Wine and Pyramid Schemes? Let’s Uncork the Truth About Wine MLMs
We’ve all seen it. A random message from someone you haven’t spoken to since high school, raving about “clean-crafted wine” or an “amazing side hustle” selling bottles from your phone. Yep, we’re talking about MLMs. And now, they’re selling wine.
Multi-Level Marketing companies, or MLMs, operate in a gray area. They aren’t technically pyramid schemes because they offer a product, but the structure still heavily relies on recruitment. Often, the products are overpriced and low quality, with wild health claims that haven’t been approved by the FDA (or really any federal agency at all). It’s no wonder these companies get so much pushback.
MLMs are known for preying on people who are looking for flexible ways to earn money. Stay-at-home moms, college students, and folks impacted by layoffs or the current economy are often their targets. They make big promises: work from your phone, make six figures, live your dream life. But unless you joined when the company first launched, those promises are far from reality. According to the FTC, 99% of people lose money when they join an MLM. That stat alone should be a huge red flag.
Some other warning signs to look out for:
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You’re required to purchase a pricey “starter kit” (sometimes up to $5,000!) just to begin.
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The company talks about “uplines” and “downlines,” which means you’re expected to recruit others to make real money.
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You earn more from recruitment than actual product sales.
Now that MLMs are selling everything from nail polish to protein powder, it was only a matter of time before they came for our wine.
The Wine MLMs to Watch Out For
There are a few wine MLMs making the rounds, but the one that pops up most often is Scout & Cellar. Their starter kits and compensation plan make it clear they fit the MLM model. Just Google “wine MLM” and they show up on the first page.
Other companies include:
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WineShop At Home
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Traveling Vineyard
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OneHope (This one was especially sneaky and required a deeper dive.)
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Wein International
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Boisset Collection
One big issue? Selling or serving alcohol typically requires a liquor license. These MLMs get around that by offering personalized referral links. So even though you’re technically ordering through a company site, the consultant still earns commission. In-person wine parties are sometimes hosted to boost sales, but be warned—there’s usually a pitch to join the team thrown in.
So… Is It Worth It?
Let’s be honest. Most of the wine sold through these MLMs is mediocre at best and ridiculously overpriced. If you’re truly passionate about wine and want a side hustle, there are way better (and tastier) paths to take.
I’m launching a mini blog series where I’ll take a closer look at each of these wine MLMs. I’ll break down their starter kits, income disclosure statements, and most importantly, what the wine actually tastes like. Spoiler alert: it’s not great.
In the meantime, if you’re curious about the world of MLMs, I highly recommend reading Ask Me About Mary Kay by Jackie Brown. It offers a firsthand look at what it’s like to be caught in the MLM machine.
Also, check out the documentary LuLaRich if you haven’t already. It’s a wild ride.
Yay! Glad someone else is catching on….it’s such utter BS that they are allowed to get away with not permitting their reps. I just don’t get it. One local rep told me she would deliver sippy cups of samples. And I’ve seen pictures of reps in TX handing out samples in bags to random strangers in an outdoor mall. SO illegal!
OMG! That’s so crazy!!!
One can tell who drank the KoolAid here…just saying.
Did you write any follow up article on that subject? I am interested. I see where MLM can get criticized but I don’t fully understand why. Leaving the compliance issue aside for wine businesses, when a company offers referral links it is the same no?it s really standard now. Also how is it different than any sales team who earns commission on their personal sale and then on the team’s sales too, it is normal compensation plan any industry, so why is it bad in the MLM world?
Hi there! This is an excellent question. When someone is earning commission on personal and team sales in a regular company, most of the time they will earn what’s called base pay, so even if you’re not making any sales, you’re still guaranteed your base pay. MLMs do not offer base pay, so you’re not even getting the bare minimum. A company that’s offering commission on top of your base pay doesn’t make you buy the products from your own money to sell them. Usually with an MLM, they require you to buy products to sell or at least the “starter pack,” so it’s more likely you’ll lose money than make it. LulaRich is a docuseries about the LulaRoe MLM on Prime that’s really interesting. I highly recommend watching it. Cheers!
Sabrina, you basically handpicked a few companies on which to provide feedback. And therefore, your analysis fits your agenda. A pyramid scheme is illegal, and is not the same as an MLM. Let’s discuss why for a moment, shall we?
