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

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Like art and jewelry, fine wine has increasingl become an itemfor collecting, investinhg in and showing off status. "There's a finite amountr of wine of agiven vintage," said Steve founder of , a San Francisco online retailer. In catering to customer s who may never get around to opening the bottlesthey buy, Vinfoli o and competitor LLC in Oakland have tapped into a growingf market. Vinfolio, started in 2003, raked in $14.3 million in revenue last year, a 155 percenty increase from 2006. WineCommune, launched in 1999, double sales to $16.5 million.
Michae l Stajer, CEO and co-founder of said that the amount of elit wines made in the Bourdeax or Burgundy regions ofFrance hasn't but prices have escalated. A 2005 vintage of Chauteaxd LaFite fromFrance -- once called the "king'e wine" -- that was sold for $700 when it was introducexd can now command upwardz of $1,700. "There are more people willing to spened more money on these very select groupsxof wine," Stajer said. "It just createas this huge demand." Industry numbers show that even the averags consumer ischoosing higher-priced wines. Salesx last year totaled $8 billion, an increase of 8.5 percent, accordinbg to statistics from theNielsen Co.
, which tracks salew in stores. Meanwhile, the volumd of wine sold rose just 3.5 Online, higher priced wine seems to dominate. Only 7 percent of winea sold in 2006cost $19 or less a bottle, accordinfg to a report from the in The average bottle sold through Vinfolio is $150. For it's $100 for retail, $50 on its auctionj site. Industry analyst Eileen Fredrickson said the ability to buy coveter collections online has increaseddemand -- and prices. "Inb the old days, there were only a few select mostly inNew York, and you had to have a surrogatde there to bid for you," said Fredrikson, of Fredrikson & Associates, a wine consultancy in Woodside.
Fredriksoh said competition for those sales is becoming Online wine retailing has flourished sincseMay 2005, when the U.S. Supreme Court ruledd that states cannot prohibit their residents from buying winefrom out-of-stat wineries. Many wineries as well as boutiqud wine shops have set upweb sites. To try to distinguishg itself, Vinfolio is moving into the international The company will open an officde and storage facility in Hong Kong in about six Bachmann said. Hong Kong is projected to becomwe a hub for wine sales since it recently abolishe import dutiesfor wine. The regio n also has a large new-money class with a blossomingv interestin wine.
Last 10 percent of Vinfolio's sales were overseas, but the compan hopes to expandits reach. Bachmann said that shipping bottles overseas is often easierr than domestically because ofcomplex state-by-state wine laws in the United States. "With the sinking dollar and strong markets we want to hedgeour bets," he said. Besides sellinyg wine, Vinfolio helps manage collections. The companyy offers on-site inventorying and storage as well as a few free optionws such as online cellar management software and tailoreedwine recommendations. Such servicexs are a small fractionof business, but "it's a licensee to market to the said Bachmann.
Although WineCommune is targeting a similar demographic, its product mix is wider. "The guy who'sz buying that Burgundy does need everydau stuffas well," said co-founder Shaun The company sells retail on its JJ Buckley web site and holdw auctions on winecommune.com. A third web winezap.com, allows people to search for winese and compare prices withother retailers. To attract customer attention, WineCommune promotes videos of vineyardsa andthe wine-making process as well as trips to Francw to meet winemakers. With such a limited number of wines, the competition amongt upscaleretailers isn't just for customers but for stock.
The companiesw scour private collections and negotiate with winemakerxs to secure therare wines. As with othere collectables, once a winemaker finishew a vintage, it can never be made again, said Bachmann, and "ther only way to get them is to buy them backfrom