Dallas Business Journal
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From the August 13, 2004 print edition

Centennial banking on Bordeaux wine futures: Fine wine aficionados pay in advance
Sandra Zaragoza
Senior Writer

In an effort to establish itself as a fine wine merchant, Centennial entered the world of Bordeaux futures in 1996 -- a strategy the company says has helped it reap strong wine sales and repeat customers.

Futures have been a fixture in the Bordeaux market for decades, driven by high demand for the wines, according to industry insiders. When a consumer purchases a Bordeaux future -- either a bottle, half case or case of wine -- they are buying the right to a vintage of wine at a set price before it arrives at the store. The wine is typically released 12 to 18 months after the futures are offered.

Voss, Centennial's executive vice president, says Centennial spends more than $1 million on its Bordeaux futures campaign, on average, annually. About 70% of Centennial's Bordeaux futures are sold to retail customers, while 30% is kept as inventory for its stores and company wine "library."

"We want to be a fine wine store where fine wine customers take us seriously, and to do so you have to be in the game," said Moll, Centennial's fine-wine buyer. "We are not just selling Bordeaux, we are selling California wines, Burgundies, but without the Bordeaux futures I think customers wouldn't consider us a top retail shop."

Collectors and connoisseurs

There are typically two types of customers that purchase futures, Voss said, "The primary reason consumers enter the campaign is to get the product," he said. "Some buyers are collectors. They may sell it later on or drink it. Some of the vintages will keep for 25 years and will still be excellent wines."

The hope of collectors and merchants is that they are snapping up the wine at a bargain price. Depending on a numerous factors, including what wine critics say about the quality, the futures can increase in value even before the wine graces the shelves.

At other times, consumers would do just as well to wait and buy the bottles retail, industry insiders say.

According to Voss, some wines have doubled in the marketplace since the 2003 campaign began in June.

Prices for Centennial's 2003 futures range from $10 to $500 per bottle. First tranche, or the original offering, ends Oct. 1.

Greg Wonsmos, Centennial's president, credits owners Jim Vandeveer and his daughter Vicki Vandeveer Moore for having the foresight to focus on wine.

"We are privately owned and that gives us the ability to think long term," Wonsmos said. "It (the Bordeaux future campaign) takes a commitment and investment in inventory levels."

Wonsmos said its futures campaign was a primary consideration when building its 83,000-square-foot headquarters, where 18,000 square feet is dedicated to wine storage.

In the Metroplex, there are at least five other major merchants offering Bordeaux futures as well as a clutch of boutique shops, such as Dallas-based, The Wine Broker, a wine consulting firm that specializes in Bordeaux futures and locating rare wines. Dallas-based Sigel's Fine Wines & Great Spirits, with nine locations in the Metroplex, is widely-regarded as one of the largest sellers of Bordeaux futures.

Good investment

Both Voss and Wonsmos believe that the Bordeaux futures campaign has been an investment well-worth the risk. Since beginning the campaign and pumping up its wine inventory, overall wine sales have increased from 17% in 1996 to 30% of its total sales.

Wine consumption has steadily grown as "more women and men have become more educated and sophisticated about wine," said Deborah Holand, president of Food Sense, a consulting firm for restaurants, supermarkets, specialty retailers and convenience stores.

Centennial's current direction was set in 1996, when in an effort to lure more well-heeled and female shoppers, Centennial embarked on a long-term renovation program, Moore said.

Now, as Centennial's renovations are close to completion -- about 26 of its 32 stores in the Metroplex have undergone a face-lift -- the company believes it is attractively positioned to cultivate the wine portion of its business. Of its stores, seven are full-service convenience stores and three operate under the Big Daddy's Fine Wine and Spirits brand.

But wine isn't the only reason for Centennial's improved sales outlook, renovations have also kick-started sales. Revenue has increased 40% to 50% in renovated stores, according to Centennial. Last year, the company generated approximately $100 million in revenue and is projecting a 6% revenue increase in 2004.

szaragoza@bizjournals.com | (214) 706-7113