Buying wine for an airline "is very much an area unto itself," contends Continental Airlines VP-Purchasing and Materiel Katrina Manning. "We call it 'sexy buying.' " Most airline purchasing is straightforward, dominated by specifications and templated procedures. Not so wine selection. "It's a whole different animal," says Manning. "We have a completely separate process."
While there are procedures, wine buying is far more intuitive and less rigidly structured than other species of procurement.
Buying wine for an airline "is very much an area unto itself," contends Continental Airlines VP-Purchasing and Materiel Katrina Manning. "We call it 'sexy buying.' " Most airline purchasing is straightforward, dominated by specifications and templated procedures. Not so wine selection. "It's a whole different animal," says Manning. "We have a completely separate process." While there are procedures, wine buying is far more intuitive and less rigidly structured than other species of procurement.
To understand why, take a look at the criteria. First, airborne vintages should be "rich in aroma, but the wine should not be very heavy," says Jin Sik Bang, a key member of Korean Air's inflight service team.
At FL350, "tannin and acidity will be sensed more intensely," says Markus Del Monego, Lufthansa's sommelier. That means choosing vintages that "are slightly higher on the sugar side, slightly higher on the alcohol side . . . We need a very good flavor profile" because cabin air is dry and your nose doesn't work as well. "You need a better perfume in the wine to have an appreciation of good flavor."
At JetBlue, it's all about flavor. "Customers don't necessarily know what type of vintages they're looking for," asserts Brett Muney, the LCC's product development manager. "They're able to describe more what they want in terms of flavor, or what would go best with what they're eating." Agrees Delta Air Lines Director-Global Product Development Joan Vincenz, "Outstanding flavor is the number one [criteria]."
SOMMELIERS AREN'T JUST FOR SHOW
If carriers' prime criterion is flavor, how to determine what tastes best is more art than science. That's where wine buying parts company with classic purchasing and why so many airlines employ sommeliers. Their influence depends on the carrier. At Lufthansa, Del Monego's sway is all but supreme. Understand that he was the Sommelier World Champion in 1998 and Master of Wine in 2003.
At LH, selecting wines and then subsequently purchasing them are two separate and distinct processes. Del Monego heads up a tasting panel that recommends specific vintages to purchasing. "Then," he says, "the wine buyer starts negotiations. The tender never includes a price range," he emphasizes. Indeed, he doesn't even know how much the carrier pays for the product. The point is, purchasing is constrained by the parameters the sommelier, and the wine-tasting panel over whose selections he has certain veto rights, set. "They will not [tell vendors] 'We want a wine for $100, $50 or $10 [per bottle].' They will leave the price completely open."
JetBlue has a tasting panel too, and a sommelier. But in Josh Wesson's world, price is very much a factor. Wesson is the renowned sommelier of Best Cellars, where the highest-priced bottle of wine in the store is $15. "A neat concept," says Muney, one that JetBlue takes airborne with its heavily promoted Low Fare Sommelier offerings. The carrier sets a price point before negotiations begin. Wesson closely advises purchasing and he won't deviate from that price point just because the Bordeaux this year is especially piquant.
Employ the right people to find the best wines and you discover the best ones "aren't always the most expensive," says Vincenz. "There's not a high correlation between the things you look fortaste and brandand cost," she insists. "You have to find value wines."
These days, discovering value is a sommelier's reason for being. At Delta, Andrea Robinson, one of only 15 women in the industry to hold the title of Master Sommelier, does it. At Continental, a pair of consultants split the duties. What they have in common is that somebody outside the traditional airline purchasing structure has a real say in the wine that's boarded.
AIRPLANES AS MARKETING PLATFORMS
Part of the value proposition for the vineyard is getting its label in front of the right kind of consumer. You don't have to slather an ad on the side of a fuselage to render a flying machine an effective marketing tool. There are subtler, maybe even more effective, ways to do that. And purchasing people have discovered that vintners and distributors are willing to cut them a price break if they work it right.
