WINE BUSINESS


WINE SHOPS & WINE CLUBS: A BUSINESS WITHIN A BUSINESS

Smart entrepreneurs are creators of business. They don’t sit waiting for business to come to their door; they create doors for business to enter. One of the ways smart wine retailers are doing that in New Jersey is by developing and implementing wine-of-the-month clubs.

STARTING UP

Armando Luis could make the Energizer Bunny look sluggish. In 1986, he took the helm of Sparrow Wine & Liquors from his parents. Over the course of a few years, he turned the local liquor store into a smart-looking wine shop in hip Hoboken. In the summer of 1999, he opened the second Sparrow Wine & Liquors in this mile-square city on the opposite side of the Hudson River from Manhattan. With shops anchored on each end of Hoboken, Luis has literally “cornered the market.” In December 1999, across the street from his first shop, he opened The Brass Rail, a restaurant and wine bar. And on the same side of the street as his first store, he has a non-licensed Cuban cuisine restaurant with a BYOB policy. Sitting in his computer is an 8,000-customer list of Sparrow’s, the basis for a new wine club launched last month.

6803WIN12Armando Luis (right), of Sparrow Wine & Liquors, in Hoboken, NJ, recently launched a wine club using the operation’s already existing 8,000 name customer list. Steven Dowd (left), sommelier of the nearby The Brass Rail restaurant and wine bar, also helps select the wines for the club.

Luis’s concept for his wine club is twofold. The first part will be a wine-of-the-month membership that will send two bottles of wine at various price points.

The second part, the Private Sommelier’s Club, is more creative because it cross-sells and utilizes more of his assets. Members of the Sommelier’s Club will agree to purchase $100 of wine per month for at least six months. The wines will retail for at least $10 per bottle. Steve Dowd, Sommelier of the Brass Rail, and Luis will select the wines. With each monthly purchase the member will fill out a questionnaire evaluating likes and dislikes of the wine selections. Dowd and Luis will enter this information into the member’s computer file, building an individual taste profile.

Luis also plans to issue coupons to Sommelier Club members that can be redeemed for wine tastings at the bar of the Brass Rail.

DEVELOPING THE PROGRAM

Gary Fisch, owner of Shoppers Discount Wine & Liquors in Madison and Livingston, NJ, is an experienced hand in the wine world. After working 11 years for Fedway, one of New Jersey’s largest wine and liquor distributors, Fisch started the Madison store in 1988. Today, Shoppers presents a cornucopia of wines, specialty foods, and wine accouterments.

Fisch kicked off his new wine club this past October with a tasting at a local hotel. Attended by nearly 400 consumers, there were 56 tables staffed by knowledgeable wine personnel pouring 420 wines. Fisch hired Walter Kotrba, former owner of Morristown’s Embassy wine shop, to direct the wine club. Kotrba has designed a four-tier membership: Quaffers, Drinkers, Keepers and Custom Case. All but the latter receive two bottles each month at price points not to exceed $20, $40 and $60. Custom case members direct Kotrba to send a case of wine each month based on their personal tastes, or at a fixed dollar amount.6803IDEA4

At Shoppers Discount Wine & Liquors, in Madison and Livingston, NJ, owner Gary Fisch kicked off his new wine club last October with a tasting at a local hotel.

Fisch describes the tiers this way: “Quaffers offers inexpensive wines for enjoying with your weeknight pizza; Drinkers offers the weekend wine to take to one of the many BYOB restaurants in New Jersey; and Keepers offers the wine to age and enjoy on special occasions.”

During this past July, Fisch and Kotrba tasted 1,100 wines for Shoppers’s 34-page fall catalog. Based upon this tasting, they agreed on the wines for the wine club for October through December. Another by-product that Fisch sees from the newly formed club is that all the store employees take part in the tastings to select the monthly wines. “This gives them pride of authorship when they see their wine chosen as part of the program with their name and comments on the write-up sheet rather than Parker’s,” said Fisch.

There are costs. Fisch estimates 45 hours a month are devoted to the wine club beginning with the wine selections and carrying through to write-ups on each wine, setting up a floor display for the wines, making gift packages as a marketing tool, processing the credit cards for payment and home delivery.

6803WINE3At Magnolia’s, in Upper Montclair, NJ, owner John Finkel (center) has been successfully running a wine club for five years. Store staff (from left) Bill Kumpf, assistant manager; Michael Jordon, manager; Danielle Carfagno and Susan Finan all help in the effort to emphasize wine education for customers.

The flip side is extra profits. Fisch creates them by buying obscure wines in 10 to 20 case blocks, allowing the store to take a higher markup both through the club and floor stackings. The risk, said Fisch, “is estimating the usage. Each month brings six new wines that have to be ordered two months in advance. If you don’t sell all of it each month, you wind up with a big inventory of little-known wines.”

Although the wine club has been operating only since this past October, one custom case member told Fisch he wants Shoppers to build his wine cellar for him by sending one case of wine each month for the next five years.

