Bright Cellars, a subscription-based wine seller that was founded six years ago, has evolved, just like many other upstarts. Bright Cellars, a Milwaukee-based wine seller, says it has accumulated enough information about its customers to no longer send its members third-party wines. While some of its original offerings may be sold under other names, Bright Cellars is now directing its winemaker partners so that they can tweak the recipe.
Richard Yau, co-founder and CEO of the startup, said that optimizing wine was like optimizing a digital product. Although the company is now decentralized, Richard Yau entered into a regional accelerator program in San Francisco early on.
Yau and I spoke earlier today about this shift. Investors are supporting it with $11.2 million in Series A funding. This was led by Cleveland Avenue with participation from Northwestern Mutual and Revolution Ventures. The company has raised approximately $20 million.
Yau also spoke about the industry trends he sees because of all the data collection.
TC: You are building a wine portfolio. What does this mean?
RY: No land is ours. We work primarily with suppliers, just like big companies like Gallo and Constellation, but on a larger scale. This allows us to influence how wines taste and look, and can optimize across variables such as sweetness. How acidic should it be? How acidic do you want it to be?
TC: Which of your concoctions are you making?
RY: A sparkling wine made in Champagne, not Champagne. It is a domestic wine made from grape varietals that aren't used for sparkling wine. This wine is one of our top-rated on the platform. We have found sparkling wine to be very beneficial.
TC: How many subscribers are you currently having?
RY: While we can't share the exact numbers, we did see an increase in subscribers during the pandemic, as well as a greater share of customers' wallets going D2C. This was a positive impact on us. Even though things were slowing down over the summer, we noticed that more people are cooking at home and drinking wine.
TC: What is the average price for a bottle wine on the platform?
RY: $20-25
TC: Where are your grape producers?
RY: Most of our grape suppliers are located on the West Coast in Washington and California. However, we also have international suppliers, including those in South America.
TC: How many wines are you able to offer and how long can you try a wine?
RY: We have tested 600 wines and we currently have 40-50 wines on the platform. We don't stock everything all the time; we eliminate those that do not sell.
TC: Many D2C brands eventually expand into real-world settings. It is not something you are doing. Why not?
RY: We may at one point. However, we enjoy being D2C. It makes sense in an era where many of our members work remotely and can receive packages from home. It is in line with the e-commerce trends. You won't be buying groceries in the grocery store anymore.
TC: Where are these bottles shipped from?
RY: A variety of places, but Santa Rosa [in California] is the most common.
TC: Have your seen the effects of the weather on California winemakers? Some are spraying sunscreen on grapes to keep them protected.
RY: Climate change has definitely affected the wine industry. We are fortunate in that we can work with flexible suppliers, which means we have not been as negatively affected from a business-health standpoint. We have a lot of operations in California so we had some distribution disruptions a few years back. These were due to the fact that we couldn't ship certain days. Also, we were impacted by high temperatures. We have not experienced any supply-chain or operational disruptions so far this year.
TC: Has a legacy firm approached you about a partnership?
RY: We have had many conversations and more partnerships as we have a lot of data to help them. We can launch a wine and get feedback, almost like a focus group. This allows us to find out who likes what. Split testing two blends of wine can be done to determine which one is more successful. This is where we have had conversations with legacy wineries.
TC: They'd pay you for your data.
RY: While we are open to selling data in future, we have viewed it more as, Here's an opportunity to see how innovation works at larger wine companies. While we don't expect to be able do the same as Constellation with its large sales force and distributors across every state, what we can do is to understand the consumer.
TC: What are you learning that may surprise outsiders?
RY: Petite Sirah [offerings] are as good, if not more, than pinot noir and cabernet on the platform. We see that petite sirah members enjoy pinot and cab, which are 50 times larger than the market for petite sirah.
Merlot is also loved by people across all age groups. Although people hate merlot, we can see the benefits of red blends. . .
TC: What are people against merlot?
RY: [Laughs.] Sideways is a movie you might have seen. Pinot noir is still very popular, but not as much as some wine sellers think.
