Dear Shark Tank Masters of the Universe:
The Wine Curmudgeon does not pretend to be a financial genius; witness my inability to make any money off the blog. But your recent foray into the wine business — Zipz single-serving wine and Beatbox flavored wine — is about something I know. For smart guys, you’re doing dumb things with your money.
Know just two things about the wine business, which should put these investments in perspective:
First, that three-quarters of all wine sold in the U.S. is traditional wine that comes in a 750-milliliter bottle, just as it has been for decades. There is no evidence that that Americans are clamoring for single-serving wine or flavored wine sold in a box, no matter how cool each product may be. If you doubt that, wait in line (or have a minion do it for you) at a World Market, where the single-serving bottles are lined up for impulse purchases. Count how many people buy them. Yes, not all that many.
Second, that wine is not sold like other consumer goods, but through the three-tier system. This means that your entrepreneurs can’t sell their product to a retailer like Costco. The law in all 50 states requires them to hire a distributor to sell their product to the retailer. If they can’t find a distributor, and distributors are notoriously picky about what they represent, then it will never be sold in a store. I should also mention, thanks to three-tier, that it would be even more difficult to sell Zipz (which isn’t all that tasty) and Beatbox in Pennsylvania and New York, two of the largest wine markets in the country. The former doesn’t have any independent wine retailers, and the latter doesn’t allow wine sales in grocery stores.
I hope this helps the next time someone pitches a Shark Tank wine deal. And no need to thank me — it’s enough to know that I’m helping incredibly rich people not waste their money.
Sincerely,
The Wine Curmudgeon