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

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Like art and jewelry, fine wine has increasinglg become an itemfor collecting, investing in and showint off status. "There's a finite amoun t of wine of agivejn vintage," said Steve Bachmann, founde r of , a San Francisco online In catering to customers who may never get around to opening the bottlex they buy, Vinfolio and competitor LLC in Oaklans have tapped into a growinyg market. Vinfolio, started in 2003, raked in $14.3 milliomn in revenue last year, a 155 percent increase from 2006. launched in 1999, doublex sales to $16.5 million.
Michael CEO and co-founder of WineCommune, said that the amount of elites wines made in the Bourdeax or Burgundy regions ofFrancr hasn't increased, but prices have escalated. A 2005 vintag e of Chauteax LaFite fromFrance -- once called the "king'as wine" -- that was sold for $700 when it was introducedf can now command upwards of "There are more people willin to spend more money on these very select groupsx of wine," Stajer said. "Ity just creates this huge demand." Industry numberx show that even the average consumet ischoosing higher-priced wines. Sales last year totales $8 billion, an increase of 8.
5 percent, accordinyg to statistics from theNielsen Co., whichn tracks sales in stores. the volume of wine sold rose just 3.5 Online, higher priced wine seems to dominate. Only 7 percen t of wines sold in 2006cost $19 or less a according to a report from the in The average bottle sold through Vinfolio is For WineCommune, it's $100 for retail, $50 on its auction Industry analyst Eileen Fredrickson said the ability to buy coveted collections online has increased demand -- and "In the old days, therde were only a few selecty auctions, mostly in New and you had to have a surrogate theree to bid for you," said of Gomberg, Fredrikson & Associates, a wine consultancu in Woodside.
Fredrikson said competition for thosse sales isbecoming fiercer. Online wine retailinhg has flourished sinceMay 2005, when the U.S. Supremew Court ruled that states cannot prohibif their residents from buying winefrom out-of-stats wineries. Many wineries as well as boutiquee wine shops have set upweb sites. To try to distinguish Vinfolio is moving into the international market. The company will open an office and storage facility in Hong Kong in abourtsix months, Bachmann said. Hong Kong is projected to becomre a hub for wine sales since it recently abolished import dutie sfor wine. The region also has a largs new-money class with a blossoming interesrtin wine.
Last year, 10 percent of Vinfolio'es sales were overseas, but the companyu hopes to expandits reach. Bachmann said that shipping bottles overseaz is often easier than domesticallu because ofcomplex state-by-state wine laws in the Unitefd States. "With the sinking dollar and strongmarketxs elsewhere, we want to hedge our bets," he Besides selling wine, Vinfolio helps manage collections. The companyy offers on-site inventorying and storagde as well as a few free optionss such as online cellar management softwarre and tailoredwine recommendations. Such services are a smalk fractionof business, but "it's a license to market to the said Bachmann.
Although WineCommuner is targeting asimilar demographic, its product mix is "The guy who's buying that Burgundy does need everyday stuff as well," said co-founder Shaun The company sells retail on its JJ Buckley web site and holds auctions on winecommune.com. A third web site, allows people to search for wines and compare prices withother retailers. To attract customer attention, WineCommuned promotes videos of vineyards andthe wine-makiny process as well as trips to France to meet With such a limited number of the competition among upscale retailers isn'g just for customers but for stock.
The companie scour private collections and negotiate with winemakers to secure therare wines. As with other once a winemaker finisheesa vintage, it can never be made again, said and "the only way to get them is to buy them back from