At its simplest, the French négociant system has historically involved selling finished wines under a négociant’s brand name that was made from purchased grapes, must, or wine. In practice, the system is much more complicated, and through the evolution of technology many variations have developed to fit the needs of individual wine regions. Although the system’s demise has often been predicted, French négociants continue to find success producing wines and getting them to market.
It isn’t surprising, then, that several American producers have tried to emulate them. As in France, American négociants, or “négoces” for short, vary considerably in size and business models, but all sell the concept of over-delivering quality at a lower price. Today, the term and the practice are taking hold at multiple levels.
In the U.S., some businesses, such as de Négoce, 90+ Cellars, Grounded Wine Co., Claudine, Band of Vintners, and Cameron Hughes, operate primarily as négociants. Others, including large wineries, importers, retailers, and grocers, market their own négociant brands as a part of their overall businesses.
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Their success to date has come from shrewd and varied adaptations of the French business concept to the American three-tier system and the differences in consumer culture, but even then, success hasn’t come easily. As more wine companies navigate how to match their business model with the market, U.S. négociants are finding the operation comes with unique challenges—and worthwhile benefits.
Understanding the French Négociant System
To understand the American négociants, it is helpful to take an abbreviated look at what French négociants actually do.
A century ago, Bordeaux and some English négociants bought un-bottled wine from different châteaux and transported it to their own cellars to age the wine before bottling and selling it internationally through their own networks of importers and distributors. Then, as now, famous châteaux sold their wines through multiple négoces.
Although négociants still sell these wines, today they are bottled at the château. A key to the system is that château owners get part of their money before the wine is ready to ship using a system called “futures,” where buyers at all levels commit payment in advance for a reduced price. Presently, there are an estimated 300 négociants in Bordeaux.
Being a négociant in Burgundy is different, however, as Burgundy wines are classified by the vineyard, or cru, rather than by the winegrower, and almost all of the greatest vineyards have multiple owners. These owners can either produce their own estate wines or sell some of their grapes to someone else, who is automatically considered a négociant. However, most Burgundy négociants produce their own estate or domaine wines as well as négociant wines. There are now about 315 négociants in Burgundy.
The Varied Business Models of U.S. Négociants
In the U.S., négociant business models fall into two basic categories, each with its own permutations: one-of-a-kind bottlings of mostly finished wines sourced vintage by vintage from anonymous, high-end producers; and strictly regional blends of grapes, must, or wines from multiple sources. Some are négociant-only ventures, while others are negociant wine brands within larger import, distributor, or even winery portfolios. Some are marketed primarily direct-to-consumer, while others are traditionally distributed to on- and off-premise buyers.
De Négoce and 90+ Cellars are perhaps the best-known of the one-of-a-kind, stand-alone American négociant brands. De Négoce is the brainchild of Cameron Hughes, who has been around for 20 years and has embraced the business model broadly. The company originally operated under his eponymous Cameron Hughes brand, which he sold to Vintage Wine Estates (VWE) in 2017 when business soured, and has been known as de Négoce since May 2020.
“What’s similar between me and French négociants is that we both provide [upfront] cash flow for producers,” says Hughes. “In Bordeaux, they do it at en primeur,” the annual spring event where new, unfinished wines are tasted and priced. Hughes says his sources are “mostly family-owned, high-end purveyors,” who are willing to sell because they need money before any wine is bottled and marketed. And by selling anonymously to Hughes, they don’t have to publicly discount their wines and thus devalue their brands.
Most purchases, Hughes says, are between 400 and 4,000 gallons, which he sells online, sometimes as futures but often not. “In most cases, I buy wine before it’s bottled, get it to my ‘barn’ and bottle it” under the de Négoce label with no indication of origin other than its AVA. Hughes says he usually stocks “around 150 active SKUs with 50 to 60 in the pipeline.”
Like Hughes, Kevin Mehra, the president and founder of Latitude Beverage Co., keeps sources anonymous for his 90+ brand, which has a complex business model. “We launch about 25 SKUs each year, most between $10 and $40,” he says. About 50 wines may be in inventory at any one time. About 25 percent is mostly American wine bottled at Rack & Riddle in Healdsburg, California, but the rest is usually from overseas, bottled there by the producer. “We send most of the producers there our label artwork,” says Mehra, “but sometimes they’ve forgotten and used corks with their names, which has caused them a few problems.”
Unlike de Negoce, 90+ is strictly sold at retail. “We’re strongest in New England, and currently we are in 22 states through distributors,” says Mehra. “Small, independent retailers are our sweet spot. Grocers aren’t as good with sales talk.”
