Click Wine Group Business Information, Profile, and History

Company Perspectives:

We bring high quality wines that represent excellent value to the American table. All our wines are hand selected and exhibit balance and finesse.

History of Click Wine Group

Click Wine Group markets and distributes a portfolio of wines primarily comprised of Australian brands. The company also distributes wines it has developed or invested in, such as the hugely popular French brand Fat Bastard. Click Wine Group represents approximately 18 brands in the United States, 14 of which are produced in Australia. The company also offers a selection of more than a dozen high-quality brands marketed under the Peter Click Selections banner, which includes wines singled out by the company's founder and chief executive officer, Peter Click. Including the different varieties marketed under a single brand, the company's portfolio comprises more than 50 wines from 15 producers. Click Wine Group's subsidiary, Big Fluke Wine Company, focuses on domestic wines. The company owns a portion of Fat Bastard Wine Co., the producer of Click Wine Group's top-selling wines, Fat Bastard Chardonnay, Shiraz, and Merlot.

Origins

Peter Click's entrepreneurial career began on a road trip. Click trained for a career in the financial industry and started working for a bank, but after two years he realized he had chosen practicality over passion. Click was at a crossroads. While he knew he disliked the banking world, he did not know which direction his professional career should take him. In an attempt to find where his real passion lay, Click took the route followed by many other rudderless young college graduates--he decided to travel. Click bought an All-Asia travel pass and set out on a yearlong adventure. He visited countries around the Pacific Rim but spent most of his time in Australia. Australia, he discovered, was his passion, a country he vowed to somehow make a part of his life.

Click's time in Australia pointed him in a professional direction. The moment happened by chance, occurring at a party Click attended in Sydney. During the course of the evening, he struck up a conversation that landed him a job in a local wine shop. Click was introduced to the country's wine industry and became intrigued, eventually spending six months on a 4,000-mile trek exploring the country's wine country and culture. Click returned to the United States in 1986 intent on using his knowledge of Australian wine to perpetuate his relationship with the country he had grown to love.

When Click returned to America, he found a job as a wine buyer for a restaurant in Colorado. His stint at the restaurant exposed a business opportunity, one that dovetailed neatly with his desires. At the time, there were only several Australian wines available in the country, all less distinguished brands selling for around $5 a bottle. Click decided to give the country what it lacked, a selection of fine Australian wines. He mailed 170 letters to small wineries in Australia, offering to represent the companies in the United States. He received a positive reply from 40 of the wineries, giving him, on paper, the basis for his own wine importing business.

To turn his business idea into a reality, Click, like most entrepreneurs, needed cash. In this all-important area, Click was fortunate, obtaining $50,000 from an investor whose name was never revealed. (Click's only hint at the identity of the investor was that he was a cable-television pioneer). With the capital, Click started his company, which was initially called Click Imports, and began importing boutique, mostly family-owned, Australian wines.

Unimpressive Growth during the Company's First Decade

Importing fine Australian wines proved far more difficult than Click imagined. He spent most of his time shuttling between Australia and wine wholesalers scattered throughout the United States, attempting to develop an import business that showed few signs of promise. Click's original portfolio of brands included some of the most popular premium wines made in Australia, a roster that included Cullen, Elderton, Grosset, Mitchelton, and Mountadam, but he was able to sell only small quantities of the wines in the United States. Australia, in the minds of U.S. wine buyers, was a viticultural backwater, a perception that held the growth of Click's import business in check.

For Click, the situation worsened before it improved. After a decade in business, Click Wine Group could only claim roughly $2 million in annual sales. Click had earlier tried to expand the business by importing wines from Spain and Bulgaria--regions that were better known to U.S. wine buyers--but the diversification did little to boost the company's revenue volume. In 1997, Click Wine Group's 10th anniversary was pocked by a double blow, setbacks that conspired to make the already limping company stagger. One of the Spanish wineries Click Wine Group represented offered to buy the business. Click refused, and the winery responded by severing its ties with him, stripping Click Wine Group of 40 percent of its sales. At roughly the same time, Mitchelton, Click Wine Group's most important Australian brand, decided to switch its allegiances and sign with a larger importer. The departure of Mitchelton represented another 40 percent cut in sales. Click Wine Group, which had been struggling to increase revenues for a decade, was reduced to a fifth of its size within a year.

Click saw a decade's work unravel within months. He began calling the wineries he represented, informing them that he was closing his business. However, a call made to John Valmorbida, the owner of an Australian winery, ended up saving his business. Valmorbida told Click that the Australian government provided marketing funds to companies that marketed their products abroad. To obtain the subsidy, Valmorbida became Click's partner, enabling Click Wine Group to receive $4,000 a month in promotional funds. The monthly stipend kept the company afloat and in position to make its breakthrough less than a year later. After a decade of struggling, Click was about to enjoy exceptional success.

As Click's business reeled, two winemakers were enjoying the success of a promising new brand. Theirry Boudinaud and Guy Anderson were friends with a history of working together in the winemaking business. French-born Boudinaud was an experienced vintner, having crafted wines in California, France, Chile, New Zealand, and South Africa. British-born Anderson made wines in Italy and France. During the mid-1990s, the pair planned to meet in southern France to sample some wines Boudinaud had made. After spending a week in Burgundy making wine, Anderson joined Boudinaud in his wine cellar southern France. Boudinaud wanted Anderson to taste an experimental Chardonnay he had made, one made with yeast cells left at the bottom of the barrel, a process known as leaving the wine "one the lees." Both men loved the wine, with Anderson remarking, as quoted in the May 27, 2004 issue of the Philadelphia Inquirer, "This is every bit as good as any one of the Batard-Montrachets I was making last week," referring to the rich white Burgundy wine from a village named for an illegitimate son. Boudinaud offered his own assessment, adopting a British descriptive term he had heard Anderson use. "Well, I don't know if it's Batard-Montrachet quality," Boudinaud said, "but it is one fat bastard of a wine." Boudinaud and Anderson agreed they had tasted a quality wine and wrote "Fat Bastard" on the tank.

