How David Parker Of Benchmark Wine Group Built A $40 Million Online Wine Retail Business

Some doomsayers have called wine tech a “graveyard of failure.” But that’s far from the reality I see playing out. Spectacular crashes may get more attention, but for every dumpster fire, there’s an online wine platform that’s quietly crushing it.

I’m not the only one with this viewpoint. “I think just the opposite,” says David Parker, founder and CEO of Benchmark Wine Group. “Online fine and rare wine is the fastest growing segment of the wine market.”

Over the past 25 years, Benchmark Wine Group built slowly, scaled responsibly, and is now reaping the rewards — to the tune of $40 million a year in sales. The collection of companies comprises Benchmark Wine Group, an online wine retailer, distributor, and importer; the online wine and spirits auctions site Brentwood Auctions (formerly Brentwood Wine Company); a shop in Washington D.C. called Benchmark Wine & Spirits, which does online sales and pick-up, with in-person shopping to come; and First Growth Technologies, a data and services company publishing Wine Market Journal and Spirits Market Journal, which track auction prices. The companies are strategically aligned, and complementary to one another. For example, data from First Growth informs auction prices at Brentwood Auctions and product prices at Benchmark Wine & Spirits.

I talked with Parker recently about strategic growth, the booming online market for fine wines, and buyers’ growing thirst for rare spirits.

Erica Duecy: Talk me through the scope of your business.

David Parker: Sure. So we are nominally the largest wine retailer in the country. We hold three licenses. We hold a retail, a distribution, and an import license, which you can do in California. But we’re primarily a retailer specializing in back vintage, collectible, investible, and hard-to-get wines. We collectively call those “rare wines.” More recently, we’ve built up a large-ish customer base of trade buyers — Michelin-star restaurants, other top restaurants, very top retailers, and even some distributors and European brokers. We’ve been broadening our trade customer base pretty quickly.

We have a D.C. operation, and we’re starting to focus on direct imports of a few brands and being the designated distributor of a few brands. It’s run under a separate company, Benchmark Wine & Spirits. A retailer in the District of Columbia has the right to bring products in from outside the District. Retailers in the District have the right to sell to restaurants, and we have an import license for them also. So they can essentially do most of the same things, but they can also trade in rare spirits, which we can’t do out of Napa. So we’ve been dealing in rare spirits now since March of last year.

Duecy: How did the company start out?

Parker: My first career was in high tech. I ran engineering for a number of tech firms and became a wine collector. I bought a vineyard out of interest, and then I bought another one. So I kind of got exposed that way. Then, in 1998, I decided to focus on wine through the data aspect of it, realizing that wine was somewhat behind in data and technology as an industry.

We set up Brentwood Wine Company, the auction house, in Oregon. It was a pure three-tier state, so we needed to own the wine to sell it. At the time, there was a small periodical called Wine Market Journal that tracked wine auction prices, and I got access to their data. Later, they came to me offering to sell it. The owner who had put it together offered to help start a company in California, which had much better laws in terms of doing what we wanted to do. And we saw much higher potential to do retail. Benchmark was founded in 2002 and quickly outgrew Brentwood, and really has been on a nonstop growth trajectory since then.

Duecy: What does Benchmark do that you can’t get from other auction services?

Parker: Generally, when you sell at auction, you give them a list of your wines. They give you a broad range of what you might expect to receive for that. You then sign a contract with them — essentially selling on consignment — then send it in a number of months later, and they hold the auction. And then months after that, they pay you based on what they received, minus a large commission, 20% to 27%. So it’s a long unsure process for you as a seller.

What we tend to do is give you a flat appraisal because we have so much detailed data and software that sits behind it. We give you a quote — your cellar is worth exactly this much — and you’ll be paid. If it’s a large collection, we’ll go pick it up. And as the truck is pulling away, we can have the money wired into your account. If it’s a little smaller, you send it to us. We check it in, we inspect it. And assuming it’s all in good shape and what you said it was, we’ll have a check out to you in a matter of days. We offer security, and much faster payment if you’re on the sell side.

On the buy side, we put what we call our “provenance guarantee” on every bottle. That’s a guarantee that we know the source, we’ve inspected the source, we’ve hand-inspected every bottle, and you really have full recourse if there’s a problem. If you don’t like the look of the bottle, just send it back for a credit. If you open the bottle and it’s corked or it’s spoiled, we’ll give you a credit.

Duecy: I heard an appraiser recently refer to a “Benchmark-quality cellar.” She said she wouldn’t be bringing a certain cellar to Benchmark because it had quality issues, and would presumably be turned down. Can you talk me through the vetting process for cellars?