Among the second négociant category, those which produce regional blends, Josh Phelps’ Grounded brand is a market leader. After buying bulk wine when he co-owned the Taken brand, Phelps says when he founded Grounded Wine Co., “I didn’t want to be at the mercy of bulk producers, either from a quality or cost standpoint.” Working with long-term grape contracts throughout the West Coast, Phelps oversees production at five different wineries and sells his widely marketed Grounded wines both at retail and online.
Band of Vintners is a more scaled back operation, founded with the 2014 vintage by seven Napa Valley partners, four of them winemakers. “We thought it was a good, romantic idea to create a Napa Valley Cab that punched above its weight,” says Brennan Anderson, whose day job is VP of marketing for Folio Fine Wine Partners. Through personal contacts, they source samples from various wineries, decide on their final blend, then buy enough wine to produce about 4,000 cases. Currently, they make only the Cabernet Sauvignon, but Anderson says they may consider expanding.
A Challenging Market for Négociants
One might think there would be more American négociants, as owning winemaking facilities is optional and thus less capital investment is needed. But sourcing product and getting it in the hands of the producer is highly competitive—with low margins. As Hughes notes with his de Négoce brand, even his network of contacts has limits when there are small harvests and natural disasters. “Before the fires in 2020, everybody was trying to get rid of excess supplies,” he says, “but after the fires things dried up for a while.”
Of course, there are huge amounts of wines readily available from generic appellations—World Bulk Wine Exhibition estimates 38 percent of international global exports are bulk wines worth more than $360 billion—but it’s tough to buy and sell these wines at competitive prices. Hughes’s de Négoce brand sends almost daily email blasts to its online market, and those who choose to sell through the three-tier system must fight for shelf placements. Plus, low margins dictate higher volumes are needed for profitability.
It can also be difficult to get consumers to purchase wine from negociants. While many buyers are wedded to the idea that a low-price, high-quality wine will bring sales, others, especially younger consumers, are curious about the provenance of their wines beyond appellation and price tag, preferring to also have an emotional connection with a brand. Such connections have been shown to establish long-term brand loyalty.
Bruce Hunter, the managing director of Shaw-Ross International Importers, has almost 50 years of experience in the international wine trade, and he sees complications in the proliferation of American négociants, especially freestanding ones without marketing alliances. “I think there will be a spot for them, but I just don’t see them as successful as they are in other parts of the world,” he says. “When you come here you’ve got 50 [individual states] and you have the federal, state, and municipality laws; it’s a more complicated way of doing business.”
Opportunities Make the American Négociant Model Outlook Bright
Still, the négociant system in all its configurations serves an important role for many people who play vastly different roles in the U.S. wine business. A small grape grower or grower-producer can establish long-term contracts with négociants, providing a steady cash flow and better credit ratings. Premium producers can use négociants as safety valves to acquire extra income up front without having to reduce prices and sully their reputation. Entrepreneurs with marketing expertise see it as a promising niche with little need for infrastructure and capital investment. Corporate entities feel that owning négociant lines broadens their portfolios and adds equity to their businesses, such as grocery chains like Costco (Kirkland Signature) and Trader Joe’s (Charles Shaw, aka “Two-Buck Chuck”) and importers like Deutsch Family (Josh Cellars).
Some high-end West Coast wineries, such as Gamble Family Vineyards in Napa Valley, have taken a page from the Bordeaux château playbook and are using their reputations as prestigious, high-quality producers to sell an affordable négociant brand, as Lafite-Rothschild does with Légende and Mouton-Rothschild does with Mouton Cadet.
“Our new Mill Keeper line falls within the négociant category,” says Gamble Family owner Tom Gamble, and uses multiple sources for each wine. “By using the Mill Keeper label, I gave myself the gift of taking the pressure off by not competing under the Gamble label.”
Armando Dawdy, the beverage manager at Brenner’s on the Bayou in Houston, says the Mill Keeper Napa Valley Cabernet Sauvignon is on his wine list in addition to two higher-priced Gamble Cabs. “It’s one of my best sellers because of the Gamble association and the fact it’s from Napa Valley,” says Dawdy.
Mehra sees size and diversity as key advantages for a négociant. When he faced supply problems after California fires shut off an important source, “We just brought in more fine wine from Bordeaux and Barolo,” he says. “Being a négociant is good because a négociant can be flexible.”
Dispatch
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Roger Morris is a Delaware-based writer who for the past 20 years has contributed articles on wine, food, and popular culture to about a dozen publications in the U.S. and Europe. Currently, he writes for World of Fine Wine, Drinks Business, Meininger’s, VinePair, Wine & Spirits, and Global Drinks Intel, among others. In prior years, he taught writing at Arizona State University and the University of Delaware and was an industry marketing executive.
