Numerous ads in wine industry newsletters advertise bulk wine. I am often puzzled about the reason for this classification and who purchases such wine. There are a lot of California bulk wine ads. I also see wine sales from Washington, Oregon, and East Coast wineries. It is not uncommon to see ad for wines from international wine regions.
The bulk wine sector is an important part of the wine business that is often overlooked by casual wine consumers. What are bulk wine and grapes? This wine is made from wineries’ surplus production that has yet to be bottled and labeled. A segment of the market is made up of wineries and vineyards that only produce wine for the bulk market. Some brands do not have a winery, and instead rely on the bulk markets to build their brand. Bulk grapes are similar to wine and come from either a winery’s or independent vineyard. These grapes can be purchased by the pound at harvest, often up to a year ahead.
Bulk wine is wine of known quality and is tasted before it is purchased. Brokers who sell wine without a home do not take ownership of the wine but must still obtain a license from the Tax and Trade Bureau of the Department of the Treasury. Bulk wine is a wine of high quality that is known to have a pedigree, has historical characteristics, and can be easily tasted/tasted.
It would be easy to conclude that all wine produced in the United States would find a market through demand, given the 2.8% increase in U.S. wine sales year-over-year. California’s vineyard planted acreage is expected to remain flat in 2017, compared with 2016, with 15,000 acres of new land being planted, most of which are in the San Lois Obispo Coastal region. Planted vineyard acreage numbers can be misleading because there is always acreage that has been removed from the vines for replanting. Despite changes in the global wine market, both the bulk wine and grapes market continues to grow. The reasons for this growth are many and complex. So, the question that begs clarification/amplification is: What happens to surplus wine and grapes?
Anyone can buy surplus wine. Many wine labels are available that use surplus wines, or bulk grapes. One could purchase the wine and have it shipped to a winery. They would then blend the wine and bottle it for distribution.
You want to understand how bulk wine affects you as a consumer. Let’s say you enjoy a wine at a restaurant, or at a friend’s house. You then go home to search for the winery where it was made. Surprise, the winery is not easy to find. The wine you are excited about may have come from an accomplished winemaker who bought bulk wines from which he blended/bottled/labeled that new favorite wine you just discovered. Most likely, the bulk wine was sold by a broker who deals in bulk wines. There are many around the world, but only a few in each nation.
The Ciatti Company, located in Northern California, is the largest global surplus grape and wine broker. Since 1946, they have been selling wine and grapes all over the globe. Steve Dorfman-Partner at Ciatti says that on average, they receive or initiate approximately 4,000 conversations about buying or selling bulk wines. “The bulk market is mostly a business to business transaction. It can include large wineries with international brands and start-ups with a vision of a new brand. Bulk brokers are not targeting home winemakers. Some of their wine transactions involve more than 10,000 gallons.
This wine business is distinct from the custom crushed sector. These wines are usually produced by a winery that has fermented a product that may or not be a varietal. A custom crush is mainly the process of purchasing grapes, crushing, fermenting, and bottling wine according to a particular customer.
The soft underbelly in the wine business is the surplus wine and grape business. This business can be large and does not only apply to wineries with surplus juice. There are also wineries and vineyards that specialize in the production of bulk wine. There are wineries and vineyards that produce bulk wine only. Some wineries and brands can forecast the needs of bulk grapes in order to plan their next harvest. Bulk grape brokers are busy in the winter selling next year’s harvest or beyond from vineyard production. Bulk grape buyers may even be able to specify grapes by their clone. Bulk brokers then try to match buyers and sellers.
What are the steps involved in acquiring bulk wine? This type of wine is essentially a finished product.
* The process begins by e-mail or phone call. The buyer must specify the wine type that is required for a label, blending, or varietal. A few bulk wines can be purchased to test new product concepts being considered by wineries or private labels.
* Next, define the requirements in terms of ABV, acidity and tannins. A bulk broker can then select bulk wines that will be shipped overnight to buyers for analysis and tasting. There may be specific requirements regarding the source/AVA of the fruit.
* Customers/buyers may request additional samples or other options after tasting the first sample.
Pricing is ultimately the most important factor. Bulk wine and grapes still depend on market conditions. Dorfman says that market conditions depend on drinksfeed availability, quality, prestige, customer preferences and demand. “Nothing in bulk wine business is constant.”
* A Memorandum of Understanding (MOU) is signed by both the seller and the customer describing the terms, conditions, and shipping terms.
The deal is now done.
Most bulk wine companies have a set commission schedule to reward their efforts. This is usually determined by the country of origin. Based on the country of origin, the commission is usually between 2 and 4 percent.
It would be wrong to suppose that surpluses (grapes and wine) are the result of over-production, as we have already noted. Wineries and vineyards can plan for surpluses that they can sell to finance a limited private production or test new wine ideas. Wineries with their own vineyards plan for excess production to make it economical for them to purchase certain grapes that they require for their established labels.
There are also wineries and vineyards that do not produce wine under their own labels. These wineries and vines exist to supply the negociant market, private wine producers, and wineries looking for additional wines. Many wineries that are the biggest purchase bulk wine because they don’t have enough to expand production or have problems with their current supply. Bulk wine purchases seem to be a risk-free option for both new and experienced winemakers. Cameron Hughes Wines is an example. They started by purchasing small quantities of bulk wine, and their growth has accelerated over the years.
Ray Isle, writing for Food & Wine, describes the negociant as follows: First, he started in Burgundy and purchased grapes or finished wines from the region’s many small estates. Then he blended, bottled, and sold the wine under his name. Most of the top Burgundy producers, including Jadot and Drouhin, are primarily négociants.
There is no good or bad wine. Wines that are looking for a match are the best. Ciatti knows that all bulk varieties and bulk blends can be used. Dorfman stated that every winemaker has problems in producing their wine. These issues can be solved by using bulk wine. Their business is 55% domestic and 45% international. There seems to be a place for quality bulk wines anywhere in the world.