Vault

Off-Premise Wine Storage 101

While many wine storage customers are experts when it comes to wine appreciation, not everyone is an expert in the details of third party wine storage. As a result, Chelsea Wine Storage ("CWS") has written the following to as best as possible explain what we do and why we do it. CWS believes that our practices, procedures and fee structures are in keeping with wine storage industry standards. As such, CWS invites your scrutiny and is more than happy to be informed of any competitor practices which may prove of note.

CWS offers two basic ways of storing wine, in "open storage" or, in much fewer instances, in "private lockers." Open storage means that cases of wine or any other stored alcoholic beverage can be stored in any area within the facility with the exclusion of private lockers. These cases are stored on alphanumerically labeled shelves throughout the facility and there is no guarantee that any one customer's cases will be stored together in any centralized manner. Where cases are stored remains at the discretion of CWS personnel as they locate open spaces throughout the facility. All open storage customers are able to access CWS's computerized inventory control software system via the internet.

"Private lockers" are enclosed spaces of varying sizes that are rented to one specific customer. Currently, there are lockers that utilize the CWS inventory control system and those that do not. CWS management believes that private lockers work best for "do it yourself" type customers, those who are willing to personally themselves inventory their wine collection as well as physically manage their locker space. Those existing private locker customers who are currently utilizing CWS inventory control will remain "grandfathered" into inventory control for as long as their lockers are utilized. Newly vacated or newly built lockers will be rented without inventory control.

In passing it should be noted that most wine storage facilities throughout the U.S. are comprised of private lockers only and provide zero inventorying services. Their business model is very similar to basic "mini-storage" facilities, simply adding in temperature and humidity control as well as heightened security. Only in urban areas such as New York City does one typically encounter wine storage facilities which inventory their customers' wine.

Given that CWS offers a broader array of inventorying services than most, how does such inventorying work? We receive cases in a variety of manners. From our customers themselves, directly from wineries, directly from retail stores, directly from wholesale distributors, from other third parties. etc. CWS may receive individual bottles, partially filled cases, or full cases (both solid and mixed). Our current handling fee for each case received is $5.00 per case. This fee covers both the manual labor associated with receiving the wine and placing it later on the shelves as well as the data entry associated with the inventorying process.

Given the extremely broad variety in the packaging of the wines at the time CWS receives them, it is more fruitful to think of them in term of "pieces" than strictly by the United States standard of 12 bottle cases of 750ml bottles. CWS has no control over the state of the wine as received. Every attempt is made to assess handling fees fairly, however, there will naturally be disagreements as to what a "case" of wine means. Hence, using the term "piece" helps clear up ambiguities.

Examples of how this term helps are as follows. CWS may receive a discrete "piece" via FedEx which consists of one magnum bottle of wine packed in Styrofoam. This is one discrete piece. CWS may receive via UPS a three bottle Styrofoam shipper of magnums. This is one discrete piece as well, despite the disparity of liquid volume. The same holds for 375ml bottles, which are often cased from the winery in 12 or 24 bottle cases. A 24 bottle case is a discrete item which counts as one single "piece."

The thorniest aspect of this approach is with the more European way of selling cases of wine in six bottle quantities. CWS will receive multiple "six-packs" of the same wine at a single specific point in time. For example, four six-pack cases. Now, are these four discrete pieces or two discrete pieces? Along United States standards, CWS should treat two six-packs as one discrete case. In fact, the two six-packs might very well have been sold to our storage customer as a single case. Yet, the physical cases are separable and not one discrete piece. Should CWS then tape two six-packs together and treat the result as a single 12 bottle case? If so, what to make of the situation if the customer requests six bottles in a year? Does the 12 bottle case become then a de facto six bottle case without an empty six slots as would happen with a standard "normal" 12 bottle case? Or should each six-pack be kept separate? Or, even further, should the two six-packs be removed from their original boxes and reboxed in an entirely different, standard 12 bottle case? What of instances where one six-pack is received in April and another in June? Should these entirely different shipments months apart be made into a single 12 bottle case?

This may sound academic to some, but this represents a real challenge for CWS as many customers will question why they are being charged for X amount of cases when in fact they only have Y amount of bottles which makes a lesser Z amount of cases instead. There truly is no simple answer, thus CWS must rely on its own instincts in any particular situation, attempting to balance fairness between itself and the customer.

The same situation occurs when we receive deliveries. For example, the wine store Zachys often pulls bottles from multiple warehouses to fulfill an order for a customer. As a result, 24 bottles (e.g., two cases of wine) may arrive at CWS in as many as ten discrete pieces. CWS did not box these wines, only receive them. To simplify the process CWS will assess handling fees for the ten pieces received. It is impossible to equitably treat each situation as its own special instance. CWS counts the number of discrete pieces received and bills accordingly, even if after inventorying the number of final pieces added to inventory is much fewer.

Next, what happens when CWS opens the case to perform inventory? This also depends. If the wine comes from a wholesale distributor CWS may safely assume that the contents are as described on the outside of the case. If received from the customer, a retail store or winery, the contents must be verified for proper inventorying. This may mean prying open a perfectly sealed wooden box or cardboard case which to all eyes may appear to have never been opened previously. While CWS attempts to avoid doing so, so as to keep the case's exterior pristinely intact, both the customer and CWS gain protection against future claims of misinventorying by opening such cases. Naturally, this situation does not occur with cases obviously opened previously by the sender or by packages received via courier services and packed in Styrofoam for safe transit. These are always opened, inspected and inventoried appropriately.

