Steeped in tradition and vintage laws restricting the sale of alcohol online, the wine industry is one of the last to discover e-commerce. Although some local wine shops offer a "value added" online delivery service, many wineries have had trouble selling wine directly over the Internet to customers. In the US, for instance, regulations dating back to the prohibition, which prevent the movement of alcohol across state lines, make business-to-consumer Internet sales near impossible for small wineries.
But other countries are leading the way. Owners of Australian wineries, who struggle with high national wine taxes, over-capacity and flat domestic growth, are slowly coming to enjoy the benefits of e-commerce. For many distributors, who control the export of wines to the rest of the world, little-known wineries are seen as more trouble than they're worth. But there's more to Australian wine than Jacob's Creek.
Famously fruity Australian Shiraz and Cabernet from the most prominent wineries down under get much of the shelf space in Irish off-licences and supermarkets. But what about those less sugary, but equally cheeky, numbers? The classic Australian Mount Mary, for example, is like gold dust even in Australia, and has been largely shut out of the lucrative international market ... until now.
A growing number of online wine exchanges - which trade rather than buy and sell wine - are cutting out the distributors and selling directly to retailers and consumers. They are gradually changing both work practices and attitudes in what is a fiercely conservative industry. Wine-savvy Internet entrepreneurs - such as Christopher Burr, chairman and chief executive of Uvine, a London-based online wine exchange - are finding a new generation of customers in the UK and Ireland.
Unsurprisingly, Australia is proving very popular. With a 29 per cent consumption tax on wine sold domestically, it makes sense to sell overseas. "Our turnover there doubles every month," Burr says.
"Australians don't have the prejudices or conservatism of Europeans in this business. They are open to new ways. We do give priority to smaller wineries, but they all have the opportunity to trade with us. We have 600 Australian wines from 200 wineries on offer with a value of about AUS$ 2 million about £970,000)."
Burr, who used to run the wine department at Christies in London, has seen a reluctance among some of his peers to embrace the Internet. All the better for Uvine, which recently celebrated its first birthday. It has been forging into new markets, including Hong Kong, which has a crippling 60% per cent tax on domestic wine sales.
His offers include a collection of every vintage produced by Grange since 1951. "This is a unique opportunity," he says. At a price tag of AUS$ 148,000 (nearly £72,000), he's not wrong. "But we're not snobby in any way," Burr insists. "If the wine is good, we'll trade it." As the customer must pay for delivery, he is geared towards the serious wine connoisseur. As an online exchange, he takes 5% per cent from the seller and 5% per cent from the buyer. Most e-retailers charge around 15% per cent commission, while auction houses like Sotheby's charge up to 25% per cent.
As Uvine charges around 20% per cent less than bricks-and-mortar retailers, it can offer bottles of Bollinger for around £70 a case. "It makes a jolly good deal," he says.
As these online exchanges involve "trading", confidentiality is key. Burr, therefore, will not reveal the identity of his Irish clients. "If you are a wealthy Irish businessman," he says, "you wouldn't want everybody to know that you have a cellar worth up to £100,000." Wineries are a different matter. Australia's Atherton Wine, which produces up to 80,000 cases a year, and Rochford, which produces only 12,000 cases a year, are just two to enjoy this new outlet. Wherever Uvine go, they go. While top Bordeaux red wines, likesuch as Chateau Mouton-Rothschild, have always been regarded as a good drink and investment, lesser-known Australian wines are also starting to make it on the scene - and the Internet.
Established vintages from Penfolds Grange 1989 have more than doubled in five years. But once obscure Australian labels, such as Clarendon Hills, have emerged:, its 1996 Astralis Shiraz may fetch well over £100 at auction.For those with a more modest budget, Independent e-retailers who buy wine from wholesalers, rather than wineries, offer services that lie somewhere between these exchanges and those Internet delivery services attached to bricks-and-mortar off-licences. On the one hand, they access a larger variety of wine than your corner shop. On the other, they don't specialise in seeking out more unusual, under-appreciated wines from the other side of the world.
Dublin-based ewine.ie, found_ed by Philip O'Connor last November, is one such company, offering more well-known wines by Louis Latour from France and Lindemans from Australia. And with minimum orders of one case and just three part-time staff, he aims to keep prices 10% per cent below normal retailers.He also offers free nationwide delivery. (In the Dublin area, O'Connor will deliver the wine to your doorstep himself.) As he exists in cyberspace, overheads are minimal. His biggest cost was a one-off fee to a web design company to set up his site.: "You wouldn't get much change out of £25,000," he says.
He sources his wine from Gilbeys, one of the most extensive wine warehouses in Ireland. Nor does he rule out smaller wineries. "We have had calls from agents in France who have put together portfolios of smaller chateaus," O'Connor adds. "But, as we don't deal directly with wineries over the Internet, I usually point them in the direction of Gilbey's' warehouse." Small wineries, therefore, must still deal with the three-tier system of agent/distributor, wholesaler (Gilbeys) and e-retailer (O'Connor).
"We'd have one or two wines that you wouldn't get in the off- licences," he says. "We also have mixed cases, which are very popular." They include the so-called "New World Adventure" case with bottles from Australia, Chile, America and Argentina, and "Dinner Party" cases with red and white wine, dessert wines and two bottles of champagne. Prices range from £54 for a 12-bottle case to £7,500 for a 12-bottle case of Chateau Petrus. But the most popular cases go for anything up to £130.
The U.S., with its thicket of regulations, remains one of the biggest untapped markets for purchasing wine over the Internet directly from wineries. In many wine regions across the U.S., it is still customary to ask local priests and ministers to bless the vineyard in spring and the harvest in the autumn. Today, many small wineries overshadowed by the major wine powerhouses may be thinking of including their computers in that most holy of customs. Just 5% per cent of US wine sales take place on the Internet, and most of that those are domestic sales.
Some intrepid Internet companies have tried. In order to sell wine to consumers across state lines,. San Francisco-based WineShopper.com spent its early days painstakingly obtaining clearance from regulators state-by-state, sometimes routing cases of wine via stores/retailers on paper only. But that's a lot of leg work for one lone start-up. It was eventually soaked up by evineyard.com, one of the few in the U.S. still selling wine online.
As a result, there has been a wave of consolidation in the Internet wine industry. Many U.S. wine websites only deal with business-to-business production supplies, such as oak barrels and bottles, leaving the computer-literate wine connoisseur high and dry.
Back in London, Christopher Burr's Uvine.com has yet to fully explore the U.S. wine market. "We are focusing on being completely global," he says, "but the U.S. is the hardest market, so it's not an area where we've concentrated our efforts. In other countries the industry is more consumer-led."