With Massive Growth and Mixed Reviews, Scout & Cellar Cannot Be Ignored

Scout & Cellar wine
Animation by Eric DeFreitas

On its website, Scout & Cellar, a winery based in Dallas, Texas, makes repeated references to doing good.

“What makes us different?” reads one section, “It’s our commitment to doing the right thing. Every time.” Elsewhere, the company describes its mission as a matter of principle: “Why do we do this? Because we hold ourselves to a higher standard.”

Some aren’t so sure. While the company generated $20 million of sales in 2018 and says it’s affiliated with nearly 20,000 consultants nationwide, critics take aim against both its “clean” claims and referral-based business practices.

So, is Scout & Cellar a benevolent corner of the notoriously exclusive wine industry? Or do its carefully phrased terms and conditions make the world of wine even more opaque?

Can a Wine Ever Really be ‘Clean’?

The Wine

Scout & Cellar was founded in 2017 by Sarah Shadonix, a former Dallas attorney who’d caught the wine bug. Nine years into her legal career, Shadonix had joined the Dallas Sommelier Society and soon left law for e-commerce venture Wine Country Connect, which connects wine producers with consumers.

In an interview earlier this year with the Dallas-based publication D Magazine, Shadonix said that around the time she worked at Wine Country Connect, she began to notice that drinking even a few sips of wine made her feel ill. She concluded that pesticides and chemicals in the wine were the likely culprits.

With Scout & Cellar, Shadonix resolved to sell only what she calls “clean-crafted” wines, which the website defines as bottlings “free of yucky stuff like synthetic pesticides and chemical additives and has fewer than 100ppm [parts per million] of total sulfites.” The site says that its wines go through “two rounds of independent lab testing” to ensure they meet this criteria.

“This combination of the audit of farming and production practices followed by independent lab testing ensures that each and every Scout & Cellar beverage backed by the Clean-Crafted Commitment® is made from fruit grown without synthetic fertilizers, pesticides, herbicides and fungicides or persistent chemicals, and is produced without synthetic processing aides or sweeteners and is low in sulfites,” a Scout & Cellar representative wrote in a prepared statement.

“The final test is one of quality where we determine if the wine is delicious—if it’s not, we won’t sell it,” the statement continues.

The problem with making “clean-crafted” wines central to your mission is that some industry professionals say they don’t exist.

“They are using language that is very popular, ‘clean living’ and such, trying to appeal to the wellness crowd,” says Michele Thomas, a wine educator, sommelier and the general manager of The Greene Grape in Brooklyn, New York. “But wine isn’t about wellness. It’s about booze.”

Marketing “clean” and “better-for-you” wines is misleading, Thomas says.

“It starts to feel really icky when it becomes packaged in this, ‘Oh, this is healthy for you, this is better for you,’ [because] that is just not true. Wine is wine. It’s about moderation. Consume it, definitely, get good-quality stuff. But it’s never going to be good for your diet.”

Michele Thomas wine
Michele Thomas at Greene Grape / Photo by Aundre Larrow

Of course, there are all sorts of reasons for wanting to buy organic or biodynamic wines, Thomas adds, including environmental concerns. Reputable certification programs, like those run by USDA Organic and Demeter International, exist for both, she says.

In her interview with D Magazine, Shadonix explained that California and Oregon grapes grown by Scout & Cellar are hand-sorted to remove clusters that may taint the wine during fermentation. Thomas wonders about the intentions behind including this detail.

“It’s a process widely used with quality, smaller production wines, so that’s good,” says Thomas. “However, it does make me wonder if they’re trying to make their process sound more involved than it is.”

Then, there’s the question of market transparency. Scout & Cellar makes its own wines and packages them as such, but it also sells bottles made by others under its own brand name.

“Scout & Cellar is a winery,” says Jon McDaniel, the company’s head of wine education. “The vast majority of our wines are produced by Scout & Cellar. We contract with the grape growers, and we are the ones that are producing those wines. But occasionally we bring wines to market in partnership with other wineries.”