"We're putting their wines in front of customers who are retail buyers," says Manning. "I'll tell you, this is realnot rhetoric." She says Continental often has customers e-mail saying they had an especially good wine on a certain flight on a given day, forgot to write the name on the label down and want to buy it. CO will tell them what vintage was boarded that day. "We've actually helped hook up customers with wines that were hard to find," she says.
JetBlue leverages Josh Wesson's name and heavily promotes the inflight product to drive lower prices.
Airlines buy a bunch of wine. While there do not appear to be industry figures for the total amount, consider that Korean Air spends $4.2 million per year. Other carriers won't say how much they lay out but the quantities are considerable. In business class alone, Lufthansa boards 300,000 bottles every month. Delta purchases 130,000 cases per year and Continental buys some 1.5 million bottles annually.
While widget purchasing is purposely uniform, wine buying is decidedly divergent. Everybody approaches it differently, both in selection and in timing. Jin Sik Bang says KE engages in "forward buying," especially for some reds served in first class; "We will purchase [these] wines three to four years in advance and keep them in the cellars." He says this allows the carrier to save 30%-40% compared to buying nearer the time the wine is actually served.
At JetBlue, it's tougher to "forecast the right quantities," says Muney. "We're constantly taking on new aircraft, so it's difficult to really get the numbers exact." The airline changes wines, one red and one white, every six months.
Lufthansa's program is both sophisticated and farsighted. "All wines up to 2012 are already purchased or reserved," says Del Monego. "We have to purchase the quantities that we need. That's the main problem. You have to secure the quantities."
Jason Adams couldn't agree more. "It's a pretty big challenge," says Delta's GM-supply chain management. "You need to understand what your needs are." DL ensures that it gets the wine it needs in a couple of ways. It builds into the bid process a provision that vendors can bid only if they can deliver. Beyond that, and this is perhaps the more important component, it has cut its sourcing cycle. It used to be six months, now it's two.
"If we select only two red wines to run a whole year, there's no way that demand can be met," says Adams. "No winery has that quantity." That's why the carrier sources for just 60 days. "If I'm sourcing for two months, it might be for 5,000 cases." That's manageable. If it's for six months, it's 30,000 cases and that can be manifestly unmanageable.
Continental doesn't engage in the futures market, says Manning. "Those who tend to get involved with a limited number of wineries, and tend to trust those wineries' manufacturing processes and ability to produce, they buy forward. It's just not our philosophy."
SEARCHING FOR 'DISCOVERIES'
Every airline interviewed by Airline Procurement for this story, however, holds one philosophy in common: A selection process designed to ferret out "discovery" vintages while appealing to the universal palate at the same time.
Although Lufthansa has a wine panel, the procedures it employs are always designed to produce "one or two 'discoveries,' " says Del Monego. "If you only serve wines [passengers] know, it can be very boring." LH recently uncorked a wine from China. Its wine panel winnows down each category to 3-6 selections, then hands the process off to purchasing.
At Delta, sommelier Robinson and the marketing team evaluate some 600 selections. From those, "We'll select more than 35 different wines," says Vincenz. "Then, negotiation takes place."
Of the five carriers interviewed for this piece, Continental's purchasing procedure, perhaps because it doesn't have a sommelier per se, appears the most complex. Distributors perform the first short-listing. "Otherwise," says Manning, "we'd have to wade through 300 recommendations for Chardonnay." Then the carrier's two consultants pare the list further, sending some 15 selections to CO for a blind tasting at its Houston headquarters.
This is where wine purchasing really differentiates itself from more mundane mercantile matters. Several Friday afternoons each year, CO gathers marketing types, food service people, inflight and finance folks. In the same room you'll find local Houston chefs and frequent fliers. The results of the blind tasting are put before the airline's beverage committee and there is a final decision. "We may not choose the wine that gets the highest score," says Manning. "We balance to a budget. If we choose to spend more money on our Bordeaux, maybe we'll spend less on our Chardonnay this year."
In the halls, "there's a very lively and open discussion," she says. In this nifty niche, this special species of "sexy buying," it's not the kind of discussion engine lubricants tend to engender.