Sniffing Out Wine Bargains? Modern-day California Négociant Wines Can Deliver Big Tastes at Small Prices

Launching a traditional winery -- sprawling vineyards, charming winery buildings full of equipment, a friendly tasting room -- is an anachronism today in California wine country for anyone but the super rich. Current or potential vineyard land in prime locations is spectacularly expensive while the odds of making much money in this feel-good field can be low.

So what do you do if you're not Fergie, Joe Montana, Drew Barrymore, Brangelina, Wayne Gretzky, Madonna, Antonio Banderas, Nancy Pelosi, Mick Fleetwood and scores of other rich, famous folks bitten by the wine bug?

You do it on the cheap by following the négociant model. In France, the traditional négociant-éleveur buys grapes or finished wine from outside sources, with the final product sold under the négociant's label. In modern-day, costly California, this concept has lately been enabling underfunded but passionate individuals to enter a low-margin but romantically appealing business. (According to Silicon Valley Bank, average 2013 pretax profits in the wine biz were an astringent 3.9%.)

Some of these eager new operators not only don't own vineyards but might not have an actual winery, either. Some simply blend and bottle wine made elsewhere and those who do purchase grapes might use rented space in existing wineries or "custom-crush" facilities for the winemaking. But for wine consumers who don't insist that the wine they buy is accompanied by a palatial wine estate, there are some superb wines at surprisingly affordable prices available from these up-and-comers.

According to Ryan Woodhouse of Bay Area wine retailer K&L Wine Merchants, the négociant concept "has become very prevalent in California in the past five years. It's a new generation of winemakers who aren't grounded in a family estate. And it relates to just how much wine real estate costs these days."

To him, some of the most inspiring wines are produced by tiny operations run by wine nuts or assistant winemakers at other wineries who keep their day jobs to finance their budding brands -- at least, until their wines catch on with consumers. Some examples are: Comartin Cellars, founded by former Testarossa assistant winemaker Adam Comartin, who's now making complex grenache-based wines in a rented space; Tatomer Wines from Graham Tatomer, who's quickly become a star and thus able to quit his previous wine gig by crafting luscious, bone-dry rieslings; and in a cramped Berkeley warehouse, Donkey & Goat Winery, from husband-and-wife winemakers Jared and Tracey Brandt, who produce lovely, complex, cool-climate, minimal-intervention, foot-stomped wines made with natural yeast, limited sulfur, no plastic containers and no filtering, stabilizing or new oak.

There are often some intriguing rags-to-riches stories behind some of these budding California négociants. Consider Morgan Twain-Peterson. The son of famous zinfandel winemaker Joel Peterson, the history major -- who had intended to teach -- instead wandered around the wine industry in various capacities and eventually launched his Bedrock Wine Company in a former chicken coop. His unusual focus took some time gaining traction -- all his wines are made from ultra-low-yielding "heirloom" vineyards with many well over 100 years old. One example is a field blend of 22 red varieties planted between 1888 and 1895 that delivers a spicy, rich fruitiness with great structure and is now creating buzz among wine geeks.

Some wineries originally set in motion via a boot-strapped négociant model have evolved into makers of sought-after trophy wines. It's now difficult to buy Kosta Browne's fruit-forward, pricey pinot noirs from notable vineyards without a long wait to join the mailing list. The winery was started in 1997 by two fellow restaurant workers, Dan Kosta and Michael Browne, who originally pooled their tip money to launch the operation.

Childhood friends Duncan Arnot Meyers and Nathan Lee Roberts grew up middle class in Napa at a time before millionaire's wineries and cult wines ascended. As young adults in 2001, they collaborated on making a barrel of wine and slowly expanded from there. Even today, they work in a bitty Healdsburg warehouse, have no staff and no vineyards. But the small-production Arnot Roberts wines have gained acclaim and a serious following.

As is typical for today's highest-end, most buzzed-about wines, purchasing Arnot Roberts' several varieties is limited to their mailing list customers. This is also the case for another now-well-regarded négociant operation, Anthill Farms Winery, which makes wonderfully complex pinot noirs in rented space in Healdsburg. Self financed with a measly $9,000 by three guys who met as crush interns at local marquee winery Williams Selyem, Anthill Farms is still a small operation and continues to be devoted to producing nuanced, balanced wines.

One trend that has helped would-be winemakers set afloat their own brand is the large amount of wine and grapes available on the so-called spot market. "There are a number of wineries that produce perfectly fine wines but it isn't what they believe should be in their flagship label," explains Gladys Horiuchi, director of media relations at the Wine Institute in San Francisco. This wine is put into second labels or sold to other wineries or wine brokers, she says.

By her estimate, about 20% of the wine produced in the state ends up in this category, so there is a lot of wine available for those who want to start a new brand or expand an existing one without the cost of a winery or vineyards. "This is a behind-the-scenes business that consumers don't know about or care about," says Horiuchi.

This invisible business has helped fuel quite a few négociant operations that buy large amounts of bulk wine from all over and sell it into the lower-end market. Labels such as Layer Cake, The Seeker, Cigar Box, Castle Rock, Three Thieves, Cupcake and Treasure Hunter might be the bargain-hunter's friend but they aren't found in trendy boutique wine shops. "A lot of those are supermarket wine," opines Woodhouse, whose customers at K&L often prefer undiscovered gems from smaller emerging wineries.

