Retailers with provenance guarantee on older bottles

WINE TALK
21

I want to own a wine store and have great old wines for sale in it, and I have thought about what I would do in this case.

First of all, i would not sell bottles I knew to be improperly stored.

Second, I would not be able to provide givebacks for TCA.

Third, if the wine was just not to their liking (tertiary when they like primary) I would not give givebacks. (I would hope not to have this occur, but I would want to be big enough eventually that I don’t personally handle every transaction, so this could occur (say over the Internet)).

But if a bottle of wine had been improperly stored and I sold it, I would consider a giveback. But I would not make a blanket guarantee. It would be case-by-case (no pun intended).

If I had a case of the wine, I would open another bottle and judge it to help me evaluate what to do. I would rather run a good business that sell bad wine. I would have to buy correctly, not getting too heavy into wines that are potentially not good. Even some of the wines in the Koch auction last year seemed like they were risky - description of seepage, etc.

Keep in mind that this is just a dream right now.

My other thought is to just start my own auction house.

22

This sounds like the standard retail attitude: The customer bears all the risk. As a consumer, it’s really annoying to read this.

Ha! The ultimate way to avoid any risk.

23

Well, John, how would you do it? A store is a business, meant to provide a service while being profitable.

I thought actually being open to givebacks was more customer-friendly than most models, which would not consider a giveback. The point would be if I made a mistake in buying the wrong cellar, I would be open to a giveback - if it is something that can be traced to a decision of my own.

As for TCA, I have never heard of it being caused within the retail environment. In my experience, wholesalers will refund a retailer for a corked wine - but only within a very limited amount of time, 30 days after purchase.

I suppose it’s possible to create a model where givebacks are built into the price, but then the price of all bottles will go up.

You say customers assume all the risk - but they also enjoy the benefits of not paying more to have that risk eliminated.

24

Ask Chambers Street. They seem to be doing well. Obviously, they build it into the price, but their prices on older wines are consistently fair.

You’re “open to” a return but you won’t guarantee that you’ll allow that? That’s not very reassuring to a customer.

No, TCA isn’t the retailer’s fault, and I realize corked bottles can’t always be returned to the distributor – particularly if they’re old or were purchased on the secondary market.

But you response reflects the general industry attitude that TCA is a risk for consumers to bear. It’s really mind-boggling that, for years, an estimated 10%-12% of all wine was TCA-infected and, for the most part, the industry said, “Tough.” (Luckily the defect rate has fallen in recent years.) It’s particularly weird when many wines as sold on the basis that you should wait years to open them. What apparel stores would accept that 10% of its shirts were defective, but that’s the customer’s problem? Or a camera maker, or whatever.

Retailers need to push back on distributors on TCA, and the distributors and importers need to push back on producers.

If you want to fulfill your dream, my advice is to start looking at all these things from the consumer’s perspective rather than just adopting the status quo approach of existing retailers.

25

Seriously - you can only guarantee the proveniance of a bottle if you purchased it directly from the producer … and either collected it by yourself … or have it shipped yourself under strictly controlled conditions …
Otherwise it´s a matter of trust and believe …

Good if a retailer guarantees the origin and condition …

However: a “corked” bottle is not a question of proveniance but only of cork quality (TCA-free) …
if you can return it depends on the business policy …

26

Frankly, John, that’s a good response.

I did not read the Chambers Street topic link initially (from Mark) but I did just now. That is nice to know they subbed out wines for both over-the-hill and corked.

My thoughts on the potentially - but not necessarily - guaranteeing wines was two-fold.

First would be based on the profile of the consumer. If it was just someone who was one-off purchaser of say a birth year bottle and didn’t understand how wines evolve, I wouldn’t necessarily sub out if a 1985 Mayacams CS didn’t taste like a 2009 Merus. Of course I would want to ensure the buyer knew the differences up front but it’s possible a transaction could take place without them knowing. But even guaranteeing transactions like this won’t be that costly, I would think.

Second was your own point that “sometimes a wine is shot even though it was well stored.” That was mainly what I didn’t want to guarantee against. Because originally what I thought was that people would trust me to find wines that were well stored - and trust me, I have found many that are not.

