DC Wine Enthusiasts Combine Purchasing Power with the Capitol Case Club

Thursday, February 25, 2010

A very cool site was announced this week that wine consumers and retailers, especially those near our nation's capitol, will want to take note of.  The Capitol Case Club "is a private collector's club that helps DC-area consumers access and negotiate case discounts for premium wine without a minimum purchase requirement."  More information on how it works is available on the site.

I love the idea, and the focused way it has been implemented is inspiring.  We've done a couple of public case clubs here on this site (2005 Cakebread Cab and 2007 Autard Chateauneuf-du-Pape) and they've gotten a great response.  From this, we've developed a small network of similarly-value-minded enthusiasts interested in combining purchasing power to get the maximum possible discount without having to buy multiple straight cases. 

How Do Case Clubs Work?

Someone in the group proposes a wine they'd like to combine purchasing power on and an approximate target price. Within a day or two, the group assesses the level of interest and if we get to a case or two, we send the offer out to area retailers for bid.  Ideally, retailers would be local (all need to be in-state in Massachusetts because of shipping laws) and open to pick-up from individual consumers while still passing along the maximum discount to each consumer in the club.

How Well Do They Work?

In practice, there's a lot of nuance in the way this operates.  One might ask- why don't retailers just advertise specials on their website and sell wine that way?  The problem with this is that some retailers are cagey about revealing anything about the wines they sell.  They evidently see their product selection and pricing as private information competitors will leverage to their advantage.  I think case clubs are well-suited to retailers like this because they offer a way to sell a relatively large volume of a single wine without revealing publicly they trade in that wine.

There's a limit to how low retailers can go on price.  It's illegal in most states for a retailer to sell wine than less than they pay for it.  That said, there are different pricing models in effect.  Some retailers offer a 25% discount if you buy 2 or more mixed cases.  Others offer the first bottle at maximum discount.  Either way, there is a limit to how tight a margin retailers are willing to go even when selling multiple cases of a single wine.  The goal with a case club is to execute one tidy transaction for a respectable quantity of wine that makes it worthwhile for the retailer and the club members.

Not all retailers are able to obtain the same wines. Especially when a wine is "hot" as a result of high rating from a prominent wine publication, retailers jockey for position with the distributor to obtain the wine. What works best, I've found, is finding a retailer who already sells the style of wine you're looking to buy.  They're more likely to have connections with the distributor and able to fulfill the order at the best price.

I think the deals that work best are for hard to find wines north of $30.  Hard to find wines from popular brands like Cakebread, Sea Smoke, and Kosta Browne generate a lot of interest from consumers.  Higher priced wines are good for retailers because even if the margins are tight they make some amount of money on the transaction.

Where Do We Go From Here?

I'm looking forward to following the Capitol Case Club and monitoring their success. I'll also look forward to learning from them and sharing ideas to make case clubs work better for everyone.

Consumers: What can we do to improve the way these informal consumer case clubs work for you?

Retailers: What do you think of case clubs?  Do you like the way it brings straight case purchases of a wine you might not have otherwise sold to a single buyer?  Or does it reduce margins for everybody?  How would you like to see this work for it to make sense for you as a retailer?

If you're a Massachusetts wine retailer who would like to receive an E-mail from me when we have interest in a specific wine please E-mail me at wellesleywinepress@gmail.com and I'll place you on a private list I keep for sending wine out for bid. 

Consumer friends- if you'd rather not comment publicly but you have thoughts on the subject please drop me an E-mail.  I'd love to hear from you.


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