This Wine App’s Business Has Taken Flight Amid COVID-19

The COVID-19 pandemic has forced businesses across product categories to embrace e-commerce, with consumers tapping new online channels for the fine food, alcoholic beverages and socializing they once found in shops and restaurants.

Benchmark Wine, an established online seller of rare wines, has been a major beneficiary of this change in behavior, with profits nearly twice what they were over the same period of 2019: The first quarter of 2020 is among the company’s best in its 20-plus year history, CEO David Parker told CO—.

Though the wine industry is estimated at over $300 billion, buying wine has thus far remained a mostly offline experience due in large part by the patchwork of regulations that vary by U.S. state. Though some states consider liquor and wine stores to be essential businesses, on-premise sales have taken a hit amid homebound consumers. Now, restaurants are delivering bottles of wine, beer and pre-mixed cocktails with takeout orders, while wineries and distributors explore other direct-to-consumer channels.

Parker, whose career spans both the high-tech world of Silicon Valley and Northern California’s wine industry, believes he can apply this this collective experience to continue to drive interest in buying fine wines online, even among younger consumers — whose wine consumption lags their older generational cohorts. "There’s a shift from drinking more to drinking better.”

The ripening market for wine online

The future of e-commerce for alcoholic beverages looks bright, Andrew Adams, editor of the Wine Analytics Report told CO—, “as millions more consumers are discovering the variety of wines they can purchase online and have delivered to their home or workplace.”

With decades of experience online, Benchmark is well positioned to enjoy the long-term benefits of a larger online wine economy. “We’ve always shipped directly to homes and businesses,” Parker said, “so this current situation is something we’re very used to and very good at.”

How fine wine’s internet pioneers are evolving in the face of a pandemic

Despite its recent uptick in business, Benchmark and Parker himself have been fixtures of the dot-com wine scene for over 20 years. In 1998, Parker founded Brentwood Wine Company, an eBay-inspired online auction house for rare wines. Though Brentwood Wine exists to this day, through it, Parker noticed the need for online wine retail, rather than auctions.

“Benchmark grew much more quickly than Brentwood,” he said, “because people would rather buy in a retail environment than bidding at an auction and waiting to see if they’d won, and getting the wine much later.”

In 2002, Parker bought the Wine Market Journal, which, at the time, was one of the few comprehensive sources for wine valuation on the internet. Parker and his team used Wine Market Journal’s data to build software that could confidently evaluate the price of a wine and then sell it online for a profit.

Benchmark is now the largest online seller of rare wines, and is one of the few California companies to hold auction, retail, wholesale and import licenses. “We’re pretty much able to buy from anybody and sell to anybody,” Parker said, which is key for a business selling product that is, by definition, rare. Unlike the local wine shop, Benchmark serves a niche customer base that is rather dispersed across the country, making them best served by the internet anyway.

“They’re not likely to find what they’re looking for in their local shops,” he says, “so they look online and find us.”

Now, a different kind of online shopper is navigating to Benchmark’s site. With liquor stores closed or inaccessible, consumers are looking to e-commerce to purchase bottles to drink with dinners at home, rather than to store in a cellar.

“We’re seeing a lot of people [who] are buying our more affordable bottles for what appears to be immediate consumption,” Parker said. “I think that group is here to stay.”

Beyond the convenience of home delivery, e-commerce also expands the range of wineries and the types of wine available to the average consumer. Parker believes that this access to variety will continue to encourage people to drink higher quality wine.

Replicating the high-end experience in a touchless, digital setting

From apparel and accessories to food and cars, luxury brands and retailers have struggled to successfully replicate online the white glove experience one might get in person. Parker has considered this dilemma from the beginning, focusing on top-notch customer service and a premium e-commerce experience.

Parker believes that even after the pandemic passes, more people will spend more time at home. “Bringing high quality experiences to them at home is the future for us, and probably most other service industries in the country.”

Now more than ever, Benchmark is focused on helping its retail partners invest in this experience as well. “We’re a critical part of the supply chain because so many other companies rely on us as well as the individuals at home,” he said. “We’re fortunate that our business is still booming, but we need the rest of the industry in place when this is all over."

Part of the current challenge for Benchmark, wineries and other wine retailers, is replicating the high-end experience in a touchless, digital setting. So far, it’s been translating the wine tasting experience to online platforms, with live videoconferences hosted by master sommeliers and more intimate discussions as well. Parker hopes these kinds of digital events can help expand the community of fine wine drinkers even further.

“Winery employees throughout the U.S. are becoming experts in this outreach and consumers are getting used to it,” Adams says. “I wouldn’t be surprised if it continues to some degree after the crisis.”

Long-term changes to the world of wine and spirits

As in most consumer categories, questions remain as to what the wine and spirits category will look like once retailers reopen for business.

Rob McMillan, executive vice president of the Silicon Valley Bank Wine Division, agrees that e-commerce will enable higher consumption of fine wine, but for a much simpler, logistical reason. “Perhaps the most limiting factor for selling online wine is delivery itself,” he said, explaining that the majority of wine sells for less than $20 retail but costs much more to ship, considering the weight and fragility of a case of wine. “Shipping costs would run between $35 to $50, which in many cases makes the purchase uneconomic. Higher priced wine is more suited to e-commerce.”

Many long-term changes in e-commerce for wine depend on the regulations that remain when the world opens up for business once again. With new direct-to-consumer options emerging as a result of social distancing, consumer expectations are changing as well.

Said Adams: “I personally hope that this crisis will ultimately remove many of the legal and bureaucratic obstacles to shipments as more consumers realize they live in states that don’t allow for unfettered shipment of wine direct to consumer.”

And while the higher rings in online [sales] will likely fall back once life normalizes,” McMillan said, “there is no question that some consumer behaviors will remain.”

Indeed, the pandemic has given consumers more opportunity to incorporate wine into their life, and “to have learned a lot from that experience,” Parker said. “I think there’s going to be a lot more people spending a lot more time at home even if they don’t have to when this thing passes, so bringing high quality experiences to them at home is the future for us and probably for most other service industries in the country as well."

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