The following-their-bliss négociants getting attention from such shoppers are thriving due to the business practices of many established and admired wineries. It's now very common for well-regarded producers to sell large amounts of their grapes or barrels of wine in order to maintain the stellar quality that commands high prices. A renowned operation like the Russian River Valley's Martinelli Winery-- which started in the 1880s -- now has well over a dozen prime vineyards in the region and not only sells about 90% of its grapes to other wineries but has sold -- often called "bulked out" in the business -- finished wine as well.

But ironclad contracts prohibit those buying these castoff wines from revealing the source for fear of soiling a winery's reputation. Nevertheless, making a business from these stealth wines can lead to success. Just ask Cameron Hughes, whose eponymous label was built on selling other wineries' excess supply under his name for tantalizing prices. Starting in 2001 with a couple of lots of good but unwanted wine, Hughes has expanded his label to more than 400,000 cases today.

While the winery sources remain a deep, dark secret, Cameron Hughes bottles boast some impressive appellations -- cabernets from Spring Mountain, Stags Leap and Oakville in the Napa Valley, for instance. "All of these AVAs command a price premium, yet our most expensive cab from these spots is $30," Hughes explains.

In fact, his label has offered wine from some of the vineyards in Napa and Sonoma that were among the all-time "top 10" recently named in a book, "The Call of the Vine." The Cameron Hughes brand has half a dozen product lines but most beloved by wine nuts is the Lot series, which includes a myriad of different wines. Say, a pinot noir from the Santa Rita Hills for a miniscule $17.50 or a Monterey chardonnay priced at just $10.50.

As its fame has grown and its connections have flourished, Cameron Hughes Wine has gone international, offering discarded gems such as a syrah from France's storied Northern Rhone for $17.50 and a St. Émilion Bordeaux for only $9.80. Wines from Washington State, Argentina, France, Italy and Down Under have been sold for a song, along with countless wines from many California wine regions.

According to Hughes, his operation now buys some California grapes and makes some wine "close to the source" in custom-crush facilities as well as acquiring many lots of finished wine. "We maintain low overhead without owning a winery facility or vineyard," he says, which is what helps keep prices so low. But he's still selective about what he buys. "I don’t buy every wine I am presented. This is needle-in-the-haystack stuff," he reports.

Banshee Wines is a similar operation that started on a shoestring in 2009 by buying, bottling and selling several barrels of excess wine from a cash-strapped winery. Founded by three young Eastern transplants who had dreams of starting their own wine business, Banshee later evolved toward a more traditional winemaking model -- buying grapes and making wine -- even knowing the profitability challenges in their chosen industry.

Partner Noah Dorrance admits that after launching a modern-day winery, "you're likely to have a very tough time making your money back. For a lot of people who do it, they're going into it with something different in mind -- a lifestyle choice. A lot of them know full well that they're never going to make their money back."

Banshee has been hedging its bets by avoiding the usual massive capital expenditures that come with opening a winery; wines are now made by two talented consulting winemakers in rented space at Copain winery. But while Cameron Hughes Wine profitably continues its "virtual" business model, as Hughes calls it, Banshee has dreams of becoming "a real winery," Dorrance reveals.

Beginning with delicious, $20 Sonoma County pinot noirs, the Banshee label quickly advanced up the price and quality food chain. Made with first-class grapes from esteemed vineyards, recent Banshee wines have gotten impressive scores from picky wine reviewers and now top out at $70. Other varietals have been added to the portfolio beyond pinot noir but an attractively priced pinot -- it's now $25 -- still remains in the line-up.

Banshee Wines opened a tasting room in downtown Healdsburg last year and Dorrance reports that he and his partners are now hopefully scouting vineyard locations. "We're sort of the Benjamin Button of wineries," Dorrance chuckles, moving backward into acquiring the usual winery accoutrements.

But Banshee hasn't forsaken the purchased-wine négociant approach that attracted and then captivated thrifty wine lovers. A second label, Rickshaw, was added in 2010 that now encompasses about two-thirds of overall sales and involves purchased wine -- and leftovers from the Banshee label -- that is blended, bottled and sold for rock-bottom prices. "Rickshaw has become what Banshee was," says Dorrance.

The popularity of tasty, low-priced négociant wines such as those from Banshee, Cameron Hughes and others is also procreating a burgeoning supply of private-label wines offered by restaurants, companies, stores and prolific gift givers. With wine consumption and vineyard acreage both increasing, experts are predicting that availability of this type of négociant wine will continue to expand.

K&L's Bryan Brick is a believer. Rather than utilizing the services of the several firms specializing in this product, the progressive wine chain where he is a domestic wine buyer is taking a DIY approach to private-label wines. The chain now sells thousands of cases of wine priced an average of $24 that it acquires through brokers or directly from wineries, then labels.

Overseeing this program is one of Brick's duties and business is booming, enabled by how much excess wine is sloshing around in wine brokers' warehouses and elsewhere. "The quality of bulk wine is as good as I've ever seen it," he says. Large amounts of négociant wine goes into K&L's Kalinda label but Brick has worked with respected wineries like Au Bon Climat, Talley, Qupé and Bethel Heights to produce special co-branded wines at fetching prices.

Wine consumers in pursuit of yummy wines for smaller dollars will often find agreeable choices among négociant wines, whether bought in wine shops or online. Turning the old cliché "you get what you pay for" on its head, this kind of wine is for those whose sensory enjoyment comes from what's in the bottle rather than written on the label. Just because a gilded bottle of estate-grown wine from a famous producer costs $75 doesn't mean it will always taste like $75. But with négociant wines, there a chance that it will -- at a fraction of the price.