Tag Archives: Amazon wine

Winebits 607: Amazon wine, cheap wine, ancient wine

amazon wineThis week’s wine news: Amazon may deliver wine in San Francisco, plus one wine reviewer fails to find quality cheap wine and archaeologists discover an ancient winery

Amazon wine delivery: Amazon, twice thwarted in its attempt to sell wine over the Internet, may have found a way around the problem: Local delivery. The cyber-ether giant has applied for a license to open a liquor store at its San Francisco warehouse, where it would sell beer, wine, and spirits. Amazon’s license application says the store would be open 8 a.m.-4 p.m., but it would deliver alcohol from 8 a.m. to midnight. Oddly, this seems to be what Amazon has been doing in Los Angeles, without anyone finding out until Blake Gray visited the store. He reports that it seems to be violating a variety of California’s liquor regulations.

Where is all the cheap wine? All Winethropology’s Steve McIntosh wanted to do was buy “a mixed case of inexpensive wine. My target price range was $10-13, and my objective was to have some bottles around to enjoy with weeknight meals. Nothing extravagant, just a handful each of summer-friendly reds and whites.” Which, of course, is what most of us want. Does it seem like asking a lot? So what happened after visits to three independent retailers in and around Columbus, Ohio? “I failed. Miserably. Five bottles with an average price of $14 made it home with me. … Has wine become so expensive now that drinkable $10-12 wines are the unicorns of the industry?” Regular visitors here well understand what happened to Steve, since I’ve been lamenting the same thing for a couple of years. Steve’s analysis of premiumization is spot on.

A long, long time ago: Excavations in a northern Israeli hilltop town have discovered the largest Crusader-era winery yet found in that part of the world. The winery dates from the mid-12th century, when European Christians established a series of small kingdoms and principalities in the wake of the 11th century First Crusade. The area around the winery had been planted with vines during the Roman and Crusader periods. As such, it would have likely been the center of wine production in that region, where local grape growers would be required to bring their crops as rent or dues.

Amazon Wine 3.0: Is the on-line retail giant getting back in the wine business?

Has Amazon figured out how to make wine work after two e-commerce flops?

Amazon has twice given up selling wine over the past decade, perhaps the two most notable flops in the e-commerce giant’s history. But it looks like the company may be getting ready to try again – call it Amazon wine 3.0.

The evidence comes from two places: First, a Washington, D.C.-area job posting for a “manager of alcohol public policy” – someone to “create, execute, and manage key public policy issues related to alcohol procurement and sales.” In other words, someone to navigate the three-tier system for the company, which it wouldn’t need unless it was getting ready to launch a major booze initiative. (A tip o’ the WC’s fedora to blog reader Tony Caffrey, who spotted the ad.)

Second, rumblings in the trade press that Amazon might buy or lease abandoned Kmart and Sears locations (and even Pier 1?) to open more Whole Foods; to set up some sort of warehouse/retail operation; to build more Amazon Go pop-up stores; or for something that no one but Amazon knows yet.

Amazon didn’t respond to an email request for an interview. But I talked to several supermarket analysts, and they agreed something may well be going on.

“Amazon doesn’t really get all that wrapped up in failure,” says Bill Bishop, the co-flounder of the well-respected Bricks Meets Clicks consultancy in Chicago. “It’s very much a learning organization. Wine in particular, and alcohol in general, is very attractive for an organization like Amazon.”

What makes Amazon think this effort will succeed when the first two failed? In 2009, it killed a test project called AmazonWine, in which it would have sold wine just like it sells books, computers, and garden hose, because the company couldn’t make it work given the complications of U.S. liquor laws. In 2017, it closed AmazonWine 2.0, in which it didn’t sell wine but sent buyers to winery websites to make the purchases – again, because of the complications of U.S. liquor laws.

It does sell wine on-line through Whole Foods, but the orders must be made using your local store’s website and you’re limited to the inventory at that store. Plus, you have to deal with a third-party delivery service and a potential delivery fee. Which is hardly the same as Amazon’s seemingly unlimited inventory and free Prime shipping.

The sense from the analysts is that the company figured out how to work within the three-tier system for what it’s going to try next, in much the same way that alcohol delivery apps like Drizly and Internet retailer Wine.com have figured it out. But don’t expect delivery, although that’s possible, as much as a variation on the current Whole Foods setup.

Amazon Wine 3.0

One possibility:

• You order wine from the Amazon website, which sends the order to a company distribution center in your state in one of those empty Sears stores. In this case, your choice could well be every wine available from your state’s distributors, based on the Drizly model.

• The Amazon retail/warehouse in the old Sears would have a standing inventory of the most commonly ordered wines, while special wines could be shipped from the distributor to the warehouse.

• You pick your order up at the old Sears store, in much the same way you can drop off Amazon returns at some Whole Foods stores.

The advantages here are obvious: Amazon has the booze supply chain infrastructure in each state where it operates Whole Foods, plus the leverage of existing Whole Foods liquor licenses. And, since you pay for the wine on the Amazon website, there’s less legal hassle about underage drinking. All you have to do is show an ID at the old Sears store when you pick up the wine.

In addition, says Bishop, advances in robotics may make it possible to run the retail/warehouse in the old Sears with a minimum of employees, trimming costs and allowing Amazon to undercut traditional wine retailers. Think of R2-D2s scurrying around the building, picking and sorting orders. The only humans needed would be to check IDs.

Will this happen tomorrow? Probably not. Will it happen in exactly this way? If I knew that, I’d be living in Burgundy. But I talked to some very smart people, and their consensus was that something like this makes sense, and it especially makes sense given Amazon’s seeming obsession with wine.

