Bright Cellars Secures New Funding for Wine Subscription Personalization

Bright Cellars: Data-Driven Wine Subscription Evolves

Bright Cellars, a wine subscription service established six years ago, has undergone significant changes since its inception. Initially, the Milwaukee, Wisconsin-based company offered wines from third-party producers tailored to individual customer preferences.

However, Bright Cellars now asserts that its extensive data collection allows it to move away from reselling wines made by other brands. While some initial offerings are still sourced from other labels under different branding, the company is increasingly successful by collaborating with winemakers to refine their recipes.

Optimizing Wine Through Data Analysis

“We’re optimizing wine in a manner similar to how a digital product is optimized,” explains Richard Yau, co-founder and CEO, originally from San Francisco. The startup benefited from an early regional accelerator program and remains largely decentralized in its operations.

Yau discussed this strategic shift, which is being supported by $11.2 million in Series B funding, spearheaded by Cleveland Avenue, with contributions from Revolution Ventures and Northwestern Mutual. To date, the company has secured approximately $20 million in funding.

Industry Trends and Data Collection

Yau also shared insights into emerging industry trends identified through the company’s comprehensive data collection efforts.

Portfolio Development and Wine Customization

TC: Could you elaborate on the concept of building a wine portfolio?

RY: We do not possess any vineyards. Instead, we collaborate with suppliers – a practice common among larger companies like Gallo and Constellation – but on a significantly larger scale. This allows us to influence the characteristics of the wines, optimizing factors such as sweetness, acidity, color, branding, and identifying the customer segments most likely to appreciate each wine.

Unique Wine Concoctions

TC: Can you provide an example of one of your unique wine creations?

RY: We produce a sparkling wine using the Champagne method – though it is not a Champagne wine, being a domestic variety – and utilizes grape varietals rarely employed in sparkling wine production. It has become one of the highest-rated wines on our platform. Sparkling wine has proven to be a particularly strong performer for us.

Subscriber Base and Pandemic Impact

TC: What is the current size of your subscriber base?

RY: We are unable to disclose that information. However, we observed a notable increase in both new subscribers and the proportion of customers’ spending allocated to direct-to-consumer (D2C) purchases during the pandemic, which positively impacted our business. Even as restrictions eased, we found that consumers continued to cook and dine at home more frequently, leading to increased wine consumption.

Pricing and Grape Sourcing

TC: What is the typical price point for a bottle of wine on your platform?

RY: The average price ranges from $20 to $25.

TC: Where do you source your grapes?

RY: We primarily source from the West Coast, specifically Washington and California, but also maintain relationships with grape suppliers internationally, including those in South America and Europe.

Wine Testing and Selection

TC: How many wines have you tested, and how many are currently available?

RY: We have evaluated approximately 600 wines, and currently offer between 40 and 50 wines on the platform. We continually refine our selection, discontinuing wines that do not perform well.

Direct-to-Consumer Focus

TC: Many D2C brands eventually expand into physical retail locations. Why haven’t you pursued this strategy?

RY: While it’s a possibility for the future, we favor the D2C model, particularly given the increasing prevalence of remote work and the convenience of home delivery. This aligns with broader e-commerce trends; consumers are shifting away from traditional store purchases, including wine.

Shipping and Distribution

TC: From where are the wine bottles shipped?

RY: Primarily from Santa Rosa, in the Bay Area.

Climate Change and Supply Chain

TC: Have you observed the effects of changing weather patterns on California winemakers, such as the practice of applying sunscreen to grapes?

RY: Climate change has undoubtedly impacted the wine industry. Fortunately, our diversified supplier network provides us with some resilience. From a business perspective, we haven’t been severely affected. We experienced some distribution interruptions in California a couple of years ago due to warm temperatures, but so far this year, we haven’t encountered any significant operational or supply chain disruptions.

Potential Partnerships and Data Utilization

TC: Have you been approached by established wine companies regarding potential partnerships or acquisitions?

RY: We’ve engaged in discussions, primarily focused on potential partnerships. Our extensive data holdings could be valuable to them, allowing us to launch new wines and gather feedback akin to a focus group. We can also conduct A/B testing on different blends to determine consumer preferences.

Data as a Valuable Asset

TC: Would you consider selling your data?

RY: We are open to exploring data sales in the future, but our current approach centers on leveraging our insights to understand innovation within larger wine companies. While we may not be able to replicate the scale of companies like Constellation, with their extensive salesforces and distribution networks, we can provide valuable consumer understanding.

Unexpected Consumer Preferences

TC: What have you learned that might challenge conventional wisdom?

RY: Petite sirah performs remarkably well, often exceeding the popularity of cabernet and pinot noir on our platform. Despite cabernet and pinot noir being 50 times larger markets than petite sirah, our members demonstrate a strong preference for it.

Furthermore, merlot is more popular than many believe – across a wide range of demographics. There’s a common perception of disliking merlot, but our data reveals its success in red blends.

The Merlot Misconception

TC: What accounts for the negative perception of merlot?

RY: (Laughs.) The film “Sideways” continues to play a role in that perception. Meanwhile, pinot noir remains popular, but not to the extent that some wine sellers anticipate.