Wine on the waves

Cruise ships need large volumes of wine to keep their captive audience happy. Liza B. Zimmerman looks at where they find it.

Cruise ships can be lucrative wine markets.
Cruise ships can be lucrative wine markets.

The impressive selection and competitive pricing on ships can come as a surprise to those used to selling wine through regular channels. The combination of buying in large volume, sourcing in multiple markets, and purchasing wine duty free makes the cruise ship wine market one of the most lucrative – and diverse – in the world. 

While few wine cruise ship executives would share all the purchasing details, “Cruise lines are a very distinct and separate channel,” said Christian Miller, the Berkeley, California-based proprietor of Full Glass Research, a wine industry analyst. By using their own specialised brokers and purchasing directly from wineries using a direct-import model favoured by many major US retailers, most cruise ship wine purchases technically fall – legally – outside of the United States’ three-tier system.

Cruise lines’ needs differ from those of land-based hotels, restaurants, and bars, according to Wes Cort, the senior director of restaurant and beverage operations of the Miami-based Norwegian Cruise Line, which will have 15 ships by the end of April. “We purchase at a high volume and need to source [for] ships across the globe for a broad depth of different types of guests,” said Cort. “The biggest difference in the purchasing process for cruising versus a land-based hotel [wine product] is the fact that we purchase products duty free.” This buying model highlights one of the most important differences in the purchasing process that contributes to cruise lines’ often incredibly broad and well-priced wine lists.

Given their unique purchasing structure, the amount that large ships save is often passed on to their customers in low markups that can come at between “1.8% to 2.8% of our cost price,” according to Toni Neumeister, vice president of food and beverage operations at the Los Angeles-based four-ship Crystal Cruises.

“Because we are able to purchase most of our wines in international duty-free channels, we strive to pass our savings along to our guests,” said Edward Allen, vice president of beverage operations for Miami-based Carnival Cruise Line. The line has a fleet of 25 ships that range in size from 2,052 to 3,954 guests and is part of the Carnival Corporation, which also operates the Holland America, Princess, Costa, Fathom, P&O, Seabourn, Cunard, and AIDA lines.

He added that in “addition to starting with low costs, our markups are very low compared to a traditional restaurant or hotel, allowing our guests to sample some of the world’s best wines for unbelievable prices. For example, we are currently offering 2004 Dom Pérignon for $210.00 and the 2014 Caymus Cabernet for $80.00 a bottle.”

While Bernhard Klotz, senior director of culinary operations at the Miami-based Oceania Cruises, wouldn’t disclose specific markups, he did say that buying in large quantities allows his ships to pass the value on to the consumer. “When you figure we are serving more than 5,200 guests per day, that is a tremendous amount of wine.” The line has six ships that accommodate anywhere from 684 to 1,250 guests.

How ships buy wine

Most cruise lines purchase wines in a number of unusual ways that don’t include the normal sales channels, resulting in a large, well-priced wine selection. Many of the ships also work directly with brokers, such as the Napa-based Intervine, which focus entirely on cruise ships’ wine needs. “We source wines from producers and regions from all corners of the globe,” said Allen. He added that he looks “for exciting, new, up-and-coming producers,” for his guests to try. “Because we source our wines for ships sailing all over the world we do not use the traditional distributors that restaurants ashore would. Instead, we work with shipping and logistic partners.”

For Crystal, Neumeister makes his wine selections for the fleet annually, then sources product directly from wineries and restocks the ships as needed when they travel. Wines are restocked anywhere from every 10 days to once a month depending on each ship’s individual sales needs. Purchase quantities can vary from as little as six bottles to up to 500 cases.

“The quantities that we purchase vary drastically from wine to wine,” said Cort at Norwegian. “The sweet spot is not unlike what is seen at land-based establishments – recognisable varietals and blends [for] $30.00 to $40.00 a bottle.

