Amazon Wine, the Internet retailer's end-run around the three-tier system, may be in trouble. The New York State Liquor Authority, reports Wine Industry Insight, has fined a New York retailer for $50,000 for “third-party liquor sales.”
Said the authority in its ruling: “Arguably, since these third party companies are not licensed to sell alcohol, they are violating the three tier system. Additionally, by participating in this arrangement, retailers could be construed as availing their license and sharing their profits with these companies, all of which weaken the system and do not conform to the rules and regulations that govern sales of alcohol.”
The ruling was not directed at Amazon, and the case is not exactly the same – the retailer was fined for selling wine on the Internet in conjunction with a distributor. Amazon doesn’t “sell wine,” but allows consumers to use its marketplace to buy wine from retailers and wineries, All Amazon says it does is facilitate the sale, for which it takes a cut from the retailers and wineries.
Still, that sounds a lot like a third-party retailer, and Amazon doesn't help matters by calling itself a wine store on the site. And, as I reported last fall when the program was announced, there was no guarantee it wouldn’t run afoul of “newly aggressive state regulators, who might be inclined to sue Amazon just because.”
Amazon Wine launched in 2012 even though it wasn’t available in New York, the most important wine market in the country. This ruling seems to indicate it may be a long while before the marketplace gets there. In addition, though the decision has no meaning outside of New York, liquor cops across the country will undoubtedly be parsing it for ways to use in in their jurisdictions.
Jeff:
The quote you cite is not from the NY State Liquor authority. It is from the an NY association of retailers.
Also, It's not really fair to say that Amazon is doing an "end run" around any system, let alone the three tier system. The Amazon marketplace forwards requests to buy and the winery consummates the transactions, ships the wine, collects taxes and remits them to the state.
Posted by: Tom Wark | March 15, 2013 at 04:45 PM
Tom, that sounds like a plan -- let's debate Amazon Wine, Amazon's history with direct sales, and three-tier. Maybe we can even sell tickets.
Posted by: Jeff Siegel | March 16, 2013 at 06:45 AM
Jeff: California consumes more than twice as much wine as New York. Not sure how you can call NY the most important wine market in the country; Florida also consumes more wine.
New York matters, for sure. But please don't give us that "nothing outside Manhattan matters" attitude we see from the wine writing community there.
Posted by: Blake Gray | March 18, 2013 at 11:36 AM