Parker: First and foremost, the bottles need to be in virtually perfect condition or excellent condition, as we would call them. And they only are going to get that way if they were well-treated throughout their entire existence. So you didn’t ding up the labels, you kept it in temperature controlled storage throughout its life. You certainly made sure that your cellar wasn’t too dry so the corks could dry out. Next, it’s got to be a collectible wine that was made to age. And depending on where you draw the line, only 3% to 10% of all wine has ever been made to age, and it’s probably closer to that 3% number.

And we also tend to deal in the larger cellars. The larger the collection of wine you want to bring to market, the more you’re going to make on every bottle because there’s a significant amount of overhead with tracking each collection. I think our average cellar size is something like $50,000.

Duecy: When I buy a bottle, how does it get to me? Is it temperature-controlled shipping?

Parker: The collections we pick up all travel temperature controlled. And when we buy from rare wine brokers in Europe, those are also temperature controlled every step of the way. Going back out to you, you’ll have a number of different choices. If you’re in California, then FedEx, UPS, or Golden State Overnight. Overnight is generally fine, although we’ll still watch the weather and won’t ship when it’s super hot; we hold it until it’s safe. Nationwide, we can also go overnight, trying to avoid the very hottest times. Where we are usually most concerned is the final mile where it’s going from the UPS depot and being delivered to you, and you really don’t want it out in the truck all day until 4 pm if it’s a 100-degree day out.

We also have low-cost, temperature-controlled ground transportation, where it goes almost all the way in a temperature-controlled truck. And then the final mile is generally common carrier, and the bottles are in foam shippers, which themselves have a lot of insulative value.

But even so, we watch the weather on every single shipment. We have an entire department that works with people to make sure the shipment is exactly the way they want, conducive with the weather, and that will arrive on the day that you’ll have someone there to take delivery. Because even though that’s out of our control, customers view that as part of our service right up till they’ve received their wine and they’re happy with it.

Duecy: Tell me more about your new spirits auction business.

Parker: It’s growing very, very quickly. It kind of feels like the Wild West that rare wine was back in, say, the ‘90s. Rare spirits sales at auction in Europe have already surpassed rare wine there. They’ve been trading rare Scotch for a long time, also rare Cognacs and Armagnacs. But it’s growing by leaps and bounds here in the U.S.

Scotch is king in that space, but Bourbon, Irish Whiskey, and Japanese whiskey are certainly extremely popular too. I’m sure you’ve heard of Pappy Van Winkle. Everybody looks for it. Some of the older Macallan Scotches are also very highly regarded. There’s one Japanese whiskey out there — Yamazaki 55 year old — that when it trades, it trades around a half a million dollars a bottle. So it’s a big deal for people in the know.

Duecy: What’s the size of Benchmark Wine Group?

Parker: We sell an average of 200,000 to 300,000 bottles annually. Prices on bottles average around $250 to $350 apiece, though we have bottles in the $20 and $30 range, and up into the tens of thousands of dollars. Sales overall are north of $40 million.

Duecy: In terms of growth, what are the biggest opportunities for Benchmark right now?

Parker: Certainly our main rare wine business has been in the right place at the right time for quite a long time. It was extremely popular during the pandemic. Even though our restaurant sales went away, our direct-to-consumer sales went up so much. Our business jumped by 20-something percent. And the demographics at the high end of the market — the rare and collectible — that’s the highest growth segment by dollars and always has been. So a lot of our growth opportunity is just to keep doing what we’re doing, and have more people get to know us.

And spirits clearly is a whole new market for us, and one that’s growing quite quickly. We think that’ll grow to be about 70% as big as the rare wine market here in a couple years by dollars. So that’s huge. And now we’re starting to do direct import from producers as well as direct distribution from domestic producers. And so that’s all great growth — we grow our trade customers, our restaurant customers, and our retail customers.

Duecy: How does it work with direct distribution? Is it smaller wineries that are looking for distribution more broadly in the U.S.?

Parker: Yes, I’ll give you an example. We have a brand called 00 Wines that’s a highly ranked wine producer in Oregon. Their Chardonnays and Pinot Noirs tend to be scored 97 points and higher by reviewers, and they have very tiny production. They were doing self-distribution on the West Coast, but they needed a distributor on the East Coast. Our D.C. operation was able to learn about that brand and bring it right to the collectors and the very top restaurants that are their target.

Duecy: Lastly, what’s a wine that you had recently that you loved?

Parker: That’s a hard question because I love them all. Everything has its own excitement to it. Well, not too long ago I had a 1960 Vega Sicilia Unico, and that was an extraordinarily memorable bottle of wine. I was also lucky enough, when I was in the Sherry region in Jerez, to be able to taste the oldest existing wine still in a barrel, which was a 1728 from González [Byass]. And that was extraordinary; brought tears to my eyes. In this position, some people would say it’s nothing but hard work, but you’ve got to have some rewards to make it all worth it.

The conversation has been edited and condensed for clarity.