Sid Patel, chief executive and founder of Beverage Trade Network and the International Bulk Wine and Spirits Show (IBWSS), gives his insights on the US bulk wine market, and the birth of IBWSS.

Tim Hanni MW, a wine educator, and consultant say the challenge for international producers who want to enter the US market is “learning the intricacies of how bulk wine business is transacted”. Hanni MW,  who has helped to establish the USA’s first bulk wine trade fair, adds that it’s critical to establish “a network of connections to the brokers, buyers, and sellers.”

What is bulk wine?

Bulk wine is simply defined as a wine that is shipped in containers such as ISO tanks and Flexitanks, instead of bottles or smaller packaging. Sometimes bulk wine is considered to be any wine that is shipped in containers that are larger than two litres. However, technically, bulk wine is a wine that is shipped in large containers and is then repackaged at its destination.

Who buys bulk wine?

Bulk wine has a large range of buyers, which include wineries, importers, exporters, and bottling facilities.

Retailers that are looking to sell ‘private label’ wines can also be significant buyers of bulk wine. Private labels, in simple words, are the home brand wines created and sold by many liquor retail chains, supermarkets, grocery chains, and now even restaurants. The main advantage that private label wine offers retail chains is that it gives them control over the product, and eliminates the price competition from other retailers. After all, if they’re the only ones selling that brand of wine, then they don’t face the pressure to discount it.

Why bulk wine?

Bulk wine is traded for many reasons, from the need to create a blend using a varietal that’s not available locally, to a need for more wine because of a poor vintage, all the way to private label. On the other side, producers sometimes have excess grapes or wine that they can’t use themselves, and the bulk wine market offers them a way to sell that excess. Wineries – unfortunately – also occasionally find themselves stuck with excess wine because a buyer has failed to make a payment or pick up the stock.

But although there are good reasons why the bulk market exists, there’s also a good reason why the whisper market exists. It’s commonly believed –wrongly – that excess wine is always poor quality. As a result, engaging openly in the bulk wine market has the potential to tarnish the reputation of a winery otherwise known for its award-winning wines.

This scenario presents an opportunity for buyers to procure bulk wines of excellent quality and use them judiciously to build new brands, or flesh out an existing wine portfolio – provided all players can navigate this complex market.

In the US, bulk wine is traded in one of three ways

1st Tier

The first and most important tier of the US bulk wine trade belongs to wine negociants or brokers. Brokerage firms offer a great starting point for international bulk producers seeking to enter the US market, given their experience, knowledge, and connections.

It’s not surprising that San Francisco is the hub of the bulk wine business, both domestically and internationally, given that it’s both within reach of more than 4,000 Californian wineries, as well as being a significant entry point to the US.

Brokers such as Turrentine Brokerage, Mancuso Wine Brokerage, and The Ciatti Company, are leading names in the bulk wine space. Such brokers offer services ranging from grape and bulk wine brokerage to global bulk wine trading evaluations and strategic branding.

Brokerage firms may also offer ‘services as contract manufacturers or private label makers, a part of the business known as ‘custom crush’. This involves a buyer stating the profile of the wine required, which is then made to order by a winery. The buyer usually provides cartons and labels and the winery produces the finished goods.

2nd Tier

The second strata that pushes bulk wine business are wine industry classifieds. Classifieds are basically small advertisements to bring awareness to the point. These classifieds usually appear in newspapers, industry publications, or online - through websites such as winebusiness.com and Wine Country Classifieds (which is also distributed in print).

The classifieds will list available bulk grapes or the specifications of ready-made wines, and potential buyers then contact the supplier directly. Many wineries list bulk grapes and wines for sales on their regional association’s website. There are also web portals like VINEX and VinsenVRAC where buyers can negotiate on grape and bulk wine listings.

International producers can also list their products through these avenues, as long as they are able to take care of the legalities, logistics and price negotiations themselves.

3rd Tier

The third layer of the bulk wine trade market is known as the ‘whisper market’, where trade is conducted via personal relationships only. Products are not listed anywhere and nor is transactional data publicly available; nevertheless, this market accounts for a sizeable share of the bulk wine trade.

Relationships in the wine industry matter a lot, therefore the whisper market plays a large part in expanding the bulk wine sector.

Insider information is circulated about things such as how many gallons of wine are available for sale at which price and buyers privy to this knowledge can arrange to taste the product and proceed with the purchase.

Wineries can also let brokers know what wines they have for sale, and trust that the brokers will sell the product discreetly, without revealing where it came from.

Similarly, wineries or buyers looking to buy bulk wine can make their exact requirements known to a brokerage firm or negociant, who will then put the buyer in touch with a relevant winery.

This would be a trickier channel to explore for international bulk wine producers, at least until they have spent more time in the market and made deep connections within the network of bulk grape and wine buyers and sellers.

Bulk wine show

The International Bulk Wine and Spirits Show was created to put buyers and sellers together.

“Attendees and exhibitors can save hundreds of hours and thousands of dollars by having everything, and everyone, in one convenient place."

The US, whose consumption is estimated at 31m hL, has now broadly established itself as the largest domestic market in the world.

At present, it buys international bulk wines mainly from Argentina, Chile, and Canada. But given the growing strength of the US dollar and the emergence of powerful US retailers looking to build private label brands, there is a great opportunity for other countries to make a splash in the market.

France, the largest bulk wine exporter in terms of value (29% of the world’s value) and Spain, the largest bulk wine exporter in terms of volume (23% of the world’s volume), are wine-producing countries with a lot to offer this market, for example.

IBWSS launched its first show in San Francisco in 2017 and has now become an annual event. Following the success of the first show in San Francisco, IBWSS now has events in Shanghai and London as well, helping in the expansion of the bulk wine and bulk spirits business across the globe. 

* The International Bulk Wine and Spirits Show is an annual trade show and conference, open to trade professionals only.