Great wines at bargain prices

[Rich Pawlak]

I received this e-mail from Jonathan Newman, former Chairman of the Pennsylvania Liquor Control Board, today. Newman was widely credited with overhauling the archaic PA system of liquor and wine distribution, and broadly reforming the system for the better.

I've been wondering what he's been up to. Now I know:

From: info@newmanwineandspirits.com [mailto:info@newmanwineandspirits.com]

Good ideas come from Pennsylvania: the U.S. Constitution, the Philly cheese

steak, and now, a new idea that will revolutionize wine buying across the

United States.

Introducing Newman Wine & Spirits -- a brand new kind of business, but one

based on a wildly successful model that was the toast of the wine and

spirits world.

Thanks to Jonathan Newman, wine sold in Pennsylvania became much less

expensive than before.

Now, wine in your state will be less expensive too.

As Chairman of the Pennsylvania Liquor Control Board from 2002 to 2007,

Newman introduced the Chairman's Selection program, which used the state's

buying power to offer high-quality wines at some of the best prices in the

country. In some cases, wines that originally had a suggested retail price

of $45 were available in Pennsylvania stores for as little as $14.99.

Now, Newman is taking that idea nationwide, offering America's fine wine

shops and wine lovers the opportunity to buy top-quality wines at prices

never before possible.

The Newman Premium Wine & Spirits Network will combine the buying power of

fine-wine retailers throughout the country, making possible opportunistic

large-volume purchases.

It's a win-win situation. Customers win, because they get great wines at

unbelievable bargain prices. Retailers win, because they get regional

exclusives on great deals that will draw shoppers to their stores. And

wineries win, because they're able to expand their brand recognition while

clearing inventory and increasing cashflow.

When the Chairman's Selection program in Pennsylvania was at its height,

customers and retailers from other states frequently asked Newman, "When can

we get these great deals in our state?" The wait is over.

For more details, visit newmanwineandspirits.com.

Contact information: Vice President of Marketing W. Blake Gray,

415-307-6727, info@newmanwineandspirits.com

Q & A with Jonathan Newman

Q: Jonathan, is this business a distributor, a retailer or a winery?

A: It's none of the above. It's a completely new idea. If you want to

compare it to any previous types of wine businesses, you could look at the

negociants in France. But they're coming at it strictly from the winery side

of the business. We are much more focused on helping retailers than they

are.

Q: Can you briefly describe how it works?

A: Let's say a winery has a large inventory of a high-quality wine that, for

whatever reason, isn't selling as fast as they need it to. It's a good wine,

with decent scores from the major ratings organizations. But perhaps the

winery doesn't have distribution or proper marketing, and sales are slow.

What Newman Wine & Spirits will do is, first, taste the wine. That's

crucial. We have a professional wine tasting team with great palates, and we

won't purchase any wine for our network that we don't personally approve of.

Then, if we like it, we'll negotiate a deal to buy the entire stock of it at

a discount price, so we can offer it to our retail network at a price that's

previously unheard of. The quality-price ratio of our wines is going to be

spectacular.

Q: If it's good wine, why would the winery make such a deal?

A: For one of several reasons. First of all, we'll pay them promptly -- not

everyone does that. Wineries are businesses, and sometimes they need cash

flow. Also, if we like the wine -- I can't stress that enough -- we'll buy

the entire lot of it. Sometimes wineries need to clear out space for the

next year's harvest. Having unsold wine sitting around in the warehouse is

literally costing them money. Another important factor is that our retail

network will take a real interest in selling the wine. Some wineries lack

marketing resources, and have difficulty getting nationwide distribution of

their wines. Retailers are enthusiastic about the great values we have to

offer, so they'll hand-sell the wine and tell their customers about its high

quality. The winery's going to get greater brand recognition from us, with

premier placements inside the stores, rather than sitting out of sight on

the bottom of a shelf somewhere, or worse yet, in a warehouse.

Q: You describe the business as a "win-win" for the wineries and the

retailers. What does the retail store get out of it?

A: Well, the obvious thing is that they get great wines at prices that

didn't seem possible, while still getting healthy margins. But there's more

to it than that. These are one-time, opportunistic buys, and consumers will

quickly learn that if they don't grab that wine right now, it will be sold

out the next time they visit the store. In Pennsylvania, we got customers

excited about the "treasure hunt" of finding these kinds of values.

Customers visited the stores more often, and when they found a great deal,

they would call or text message their friends about it. Often we could sell

our entire stock of one of these wines -- thousands of bottles -- in less

than a week. The "treasure hunt" nature of these buys drives traffic to the

stores and brings in a lot of excitement. Retail stores love bringing their

customers in more often, and we'll help them do that.

Q: Can any store join your network?

A: That's a good question. Another thing we're offering stores is regional

exclusivity. In other words, if one store buys a wine from us, we guarantee

that it's the only store in its area that will get that deal. That's a big

competitive advantage for the store that gets the deals. Regional exclusives

are going to be a big incentive for our stores. We already have an

impressive group of fine-wine retailers from around the country that we'll

be representing, and we expect to have the full country covered by our

launch date.

