Welner Wines sells to the under 10 dollar wine segment with Panache, Chutzpah, and Quality

I have yet to have the honor to meet Shimshon Welner, in person, but Mr. Welner was very kind to take the time from his very busy schedule, as you will see soon, to talk with us about the kosher wine industry as a whole, his wine company, and the underserved market for kosher quality wine under 10 dollar. As you talk with Mr. Welner you cannot help but be impressed by his obvious passion for this industry, but also for his equally obvious self confidence and knowledge when it comes to selling into the ever growing kosher wine market.

I have recently been talking with my friends about the kosher wine market, the plethora of options, and the deep and real fear I have around the number of wineries going kosher. In Israel, for the longest time, the majority of wineries were non-kosher, while the majority of wine sold in Israel was kosher. That being on account of the largest wineries being kosher, who produce over 90% of wine in Israel:

  1. Carmel
  2. Barkan- Segal
  3. Golan Heights (Yarden)
  4. Teperberg
  5. Binyamina
  6. Galil Mountain
  7. Tishbi
  8. Dalton
  9. Tabor
  10. Recanati

Many if not all of these wineries started off kosher, for a myriad of reasons, with a strong contributor being the ability to sell the wine to anyone and anywhere. That is a fair amount of wine that needs to be sold to an already well defined and limited group of Jews. Yes, religious Jews are buying wine more than they used to, still more and more wineries are starting kosher wine production. Many of them producing wine in the category that I call “death valley”, the wines with a rating of 84-90, that cost anywhere from 18-30 or more dollars. The scary part, is that the very large majority of all kosher wine out there fall either below 85, which makes it almost unsellable, or above it, but at a price point that just adds more product to the already yawning gap of under 90 point wines. Above 90, people have a desire to try it a few times, and may well continue to buy the wine, if they like it. Under 90, the wine will be bought maybe once as a way to try something different, but once they realize the product is inferior, they will not buy it again. So why the fear? Because 10 years ago, we would have been begging and screaming for this potential nightmare, but now it is getting to be a real potential problem.

You see there are three legs to the wine selling business, price, quality, and consumer. If you have a low priced and high quality wine that anyone can drink – you have no problems. If you have a high priced and low quality product that anyone can drink, you have some issues. If however, you have a low quality product with a high price and even lower consumer base, by not making the wine kosher, you are in deep trouble. You see, there are many hundreds of thousands of bottles of wine out there that a non-kosher wine market can sell, and they are often better and cheaper than their kosher counterparts. There lies in the conundrum that I am deeply fearful of. That is why I was so excited to speak with Mr. Welner.

Mr. Welner’s career started with selling apples, as part of one of the largest fruit purveyors in all of Israel, Pairot Golan (Fruits of Golan). On a trip with his wife to Washington State in America, to see their apple business up close, he heard about the success of Yakima Valley wines, and their transition from apple growers to vineyards. Upon returning to Israel, he started looking into the many vineyards that were planted in the Golan, and realized they were not going to cut it. So he plowed over 230 acres of land riddled with Syrian tank carcasses, and plowed over the horror of the past with a gift for the future. He brought over Peter Stern as a consultant (winemaker extraordinaire), plowed a million dollar grant into building the winery, including new steel vats, French oak barrels, and other high tech wine making utensils from Italy. All told a large investment to say the least, including the land and the winery itself. However, the investment paid off, he created the platform upon which almost every boutique and large winery in Israel has copied, and in my eyes the father (along with Peter Stern) of the Israel Wine Revolution. The wines he produced were finally of the class and quality that he so badly craved, but now he faced his largest challenge yet, how to sell this wine to a public that thought of Israel and kosher wine as crude and backdated.

Here starts the story of the irrepressible Shimshon Welner, his unwavering belief in his abilities to sell fruit, just in a different container! It takes a certain makeup and bravado to take a wine that no one knows about and sell it so successfully that he creates a whole new wine segment that essentially did not exist before it. This ability was learned from his earlier job, as head of the Pairot Golan, the knowledge of how to sell to stores, supermarkets, restaurants, and hotels, essentially how to sell product of the tree or vine to the consumer, or as bloody close as he could, without undercutting his larger market or his distribution arms. It is this knowledge along with his ability to create quality product that Mr. Welner has leaned on these past 30 plus years, and what he continues to make use of in his now, third company, Welner Wines.

Mr. Welner worked with Yarden until 1989, when he stepped down from the day to day operations, and spent time with friends and family, until he felt the need to scratch the itch once more. Convinced that the future lie in mastering the three legs of the tripod lie in making kosher wine with above average quality and rock bottom prices, he helped Royal Wines from 1996 till 2001 with their Alfasi line from Chile. In that time, he created a new Brand for Royal, rocked the prices, and created a wine with solid above average scores. Sound familiar? It seems that Mr. Welner was put on this planet to recreate something new with the experience he garnered from his past.

While working with Royal, Mr. Welner was always looking for something he could call his own once more, and he found that with Welner Wines in 2002. He started with the Tierra Salvaje label from Chile and Spain. The only real mark on his almost perfect salesman record would be his initial idea to allow Tzali’s to distribute his wines in the US. Clearly Tzali bit off more than he could chew initially, but then the first of two horrible recessions hit this country and that forced Tzali to discount, and worse, hang on to dead wines. These quality wines are not meant for long term cellaring, and 8 to 10 years is far too long to be holding on to the wine. The real shame was that though Mr. Welner had figured out that he needed a new distributor, the wine was already out there and underselling new legitimate quality vintages and sullying the brand, all at the same time. All the while, the wines were doing great in other parts of the world where Mr. Welner was selling the same wines, Israel, Europe, Canada, and South America. Once again Mr. Welner leaned on his experience and knowledge; he sold as close as possible again to the consumer, selling directly to large supermarkets in Israel and around the world. As time progressed he expanded the Tierra Salvaje label to include a more diverse set of varietals in a larger set of countries. He then slowly added the Terroso label and expanded it into Spain as well. He took the Terroso label to SuperSol markets and the Tierra Salvaje label to Blue Square markets, both in Israel through Uri Shaked (the Israeli Wine Man of the year in 2010). In the US and Canada, Mr. Welner uses both kosher and non-kosher distribution points, and other wine stores, distributors, and supermarkets. Around the world he works with supermarkets and wine stores, as well, all in the pursuit of debunking the false myth that you can judge a wine by its price.

