Kevin O'Leary's Massive 'Shark Tank' Investment In Zipz Designed To Take Wine Where It's Never Gone Before

How many times have Shark Tank viewers seen Kevin O'Leary tout his membership in the Confrerie des Chevaliers du Tastevin? While "Mr. Wonderful" doesn't shy away from expressing his love of wine, he does balk at investing in companies that step into the tank with outrageous valuations. So that's why O'Leary's $2,500,000 bet on Zipz Wine, in exchange for 10 percent equity, might have shocked viewers at home. When the episode aired in December 2014, it was the biggest deal in Shark Tank history.

But according to a self-penned article on The Huffington Post published in April 2015, O'Leary wasn't planning to be a passive investor in Zipz, which sells sealed individual glasses of wine. He got in touch with an established figure in the wine industry, Pat Roney, and struck a 50/50 deal to start a new venture: O'Leary Fine Wines. Except the venture wasn't exactly new -- the shark's namesake wine has been on shelves for a number of years, winning a "Best Value" award in 2012, according to a press release.

O'Leary even discussed his own wine venture during Zipz's Shark Tank pitch, saying he'd spent two years trying to get his wine into Costco, which is a global leader in wine sales. O'Leary called Zipz's $2.99 price point for an individual glass too steep, especially when the vast majority of wine sells for under $20. In his Huffington Post piece, O'Leary claimed that 97 percent of wine sold in the U.S. costs less than $14.95 per bottle.

As Business Insider reported, O'Leary's investment in Zipz was contingent on a Costco deal and a reduction of the Zipz price point. As the entrepreneur, Andrew McMurray, stepped outside to consult with an advisor on O'Leary's offer, Lori Greiner asked O'Leary if his own frustration with Costco was his motivation for landing the Zipz deal. He confirmed that. By that time in the pitch, all the other sharks had pulled out. Inc. reported that Mark Cuban objected to the Zipz branding, Daymond John said it was just too risky, Robert Herjavec wanted to focus just on licensing, and Lori Grenier called the investment "too crowded."On Tuesday night, viewers of Beyond the Tank will see how it all turned out. According to his Huffington Post article, O'Leary had planned to sell single-serve stock of O'Leary Chardonnay, made using grapes from Roney's vineyards, by the summer of 2015. The single-use packaging, of course, would use the Zipz technology.

Zipz was not the first single use wine to enter Shark Tank. Copa di Vino came in with a similar idea, but the proprietor wanted to sell his own wine and not license the containers. An interesting side note during the Zipz pitch was learning that, according to McMurray, neither he nor Copa di Vino holds the patent to the single-use container and seal. It's owned by a company in France.

Why is the technology important? As any wine drinker knows, even the smallest bit of oxygen can turn wine into a cooking ingredient pretty quickly. O'Leary wrote in his Huffington Post piece that big names in the wine industry had tried before to market single-use wine, but the technology never worked. In typical grandiose manner, O'Leary said that he would succeed where others had failed, even if Roney warned his investment in Zipz may have been risky.

"Someone new had to blaze the trail and prove out single serve in the market. I decided it would be me - and O'Leary Fine Wines was born."
Beyond the Tank airs Tuesday night at 10 p.m. on ABC. A new episode of Shark Tank is scheduled for Friday at 9 p.m.

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