Overview
Zip’s Wine was a product that made a splash on Shark Tank in 2014. Founder Andrew McMurray appeared on the show seeking a $2.5 million investment for a 10% stake in his company.
The product was a wine alternative packaged in a plastic container shaped like a wine glass with patented shrink wrap to protect the wine from UV rays.
Shark Kevin O’Leary was excited about the investment and tweeted about it, guaranteeing success for Zip’s Wine if it could get into Costco. However, the product never made it onto Costco’s shelves and the business struggled to generate profits in the first couple of years after the deal.
The business model needed to change, so Zip’s Wine shifted to being a business-to-business packaging company focused on its patented design rather than a business-to-consumer company that sold wine.
Zipz’s Shark Tank Pitch
In 2014, Andrew McMurray appeared on season six of Shark Tank, offering 10% equity for $2.5 million. Despite McMurray’s appeal and Zipz’s ingenious design, the Sharks weren’t convinced.
However, Kevin O’Leary, a big wine connoisseur, wanted to get into Costco and struck a deal with McMurray. O’Leary agreed to invest $2.5 million for 10% but got the option to buy an additional 10% stake later at the same valuation.
Post-Shark Tank Challenges
Zipz Wine secured one of the biggest deals in Shark Tank history, but the company’s future was not as bright as the founders had hoped. Once the show aired, the business had a lot of hurdles to overcome.
With the help of Kevin O’Leary, Zipz Wine secured a contract with Arctic Beverages and sold its product at over 1,200 locations across the United States. They later sold wine packets through online shopping platforms.
However, the competition was tough, and the business model of selling wine to consumers wasn’t profitable.
Brands like the Chilean Chardonnay maker Chillin were always one step ahead. This led Zipz to stop producing wine and focus on packaging for other companies. Zipz rebranded from Zipz Wine to Zipz Packaging and is now worth an estimated $1 million.
Pivoting Strategy
The product was initially successful, with estimated sales hitting $2 million after O’Leary’s investment. However, the company failed to generate profits in the first couple of years after the deal, and McMurray decided that peddling wine was simply not going to work with so many better-established brands to choose from.
The business model needed to change, and Zip’s Wine shifted to being a business-to-business packaging company focused on its patented design rather than a business-to-consumer company that sold wine.
This new approach allowed Zip’s Wine to partner with winemakers to package their wines instead of competing with them for the same market share. According to McMurray, the packaging approach turned out to be successful, as they were able to turn their competitors into endorsers of their product.
However, it is unclear how successful this new business model turned out to be, and Zip’s Wine marketing efforts reportedly ended in 2019, with the website being dormant as of 2021.
The failure of Zip’s Wine to sustain its initial success after Shark Tank is not uncommon, as many food and beverage companies that have appeared on the show have found investment success to be elusive.
But, the publicity of appearing on Shark Tank can also help companies, as seen with the significant spike in sales for Zip’s Wine after their appearance on the show.
Andrew McMurray’s Background
Andrew McMurray, the co-founder of Zipz Wine, is from Scarsdale, New York. He graduated from UMass Amherst in 1990, where he studied Business, Management, and Marketing. He has been the Vice President of Zachys Fine Wine since 1993.
McMurray ran Zipz Wine with his partner, J. Henry Scott, who is an engineering graduate from Rutgers University. Scott worked in corporate development at AirSpa before co-founding Zipz Wine.
From Idea to Reality
Zipz Wine was born when McMurray and Scott met at Citi Field in New York. McMurray shared his idea of creating a wine product with single-serve packaging, and Scott loved it. They teamed up with Fetzer Vineyards to kickstart the business.
The startup launched in 2012, but the initial designs were poor and lacked any wrapping that prevented wine leakage. This inspired Scott to create a dual-function coaster and lid.
The packaging is a plastic vessel in the shape of a wine glass. To drink, you simply need to unwrap and unscrew the top part. With the help of Fetzer Vineyards, the product was sold at stadiums and generated over $650,000 in sales.
Lessons From Zipz Wine
From the narrative of Zipz Wine’s journey on “Shark Tank,” here are three practical tips for aspiring young entrepreneurs:
1. Adapt to market feedback and evolve your business model
After struggling to compete in the consumer market against established wine brands, Zipz Wine pivoted from a business-to-consumer (B2C) model to a business-to-business (B2B) model. They shifted focus from selling their own wine to partnering with winemakers to use their patented packaging technology.
Do this: Be open to adapting your business model based on market feedback and operational challenges. If your original concept doesn’t work as expected, consider pivoting to leverage your strengths in new ways. This could involve targeting different customer segments or adjusting your value proposition.
2. Understand the importance of distribution channels
Despite securing a significant investment from Kevin O’Leary and planning to revolutionize the wine industry with single-serve technology, Zipz Wine failed to get their product onto Costco shelves, a key distribution channel they were counting on.
Do this: Develop a robust distribution strategy. Understand where your customers shop and how they make purchasing decisions. Securing the right distribution channels can be as important as the product itself, especially in consumer goods where shelf space is competitive.
3. Be prepared for the post-Shark Tank reality
While Zipz Wine experienced a significant sales spike post-“Shark Tank,” the long-term sustainability was lacking due to high production costs and insufficient market traction. Additionally, not all deals that appear successful on the show translate into long-term partnerships or financial success.
Do this: Manage expectations about what appearing on shows like “Shark Tank” can do for your business. The initial exposure can provide a significant boost, but sustainable growth will depend on solid business fundamentals like cost management, customer acquisition, and effective scaling strategies.
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