Q: Will you create private label wines for stores that want them?

A: Yes, we will. Private label wines are one of the biggest growth areas of

the wine industry. Wine retailers love them because they can put their

store's name on a bottle of great wine, often with greater gross profit

margins than they make from a winery's standard release. But up until now,

private label wines have really only been possible for very large retail

chains. Most retail stores are not individually large enough to create their

own Napa Valley Cabernet Sauvignon, for example. Our buying power will make

it possible for them to do that.

Q: You mentioned Napa Valley. Tell us some other places you'll buy wines

from.

A: We plan to buy the most popular varietals from all the great

wine-producing regions of the world: California, Oregon, Washington, France,

Italy, Australia, Argentina, Chile, Spain, New Zealand. You name it. If it's

a high-quality wine, and we can offer it to our network at a great price,

we're interested in it.

Q: Are you worried about sourcing enough wines?

A: Not at all. The time is right for this business. There's a worldwide wine

glut. Wineries are simply making more good wine than the world's consumers

can buy. And that trend isn't slowing down -- more and more vineyards are

being planted every day. So if, for example, a rainy harvest season in Spain

means that there aren't any good values for us to pick up one year, we can

simply look to Italy or Argentina or other opportunities around the world.

In Pennsylvania, we were always offered much more wine than we were

interested in buying. I rejected well over half the wines that were

presented to me, yet we were never short of great wines because there were

more and more offers as the program grew. Now that this business is going

nationwide, we expect that trend to increase.

Q: When do you expect to have your first wines in stores?

A: From our offices in Philadelphia and San Francisco, we expect to begin

shipping wine to retailers shortly after the New Year. The demand from

retailers is already beyond our expectations, so we'll be working hard from

the beginning to identify great wine bargains. We'll be offering great deals

on a regular basis -- sometimes several in a week.

Q: And all the wines will be good?

A: You bet. It's important to note we won't buy wines with bad press, even

if we disagree with the reviews, because that would make selling them

difficult for our retail network. But we're not going to rely on outside

reviews to determine what's good. Our professional tasters will sample every

wine. We won't buy anything we don't like, and for everything we buy we'll

negotiate a price that makes it a stunning value for the consumer. When you

buy a wine that was chosen by Newman Wine & Spirits, you can be sure that it

will overdeliver on quality.

Q: Wine lovers are going to love that.

A: They sure are.

Edited November 5, 2007 by Rich Pawlak (log)

[MarketStEl]

Inquiring minds want to know:

Will he have the Pennsylvania Liquor Control Board for a customer?

[Rich Pawlak]

I suspect that it will occur when:

a)pigs fly

b)it snows in hell

c)Hilary Clinton goes on a double date with Dick Cheyney

d) dogs and cats start mating

e) Springsteen sings opera

[TAPrice]

Did he have a falling out with the Pennsylvania alcohol board? I'm guessing there is some background here that I don't know.

[Rich Pawlak]

Newman was unceremoniously forced out of his high-power, low-pay position with the PLCB, as detailed in many news reports like this one. It was all pretty ugly.

[HappyLab]

Sounds good in principle, but I just don't see how this will happen. Good luck to Mr. Newman, but I don't see how the business plan will work given the fierce competition prevalent in the wine industry.

[MaxH]

I've been wondering what he's been up to.  Now I know:

And though you didn't emphasize it, if anyone was wondering what happened to Blake Gray (until recently at the San Francisco Chronicle, writing about wine) --

... The wait is over.

Contact information: Vice President of Marketing W. Blake Gray, 415-307-6727.

[MarketStEl]

Newman was unceremoniously forced out of his high-power, low-pay position with the PLCB, as detailed in many news reports like this one.  It was all pretty ugly.

←

It's a Pennsylvania thing. You wouldn't understand. Most Pennsylvanians wouldn't understand either. The speculation was that someone -- Gov. Rendell? the legislative leaders? -- didn't like the high profile the publicity-savvy Newman kept, burnishing his own image and rep along with that of the widely reviled (at least in the Southeast) Liquor Control Board. I cannot recall a PLCB chairman ever doing radio ads. (Actually, the PLCB didn't advertise at all up until about a decade ago.) Newman did.

(As the son of Pennsylvania Supreme Court Justice Sandra Schultz Newman, the PLCB chair was not unfamiliar with state politics, FWIW.)

I've been wondering what he's been up to.  Now I know:

And though you didn't emphasize it, if anyone was wondering what happened to Blake Gray (until recently at the San Francisco Chronicle, writing about wine) --

... The wait is over.

Contact information: Vice President of Marketing W. Blake Gray, 415-307-6727.

←

Good luck from one VP of Marketing to another. At least he is getting paid, I hope, and has access to great wine buys.

--Sandy Smith, Vice President of Marketing, Philadelphia Gay Men's Chorus (a labor of love)

Edited November 6, 2007 by MarketStEl (log)