Millions of dollars have poured into two Massachusetts startups that want to change the way you drink wine. Both of them, Coravin and Kuvée, were included last month on a list of “9 wine tech startups creating all the buzz,” compiled by CB Insights, a database of startup info. And both were out at the Consumer Electronics Show in Las Vegas last week.
Coravin was unveiling its newest product, a wine preservation system dubbed the Model Eleven. Kuvée had designed a somewhat similar product — an Internet-linked wine bottle that could keep its contents fresh for as long as a month after the first glass is poured. But in Vegas, Kuvée was hunting for a financial lifeline after laying off most of its employees and shutting down its Boston office last year, unable to raise more money from the venture capitalists who had put $10 million into the company’s bank account.
Disrupting the way we drink wine, it turns out, is much harder than picking the perfect white to pair with a cedar-plank grilled salmon.
Burlington-based Coravin was founded in 2011 by a mechanical engineer and medical device executive Greg Lambrecht, and Josh Makower, a venture capitalist, doctor, and entrepreneur. Its product was originally dubbed the Wine Mosquito because it uses a long needle to pierce through the cork and allow wine to flow through. Instead of allowing air into the bottle, the Coravin system injects argon gas to preserve the wine. Coravin’s chief executive, Frédéric Lévy, says the company has bottles that were opened with an early prototype system 10 years ago that are still drinkable.
Another aspect of the company’s pitch is not just extending a bottle’s longevity, but allowing you to pour glasses of several different wines throughout the course of a meal, bringing a restaurant-style dining experience to the home.
“We want to retire the corkscrew,” Lévy says. Coravin’s least expensive product sells for $200, and the newly announced Model Eleven will hit the market later this year priced at $1,000. It can be linked to a mobile app to recommend the best wine to pair with a meal, album, or movie. The mobile app can also reorder the $10 argon gas canisters. (Each canister allows a Coravin dispenser to pour about 15 glasses of wine.)
Lévy says Coravin now has 100 employees in Massachusetts, the Netherlands, and Hong Kong, and sells its products in more than 60 countries.
Vijay Manwani, the founder of Kuvée, observes that the $1,000 Model Eleven is “a high-end product,” and that the company needs to find a successful way to sell its wine systems to the middle of the market “or they will run into a wall.”
Kuvée got started three years after Coravin, in 2014, and launched its product in 2016. Its idea was to initially sell a $200 system and then generate ongoing revenue by delivering wine itself to the consumer. The Kuvée system itself looks like a slightly oversized bottle with well-hidden technology inside. It includes a digital display instead of a paper label, a special valve that keeps oxygen away from the wine, and a WiFi connection that allows you to reorder a vintage with a quick touch.
The wine itself comes in a metal canister that is much less expensive to ship than a bottle, and less likely to break. Kuvée has arranged to sell wine from brands like Bonny Doon, Coppola, and Schug, at anywhere from $12 to $55 for a 750 milliliter canister (the same size as a traditional wine bottle).
But designing the product and establishing those partnerships with vineyards was expensive and time-consuming. Manwani told me in 2016 that the company would need more money in 2017 for marketing and promotion. That didn’t happen. The company then decided to shift from a direct-to-consumer selling approach to one that would target wineries. The Kuvée system would offer them a way to build stronger relationships with their most loyal buyers, like those who signed up for their wine clubs. That would let the winery handle the marketing that could help Kuvée grow.
But the fires that erupted last fall in California’s Napa and Sonoma counties damaged wineries and destroyed employees’ homes. “We had a lot of opportunities to get the product out at scale that got delayed,” Manwani says. The company vacated its Boston office space and let go about 15 of its 20 employees, Manwani says. But he and a small team are still pursuing the vision of helping wineries deliver their products to wine lovers with the Kuvée technology.
Before joining Coravin in 2015, Lévy had spent the past two decades helping build the Nespresso business inside Nestlé SA, the Swiss food giant. Nespresso makes single-serving, pod-based coffee machines and operates a network of 450 stores around the world to sell them. Analysts estimate that the Nespresso business generates about $5 billion in revenue for Nestlé, and sales have still been growing at a double-digit rate in recent years.
Surprisingly, in the United States, wine is an even bigger business than coffee: $60 billion versus $48 billion, according to stats from the Wine Institute and the Specialty Coffee Association of America.
Entrepreneurs look at examples like Nespresso or Keurig and say, “Why can’t we do that for alcohol?” — in the words of Brad Rosen, founder of Drync, a Boston mobile app that sells wine. The wine market, he points out, is fragmented and still constrained by lots of regulation about how it can be shipped and sold — and also by the product’s perishable nature.
Rosen estimates that more than 20 Boston-area startups have tried to take on the wine market since he started his company in 2008.
None has yet built a business to rival Nespresso or Keurig, and several have already gone down the drain.
But give up while there’s still the possibility of success? That’s just not how entrepreneurs are wired.
“Why would an entrepreneur ever want to do that?” Manwani said in December. “We are at the 80-yard mark over here. We need to finish this race.”Scott Kirsner can be reached at firstname.lastname@example.org. Follow him on Twitter @ScottKirsner.