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Untangling Lineage:  The Gray Market of the Wine Industry

With the rise of Groupon, an increase in wine imports into the U.S. and a preponderance of private label wine with mysterious provenance, now is a good time to unravel the backstory of a bottle of wine, Food Network “Unwrapped” style, with, perhaps, more unsavory results and even less understanding.

The Deal is On

It all started innocently enough, as most dabbling’s do:  When a Groupon was announced in Indianapolis for a wine web site called Barclay’s Wine (their tagline:  “In Vino Veritas”) offering a $75 Groupon credit for a $25 expenditure, well, you might as well have pulled my wallet out of my pocket for me.

Despite having never heard of Barclay’s before, I figured a bet that pays off 2:1 can’t be that bad.  They have a very small selection of wine – 50-ish selections from $12.95 to $78.50, with a heavy lean towards imports.  In a thought process that I presume is natural for their customers, I became particularly interested in Barclay’s offerings of more expensive wines – a chance to experiment with aged “Super Tuscan’s,” Barolo’s and Rioja’s.  Library wines?  From a 2:1 credit?  Yes, please.  It’s like gambling with house money, the smart way to go, or so I thought.

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I had never heard of most of the wines on offer, which is not unusual for me with international wines, nor for legions of other wine enthusiasts.  I pressed on.  I purchased a 1996 Gran Vino Enologica Rioja designated as a “Gran Reserva.”  Typically only designated in the best vintages, of which 1996, according to most, was a good, but not great year, Gran Reserva’s are the highest designation for Spanish wines and must be aged a minimum of two years in oak and three years in bottle.  This 1996 therefore had about nine years of age from the point in time in which it was ready to release to market.  Not bad for $62.50 nor the $25 it actually cost me.

Oh?  That’s a surprise

Color me surprised, however, when the wine arrived on my doorstep and the bottle, faux-aged label and the wax and straw adornment were pristine – pristine to the extent that unless the wine was aged in a hermetically sealed box absent light there is no way this wine was bottled in late 1998 or early 1999, particularly so because the bottle itself was incredibly light, the kind that would be from an “Eco” series from a bottle manufacturer, a recent development to reduce bottle weight.

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I opened the bottle – It had a terribly flat nose with whispers of licorice and no other discernible characteristics.  The wine was oxidized, the fruit was gone, tannins were very soft, but the acid was integrated.  In a word:  Disjointed.  And, impossible to analyze objectively.  Could it be aged?  Perhaps, so.  Regardless, it was bad.

I looked online for this wine—a practice I’ve become accustomed to doing AFTER trying a wine (and not before) in order to maintain a sense of objectivity.

My sleuthing go-to’s of CellarTracker, Wine-searcher, and Snooth yielded very little information on the wine that wasn’t Barclay’s related.  It must be a private label.

But, a private label makes very little sense for an aged Rioja, particularly one with a brand-spanking new label that denotes that my bottle is number 762 of 12,000.  What Spanish winery would be sitting on 1000 cases of wine in bottle from a Gran Reserva year nearly fifteen years prior?

The Unraveling

I did a TTB COLA label search and found the label registration from 2004, registered to American Wine Distributors in San Francisco with Keron Lenz as the contact.  I contacted Keron, who is, in fact, an independent wine compliance consultant and she deferred me to American Wine Distributors.

The label yielded a couple of bits of investigative information.  First, the name of the importer – The Dominion Wine Group.  Second, the Rioja authenticity label and, finally, the name of the Spanish winery.

In checking out the importer, their address, via Google maps appears to be a small, non-descript office in Corte Madra, CA.  Dennis B. Canning, the only known contact I could find, is listed as having a relationship with American Wine Distributors, one of just a few references online for Canning whose company doesn’t have a web site.

They’re probably an import paperwork business, of which there are many in the wine business, set-up for the sole purpose of legality and making a couple of bucks a case on legal rubber-stamp based importation.

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Checking out Rioja certification related to a specific wine proved more difficult, but what I did find out is that the certification labeling on the bottle does represent new Rioja art as of 2008, so this 1996 was certified by Rioja sometime in between ’08 and present.

Finally, I investigated the winery, Bodegas Rioja Santiago, who appears to be a legitimate wine company who is in the business of growing, making and aging wine.  Presumably, they sell a handful of labeled wines, and sell-off the rest of their inventory.

Circling back to Barclay’s wine, more investigation yielded that not only is Barclay’s doing Groupons in Indianapolis, but also many other major markets across the country; virtually all of their wines are of the private label nature.

How it Works

Based on educated guesses – here’s how it works:  Barclay’s Wine operates in the gray market of the wine world—legal, yes, but also on the fringes of what our traditional understanding of wine provenance is.

Barclay’s, an ecommerce retailer, works with American Wine Distributors (AWD) to source finished, bulk wine from around the world.  In this case, AWD already had a label approved and an importer in place to have the wine custom labeled, going through the TTB with compliance as necessary.  Strictly a paperwork deal with the importer, the wine comes into American Wine Distributors who distributes to a network of their distributors across the country, ready to drop-ship to consumers via retail partners like Barclay’s.

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The wine, at this point is likely very margin rich, meaning that Barclay’s sets retail prices based on what they think the market will bear after paying for the wine costs downstream – purchasing the wine, labeling via AWD, importation fees to an affiliated importer and taxes. 

Responsible for demand generation, Barclay’s uses a Groupon offering to generate consumer interest—giving a $75 dollar value for $25 plus shipping means there is still plenty of money to be made on downtrodden wines purchased for pennies per gallon.