UP AND RUNNING

Magnolia’s was founded in 1995 by John Finkel, a former teaching tennis pro. It is located in Upper Montclair, NJ, a high-income community a half-hour west of Manhattan.

Beginning the wine-of-the-month club was one of the first business decisions Finkel made. His concept was to have three monthly flights: two wines each valued at $8 to $12; $13 to $20, or $21 to $50. Nearly five years later, he finds the concept still valid. “I like the way our program is designed. We don’t just send two bottles. We give the member an option of two white or two red, or one of each. It creates more work for us since we are not choosing the same two bottles for everyone,” stated Finkel. He estimates the monthly labor cost for the club is 40 hours.6803WINE2

At Angelbeck’s, in Upper Montclair, NJ, owners Alain Lacorte and Richard Calotta also emphasize product education in their wine program.

Magnolia’s emphasizes wine education with its monthly wines, a newsletter, winemaker dinners and tastings. Each member of the club receives notes about the wine, its region and winery. A recipe for the monthly selections written by a local chef is also included in the package.

Finkel said, “You want to give your customer a full package about wines and the store. If they look to us as a shop where they can learn about wines, then Magnolia’s is not just another place to grab a six-pack and run.”

Angelbeck’s is a few blocks from Magnolia’s. When Alain Lacorte and Richard Calotta purchased it in 1993, Angelbeck’s had a wine of the month program. They continued the wine club’s three tiers: original, deluxe and collectors, but moved the price points higher. This was done to give them more flexibility in selecting wines. On the first of the month, members in the original category receive three wines with a maximum price of $24; deluxe members get two wines valued for $28, and collectors acquire two wines for $50.6803IDEA2

At Peterson’s Wine Shop, in Westfield, NJ, store manager Jackie Reilly, daughter of owner Phil Reilly, is part of a staff that spends about 40 hours a month on the wine club.

Education plays a key role in the selection of the wine. “We want to give good value and education; sometimes we select a white and red wine from the same winery to educate the customer about a particular winery’s efforts,” said Lacorte.

Angelbeck’s also incorporates seasonality into the selections. This past fall, champagne was featured October through December in preparation for the holidays and New Year’s Eve. During the summer, a rose is often included in the package.

Sometimes, the seasonal selection becomes a big store seller. “Last year we included an Australian port, Hardy’s Whiskers Blake Tawny port. It became a big mover for us at $12.99,” said Lacorte.

Lacourte, Calotta and two employees form a tasting team that selects the wines. While the tastings help train the staff’s palates, Lacourte and Calotta see other benefits from the program. Every month they have seven new wines in the store and program. “It keeps the store fresh,” stated Lacourte.6803IDEA3

At Clinton Wine & Gourmet, in Clinton, NJ, owner Chris Cree, one of only 17 Masters of Wine in the U.S., selects the wines and writes the tasting notes for his store’s wine club.

Phil Reilly purchased Peterson’s Wine Shop in the well-to-do town of Westfield, NJ, in 1995. Reilly, a former chief financial officer of Lechters, the kitchen and home supply retailer, has developed his club to 160 members. The club has two tiers: double bottle and collectors. On the first Saturday of the month, the double bottle members receive a red and white wine with a value of $18. Collectors receive one wine, usually red, valued at $18. Reilly likes to use direct imports from foreign suppliers and direct offerings from domestic wineries for his club selections.

Reflecting his corporate background, Reilly says about wine clubs, “I think it is a natural extension of a good wine shop. It encompasses staff tastings, selection process, customer relations, discipline to incorporate variety within your wines, and a focus on buying opportunities.”

Peterson’s staff spends about 40 hours monthly on the wine club. It covers receiving the new wines, stacking, unpacking, putting it in delivery sacks with information, routing, and processing payment, new accounts and renewals. “It is a challenge,” said Reilly. “We do it because we get a great customer reaction. They think it’s fun to get their new wines on the first Saturday of the month.”

Clinton Wine & Gourmet is owned by Chris Cree, the sole Master of Wine in New Jersey and one of only 17 in America. Considering his credentials, it’s only natural that he selects the wines and writes the tasting notes for members of his one-year old club. Members receive two wines for $25. The wines are stuffed in a custom-designed bag, colored paper fills out the wine bag and it is tied with a ribbon.

Located in the semi-rural area of Clinton, NJ, Cree doesn’t deliver. Members come to the store to pick up their wines and this often generates additional sales in wine and gourmet foods. Also, the two monthly wines are always floor-stacked and gift-wrapped for promotion and sales.

Cree said, “I discovered during the past year that the selected wines of the month give a jump start to featuring them on the floor.” He finds the program so positive that he plans to expand it as customers are asking for more options.

That’s a smart retailer: he gave his customers a new door, they entered and asked for additional corridors of commerce. It’s a way of doing business that all retailers should consider.

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