Winebusiness.com - Homepage for the Wine Industry

Small Company with Big Backing Unveils Innovative Solution for $100-Million Winery Problem


Date: 10/09/13

PRESS RELEASE

Underground Cellar, the new wine start-up founded by technology entrepreneur Jeffrey Shaw, has reconstructed an innovative solution to a problem plaguing the $1.4 billion direct-to-consumer wine industry: deep-discount websites. Underground Cellar’s solution is expected to save wineries millions of dollars by steering them away from the deep-discount players like Lot18, Wine.Woot, Wines Til Sold Out, Invino, and WineAccess.

Underground Cellar has received big backing despite having 26-year-old Shaw at the helm; quietly raising their seed financing round in May of 2013 and building out an impressive team including naming Jeff Keller as their VP business development, who hails from WineAccess, one of Underground Cellar’s key competitors with online wine sales estimated at $25 million dollars annually.

For several years now wineries have looked to these “flash” sites to sell their excess and overstocked wine, but at a huge cost — bastardization of their winery’s brand, reputation, and pricing structure. The profits for wineries resulting from these flash sales are extremely inconsistent, and do not provide reliable revenue streams sustainable over the long-term.

Industry consulting firm VinTank estimates that flash sales now generate in excess of $100 million annually for wineries looking to float through a financial pinch. Shaw realized there is a better way for these wineries to quickly sell their wine without sacrificing their brand and future pricing structure: all they had to do was ditch the discounts and replace them with upgrades.

“Instead of discounting wine, we reward buyers with opportunities to be upgraded for free to high-priced wines from their favorite winery’s inventory: often hard-to-get bottles like library wines or bottles from the winemaker’s private stash. Buyers can increase their upgrade potential through ‘influence points’ which are earned by participating in winery offers, engaging in meaningful discussions, and participating in other site activities,” explained Shaw.

Underground Cellar also has the first of its kind storage solution—“CloudCellar” – where buyers can purchase as little as a single bottle of wine from a winery, and store it for as long as they want for free, at Underground Cellar’s perfectly maintained humidity and temperature-controlled wine cellar in Napa Valley. Customers can mix-and-match bottles from different wineries over time, and when they are ready to take delivery they simply log onto the website and select which bottles they want delivered; 6 bottles arrive anywhere in the U.S. for only $5; and 12 bottles are shipped for free. Underground Cellar even boasts being able to deliver wine chilled and ready to drink (nearly anywhere in the US) through a special arrangement with FedEx and Copper Peak Logistics.
Sept. 12 marked the public launch of Underground Cellar’s online wine deals marketplace available at their www.UndergroundCellar.com website.
 

Subscribe to Daily news Email

FREE Wine Business Daily News delivers the industry's top stories emailed to you from our editorial team.

most popular daily news links

latest used barrels

- used barrels  •  Sep 15, 2014 at 7:56PM PDT
- used barrels  •  Sep 15, 2014 at 4:10PM PDT
- used barrels  •  Sep 15, 2014 at 4:10PM PDT
- used barrels  •  Sep 15, 2014 at 12:47PM PDT
- used barrels  •  Sep 12, 2014 at 9:34AM PDT

latest real estate

- real estate  •  yesterday at 5:54PM PDT
- real estate  •  yesterday at 2:34PM PDT
- real estate  •  Sep 14, 2014 at 6:02AM PDT
- real estate  •  Sep 14, 2014 at 6:02AM PDT
- real estate  •  Sep 11, 2014 at 4:23PM PDT

latest services & supplies

- services & supplies  •  yesterday at 10:42AM PDT
- services & supplies  •  Sep 15, 2014 at 9:08AM PDT
- services & supplies  •  Sep 15, 2014 at 9:08AM PDT
- services & supplies  •  Sep 13, 2014 at 12:57PM PDT
- services & supplies  •  Sep 11, 2014 at 10:37AM PDT

industry events

Search Events:

Copyright© 1994-2014 by Wine Communications Group. All Rights Reserved. Copyright protection extends to all written material, graphics, backgrounds and layouts. None of this material may be reproduced for any reason without written permission of the Publisher. Wine Business Insider, Wine Business Monthly, Grower & Cellar News and Wine Market News are all trademarks of Wine Communications Group and will be protected to the fullest extent of the law.