CPG Playbook   //   August 4, 2023

Boxed wine startups are trying to build viable DTC businesses

Boxed wine startups are trying to learn from the previous mistakes of DTC wine businesses. 

Digital wine clubs have struggled to maintain the momentum gained from at-home drinking during the onset of the pandemic. Winc, which invested heavily in private labels and its tech platform, filed for bankruptcy last December — less than a year after going public. SommSelect, an online wine club founded in 2014, also filed for bankruptcy that same month. 

Now, more boxed wine startups are trying to make a go at building a viable online business. The boxed format is not only cheaper than per-bottle prices but also offers conveniences like longer shelf life and less waste. Founders of boxed wine businesses say these advantages also make production and fulfillment — especially online — much easier than selling wine bottles. Coming off the at-home habits the pandemic helped create, a new class of boxed wine startups say they’re better equipped to do digital wine sales. Founders of new brands like Juliet Wine, Boxt and Gratsi say they’re offering a better bang for buck, more sophisticated wines than past boxed varieties and more sustainable packaging.  

Much of this recent success is due to a slowly-changing perception shift. From the Tank is a boxed wine brand by wine importer Jenny & François Selections that’s been around since the early aughts. The brand was one of the earliest examples of upstart players disrupting the stagnant category, which at the time was dominated by corporate names like Franzia, Bota and Black Box. “Things have developed a lot since we launched,” said Jenny & François co-founder Jenny Lefcourt. “It’s a format I really believe in.” 

Lefcourt explained that while boxed wine’s reputation has improved over the past decade, the reasons behind its demand have changed. For instance, she said, “with the economy the way it is this year, people are looking for less expensive options.” At the same time, she noted that wine production has become more expensive following a glass bottle shortage in the past couple of years. 

As a result, boxed wine is gaining traction among more serious wine drinkers — including millennials and Gen Z. “Now it’s less about having to convince retailers to carry boxed wine, and more so competing with the growing number of brands on the shelf,” Lefcourt said. 

The growing trend hasn’t gone unnoticed by the industry, as evidenced by a slew of boxed newcomers.

Boxed wine startup Juliet Wine launched in summer of 2022 with three California varietals, Pinot Noir, Sauvignon Blanc and Dry Rosé sold at $35 per box. Co-founders Allison Luvera and Lauren De Niro Pipher said they consciously set out to create wine in a box due to several factors. For one, the company says the packaging creates 84% less waste than glass bottles and helps the wine stay fresh for up to six weeks after opening. 

“We were always going to do a box,” said Pipher, having seen the evolving drinking habits since Covid began along with the volatile digital wine club space. “But we wanted it to feel elevated for displaying at parties or gifting it to friends.” Instead of the three-liter size of most boxed wines, Juliet’s is 1.5 liters – equivalent to two standard bottles. “It was a conscious decision to offer a more approachable size, especially to the customer that cares about quality and sustainability aspects,” said Pipher.

Pipher added that among a sea of bottles, Juliet’s patent-pending cylindrical container, called the Eco-Magnum, helps the brand stand out on social media. “A lot of our online sales are driven by the aesthetic and branding,” she said. Currently, Juliet wine is attracting women of all ages, Pipher said, including the 21-34 age range which she says was unexpected. Juliet currently has an over 20% repeat purchase rate on their e-commerce platform, and is on track to increase sales by 120% month-over-month this year.

Despite lower fulfillment costs, Luvera said growing wine sales online still has its challenges, including creating effective digital ads and managing retention rates. Varieties like Cabernet Sauvignon, Chardonnay and a limited-edition orange wine are on the way “to help drive traffic” during gifting seasons, said Luvera. Juliet is now preparing to launch a refill program, giving subscribers the ability to replenish with wine pouches that are shipped with branded ice packs. “Not only is it more sustainable, but it makes it faster to chill,” Luvera said. As is with many subscriptions, this is also a retention play for customers interested in receiving discounted pouches monthly with less waste.

Sarah Puil, founder of Boxt wine, which launched in 2020, said the growing crop of high-quality boxed wines is reflective of changing consumption patterns. However, she said, boxed wine isn’t meant to replace bottles — but complement traditional wine bottles as a cheaper alternative for at-home drinking.

Boxt specializes in European house wines that come in reusable wood boxes, meant to be refilled via subscription orders. “We’re trying to show that boxed wine can be a great house wine and a smart way to drink wine at home,” she said. “Plus, the flexible refill program lends itself well to DTC.” 

Boxt is taking a loyalty and referral-first approach, prioritizing growing its rewards program over investing in social media advertising. Rewards members earn $25 website credit when they join, and receive further Boxt credit with purchases or when referring friends. “We aggressively reward referrals to help this create a group of combined lifetime value customers,” Puil said. 

For now, the Boxt website will remain the main consumer-facing channel, Puil said. However, over the past six months, the company started an on-premise program to service bars, restaurants and other retailers. “Boutiques and salons are particularly growing fast because boxed wine is a convenient and affordable way to serve their clients,” she said.

Another newcomer is Gratsi. The comapny is positioning its house wines as a go-to for health-conscious drinkers, with zero sugar added and low-calorie. Gratsi soft launched in 2021 via its website, and sold about 2,000 cases that year. This year, Gratsi is on track to sell 65,000 cases. 

“We want to be as utilitarian as possible,” said Gratsi founder Stephen Vlahos. “But it still has cool branding and ticks off health and wellness boxes.” To keep shipping costs down, the company has stuck to three SKUs – red, white and rosé – which Vlahos said “helps with fixed shipping prices.” He noted that one three-liter Gratsi box weighs around 16 pounds, about a third of what a 12-bottle case weighs. Customers are also repurchasing within 90 days of their first order, “which is higher than we originally anticipated,” Vlahos said. One of Gratsi’s most popular options is the two-box subscribe and save combo, which costs $78.00.

E-commerce appears to be a fitting format for boxed wine. But at the same time, retailers are interested in carrying this new class of Instagrammable boxes to attract younger customers. “Half of our sales come from e-commerce and the other half from retailers in states we’re available,” said Juliet Wine’s Luvera; Currently these include two major markets, California and New York, with states like Illinois and Connecticut to be added later this year. Juliet is also sold on Gopuff and the company is in conversation with ReserveBar for online shipping.

Boxt’s Puil added that overall, growing post-pandemic sales show that online customers are more likely to gamble on boxed wine than expensive wine-of-the-month memberships. 

Even when tailored to a customer’s taste, “the multi-bottle club format means you still might get a bottle you won’t like,” Puil said. “With a box, you know what you’re getting.” 

For these boxed wine upstarts, “the timing is right,” says Gratsi’s Vlahos. “With the current state of the economy, we have an opportunity to convert more at-home drinkers to boxed varieties,” he said.