All the knowledge in the world on how to get wine to the customer at the lowest cost alone cannot keep the costs down. Mr. Welner’s knowledge does not end at the world of sales, he is also an accomplished wine maker, being around Mr. Stern for all those years rubs off. According to Mr. Welner, in the early Yarden days, while Welner handled the business and sales sides of things, Mr. Stern handled the wine side of things. “Without Peter we could not have achieved our goals … he is a real teacher and great person … Peter taught me wine production and the production rules of how to produce decent to great wines.” says Mr. Welner. With that knowledge and hotline in tow, along with his wine contacts, Mr. Welner built state of the art wine making facilities in each of the countries. Though the initial and ongoing investments are large, the payoff is the ability to control quality while keeping costs low.

In addition to his knowledge and Rolodex, Welner Wines works with the wineries to share the costs of the wine production, in a highly symbiotic relationship. Welner Wines invests in the wineries where it makes the kosher wines, in return the wineries agree that they would possibly pickup any unsold wine under the winery’s label. This means that the winery has full confidence in the kosher wine and its quality. This is even more clearly shown with the Terrenal Spanish wines not being mevushal. This is because the winery was afraid that it could not sell the wine, if it was called upon to sell any unsold Terrenal wine. The good news is that this agreement has never been needed, as of now, but it still shows the wonderful relationship that Welner Wines leans on and yet another example of how they are able to keep the costs down. Indeed, Welner Wines has commonly sold out of its vintage, before the next vintage is ready to sell. On a side note, within a few weeks of the 2009 Terrenal, from Argentina, being released, it was out of stock, much to my own chagrin. Add on the direct shipping or lower cost shipping and the prices start to make sense, as does his insanely busy schedule. When Chile and Argentina are in full production, he practically lives in the southern hemisphere, flying back and forth between them, from early March to late May. Then it is off to Europe, where he once again takes up lodging, from August till September. I have no idea how he was able to manage four southern hemisphere wine countries at the same time (Australia, South Africa, Chile, Argentina), even if Chile and Argentina are close by each other. In the end, the hectic lifestyle has one clear winner, the consumer, who gets quality wine for a low price.

The main success factor of any successful niche product is that it must be desired by the niche and the non-niche clientele. Successful kosher endeavors have always had their roots in the kosher market, but require their fruit to be enjoyed by the public at large. Welner Wine’s have successfully created wines that talk to not only the kosher minded but to almost any wine drinker at large. Finland, with a Jewish population of 1600 people, consumes almost 20x that much of Welner Wine’s Prosecco. It does not begin and stop there, a large amount of the wine sold by Welner is consumed by non-kosher minded people. This is the kind of foundation that allows good companies to grow and to innovate, without the fear of needing the niche market, alone, to survive.

Two labels are nice and all, but there are more wine regions in the world. So, carefully, Mr. Welner stretched out to Australia, Italy, South Africa, and France. Unfortunately, even if you can control the three legs, you cannot control the outside forces that push on those legs, those being, price inflation, country unrest, natural disasters, and the fickle palate. While Australia was fine for a while, it quickly improved economically than the rest of the world, in the early 2000s and equally quickly became far too expensive to buy grapes, produce the wine, and ship it half way around the world. Argentina had the same set of issues for the opposite reason. Their economy was going so bad and they were in so much debt, that they had to print their way out of it, again causing skyrocketing inflation, and ever increasing costs. If all that was not bad enough, in early 2010 Chile was rocked by a massive, with its destructive impact hitting in the heart of Chile’s wine region. It also unfortunately hit the winery that Welner Wines uses to produce their wine. A fair amount of wine was lost, however, the majority of it (from the previous year’s harvest), had just been shipped out, a true God send. They once again invested into the winery and built it back up just in time to produce the 2011 grapes which will be happening in a few months. South Africa was unfortunately just not in enough demand. Where the fruit, price, and quality were there, I personally liked many of the Welnerberg wines; the broader consumer market was not that interested. I guess sooner or later, with all there is to choose from, the market will opt for what they know than what may seem foreign.

The future looks bright once again though. With Argentina’s economy once again viable, and Chile back on line, the crown jewels of the Southern Hemisphere’s wine trade is working again, with solid quality and low prices. Italy is producing some of the best wines to come out of Welner’s labels, and Spain continues to produce heavy hitters at a fraction of the normal cost. France has been around for some time now, and is slowly becoming a real winner as well. Welner Wines continues to grow at breakneck speed, from its fledgling beginning to now, in 8 years it has grown its wine production 6 fold! With all the ups and downs, there has been one constant, that being Mr. Welner and his passion to bring quality kosher wine as close as he can get to the consumer, for rock bottom prices. It is the motto of Welner Wines and it rides on the shoulders of a man who knows he can keep his eyes are focused clearly on the future because he has his feet planted firmly in the past.

Advertisements

Posted on January 30, 2011, in Wine Industry, Winery Visit and tagged , , , , , , . Bookmark the permalink. 2 Comments.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: