Thrive Market, the membership-based organic online grocer, is getting into the wine business.
Starting today, Thrive Market will offer six- and 12-bottle bundles of organic wines, all priced at $18 per bottle or less, to the 38 states that allow wine shipments.
Nick Green, Thrive Market’s CEO and co-founder, says the business rationale for selling wine was simple. In a survey of its customers, Thrive Market found that 75% drink wine twice per week or more, indicating a potential demand. Finding good-tasting, affordable organic wines was another matter. So was finding a way to ship the wine that fit Thrive Market’s requirements for environmental friendliness.
Organic wine selection
To select the wines, Thrive Market’s master sommelier Josh Nadel tested hundreds of wines from around the world, Green says. The result was an initial selection of six red, six white and four rosé wines—mostly from Europe—that will be sold in assortments based on region or price. Many of these wines haven’t been imported to the U.S. before and are from small producers, Green says.
But wait, isn’t wine generally natural, even without being organic? Not so, Green says. Winemakers routinely add fruit flavorings, stabilizers, preservatives or sugar to balance the flavor profile of a vintage and improve its shelf life. And, because alcohol is not regulated the same as most other food and beverage products, he says, those ingredients don’t have to be listed on the label. In all, Green says, more than 70 kinds of additives are used in the wine business.
For wine to be legally sold as organic, all grapes and other agricultural ingredients (including yeast, if commercially available) must be certified organic, except those on the the National List of Allowed and Prohibited Substances, according to the United States Department of Agriculture. Non-agricultural ingredients must be specifically allowed on the National List and may not exceed a combined 5% of the total product, excluding salt and water. Also, sulfites may not be added. Like all organic products, organic wine also must be produced without excluded methods (such as genetic engineering), ionizing radiation or sewage sludge and under the oversight of an organic certifying agent.
Logistical challenges
The U.S. organic food market hit a record $45.2 billion in sales in 2017, an increase of 6.4%, according to the Organic Trade Association’s 2018 Organic Industry Survey released in May.
Green predicts Thrive Market’s annual revenue from wine sales could reach $10 million or more within a year. But, the expansion into wine selling was not as simple as just adding another product line.
“From a logistics standpoint, it certainly was a challenge,” Green says. For one thing, he says, the company wanted to find ways to ship the wine that did not require a lot of non-sustainable foam packaging to protect the bottles from breaking in transit. He says Thrive Market found a solution that uses post-consumer recycled materials. Thrive Market also was able to find a logistics company that already had the licenses required to ship wine to the states that allow it.
Green says the wine is sold in assortments, rather than by the bottle, to keep prices down for consumers and make the shipping more environmentally friendly. Those logistics challenges are similar to the ones Thrive Market faced earlier this year when it started selling meat and seafood for the first time.
In April, Thrive Market began offering beef, poultry, pork and seafood in packs of 6.25 pounds to just over eight pounds per order. Selling in large packs helps Thrive Market ship the orders as sustainably as possible and keep the per-serving prices to about $5 to $6 each. Green says it took more than a year to work out the details in a way that made sense both economically and environmentally.
More than six months later, meat and seafood sales are doing well, but Green declined to provide sales figures. “It is exactly what we hoped it would be,” Green says of the meat and seafood sales.
Thrive Market is No. 208 in the in the Internet Retailer 2018 Top 1000. Since 2015, the retailer has received almost $162 million in funding from investors, according to Crunchbase data. Most recently, it received $111 million in a Series B round in July 2016 and another $10 million via a convertible note offering in October 2016. Each $60-per-year paid membership sponsors a free membership for a low-income family, the company says.
Green says the average household income of Thrive Market members is $75,000 and about 45% of its customers live in the Midwest or the Southeast.
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