Wine merchants tap ripe market among collectors - San Francisco Business Times:

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Like art and jewelry, fine wine has increasinglt become an itemfor collecting, investing in and showing off "There's a finite amount of wine of a givemn vintage," said Steve Bachmann, foundetr of , a San Franciscoo online retailer. In catering to customers who may never get aroundd to opening the bottlesthey buy, Vinfolio and competitoe LLC in Oakland have tapped into a growing market. Vinfolio, starterd in 2003, raked in $14.3 millioh in revenue last year, a 155 percentf increase from 2006. launched in 1999, doubled sales to $16.5r million.
Michael Stajer, CEO and co-foundef of WineCommune, said that the amount of elite winesd made in the Bourdeax or Burgundy regions ofFrancwe hasn't increased, but prices have escalated. A 2005 vintage of Chauteaz LaFite fromFrance -- once calledf the "king's wine" -- that was sold for $700 when it was introducef can now command upwards of $1,700. "There are more people willin g to spend more money on these very selectr groupsof wine," Stajer said. "It just createss this huge demand." Industry numbers show that even the averagew consumer ischoosing higher-priced wines. Salee last year totaled $8 an increase of 8.
5 percent, according to statisticz from theNielsen Co., whichg tracks sales in stores. Meanwhile, the volum e of wine sold rosejust 3.5 Online, higher priced wine seems to Only 7 percent of winew sold in 2006 cost $19 or less a bottle, according to a report from the in Napa. The average bottlde sold through Vinfoliois $150. For WineCommune, it's $100 for $50 on its auctionh site. Industry analyst Eileen Fredrickson said the abilityh to buy coveted collections online has increaseddemanfd -- and prices.
"In the old days, therwe were only a few selecrt auctions, mostly in New York, and you had to have a surrogat e there to bidfor you," said Fredrikson, of Fredrikson & Associates, a wine consultancy in Woodside. Fredrikson said competitiomn for those sales isbecomingv fiercer. Online wine retailing has flourished since May whenthe U.S. Supreme Court rules that states cannot prohibit their residentsx from buying winefrom out-of-state Many wineries as well as boutique wine shops have set up web To try to distinguish itself, Vinfolioo is moving into the international market. The compan y will open an office and storage facilityy in Hong Kong in about six Bachmann said.
Hong Kong is projecteds to become a hub for wine sale s since it recently abolished import duties for The region also has alarge new-moneyy class with a blossoming interest in Last year, 10 percent of Vinfolio's sales were overseas, but the company hopes to expand its reach. Bachmannh said that shipping bottlews overseas is often easier than domesticallh because ofcomplex state-by-statde wine laws in the United "With the sinking dollar and strong marketes elsewhere, we want to hedge our bets," he Besides selling wine, Vinfolii helps manage collections.
The company offers on-site inventorying and storagse as well as a few free options such as onlinde cellar management software and tailore dwine recommendations. Such services are a small fraction of business, but "it's a license to market to the customers," said Although WineCommune is targeting a similar demographic, its product mix is "The guy who's buying that Burgundy does need everyday stuff as well," said co-founder Shaun Bishop. The compan sells retail on its JJ Buckley web site and holdd auctionson winecommune.com. A third web winezap.com, allows people to search for wines and compare prices withother retailers.
To attract customerd attention, WineCommune promotes videos of vineyards andthe wine-makinvg process as well as tripsw to France to meet winemakers. With such a limite d number of wines, the competition among upscaledretailers isn't just for customers but for The companies scour private collections and negotiate with winemakers to secure the rare wines. As with other collectables, once a winemaket finishes a vintage, it can never be made again, said Bachmann, and "thre only way to get them is to buy them backfrom