This especially tends to happen with imports, McDaniel says, because “it’s a lot easier to bring over wine from Spain than it is to bring over grapes from Spain and then to process them in the U.S.”

He insists that the company maintains certain criteria for all wines sold under the Scout & Cellar label.

“If we’re producing them from grape or in partnership, all those wines go through that Clean-Crafted standard, that commitment there, to make sure it meets our standard in every partnership we work on,” he says.

The problem with making “clean-crafted” wines central to your mission is that some industry professionals say they don’t exist.

Scout & Cellar is hardly the only company to utilize the power of its own brand name to sell other producers’ wine. Trader Joe’s and Costco have house labels under which they market other wineries’ products.

However, these relationships aren’t always made clear to consumers and can further blur their understanding of how wine is bought and sold. Scout & Cellar’s 2019 Conte De La Terre Pinot Gris, for instance, costs $26. The grape grower, Maysara, which manages a certified biodynamic vineyard, sells a 2019 Arsheen Pinot Gris on its website for $18. Both wines are listed at 12.5% alcohol by volume (abv).

Is this a smoking gun? Not necessarily. There are endless reasons why similar-sounding bottles might have different prices, including whether grapes come from the same vineyards or how the wines are packaged and distributed. But Thomas believes these disparities don’t make it easier for consumers to determine where greater value might lie.

The Consultants

Scout & Cellar uses individuals, called consultants, to market the company’s bottles directly to consumers via tastings at a private home, office, “yoga studio, boutique or other similar establishment,” according to the Policy and Procedures agreement on the website. This agreement places certain restrictions on consultants, including that consultants “are not authorized to interact with the media… regarding the Scout & Cellar business or products.”

According to a 2019 article in The Dallas Morning News, Scout & Cellar had more than 7,000 consultants among its ranks at that time. In a statement sent to Wine Enthusiast earlier this year, Scout & Cellar said it has nearly 20,000 consultants, suggesting a rapid growth.

William Keep, a professor of marketing and former dean at The College of New Jersey’s School of Business, believes the company’s structure has the hallmarks of multi-level marketing (MLM). In MLM, “the role of the ‘consultant’ is twofold,” Keep explains. Such individuals not only represent the company and sell its products, for which they’re presumably financially compensated via commissions, but are also expected to buy into the program.

At Scout & Cellar, consultants must purchase a $250 Business Basics Kit and pay an annual renewal fee of $129.95. According to the company’s compensation plan, consultants must generate at least $600 of “qualifying volume” annually to remain consultants. Their own purchases count toward that total.

Scout & Cellar consultants
Individuals called consultants market Scout & Cellar bottles directly to consumers / Getty

Alanda Carter, host of the podcast, “Hey Hun, You Woke Up!”, recorded an episode about Scout & Cellar in 2020. She says that building awareness about MLM companies, and helping people make informed decisions before joining them, is the guiding force of her work.

“The thing that I always keep in the forefront of my mind is they are being victimized and they don’t know it,” she says of MLM participants.

Whether they identify as victims or not, some consultants find it difficult to make money.

“It’s not profitable for me,” says Megan Kitchens, a Scout & Cellar consultant based in Hendersonville, North Carolina. Kitchens signed up with Scout & Cellar in May 2020. Although she loves the wine, she isn’t sure she’ll continue.

“It’s hard to sell for the price. It’s definitely easier for wealthy ladies to sell because they have wealthy friends to sell it to. My people all love it but not enough to spend the money.”

Earnings aren’t the main draw for some consultants, however.

“I love the social aspect of it, especially after over a year of Covid cancellation of all events,” says Aimee Wendrock, a consultant in Katy, Texas, who joined last December. “I initially got into it because I was buying so much wine from another consultant that it was a no brainer to buy from myself and sell to others. I’ve bought and earned so much wine that my husband turned a coat closet into a wine closet for storing all of the wine. The earnings are a bonus!”