Wine storage is in essence a "cubic inch business," as the facility derives revenue from maximally filling the utilizable space. The more which can be packed in, the more revenue generated. It is primarily, but not solely, for this reason that Styrofoam or bulky boxes (Western Carriers, Acker Merrall auction boxes, etc.) get repacked into the standardized cardboard storage boxes which CWS sells for $5.00/box. In order to maximize shelf space utilization, there needs to be the closest similarity in size among the boxes being stored together. The goal is to minimize "pieces" being shelved which exceed the cubic inch size of the standard cardboard box CWS utilizes.

The other, but vastly important, factor driving reboxing is to ensure that all the boxes on the shelves are of the greatest strength and security possible. Two aspects in turn drive this. First, cases get stacked as high as three or four high on shelves. Thus, they must have an exterior sturdy enough to support the weight of these other cases and not collapse under them, putting them all in jeopardy. Second, the divider inserts inside the boxes must be of thick corrugated cardboard to ensure that each bottle will be separated from the others fully. This aspect becomes especially important when a case possesses empty slots, where bottles can shift around and perhaps collide and break. Note too that the stronger inserts help to make the entire box sturdy enough to support the aforementioned weight of other cases. In order to protect a given customer's wines as well as those belonging to other customers, CWS must ensure that every box in open storage meet a minimal threshold of sturdiness and stability. This includes boxes which, while adequate initially, may degrade over the course of years and require subsequent replacement.

For the customers of CWS another confusing aspect of wine storage is when CWS elects to add a new case to the customer's holdings versus using incoming wine bottles to fill empty slots in pre-existing cases. CWS maintains the policy of first making an effort to fill such empty slots before adding new cases to inventory. CWS cannot predict the "in and out" habits of how any specific client will add or subtract from their wine holdings. As a result, our first priority is to minimize the quantity of cases a customer must pay for through filling or refilling empty slots in pre-existing cases. Doing so saves the customer from incurring an additional $5.00/case fee for every new case added to their holdings.

That said, there is an initial financial downside to this. For example, a new case of 12 bottles of the same wine would incur the standard $5.00 initial handling fee and a $2.80/month fee going forward from the time of receipt. Again, CWS does not know and cannot predict how long any specific case will be stored with us and the $2.85/month will recur indefinitely until such case is removed. However, if the incoming case is divided into empty slots, the new case would never come into being. Instead, there would be an increase in the initial handling fees. If there were four free slots in three different pre-existing cases, these could absorb the new case's 12 bottles. As a result, the $2.80/month storage fee would be averted while the initial handling fee would change from $5.00 to $15.00, reflecting the added labor of handling three cases rather than one. CWS here tries to save the customer money, in essence expecting that the wine will be stored long enough to absorb the extra handling fee. In the scenario just described, the wine would have to be stored with CWS for three months before negating the extra $10.00 in handling fees through avoiding the $2.85/month fee for what would have been an entirely new case stored. The expectation is that wine will be stored medium to long-term and that increased initial handling fees always cost less in the long-term than adding new cases.

This topic leads ineluctably to a very related topic, consolidation among pre-existing cases stored with CWS. As stated before, the goal of splitting up incoming wine bottles into pre-existing cases is to save the customer money over the long-term. However, this means that at times bottles the customer "wanted" together will get separated. This is a necessary by-product of utilizing the services of a third party wine storage facility - the customer relinquishes control over this aspect of wine storage. The same holds for the need to consolidate cases due to pulling individual bottles over the course of time. What once were full 12 bottle cases become only partially filled cases over time as the customer consumes their bottles. The result being the customer is paying for more cases to be stored than is necessarily needed.

Consolidation among pre-existing cases of wine is labor intensive, requiring the aggregation of the physical cases from around the entire facility as well as performing the needed data entry adjustments as bottles get moved among cases. It is arguably more difficult to perform these activities than to inventory newly incoming wine. Thus, CWS charges $5.00 per accessed case in the process of conducting consolidation activities. As with newly incoming wine, the hope for both CWS and the customer is that the consolidation fees become absorbed through longer-term monthly case fee savings.

One small "loophole" of sorts to this is for a customer to request to have specific cases (partially or completely full) pulled from inventory in their entirety. The customer can then themselves rearrange and/or consolidate the cases as desired in the waiting area of the CWS facility (perhaps in the process pulling out bottles for near-term consumption and/or adding bottles to the cases to be put back into inventory). The customer would then submit the consolidated/rearranged cases to CWS personnel as entirely new cases. The only fees incurred then would be $3.00 for each case pulled from inventory as well as $5.00 for each case (re-)submitted for inventory. A moderate savings but also an opportunity to commune with one's wine hoard!

Delivery fees are based on the labor expended on loading, unloading the CWS van as well as driving the vehicle around the city in addition to fuel, vehicle maintenance and other sundry vehicle-related costs. There is a flat $15 fee for up to three "pieces" dropped off or picked up, with a $5.00 per extra piece fee beyond the initial quantity threshold of three pieces. As a result, it saves the customer money to ensure multiple cases are picked up together rather than to schedule multiple pickups/dropoffs of three or fewer pieces.

For better or worse, wine collecting can be an expensive hobby, particularly in an urban environment where space is at a premium. Both month-to-month storage as well as the various handling fees play roles here. We at CWS wish to make wine appreciation as enjoyable and rewarding as possible for all of our customers, regardless of the size of their holdings. Hopefully, this lengthy explanation of our services and fee structures has helped better achieve this. Thank you for taking the time to read through this explanation.