I notice numerous ads appearing in wine industry newsletters that advertise bulk wines for sale and often wondered why there is this classification of wine for sale and who buys such wine. I see ads for a lot of California bulk wines as well as some of these wine sales from Oregon, Washington, and from East Coast wineries and vineyards. And with some frequency it is not unusual to see ads for wines sales coming from many international wine regions.
Bulk wine is another facet of the wine industry that is not understood by the casual wine consumer, but it is a major contributor to the growth of the wine industry. What is bulk wine and grapes? This wine comes from surplus production at a winery that has not yet made it into the bottle and labeled. There is also a segment of the market where wineries and vineyards produce wine only for the bulk market. There are also brands that have no winery and rely on the bulk market to create their brand. Bulk grapes, like wine, come from a winery’s vineyard or an independent vineyard. These grapes are sold by the ton at time of harvest; often a year in advance.
Bulk wine is of a known quality that is tasted by a buyer prior to the purchase. Brokers that sell wines without a home never take possession of the wine, but still have licensing requirement from the Tax and Trade Bureau of the Department of the Treasury. Point being, bulk wine is a high-quality wine that has a pedigree-it has a known producer, known quality, historic characteristics and is easily sampled/tasted by the buyer.
With year over year growth in U.S. 2016 wine sales of 2.8%, it would be easy to assume that all the wine produced would have a market based upon demand. Vineyard planted acreage in California is expected to be flat in 2017 versus 2016, with 15,000 new acres being planted; mostly in San Lois Obispo Coastal area. (Planted vineyard acreage numbers are misleading as there is acreage removed when vines are removed for replanting.) Even with changes in the wine market worldwide, the market for bulk wine and grapes continue growing and the reasons for the growth are complex and numerous. So, the question that begs clarification/amplification is: What happens to surplus wine and grapes?
Surplus wine can basically be bought by anyone. There are many wine labels on the market that comes from surplus wines or even bulk grapes. For example, someone could buy the wine, have it delivered to a winery, work their blending magic on that wine, do the bottling and ship to a distributor.
Now you want to know how this bulk wine impacts you as a consumer. Let’s assume you go to a restaurant or a friend’s home and you experience a wine you absolutely love, you go home and try to find the winery that produced the wine so you can buy it online or maybe you want to schedule a visit. To your surprise, you cannot find the winery. 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. The bulk wine was most likely sold by a “bulk wine” broker, of which there are many. Many around the globe, only a few in each country.
The largest global surplus wine and grape broker is The Ciatti Company in Northern California. They have been selling these wine and grapes around the world for 46 years. “In an average day, we initiate or receive approximately 4,000 conversation about selling or buying bulk wines,” says Steve Dorfman-Partner at Ciatti. “Mostly the bulk market is a business-to-business transaction that range from extremely large wineries with global brands, to start-up companies with a vision for a new brand.” Home winemakers are not the target market for bulk brokers. For example, some of their wine transactions are for more than 10,000 gallons.
This type of wine business is different than the custom crush sector of the wine business. Such wines comes from a winery that, generally, has produced a fermented product that may or may not be a varietal wine. Custom crush is mostly a process of acquiring grapes, crush, fermenting and bottling wine to a specific specification by a specific customer.
The surplus wine and grape business is the soft underbelly of the wine business. This business is large and doesn’t just apply to a winery with surplus juice. There are wineries and vineyards that exist only for the exclusive production of bulk wine. Simply, there are vineyards (as well as wineries) that only cater to a market that expects to buy bulk wine from which they label as their own brand. In the case of bulk grapes, some wineries and wine brands forecast their needs for grapes for their planned production for the next vintage. In the winter months, bulk grape brokers are busy selling next year’s harvest and/or beyond from vineyard production. Some bulk grape buyers can even specify grapes by clone; then bulk brokers try to match sellers and buyers. Wine Fountains