-A pyramid scheme does not sell product as you mentioned, it is money for recruiting, a chain letter gone bad
-A reputable MLM sells product
-In an MLM, you get commission on your teams’ sales because you train your team regarding the product, and techniques to run a successful business
-In a reputable MLM, I can never make more than my teammate in her business. If Sally joins my team, and Sally makes 5K in December, I can never exceed that 5K based on Sally alone, I still have to work my own business to earn 5K
-Reputable MLMs have a business plan that is transparent, a plan for promotion that is also transparent, most retail companies do not provide their employees with this information
-In an MLM my income is a direct reflection of my efforts, if I don’t work my business…NO MONEY – working my business includes; introducing people to product, discussing the benefits of the products to them, introducing people to the business and providing them an opportunity to join my team if they so decide, training my team to be successful
-MLMs allow time flexibility, effort-based income, room for personal and professional growth, and is by far not a get-rich-quick scheme. People actually have to work.
I own my own business (an MLM), I have a few extra thousand dollars per month, a great support group, new friends that I will have for life, awesome products that have transformed the way I look and feel, and a business I am passionate about. What I do not have: employees, rent for a building, insurance costs, stock of product stored in my house, a competitor on every corner, concern for another COVID-19 wave – my business thrives regardless, exorbitant startup costs (what business doesn’t require an up front investment to start? – rent, supplies, liability insurance, malpractice insurance, tools, etc)
So, my question to you is: Do you want to talk about how you got burned, an why you feel so bitter?
Hi Jessica, thanks for your comment. Since my specialty is wine, I handpicked wine MLMs specifically because they fit my blog’s niche, not because I have an “agenda.” My analysis comes straight from the source itself: the MLM’s website. Sure an MLM sells product, but the main way you make money in an MLM is by recruiting other people and that’s the whole point. The FTC says 99% of people will not PROFIT from an MLM and this has nothing to do with how much and how hard they work and everything to do with how the system is set up. You talk about owning your own business, but if you look carefully into your MLM’s terms and conditions, you might actually see a line where they say it’s actually not your business and everything you do or create is owned by them. This blog is my business. Everything on this blog is owned by me and not by WordPress or my hosting website. And sure every business requires start-up costs, but Scout & Cellar, itWorks, ONEHOPE, etc. are all companies that have CEOs. Those businesses require you to pay to be a sales associate/recruiter. Maybe you’ll make enough to support yourself, but 99% of the time you won’t. So good for you for getting in on your MLM early enough to make enough money to pay your bills, but MLMs are still dumb systems regardless. I stand by my statement that they are predatory and I feel lucky that I have never been involved in one.
So you recruiting people for parcelle and earning a commission on sales is any different?
You could not be more wrong about MLMs. YES there are people out there who are predatory, but when done correctly and you follow true mlm structure, I assure you—not a scheme.
Actually, yes! I earn a commission on sales made through Parcelle; however, I don’t recruit people to sell for Parcelle and I don’t make money off of recruiting people. The problem with MLMs is NOT the product. It’s the fact that most of the money made is by recruiting people and if you don’t join early, then it’s almost impossible to make money. The Federal Trade Commission has a whole article about MLMs and pyramid schemes. The fact that the FTC has grouped them together should be a red flag for everyone.
Tell me you’re involved in an MLM without directly telling me you’re in an MLM…Hun 😂
Thank you for the article. In my younger years I was involved with several MLM’s. I should have guessed that Wine Shop was MLM but I was seduced by the concept of having in home wine parties. Not that I wanted to be a consultant but I wanted some who was one to host a party in my home. Thank you for bringing up the legalities. When I’m reading to order I’ll go through a company.
I work for a wine MLM. I have explicit knowledge and documentation of the company’s compliance team encouraging the independent consultants to break state laws in order to sell their product. I have spoken directly to the Chief Compliance Officer/co-founder that defends the loophole approach. Where do I go from here?
Oh wow. I’m not qualified to give legal advice; however, if it were me in this situation, I’d submit reports to the FTC or the BBB.
I work in the wine industry in compliance. You can absolutely send the documentation to the state’s alcoholic beverage commission (ABC) and/or Dept of Revenue. Many states have some sort of whistleblower protection, too. Good for you for taking the high road!
Just stumbled upon this almost 2 years later! My MIL had a wine party a few weeks ago which I attended. The wine was overpriced but meh at best. During the whole party I kept finding it strange how she pushed the whole “join my team” thing. I did a simple search and bam found your blog! I work in normal sales and this whole thing baffles me. I would never ask one of my customers to join me to become my competition! So backwards.