“We buy at a corporate level intended for an annual programme,” said Cort. “The more a winery meets our needs and brings to the table as far as support and resources, the better they are to be a preferred partner.” He added that the cruise line also expects competitive pricing, and marketing and training support from wineries on Norwegian’s lists. Access to winemakers is also a priority, and many are often invited to pour and host dinners on different cruise lines. “Our ships restock every time they return to their loading port, which is most often the same port as the ship’s home port, but at times it can differ based on the itinerary,” said Cort. “Our distributors deliver wines to the port on their loading day.”

At Oceania, Klotz ships the wines around the world which he calls “a tremendous logistical challenge”. While wines are purchased at the corporate level and replenished as needed every few days, “We always remain cognisant that regional, specialty wines are a key component of the food and wine experience.” The cruise line has “warehouses around the world so some wines will be stored in the US, others in Europe and South America, etcetera.”

Cruise ships also have an added advantage – like large hotels – of having a captive audience and earning revenue from rooms and their food as well as their beverage programmes, according to Neumeister. Cort added that his beverage team finds wine on their own, and picks up favourites that are presented to them by wineries. “We are constantly searching for new wines for … our guests to enjoy. We travel to wine countries, gather research and stay up-to-date with industry periodicals, attend industry events, and foster relationships with winemakers,” shared Cort.

The sales model

Cruise ships have the impressive advantage of being able to serve thousands of bottles of wine an evening to a fairly captive audience. That puts them in the big-league buying arena with large hotels such as the Bellagio and the MGM Grand in Las Vegas, which has more than 5,000 rooms.

Norwegian recently introduced a new wine tasting venue called A Michael Mondavi Family Wine Bar on the Norwegian Escape and Norwegian Dawn, its most recently refurbished ships. “The cellar features an extensive wine list of more than 100-plus bottles, as well as the opportunity for our guests to engage in hands-on, interactive [wine activities].”

The offerings of the majority of cruise lines that service the American public skew towards the better-understood, domestically produced wines. Of the major ships, Crystal Cruises tends to focus more on Old World wines, given that its fleet has almost entirely European sommeliers. While guests are interested in trying new grape varieties, according to Neumeister, they generally stick to what they know when it comes to high-end wines.

Most ships also vary their lists depending on what area of the world they are visiting. “Our guests love to experience local flavours in both food and beverages, as we find it adds to the authenticity of their vacation,” said Cort. As a result, the line supplements its wine lists “based on the ship’s itinerary to provide our guests with local flavour in South America, Australia, Europe, and the West Coast of the United States.”

“Like our guests, our wine list skews toward American/New World, though we offer a wide variety of Old World wines,” said Carnival’s Allen. “While our primary sailing region is North America and the Caribbean, when sailing outside of this area we always like to incorporate local wines to our core list to allow our guests the chance to try wines from the regions they are visiting.”

Norwegian’s ships also tend to feature more wines produced in the US than those made abroad. “Our wine lists do tend to skew more New World as our guests are attracted to recognisable brands,” said Cort. “However, this has changed a bit in the last couple of years with guests’ increased interest in wines from different regions of the world and a re-sparked interest in unique Old World [wines].”

While all the food and beverage directors of major cruise lines suggested that wine producers reach out directly to them for new sales opportunities, they are not always the easiest executives with whom to connect. And much like major chain restaurants and hotels, they have a fairly constant need for well-known, well-distributed wines that can supply multiple ships with different travel itineraries. Winery executives need to be aware of whether they have the volumes to supply the ships or not.

Cort said that ships’ wine lists are evolving just “as they are in land-based food and beverage venues – there is new interest in non-traditional regions, new varietals, and blends.” He added that all these trends, as reflected in other on-premise venues, keep cruises on track and on top of trends.

Klotz at Oceania also agreed that the world of wine on ships was changing almost in lockstep with much of the on-premise arena. “More people are drinking wine and becoming interested in it. Wine used to be for ‘elites’, and ‘snobs’, but the traveling public is less afraid of wine today than a decade ago. Many more people are enjoying it and trying new and different wines.”

When wine markups are so gentle on cruise lines, there is all the more reason for guests to experiment and try new wines. 

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