Category:Wine trends

Amazon.com, Prohibition, and the three-tier system

amazon wineProhibition — the constitutional amendment that made it illegal to manufacture or sell alcohol in the U.S. — ended 76 years ago. But its legacy is still with us.

That’s what I find most intriguing about the news that on-line retailer Amazon.com has killed its plan to sell wine through a business called AmazonWine (which it brought back in another form three years later). It has been running a pilot program for about a year, testing the incredibly complicated logistics involved in selling wine to 50 different states. Last week, though, it said enough was enough. The company didn’t give a reason, but most people who are supposed to understand these things say Amazon couldn’t solve the distribution problems.

Or, as industry consultant Jon Fredrickson, who knows as much about this stuff as anyone, put it: “People have no idea how complex this is, dealing with 50 different [state] governments. You wonder if a company like Amazon, which is well organized to sell just about anything, can’t pull it off. But wine is different from anything else they are selling.”

And those distribution problems are a result of Prohibition. The political compromise that ended Prohibition allowed each state to regulate alcohol in its own way, and they have — in ways that are completely unimaginable. New Yorkers can’t buy wine in grocery stores. Montgomery County, Maryland, residents can’t buy wine at retailers like Cost Plus World Market, but residents of adjacent Prince George’s County can.

There are not just 50 laws for 50 states, but laws that vary from county to county within states, and even — get ready for this — different laws within the same city. In Dallas, for example, I live in a wet area. Go a mile or so north, where Dallas is dry, and ordering wine on-line (to say nothing of buying it in person) is a completely different legal proposition.

It’s no wonder then, that Amazon gave up. I have been writing about on-line wine sales for as long as there has been such a thing, and no one has succeeded. Virtual Vineyard failed. WineShopper.com (which Amazon invested in) failed. The first version of Wine.com failed. Even the current version of Wine.com has limited reach, with wine sales to just three dozen or so states.

So why are we still hampered by a ban that ended almost eight decades ago? Because the system of 50 laws for 50 states works best for those who have the greatest financial stake in it — independent retailers, the distributors who sell wine to all retailers, and the legislators who write the laws and get campaign contributions from the first two groups. It’s called the the three-tier system, and it’s the law in every state. Consumers, with some exceptions, must buy wine from retailers, which must buy from distributors, which buy from the wineries. Retailers can’t buy direct from the winery (which drove warehouse giant Costco to unsuccessfully sue Washingon state) and consumers mostly can’t either. The three-tier system almost makes it unwieldy at best, and impossible at worst, for on-line retailers to do business.

I don’t want to get into an argument about whether the three-tier system is good or bad — there are arguments to be made on both sides. I will note, however, that wine, beer, and spirits are about the only industries that have their distribution systems mandated by law. If I want to buy a TV, I can buy it from an independent retailer, a national chain, on-line or direct from the manufacturer. So why should wine be any different from buying a TV?

The other thing to note is that distributors and independent retailers do their utmost to keep the system in place. I understand this — retailers are terrified of competing with national chains that can underprice them by buying direct, and distributors are even more terrified of losing gigantic accounts like Costco and Walmart, which would buy directly from the wineries and bypass distributors if the three-tier system didn’t exist.

But I’d also argue, and I have said this to retailers and distributors, that the three-tier system is not forever. It’s going to change, and probably sooner rather than later. The Supreme Court chipped away at the system in its 2005 Granholm direct shipping decision, and there are other cases making their way to the court that will further chip away at it. Independent retailers and distributors would be better off in the long run if they spent more time figuring out what they’re going to do when the three-tier system ends than by fighting to keep something that is the product of a failed social movement.

, , , ,

Even the big shots want us to drink local

A couple of very odd wine articles this week, in which two of the most important wine writers in the United States take restaurants to task for not serving local wine:

The New York Times' Eric Asimov writes that "Nobody goes out to dinner in the San Francisco Bay Area to eat food flown in from Europe."

Jon Bonne in the San Francisco Chronicle asks: "Do our wine lists ignore California?"

Why odd? First, because Asimov and Bonne have not always been at the forefront of the Drink Local movement. Second, of course, because drinking local in this case means drinking California, which isn't very local for the rest of us. Obviously, it would be better if Asimov criticized New York City restaurants for not serving New York state wine, and if Bonne criticized Washington state restaurants for serving California wine.

Still, we'll take any help we can get. Because, if Mainstream Media types like Asimov and Bonne are starting to understand Drink Local, it means we've made progress. And, to paraphrase Paul Henreid in Casablanca (shameless plug here), "Welcome back to the fight. This time our side will win." Which also gives me the chance to include this video, courtesy of cyberperson53 at You Tube, that includes Henreid's line.

