Wine storage business

I have seen that in the major cities there appears to be a growing business around commercial wine storage for consumers as well as commercial establishments like restaurants. All of them seem to offer similar services, storage (constant temp & humidity, low lighting, no vibrations), tasting room, pickup & delivery, inventory mgmt. I'm comptemplating opening a small business in a mid-size midwestern town, large university, good demographics re age & income. I'm looking to get input from folks on whether they have used one of these offerings before or would if it was convenient? Could store as little as 2 cases up to 100+ cases. Your thoughts are most welcome

Thanks

I have seen that in the major cities there appears to be a growing business around commercial wine storage for consumers as well as commercial establishments like restaurants. All of them seem to offer similar services, storage (constant temp & humidity, low lighting, no vibrations), tasting room, pickup & delivery, inventory mgmt. I'm comptemplating opening a small business in a mid-size midwestern town, large university, good demographics re age & income. I'm looking to get input from folks on whether they have used one of these offerings before or would if it was convenient? Could store as little as 2 cases up to 100+ cases. Your thoughts are most welcome

Thanks

Speaking as a resident of the Midwest, I have some doubts as to the viability of such a business here. One driving force for wine storage is the inability to store wine on your own owing to lack of space. In cities like NYC and SF, that makes a lot of sense. Another driving force is weather unsuitable for wine storage, such as friends in Phoenix and Texas have (though they can certainly invest in an actively cooled "wine room"). A third driving force would be land unsuitable for cellar construction (New Orleans or Amsterdam, anyone?). However, none of those factors are likely to be in evidence in most of the Midwest. In my case, I bought a home with a coal cellar that was very easily converted to a passively cooled wine cellar that can hold ~100 cases. I would guess that most residents of the Midwest with a similar interest in wine would do similarly. No doubt that there will be some people who either have too much wine, or who don't want to bother cellaring their own wine -- but will there be enough of them in your community to sustain your business?

Could you find restaurants that might supplement your private clientele? A lot of time, restaurants might like to cellar wines but lack the facilities to do so and be unwilling to invest in the installation of a wine cellar in their business. A Half dozen of them would provide a good financial cushion for you.

Mark Lipton

I am a customer of such a service, and I have about ten cases in my locker. I think it would be difficult from a capital costs standpoint to JUST offer this service. My service basically is a self-storage facility with one building improved to serve wine buyers. I think many of their customers are collectors who have wineries ship the wines directly to storage. I do feel it gives some peace of mind-their commercial systems are going to be better than all but the highest end wine coolers.

Mark does offer some significant cautions. This kind of business works in Napa because of the wine industry, but is there a deep enough market demand for this service in smaller midwestern cities-even well-educated ones?

I can only offer my own data point as a potential consumer of such a service.

I walled off one quarter of the in-ground basement of my condo unit as in insulated, actively-cooled wine room. Over the 15 years I've operated it, I think it's been cheaper than a professional wine storage alternative would have, it's just as effective for preserving the wines, and I have immediate access to my entire inventory.

But for those without the basement space, or the up-front money or expertise to construct a cellar of their own, I can see professional wine storage as an alternative.

I echo the previous caution about going into this business--you will have to choose your location carefully to be successful.

-Paul W.

Randy, welcome. There is a growing interest in wine storage businesses -- here's an interesting article, for example: http://www.pressofatlanticcity.com/life ... 4624c.html

A couple of suggestions: most of the ones I know about added the wine storage service as an adjunct to some other business, at least to start -- wine retailer, storage or moving business, etc.

It costs around $2.00 a case a month to store wine -- plus or minus -- you should do a bit of research to see how much interest you might have among collectors in your area. One big plus -- if you can find a few collectors, you'll find that they find buying wine almost irresistible.

I speak with a few retailers in the area, see how they store their wine and see if they have customers who are bursting at the seams.

It's a fairly long term business, though -- people who collect often invest and are going to want to have strong certificates showing proper storage when it comes time to cash in.

If you are willing to invest the time and long term commitment, based on the difficulty of finding storage in this area, it can be a good business. Find a couple of big customers to serve as your base -- a couple of retailers willing to make a long term commitment -- and build off that base.

I spent a little time looking for business plans, Randy, and found this one for about $250 -- http://www.peregrinestrategies.com/winestorage.html

Some of the teaser stuff is interesting -- lots of people in the Midwest have basements, for example. I can't tell whether there is real value here, but for $250, it might pay big dividends -- you are contemplating a business with a pretty hefty up front investment, well in excess of the plan. Might be worth a look see.

Also check out the competition in your area. The Yellow Pages have a good intro: Wine can often be a very expensive commodity and a commodity that can become significantly more valuable as it ages. In order to ensure that their wines stay at the optimal temperature, people often have their wines stored at wine storage facilities. Wine storage facilities keep wine stored in wine cellars. Wine storage facilities are almost always underground and are kept at temperatures ranging from 10° to 14° Celsius or 50° to 57° Fahrenheit. The humidity in the cellars of wine storage facilities is always right around 75%. Some wine storage facilities allow people to store a great many bottles or cases of wine. Some wine storage facilities have very limited space. Some wine storage facilities have better security than others.

Check what's on offer in your area: http://www.magicyellow.com/category/Win ... ities.html

Finally, consumers are getting pretty sophisticated: check out the consumer's checklist here to be sure you can cover all the bases:
Link here.


Regards and good luck, Bob

To all,

Great feedback, thanks a bunch. Mark, I also share the concern about most folks in mid-size cities having homes and basements; not the same as living downtown in a big city where space is at a premium. The restaurant angle is one I'm pursuing as we speak. I need to understand if some of the better ones see a value in having a consistent and reliable space to store part of their stock. Bob, thanks for all the links and information. Yes, I'm meeting with a number of heavy duty collectors to gauge their interest and if interested what types of service they would be interested in. I have also started the analysis of the investment costs and what level of customer base would be needed to hit a break-even point and what that would mean in terms of customer acquisition and monthly growth. I've seen a number of different pricing models for businesses in NY, SF & LA as well as St. Louis, Flordia, Denver & Dallas. Have done a quick survey of any possible competition and found none either via yellow pages or via wine store folks.

Randy

Well done, Randy. One additional thought: you mentioned a college or university town. Do you intend to rely on students or staff as customers?

I'm meeting with a fellow who set up a large facility with friends in Houston in three weeks. If you would like an introduction, send me a Private Message, and I'll arrange an intro.

Randy,

I believe the most recent issue of Food and Wine has a story on wine storage. Lettie Teague, their lead wine writer, checked out facilities in several cities.