News

Reprinted from San Francisco Business Times

January 28, 2005

Like a Cork on the Ocean, WineBid.com Stays on Top

By Chris Rauber

WineBid.com, a hardy 9-year-old survivor from the prehistoric days of the dot-com boom, is boosting its online wine auctions to a weekly schedule and predicting a continued boom in business.

The Napa-based online wine auction firm just doubled its auction schedule, with weekly auctions starting Jan. 9. Auctions include rare wines and feature more than 4,000 lots, with bids typically ranging from as little as $20 to as much as $2,000 per bottle depending on the lot. The weekly auctions open on Sunday and close a week later. The site has attracted about 32,000 registered bidders who provide credit card and other information.

The firm’s success is based on the simplicity of its model, according to Jerry Zech, its longtime CEO. "We focus on one thing, rare wine," said Zech, who earlier in his career started a synthetic wine-cork maker called Supreme Corq. "We don't sell chocolate or stemware or anything else."

Customers tend to be high-income men between 45 and 55, although interest is growing across the board, and "a lot of people in their 30s have signed up," Zech said. Some buy to enjoy; others buy to invest.

Past auctions have focused on first growth Bordeaux and Bordeaux futures, hard-to-find historic vintages and other specialties, such as a Jan. 16-23 auction featuring wines from the Oscar-nominated movie hit "Sideways," which tells the saga of two middle-aged wanderers in the Santa Maria and Santa Ynez valleys northeast of Santa Barbara. Those wines included 1961 Cheval-Blanc, 1988 Sassicaia and 1995 Opus One.

The firm expects revenue this year to approach $20 million, up from $16 million in 2004, according to Zech, who splits his time between WineBid.com’s Napa headquarters and its IT and accounting center in Seattle. "I’m confident we can continue growing at the rate we’re growing," Zech told the Business Times. "As long as we stay focused on our niche, we'll continue to see that growth."

Dan McCarthy, one of the owners of McCarthy & Schiering Wine Merchants in Seattle, said WineBid.com offers good advice to potential sellers, and that its online auctions are more accessible for many bidders than live auctions. "They’ve been very successful, and I’ve steered lots of clients in their direction," he said.

Twenty-three of the firm’s 38 employees are based in Napa, with others in Seattle, Chicago and New Jersey. WineBid.com leases about 40,000 square feet of "fully air conditioned and climate-controlled space" in a huge public warehouse in Napa, which serves as its staging arena for auctions.

Zech said privately held WineBid.com is believed to be the largest online wine auction site, but that’s hard to quantify because its competitors are also private firms. WineBid.com’s investors include the father and son team that launched the firm in 1996 and the Walter Group, a Seattle-based private equity firm.

But only his company competes in the same heady realm as big auction houses like Acker Merrall & Condit, Aulden Cellars-Sotheby’s, Morrell & Co., NYWinesChristies, Christies London and Sotheby’s London, according to a March 2004 story in the Wine Spectator.

The company sells wine collections for clients, ranging in size from about $5,000 in value to the hundreds of thousands of dollars, and is licensed to accept collections from anywhere in the United States and internationally, Zech said. Buyers pay a 14 percent commission plus an additional 1 percent for insurance; sellers pay on a sliding scale, depending on the size of the collection, going up from "negotiable to 18 percent," according to Zech.

WineBid.com also buys wines from some sellers outright. That helps in cases like divorces, he notes, where "some people need to get rid of their wine quickly."