Shift Drinks: Leaving Wall Street, Film and Other Careers for Wine

Jennifer Knott, the vice president of field operations for Scout & Cellar, echoes this sentiment.

“There are a thousand different reasons why consultants choose to join our team,” she says. “There are people that are just looking for community and connection outside their family, all the way up to that person that desires to do something more full-time. And everything in between.”

She doesn’t define consultants’ success in economic terms.

“We would never make a guarantee of financial success,” says Knott. “We provide information for an income disclosure that shows, on average, for the full field, what income opportunities might look like.”

William Keep
Dr. William Keep / Photo courtesy of The College of New Jersey/ Bill Cardoni

Keep wonders if consultants make up the majority of Scout & Cellar sales each year. “When you put a person in that position—they are both a buyer and the seller—they tend to no longer take on some of the normal traits we associate with being a careful consumer.”

That person “may also be your friend, your sister-in-law, brother-in-law, someone you went to college with or whatever, but all of that is secondary to the fact that I have an economic interest in you purchasing this wine,” says Keep.

“To be clear, I am not accusing Scout & Cellar of operating a pyramid scheme,” says Keep. He says he believes the company has “chosen language that seems to intentionally distance them from language used in the past by the Federal Trade Commission” to define pyramid schemes.

The Community

For consultants who do define success in economic terms, there are financial incentives to recruit others.

“They have the opportunity, and it’s a personal choice, to build a team,” Knott says. “When they make that decision, it comes with some coaching and mentoring responsibility.”

In MLM parlance, this is called “building a downline.” In a section of its Independent Consultant Agreement on the Policy and Procedures page of its website, Scout & Cellar defines downlines as “the group of Consultants directly mentored by that Consultant, along with any Consultants beneath the aforementioned group,” and notes that Scout & Cellar owns downline information.

If a new consultant’s marketing efforts result in a sale on the Scout & Cellar website, “both the new consultant and the coach would receive a financial benefit in the form of commissions and bonuses,” says Knott. “They’re paid at different percentages or rates.”

Scout & Cellar prides itself on opening doors to people eager to work in wine, regardless of previous experience or lack thereof.

“You don’t have to come to Scout & Cellar with a ton of wine knowledge,” says McDaniel. The company offers webinars and classes about different regions and varieties geared toward 101-level audiences as well as longtime consultants.

“At one particular time, we could have six different Chardonnays available,” he says. “So, we do a lot of comparative tastings” to help consultants know how to market their products.

Scout & Cellar prides itself on opening doors to people eager to work in wine, regardless of previous experience or lack thereof.

Wine education is not mandatory, however. Threads on Reddit note that not all Scout & Cellar consultants are knowledgeable about their bottles.

“Big surprise: they don’t know anything,” reads one comment. “My mom and my aunt’s friends have been suckered into it—it’s not good! Apparently there is little to no education required—at the ‘party’ (sales event) my mom went to, the host had to read off of notecards and didn’t really know much about wine, let alone the wine she was selling.”

Some of this might be by design, as the Independent Contractor Agreement requires consultants to “agree to use written, recorded or other promotional or advertising materials that have been produced, distributed and approved in writing by Scout & Cellar.”

Redditors, always a tough crowd, remain unimpressed.

“One of my friends went to a ‘party’ recently,” reads another post. “She said that the consultant took a lot of pride in not knowing anything about wine because they were not a ‘wine snob.’ ”

Therein lies one key to Scout & Cellar’s financial success. There’s immense opportunity for wine companies to market directly to U.S. consumers who might be interested in wine but fear its snobbish reputation. On the other hand, if understanding wine is less important than the ability to sell it, only a select few can ever really benefit.

 

Editor’s note: This article was updated on September 15, 2021.

Published on September 14, 2021
Topics: Wine and Ratings