$50-Plus Wine for $10 (And How the Hell This Is Possible)

Categories: Wine Time

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A friend called about a week ago.  She excitedly relayed the details of a Cameron Hughes Wine presentation she had seen at Costco that afternoon. My reply: "That sounds great, but I think you're leaving something out. There is just no way this guy is buying up someone else's high-priced finished wines, slapping his own label on them and selling the exact same wines at discount stores for $10 to $15."
 
As it turns out, Cameron Hughes is a genius. And that's exactly what he and co-founder Jessica Kogan are doing with their Lot Series, available at Costco, Sam's Club, and select Randall's locations in the Houston area.

Hughes is a modern-day Négociant Winemaker. A négociant is a term traditionally used to describe someone who buys wines from wineries, blending and bottling them before selling to retail accounts. Négociants tend to work with lower quality wines due to their availability. If they do buy high-quality wines, they back-blend them into larger amounts of lesser quality wine to up the value of the whole. What sets Cameron Hughes Wines apart? "We bottle up the small amounts of high-end wine as a 'Lot'...preserving the ultra-premium quality of the original by bottling it unadulterated and never 'back-blended.'"

The true genius of the Cameron Hughes Wine business model is the efficiency with which it operates, drawing advantage from a highly inefficient winery system. Hughes and Kogen do not own a vineyard, winery, or production facility. Bottling is done through partnerships with various high-end wineries and vineyards around the world - eliminating a great deal of overhead and distribution costs and allowing for enormous flexibility. The wine used to create the company's best-selling Lot Series is purchased from an ever-present overstock in the industry known as "The Wine Glut."

While there is another cyclical excess that occurs every 10-14 years, they are focused on the annual oversupply between the super-premium ($15-$30), ultra-premium ($30-$50), and luxury quality wine segments ($50+) every year. This excess occurs for a number of reasons: Winemakers will always make a little extra for their final blends, experimenting with new sources, discontinuing old sources and selling off certain lots for profit; and there will be lots that are downgraded prior to bottling. I think anyone will agree that even if a lot is deemed unsuitable for sale at $50, it is still of great value at $10 or $15.

The finished Lot Series batches are in themselves works of art, never to be duplicated, small, and typically go fast. Long lines formed outside San Francisco-area Costco stores each time a new lot was released, with oenophiles buying them up by the case. When asked how he felt about the local climate, founder Cameron Hughes had this to say: "Houston recognizes great quality wine at an incredible value. We're seeing our wine fly off store shelves at more than in Sam's Club, Costco and Randall's. In fact I just returned from bottle signings in Texas, and the response was overwhelming. I can't wait to do it again." Aw, shucks. Honestly, you had us with this T-shirt.

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CHW Lot Series Available as of 8/25/10
* JUST RELEASED! Lot 153 2008 Santa Barbara County Chardonnay

*HOUSTON: ON SHELVES NOW
Lot 140 2007 Chalk Hill Cabernet
Lot 149 2007 Napa Valley (Mount George) Cabernet Sauvignon
Lot 163 2008 Lodi Zinfandel
Lot 152 2007 Alexander Valley Cabernet Sauvignon
Lot 87 2007 Alexander Valley/Russian River Valley Chardonnay

*information available at time of press. Check website for current inventory at Sam's or Costco. For Randall's, please call your nearest location.


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