But sometimes the wines are well-stored but the bottle is gone, or not good. I remember finding a nice collection, everything stored properly, and a case of 1985 Pichon Lalande too bretty too drink. I have read reviews of the wine being enjoyable but since then (a few years ago) I have not tried the wine.

I am going at this, John, like you, as a collector and lover of wine. I have worked in retail wine stores before but I haven’t owned my own yet. So I am trying to figure out the best way to do it and this thread may help me.

The dream of the store is I enjoy chasing and hunting down the cellars but I won’t ever have time to drink everything so the store would be a way to fund that passion and skill, and get wines in the hands of others.

So ultimately I am a consumer and a collector that wants to support his collecting habit with a store, so I do want to stand on the side of the consumer, as you suggest I do.

Let me ask, you, though, to consider how would you approach this issue if you became a merchant? How would you mitigate against risk? Would you taste a bottle from every single case you considered purchasing? Seems extreme in say the case of a 500-case cellar. Proper examination, tasting a few before purchasing, tasting others over time once you’ve acquired them - that would be my method.

I know I have read before here on WB that threads to change people’s minds but John may have done so with mine!

27

Just came on your post from a month ago now.

I assume stores that sell older wines do some sampling before they buy in a cellar. I have no idea what proportion they taste. I’d love to know how much. (And how can I get that job?)

Obviously most stores that sell older wines offer fairly limited guarantees, not a satisfaction guarantee, and most customers are content with that. So if you opt for that root, you will be in good company.

The vehemence of my responses to you were because you seemed to be saying it was impossible to offer a stronger guarantee, when Chambers Street does that. And you sounded like you were looking at this solely from the business person’s perspective, and limiting your risk as a potential retailer. However, in business, making the customer happy, even if it entails some returns and other costs, often pays off in the long run.

28

John, I agree whole heartedly with your point that stellar customer service pays off.

My original hesitation was rooted in two sources: 1) not knowing if I would be able to ascertain what the customer was complaining about, and 2) my being inured to the currently common market practice of assigning virtually all risk to the buyer (as until now my experience has largely been as a buyer, not selling).

But I do definitely want to be the seller of first resort.

I have had one further question for you, though, which is: how long would you let your guarantee last? I can see guaranteeing for two days, but two years seems too long. How long would you extend the guarantee?

And a follow-up question: when you say a limited guarantee, how specifically would you craft the limitations of the guarantee?

29

Interesting questions. I don’t think Chambers Street puts a time limit on theirs.

I guess you could say unlimited time for TCA. For the condition of older wines, I’m not sure what to say. As a buyer, I don’t necessarily purchase old wines to drink immediately. I may just want to grab a rarity and stash it away, so a one-month guarantee wouldn’t be that exciting. But, obviously, things are outside the merchant’s control once the wine goes out the door, so I don’t think anyone would fault you for limiting that to a month, or two or three.

30

In a sense that’s why I was hesitant to put an hard and fast guarantee. If it was a long-time great customer, I would likely extend the guarantee longer, perhaps indefinitely. Or if it were someone with a known wine knowledge pedigree buying a first bottle, I might be more lenient in the guarantee than a sale to a first-time, one-bottle buyer.

Unfair to the last type of person? Perhaps. But I would want to customize the experience, have a phone conversation perhaps to feel them out if it were over the phone, etc.

If you have any other thoughts, lmk. I haven’t done anything aside from continue in my current roles so no store in the near future.

31

Karl,

The way I see it, it is much better for both the merchant and the buyer to have a clear policy. Either it’s the “caveat emptor” employed by most of the wine world, where the savings are (presumably) passed on in the form of slightly lower margins, or you charge somewhat of a premium and make it clear that satisfaction is guaranteed regardless of an attempt to assess the wine knowledge of a client. The 2nd approach has some potential upfront costs, but if it’s done in a forthright way it can lead to a very loyal customers down the road (as is the case with Chambers St.).

32

Good point, thanks for making it.

What’s the “best” premium. 3%?

33

What about having two prices? $1500 no guarantee, $1600 guarantee?