learn to trust the Ninety+ brand, once a favorite wine is gone, it’s typically gone for good.

Source: 90+ Cellars

A upcoming example is lot #41, 600 cases of a Meritage. The source winery typically prices the wine at $110. Ninety+ will be be selling it for $25 when it arrives in mid-to-late June.

It's these types of bargains that have customers taking their chances and coming back for more. In the two years since the brand was created, the company has sold more than 44,000 cases of wine and generated more than $5 million in revenue, all while selling in just 10 Northeast states and online.

The fledgling company has received an assist from a well-known player in the craft beer world. Boston-based Harpoon Brewery recently bought a less than one percent stake in the company. It’s also allowing Ninety+ Cellars and its seven employees to move from home-based offices into a space located on the top floor of the brewery’s headquarters. More importantly, Harpoon founders Dan Kenary and Rich Doyle have been an entrepreneurial sounding board.

"They've been through what we're experiencing. It's essentially the same business, but different channels. So they give us direction on how to sustain and maintain growth," Mehra said.

As for growth, Ninety+ Cellars sales have doubled in the last year and the company expects them to double again this year. For Mehra, it’s a validation that his business model is paying off for both the brand and its growing following.

"We're looking to provide customers with a high quality wine at a great price. With the right sourcing we can make a great wine that might normally be out of reach pricewise, affordable to the average consumer."

Questions? Comments? Email us at consumernation@cnbc.com.

Featured

Retail