Boudinaud and Anderson had discovered a name and a wine that appealed to many. For Anderson, who objected to the pretentiousness often on display in the wine industry, the name of the new wine offered a perfect dose of irreverence. The wine's simple white label, decorated with a small gold hippopotamus and "Fat Bastard" emblazoned across it," attracted consumers who purchased the wine because of its quirky name and became repeat customers because of its quality. The first vintage comprised 800 cases, which sold out in the United Kingdom immediately. Production increased in subsequent years and the brand expanded. Boudinaud and Anderson introduced a Fat Bastard Shiraz to complement the brand's Chardonnay. By the late 1990s, the pair was ready to introduce Fat Bastard wines in the United States. Anderson contacted a friend in a position to help export the wine, calling Click in Seattle.

Fat Bastard to the Rescue in 1998

Click was barely keeping his company alive when Anderson approached him. He brokered a deal with Boudinaud and Anderson, taking an equity position in Fat Bastard Wine Co. and becoming the exclusive U.S. distributor of the company's $10-a-bottle wines. Click, for the first time, had firm control over the wine he was importing. Fat Bastard arrived in the United States in 1998, giving Click slightly more than 2,000 cases to test the brand's acceptance. The wines were a stunning success, quickly developing a loyal following. Fat Bastard Wine Co. shipped more than 15,000 cases in 1999 and nearly 46,000 cases in 2000, giving Click Wine Group the revenue-generating engine it had needed for more than a dozen years.

Fat Bastard became the pillar supporting Click Wine Group shortly after Click began importing the brand. Annual sales, which never threatened to substantially eclipse the $2-million mark, grew robustly thanks to the popularity of Fat Bastard, surpassing $10 million in 2001. Fat Bastard, which accounted for between 60 percent and 80 percent of the Click Wine Group's sales, breathed new life into Click's import business, giving the company a growing revenue base and enabling Click to pursue other growth opportunities. The years of struggle taught Click the advantages of having considerable control over the wines he distributed. The sudden flight of a Spanish winery and the Australian brand Mitchelton in 1997 had nearly caused his company's collapse. Fat Bastard, a brand he owned a stake in, delivered his greatest success. Accordingly, while Fat Bastard's sales soared, Click began to build a broader business base for his company, one over which he exerted substantial control.

The development of Click Wine Group's own brands offered the company's chief executive officer the chance to exer- cise greater control over the fortunes of his company. Click Wine Group introduced its own brand of wine, Buckeley's, made from grapes grown in South Australia. Click's efforts to control his own destiny would go further, but meanwhile his import business was reaping the rewards of consumers' knowledge and tastes dovetailing with Click Wine Group's portfolio of wines. The blank stares confronting Click when he preached the virtues of Australian fine wines during the late 1980s no longer existed. In July 2003, Australia became the second-largest importer of wine in the United States, unseating France. The year also marked a celebratory occasion for Fat Bastard. The brand became the top-selling French Chardonnay and Shiraz in the United States. After years of uncertainty, suddenly everything was coming together for Click.

A sense of confidence emanated from the company during the early years of the 21st century. Click was gleaning the fruits of his commitment to Australian wine and the French-made Fat Bastard, spurring him to push Click Wine Group forward. In the early 2000s, the U.S. wine industry felt the presence of "Two Buck Chuck," an opportunist named Charles Shaw who used a wine glut in California to introduce a brand of wines that retailed for $1.99. Charles Shaw quickly was selling four million cases of wine a year and drawing in new, previously untapped wine consumers. In 2003, believing that Two Buck Chuck customers would move up the price scale, Click offered his response, introducing Jackaroo, an Australian wine retailing for $6.99.

As Click Wine Group prepared for the future, its newfound success encouraged Click to launch new business opportunities. In 2004, when Fat Bastard introduced its third varietal, a Merlot, in April, Click Wine Group formed a subsidiary, Big Fluke Wine Company, to spearhead the company's foray into domestic wines. Through the subsidiary, Click Wine Group intended to form partnerships with vineyard owners and production facilities in the United States. Big Fluke's debut wine, Flying Fish Merlot, produced from Washington state grapes, was introduced in September 2004. Looking ahead, Click planned to introduce one or two premium California wines to flesh out the company's portfolio of domestic wines. In the years ahead, Click was expected to push forward with the development of his own brands, as the import business he had nursed for more than a decade began to exhibit remarkable vitality.

Principal Subsidiaries: Big Fluke Wine Co.

Principal Competitors: Bacchus Wine; Billington Distributors; BRL Hardy Ltd.

Chronology

• Key Dates:
• 1987: Peter Click begins importing wine from Australia.
• 1997: After losing two major customers, Click Wine Group nearly collapses.
• 1998: The company begins distributing Fat Bastard wines.
• 2003: Fat Bastard becomes the top-selling French Chardonnay and Shiraz in the United States.
• 2004: Big Fluke Wine Co., a Click Wine Group subsidiary, is formed to develop domestic wines.