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9 Secrets the Big Online Wine Companies DON'T want you to know.

Posted by David Laity on
9 Secrets the Big Online Wine Companies DON'T want you to know.

With the onset of Covid-19, the large online wine retailers saw a one hundred percent increase in sales. And while that made some CEOs very happy, it also left a very sour taste in the mouths of many shoppers. More people than ever before were making their wine purchases online which saw a huge increase in the numbers of first time purchasers falling foul to the clever tricks used by these goliaths.

Lured with promises of diamonds in the rough and deals too good to be true, first-time wine shoppers were left with undrinkable bottles in enormous quantities.

The fact is that the online wine world is a minefield for the uninitiated, so we thought we would expose a few of the more common tricks used by the some of the ‘big boys’, so that you can safely pick your way through to the hidden gems.

1. It sounds too good to be true?

A sub $15 bottle of wine is just that – a sub $15 bottle of wine! Anyone who tells you it is the best wine you will ever try, or it is the equivalent of a $50 bottle is lying to you. It’s that simple.

Premium wine brands have built their reputations over many years of blood, sweat and tears, and while there is some truth to the argument that you can pay more for a label than the contents in the bottle, there is no doubt that a great deal of time and effort went into making that expensive wine.

Wineries that have worked hard to build their brand value will not throw it away at any cost, let alone for the $5 they will receive so their wine can be sold for $15 by a large reseller.

2. The 24 hour price hike.

Have you ever wondered how the discounted price can be so much less than the vineyard’s price? Well, that's because the vineyard’s price never really exisited in the first place.

Large online wine companies have enormous buying power and a common trick is to buy a vineyard’s entire vintage and then get that vineyard to put up their price by an extortionate amount. Of course the vineyard has no wine to sell (it all just got bought), but 24 hours is all the big wine company needs before putting the wine on their own website at their ‘dramatically’ reduced price. That 24 hour period makes it all legal.

3. Small boutique wineries are of no interest to the big boys.

The big online retailers need quantity and so overlook the little vineyards where hands on winemaking delivers better fruit and better wines. These are the wines that win awards and these little vineyards are the true artisans in the industry. Their passion flows through to the final product in the bottle. The fact is that they simply don’t make enough wine to satisfy the big retailers and so never get a ‘look in’. But that’s probably a good thing when you take into account the next point.

4. Winemakers get ‘bent over’ the barrel.

With the closing of export markets such as China, the big wine companies have been able to take extreme advantage of medium sized vineyards who are experiencing extraordinary financial stress. With many international contracts drying up, big players in the wine world have been able to demand insultingly low prices simply because they know that a vineyard has its back to the wall. To remain solvent the vineyard has had to 'fire sale' their wines, fully aware that the damage done to their brand by the big wine company will be irreparable for many years to come.

It costs around $3 to physically put wine into a bottle and that doesn’t take into account the cost of nurturing the grapes through to harvest or the cost of turning those grapes into wine. Any sub $15 bottle you bought that tastes even halfway decent has more than likely been the result of a winemaker being pushed the brink of financial collapse. So while you’re patting yourself on the back for that bargain you just bought, another vineyard is facing financial ruin.

5. The in-house rating system.

A lot of the big wine companies use in house 'experts' to rate their wines. A quick google of the wine can often reveal what the real experts are saying, but the companies rely on a customer’s laziness not to do those hard yards.

There are a handful of wine critics in every country whose only job is to review wines. They fly around the country judging wine shows and writing for reputable publications with their careers built on expertise and impartiality. James Halliday and more recently (and perhaps more critically) The Wine Front have established themselves as the go to experts along with a handful of independent reviewers such as Huon Hooke and Max Allen.

If there is a point rating attached to the wine you are about to buy and it does not reference one of these names, you can guarantee that the rating has been made up and will be seriously inflated.

6. Own brand labels.

As the move to stocking ‘own brand’ products increase in our major retailers, so too has the introduction of ‘own brand’ wines and beers. That exclusive label which appears to be a limited-release drop handcrafted by a quirky winemaker is often the exact same wine in that other exclusive looking bottle next to it.

Hailing from non-existent vineyards, it is increasingly difficult to determine true value as these wines have been sourced from enormous tanks of low-grade fruit – referred to in the industry as ‘bulk wine’. Often a few of these bottles will be placed into a mix along with wines from real vineyards, massively increasing margins for the company while significantly lowering value for money for the consumer.

7. Taste is subjective.

The larger the business, the further away from the tasting table are those who are truly accountable for the company’s buying decisions. And in the quest for quantity, profit margins replace a genuine love for wine. If you have found a company that consistently delivers quaffable wines at a reasonable price then perhaps you are on to a good thing but remember, staff turnover is large in big companies and the person who was selecting your wines last week may not be the same person doing it today.

8. High churn rates.

Big companies operate on a high churn rate business model. Marketing outcomes are their main objective and as long as they have more customers coming in than they have going out, it is business as usual. This high churn rate allows them to neglect the customer service side of their business, often outsourcing the job to telemarketing companies whose role is to make the process of dealing with complaints as difficult as possible. Knowing they have collected two more new customers for the one they just lost means a CEO can sleep well at night.

9. Not all subscription models are the same.

“A business that fails to disclose key information in connection with an ongoing subscription may be engaging in misleading or deceptive conduct". ACCC

Online wine clubs pose some of the more significant risks for the unsuspecting consumer. Terms and conditions can be unclear or not prominently displayed and important information is often hidden. Often a customer thinks they have made a one-off purchase only to discover they are being charged additional amounts from their credit cards. With no clear communications on how to exit, it is not uncommon for additional amounts to be taken from a customer’s credit card despite a request being made for the subscription to be cancelled. Unwary customers can often find themselves locked into minimum purchase quantities with massively inflated savings claims, exorbitant delivery costs and no clear way to extricate themselves from their supposed commitment. It is a case of buyer beware because the devil is in the detail.

Author's Note:

Goodwill Wine is a certified social enterprise established to reward the supporters of good causes with excellent value, boutique wines. By tapping into tiny single vineyards, we access award winning wines in quantities too small to be of interest to the big online wine companies. And by paying our supplying vineyards what they believe they are worth, we have nurtured strong, decade long relationships with hundreds of winemakers across the country.

We understand that the nine secrets above do not reflect all large online wine companies. Some such as Endeavour Drinks have tasting panels that go all the way to the top of the organisation while companies like VinoMofo have done an enormous amount of work bringing wine down from its elitist pedestal and making it accessable to everyday people like you and me.

All wine businesses will have their pros and cons and all customers need to go into their purchases with their eyes wide open. This list is simply a guide to help you know what to look out for as you search for those hidden gems.

Happy fossicking.


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