Trading bulk wine across continents is the lifeblood of the wine industry, and with consolidation continuing and the proliferation of brands increasing, the marketplace is destined to become more competitive. Jeff Walker, managing director of WorldWineTrade.com, explains his vision of a global, online trading floor…

One billion litres of bulk wine crosses the borders of Europe a year and if Jeff Walker, WorldWineTrade.com's managing director, gets his way, these deals will be completed in a split second by the click of a button.

"We have created a global network where the top wine buyers can transact easily, securely and efficiently anywhere in the world," Walker said. Bulk wine buying is the lifeblood of the multinational wine companies such as Southcorp and Constellation Brands, and prices have fluctuated greatly in recent years. WorldWineTrade.com, the nine-month old US-based B2B portal, has exploited the fundamental principle that trading bulk wine is simply dealing with a commodity - making speed and price the overall necessities for the wine buyer.

"Dealing on the web allows our members to access data quickly and to trade cross-border with price transparency. "At the moment we have 250
members from the major wine producers and buyers but we estimate that as many as 60,000 industry participants could use our online network for their trading," Walker told just-drinks.com.

He is in a unique position to monitor the movement of various varietals and recent talk of a glut doesn't surprise him. "There is general oversupply of generic dry white and red which I think will affect the Mediterranean producers. But if there is an oversupply problem, I feel this will be absorbed by the grape juice concentrate market or the grapes will be distilled," he predicts.

An oversupply of 10%-20% over consumption is probable over the next two to three years, Walker believes, though consumption in Europe could rise by 5% during this period. "Distilling prices are coming down so the consumer can only see better value from an oversupply situation. For the wine company it means picking the right price points," he said.

What WorldWineTrade.com wants to achieve is bringing a traditional offline method of trading bulk wine and juices (its sister site WorldJuiceTrade.com has cornered this area), online to a worldwide market. The service offers real time price and cost points and is focused on Europe as 60% of the world's wine and grape production centres on the continent. Security is tight and Walker assured just-drinks.com that only "reputable producers and distributors" passed the company's vetting process, and was well aware that the French Burgundy fraud scandal was an issue but not a problem.

"We want to augment a functional trading platform and we are easier to access than some of our competitors. Our members find it very intuitive and the system has become part of their daily routine in only nine months," Walker said. The company spent 18 months and over $1m getting the site design right.

He hopes to persuade some Bordeaux negociants to pack up their tables and remain at their desks to trade but admits the system will complement the traditional methods of the Old World. "We can save days off the standard process; sampling, sample approval, transportation to the marketplace can all be replicated via our site. If they want more personal interaction, they can telephone our local representative who will offer more detail," Walker said.

The pricing and volume problems during the mid-1990s, where short supplies led to Californian vineyards planting hundreds of acres of Chardonnay, unaware that it would be too much, has hit the market hard today. However, Walker can only see more trading and profitability with the bulk-buying market acting as a safety value, letting off the steam as the market overheats.

"Consolidation will inevitably continue in the wine industry and the market place will be more challenging. More brands will proliferate but these will be cheaper and the premium market will become more expensive and smaller."

Elliot Lane

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