, , , ,

Wine at the State Fair of Texas

Each year, The Wine Curmudgeon does four or five events that are not typical events for most wine writers. This year, I spoke to a wine festival in Wichita Falls, where the Saturday night tasting was held in the county ag center, and at a music festival 60 miles from San Antonio that’s held in a campground. I did a Wine 101 talk at Grapefest in Grapevine, Texas, home of the People’s Choice wine competition ? no so-called experts allowed. And, for the third year in a row, I ?m doing a series of Wine 101 talks at the State Fair of Texas.

In most of these settings, the people who attend don’t know much about wine and might not be able to tell a cabernet from a chardonnay. But that’s OK, since that probably holds true for most Americans. It’s also why I speak to these groups. The wine world already has more than enough people who want to preach to the very small choir that is the wine world, and I didn’t get to be The Wine Curmudgeon by being like the rest of the wine world.

More, after the jump:

Continue reading

Wine consumer to wine writers: “Let’s get real”

This letter ran in a South African newspaper, and it says everything that needs to be said (and, in this case, South Africa is no different from the rest of the world). The best part is that it ?s not the Wine Curmudgeon whining; it ?s someone who pays their hard-earned money for wine and is mostly ignored by the people who make it and the people who write about it. One day, hopefully sooner rather than later, the wine business will figure this out.

Among the highlights:

? ?Your wine columnist continues to opine in his quaint, elitist style, as if anyone who can ?t afford a bottle at R150 (US$21), or was it R1500-plus (US$210), is beneath him. Many wine writers give the impression that nothing below a certain price point will ever contaminate their nostrils, let alone their lips. ?

? ?Let ?s get real here. Between boxed ?carafe quality ? and auction wines there is a whole array of, shall I call them ?sumptuous, luscious, mouth-filling, affordable wines ?

? ?Apart from the Sunday Times wine fundi, who has the confidence and knowledge to recommend wines from as little as R25 (US$3.50) a bottle, most of the other writers deserve to be put back in their elitist boxes. ?

Thank you, Jeremy Sampson, wherever you are.

Wine discounts, wine prices and wine deals

Retailers are increasing discounts to move merchandise. The Wine Curmudgeon has spent quite a bit of the past couple of weekends shopping for wine. I can ?t guarantee that what I saw in Dallas is the same thing that you ?ll see where you live, but I did see what look like to be emerging trends nationwide:

? Smaller wine departments, especially in stores like Cost Plus World Market that expanded their wine departments during the boom and now are stuck with too much floor space for a product that isn ?t selling. My local Cost Plus looks like it has reduced its wine inventory by 20 percent.

? More house labels and private labels. I visited eight or 10 stores, and the thing that struck me in all of them were lots of labels I had never seen before. These are wines that the retailers carry exclusively, which means they carry higher margins than national brands and usually sell for a little less than similar national brands.

? The beginning of deep discounting, as opposed to the ordinary discounting that has been going on for most of this year. I bought six bottles of quality wine at Kroger, including one that usually costs around $15, for $39.95. Which works out to $6.66 a bottle, and a Rex Goliath chardonnay was just $4. Kroger had not only marked the wines down, but was offering 20 percent off any six bottles. This is exceptionally notable in Dallas since our wine prices tend to be a bit higher than elsewhere.

? Lots of back vintages, especially for well-known national brands. There were 2006 and 2007 white wines and 2004 and 2005 reds for sale, vintages that should have sold out at least a year ago. Retailers will need to increase discounts to get rid of these back vintages to make room for the new vintages on store shelves, since the alternative is throwing them out.

The photo is from Wong Mei Teng of Kuala Lumpur, Malaysia, via stock.xchng, using a Creative Commons license.

Restaurant wine: We’re buying less, and we’re buying cheaper

These numbers are so important that the trade magazine that reported them, Wine Business News, said that they show that the ?wine landscape in USA restaurants clearly shifted in 2008. ? Given the way the wine business tends to discount bad news, that ?s an amazing statement.

And what did the study, conducted by Ronn Weigand and Restaurant Wine, find that was so industry shattering? That the total restaurant wine market shrank by 5.5 percent in 2008. And the 20 most popular restaurant wine brands in 2008? Almost to a bottle, they are $10 wine companies.

More, after the jump.

Continue reading

Peter Wasserman on quality wine

Peter Wasserman and Selection Becky Wasserman (that ?s his mom) are among the best French wine brokers in the world. Their wines are well-made and offer value, even when they cost a lot of money. But, unlike many of their ilk, they sell wine to importers that isn ?t expensive. Which makes the company the Wine Curmudgeon ?s kind of guy (if I can jumble up my grammar).

I chatted with Peter Wasserman during a tasting in Dallas last week. A few insights after the jump:

Continue reading