Then, insert the rube who thinks he’s buying wine with nearly free money whereby a splurge on a $62.50 bottle of wine is okay when it’s “house” money coupled with the fact that he probably doesn’t have a reference point for a 1996 Rioja Gran Reserva, nor the inclination to check, and it’s game on.

Wash. Rinse. Repeat.

Sadly, however, there are more open-ended questions for me to reconcile: 

* Is the supposed ’96 really a ’96? 

It’s Impossible to determine without carbon testing, a matter I’m unlikely to pursue. 

* How to reconcile the very light bottle? 

Was it bottled by the winery and then re-bottled to reduce shipping costs, placed in a vessel that was lighter and less expensive for shipping 1,000 cases?  It’s possible, but nearly impossible to find out.

* Is the wine even predominantly Tempranillo or lesser blending grapes?

Because of DO laws and no information on the label, it’s impossible to determine short of lab testing or calling in a Master Sommelier.  Tempranillo is an ageable wine, yet, again, the wine wasn’t overtly oaked by presence of tannins.  The notes on the site say it’s Tempranillo, but ...

Summary

Despite my sleuthing, the reality is this tale of woe happens every day in the wine world with mostly unchecked by the wine consumer.  The gray market is an under-acknowledged, but omnipresent part of the wine trade very similar to the closeout marketplace that allows name brands to end up in the dollar store.  Yet, the wine world has the added peculiarity that branding is even more stridently protected while anybody can register another anonymous wine label in a sea of wine labels.

The takeaway for me is that while Barclay’s uses the Latin phrase, “In Vino Veritas” (There is truth in wine) as their slogan, it could just as easily be another Latin phrase, “Caveat Emptor” (Let the buyer beware).

Ed. Note:  I’ve purchased two more bottles of the Enologica (continuing a streak of personal idiocy) to ensure I didn’t have an off bottle.  Regardless, I have many more questions about this luxury-priced wine than I have answers.



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Posted in, Wine: A Business Doing Pleasure. Permalink | Comments (13) |


Comments

On 01/17, AG wrote:

A very interesting article indeed.  Thanks for the great detective work here, surely you invested more time in hunting down these leads than your loss you took on this undoubtedly terrible wine.

On 01/17, Paul Mabray wrote:

I look forward to you exposing wines from other negociant services to market plonk to consumers and misrepresent them as legitimate brands.

On 01/17, .(JavaScript must be enabled to view this email address) wrote:

Nice post. I saw that same Groupon advertised in San Francisco and checked out Barclay’s before buying. When I saw the selection, I knew something was up. They were very limited internationally, but also domestically, leading me to assume a private label nightmare or a truncated site for the Groupon offer. I didn’t click the BUY but was close and glad I investigated a bit prior!

On 01/17, W. Blake Gray wrote:

Wines like this one give my blog a bad name.

I’ve often wondered about Groupon. If a wine deal is too good to be true, I find it usually is.

http://wblakegray.blogspot.com/2011/01/why-35-wines-are-worth-more-than-100.html

On 01/23, sikiƟ wrote:

thanks for admin smile) When I saw the selection, I knew something was up.

On 01/23, .(JavaScript must be enabled to view this email address) wrote:

Checked the Groupon and was amazed to find two prices for the same wine.  The Groupon directed you to a a special page with a very limited selection, and at prices 2x what the same wines were selling for on the company’s regular site. Pretty much dilutes the impact of a coupon, when you pay an inflated price for the wine.

On 01/24, .(JavaScript must be enabled to view this email address) wrote:

A friend pointed out that the WSJ wine club runs much this way—unknown wines of questionable provenance, which when researched reveal no history (and are just really bad drinkers.)  And a mailer from Laithwaite wines—who I’ve never purchased from before—arrived in the mailbox over the weekend.  A bit of research revealed many of the same wines only found at the WSJ wine club—and when reviewed, consumer scores in the 70s.

On 02/18, .(JavaScript must be enabled to view this email address) wrote:

Without going into what might or might not be accurate in all of your sleuthing - props to anyone that would spend that much time - I have actually visited the winery at Bodegas Rioja Santiago while in Haro about 5 years ago for a short week of tasting, eating, and enjoying that great town; had a private tour of the entire facility and cellars, and a very professionally-conducted tasting.  Going back to my notes: “Enologica” was their top of the line Gran Reserva, fermented at ambient temperatures and actually bottled in the plainer, thinner glass with less punt depth to harken back to the original, less hyped, marketed, and extracted-wine days of Rioja’s past (hence also the netting and wax seal).  The word simply means “wine”, and was given to this one because it was their purest example of the old world. There were walls of it bottled in shiners for years awaiting release - so that might explain the label suspicion.  It was commonly featured in wine shops there for 30+ euros, quite a price compared to some delicious local little quaffers for 6 and 8, to be sure. But it is 100% tempranillo, in a very old-style, low alcohol, limited oak and velvety, and 1996 was as you indicate, no better than a good vintage in Rioja - all of which lead to it being one of those wines that is like making love to an older woman - good, possibly even very good, but requiring a little bit of imagination.

On 03/25, TN Pas Cher wrote:

ng one of those wines that is like making love to an older woman - good, possibly even very good, but requiring a little bit of im

On 04/22, water wrote:

Most Groupon deals are too good to be true, especially lately.  I haven’t seen a wine deal on there for a while.

On 11/03, Ville-Decorating.com wrote:

High Quality article writer.

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