Sommly's founders had been exploring Texas wines in the Hill Country for years. But it wasn't until the pandemic set in that the husband and wife duo decided to build a marketplace to make buying boutique wines easier.
Since then, co-founders Erik and Sara Wagner have experienced a whirlwind of education about the wine industry – both near their home turf in Austin and across the nation, where regulations shift state to state, city to city.
They found the whole market, like so many others, has shifted significantly in the wake of reduced foot traffic caused by the Covid-19 pandemic. That makes online sales a lot more important, especially to smaller vineyards that can't afford the margins of selling bottles to big box retailers or independent liquor stores.
"A winery needs to sell their product to a distributor, who then goes and sells it to your H-E-B, for instance," Erik said. "And along that transaction, the winery ends up losing about 50% to 80% of their gross margin for that bottle that they produce. And so that's really, really difficult for a small business to sustain. It's pretty much unsustainable, to lose that much."
In November 2020, the Wagner's started their founders journey by talking to dozens of vineyard owners to see what barriers they faced to selling online. They found many of the owners were sustained largely by wine club memberships. But few had developed effective channels to sell direct-to-consumer online.
Sommly's platform is built to make that easy, without tripping on local laws. The startup sells access to its platform at three levels, depending on what visibility and services an owner may want. To avoid the need for a distributor license, Sommly doesn't take any cut of wine sales. The startup also provides online reviews and is working on events and other engagement strategies.
"Consumers want to get access to this wine that's in these boutique wineries that oftentimes aren't close by, and now they're being impacted by Covid," Erik said. "And so we started to think about how we could combine our skill sets to build a platform that can help solve that issue for the wineries, the small business owners and the consumers, as well."
Prior to Sommly, Erik led marketing and growth efforts at Plivo, Onclusive, FFW and Lifesize. Sara, meanwhile, developed tech strategy at Whole Foods Market. Shortly after its initial launch, Sommly joined the Jon Brumley Texas Venture Labs accelerator program, which wrapped up in May.
At that time, Sommly had 80 different bottles from seven wineries listed on its platform, a number the co-founders expect to grow quickly. Many of the wineries Sommly currently serves are in Texas and make 5,000 to 15,000 cases of wine per year.
"A lot of them do sell direct on their website, but one of the common things that we've heard is the only people that go to my website are wine club members. That's it. It's not like a big channel to man for them. They're not marketing professionals, generally speaking, at this scale."
Sara said Sommly is looking to grow outside of Texas to address larger markets.
"The next states that we're looking at, and not necessarily in this order, are New York, Washington, Oregon and maybe Central California areas that are less served by some of the other players," she said.
