Amazon Eager to Build Wine Market

VP of marketplace details web retail at WiVi conference, other experts talk winemaking and grapegrowing

by Andrew Adams
wivi peter faricy
Peter Faricy, vice president and general manager of the Amazon Marketplace, discusses the company's wine operations with Cyril Penn the editor of Wine Business Monthly. Photo by Erin Kirschenmann
Paso Robles, Calif.—Amazon is committed to wine for a “long, long time,” says Peter Faricy, the executive in charge of the firm’s marketplace, who adds the web retailer is enjoying success with its latest foray into the wine business.

Opening the second day of last week’s WiVi conference, Faricy said Amazon is now working with “hundreds” of wineries to sell their wine. During a question-and-answer session with Wine Business Monthly editor Cyril Penn, Faricy described Amazon’s wine trade in only general terms, saying he could not disclose any specifics such as sales figures or the exact number of wineries who are working with the web retailer.

Faricy did say that since Amazon launched its wine segment in November with more than 200 wineries, it has averaged about 20 to 25 new wineries a week. “We’ve been super pleased with the reception so far,” he said.

Amazon currently offers shipping to 15 states and Washington D.C. Faricy said the No. 1 question from consumers about wine sales is about when Amazon will begin shipping to their state. He said the site is working as fast as possible to add other states while ensuring complete compliance.

Under its current model, Amazon will never handle wine directly, relying instead on the wineries to handle fulfillment and shipping. Even if a winery can legally ship to consumers in a state not currently served by Amazon’s wine marketplace, it won’t be able to sell wine to those consumers through Amazon. This will be Amazon’s third venture into the wine business following two previous attempts with partner firms that went bankrupt.

Faricy said the site just has wine from California, Washington, Oregon and New York, but he wants to expand its offerings of both domestic and international wines. “We want every single winery there is to sign up for Amazon Marketplace,” he said.

Winery closes the sale
Amazon is acting as a portal for consumers to find wines, but it’s still up to the winery to set prices and close the sale. Currently Amazon is waiving regular fees for wineries that join the marketplace, Faricy said after the session. He said for the indefinite future any winery that joins with Amazon would only have to pay a “referral” fee of about 15% of the purchase price.

In exchange for the fees, Faricy said wineries enjoy Amazon’s huge consumer base and online sales support. The firm also gives wineries a place to showcase their wine and tell their story to consumers they may not normally get a chance to market wine. Faricy said wineries have reported back to Amazon that many of the sales recorded through the website are to new customers that were not already in their sales records. “I think that’s really important to wineries,” he said.

Being able to leverage Amazon’s vast consumer reach with its history of online retail makes it a better choice for a winery than other online retailers, Faricy said. Amazon also ensures each winery has plenty of space for photos and brand information as well as the background of the winery. “They get a chance to tell their own story,” he said.

He said wineries looking to work with Amazon could contact the company directly through its website.

Problems in the winery
During a technical session about winemaking held March 19, Richard DeScenzo, head of ETS Laboratories’ microbiology group, discussed the risk of high volatile acidity (VA) from a problematic fermentation.

DeScenzo said the issue was rather prevalent during the most recent vintage. He said in Napa Valley he often saw vans from VA removal firms driving up and down the valley all fall and into the winter. “I don’t think those guys have slept since September,” he said.

DeScenzo said the lab performed 15,000 juice panels from the most recent harvest and compared data from those to the previous year and found a 25% decrease in yeast assimilable nitrogen. He said the lab didn’t analyze the data for any specific trends but said that could be part of the reason behind a number of difficult fermentations.

VA can often spike with sluggish fermentations when winemakers assume they can wait for the yeast to finish the job. “Winemakers are the eternal optimists when it comes to stuck or sluggish fermentations,” he said.

If heterofermentative lactic bacteria are present in the must or juice they can send VA skyrocketing after metabolizing glucose and fructose. DeScenzo said winemakers should take baseline analysis of VA, glucose and fructose and malic and regularly monitor those numbers and prepare a plan of action in case of rising VA. “It’s all about assessing risk,” he said.

Too many times in the past year, DeScenzo said, winemakers opted for a reactive approach that left them with a high VA level and little other option than direct treatment.

Yield, quality debate
A panel of viticulture experts explored the much-debated topic of how yield can affect grape quality during a March 20 session at WiVi.

Mark Greenspan, the founder of Advanced Viticulture LLC, said he believes in what he termed a “magic window” around véraison, during which growers need to make decisions about vine balance. He said actions taken during this period have the greatest effect.

Several academic studies have found a vine’s ripening rate is fairly standard regardless of crop load. The idea of a window of opportunity also is being bolstered by research from Dr. Mark Matthews at the University of California, Davis. “This little window of opportunity is where ripening is decided, where the end result is decided,” Greenspan said.

While many use tons per acre to discuss yield and quality, Scott Williams, the vineyard manager with Pacific Vineyard Co. in San Luis Obispo, Calif., said the figure is often meaningless. Williams, who helps manage nearly 1,500 acres of 13 grape cultivars for about 30 different brands, said a more accurate measure is yield per trellis foot.

He said growers need to find the right balance point for a vineyard based on its location and work with a winery to find the “sweet spot” for optimum yield and quality.

Offering a winemaker’s perspective, Scott Hawley, winemaker and owner of Torrin Vineyard in Paso Robles, also said the key is to understand vineyard terrain and climate. He said there’s no specific recipe to balance yield with quality, but rather understanding what the vines can produce.

“When you talk about winemaking, we’re not magicians,” he said. “If you’re out of balance in the vineyard, we have few options in the winery.”

The inaugural WiVi Central Coast 2013 symposium and trade show drew 600 attendees. Organizers are optimistic about the future of the event. Stay up to date at wivicentralcoast.com.

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