How to stop Amazon Go: Try to buy wine

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Look at the lower right: In the most high-tech store in the history of the world, “We check ID.”

The Amazon Go employee-less store actually has an employee – to check IDs if you want to buy wine or beer

Amazon’s failure in the wine business, where it shuttered not one, but two sites, might be the only defeat the retail giant has ever suffered. So it’s probably no surprise that its new, revolutionary Amazon Go store, designed without employees or checkout lines and which has panicked every other retailer in the world, does have an employee: To check your ID if you want to buy wine.

Call it the revenge of the three-tier system.

None of the store’s incredible 21st century technology can do the ID job, even though (as described by Ars Technica’s Sam Machkovech) there are so many cameras that it’s impossible not to be seen: “They watch your every move from the moment you walk in and scan your smartphone. Every item you pick up and put down is then tracked to you as an entity – not by your face, but by your body and hands milling about and grabbing stuff.” The system works so well that it even foiled Machkovech’s attempts to steal something.

But not for booze. Writes Machkovech: “The other unusual process involves purchasing alcohol. Amazon Go leaves one staffer in the back of the shop next to a selection of beer and wine in order to check IDs. There was nothing fancy or high-tech about this when I went to peruse the beer.”

Of course, nothing fancy or high tech – because we regulate wine, beer, and spirits using last century’s three-tier system, devised when there were still ice wagons, an orange was an exotic Christmas gift, and nine out 10 rural homes didn’t have electricity.

The Wine Curmudgeon does not advocate underage drinking, and I have always emphasized responsible alcohol consumption on the blog. But – and I know a little about post-modern tech, how this sort of operation works, and a decade’s worth of improvements in ID technology – it’s inconceivable that Amazon didn’t find a way to check IDs using something other than a person. It’s difficult to believe that there’s no way to tie an Amazon account to the person who owns it, so that a 16-year-old can’t pose as someone who is 37.

But it probably didn’t even bother. The failure of both Amazon wine stores taught one of the world’s most powerful and influential companies an important lesson: You can’t beat the three-tier system.

Photo courtesy of Recode/Jason Del Ray, using a Creative Commons license

Will anyone notice that Amazon Wine is gone?

The news is not Amazon’s Wine demise, but the stranglehold the three-tier system has – even on one of the most powerful retailers in the world

amazon wineThe Amazon Wine website is closing at the end of the year, which has caused any number of eruptions in wine’s portion of the cyber-ether. In truth, though, no one else cared. My grocery store trade e-letters ignored the news, and they usually cover Amazon the way I cover cheap wine.

And the end of Amazon wine won’t make any difference to most wine drinkers, since Amazon Wine never actually sold wine. Instead, it was a platform that re-directed consumers to winery websites, where they bought wine from the winery.

Amazon was nothing more than a middleman, collecting marketing fees from the wineries that were listed on the Amazon Wine website. And it is those marketing fees that are forcing the wine website to close.

Which is the real subject of this post – yet another rant against the three-tier system.

Three-tier law includes something called tied house restrictions. One part of tied house prohibits retailers and restaurants from accepting “something of value” from producers or suppliers. This, theoretically, prevents the latter from bribing the former to sell its products, but can cause any amount of legal tomfoolery in the post-Prohibition world.

Amazon could operate its wine website because it didn’t sell wine and so didn’t need a liquor license. But as soon as it bought Whole Foods, it inherited hundreds of the luxury supermarket’s liquor licenses, and liquor licensees fall under tied house. As W. Blake Gray first reported on Wine-Searcher at the end of September, these tied house laws could cause any numbers of problems for the Internet giant.

Which they apparently have. The marketing fees Amazon was collecting from wineries that are listed on its site could be construed by state liquor cops as “something of value” and Amazon could be forced to list the wineries on its site for free. So rather than fight the system, which it has fought before to no avail, Amazon will close Amazon Wine.

Do not worry if this is confusing. The only people who understand tied house are those who enforce and litigate it, and interpretations vary from state to state. What one state defines as “something of value” may not be in another state. In Texas, there was once a marvelous debate about whether iPads given to a restaurant that bought a certain amount of product it was going to buy anyway violated tied house.

The point is that one of the most powerful retailers in the world, who revolutionized the way we shop, is terrified of an arcane law passed to keep the Mafia out of the liquor business more than 80 years ago. This speaks to the stranglehold three-tier has on the liquor business to the detriment of consumers, who suffer higher prices and fewer choices because of it. And because of three-tier’s constitutional protection and the political clout that its distributor supporters have, there’s little we can do.

Except, of course, appreciate the irony. Note that the world has not come to an end in the United Kingdom, where Amazon sells wine just like it sells books and computers. To hear three-tier’s supporters defend a corrupt and obsolete system, that’s impossible.

More about Amazon wine:
Amazon, Whole Foods, and wine prices
Amazon can revolutionize grocery stores, but it still can’t sell wine
Amazon goes into the wine business

Amazon can revolutionize grocery stores, but it still can’t sell wine

amazon

Nary a wine bottle in sight, because even Amazon can’t solve the three-tier system.

Amazon has invented a cash register-less supermarket, but it can’t beat the three-tier system

Amazon says it will open convenience stores that are actually convenient by eliminating the checkout process, using technology to make shopping quicker and easier.

The grocery store business is agog with the news; the blog’s grocery store consultant told me “The idea is not new, but I think the technological advances are what make it possible now. Getting rid of the most hated part of the shopping experience is brilliant.”

Perhaps, but the irony is not lost on the Wine Curmudgeon. Some seven years ago, Amazon killed a program to sell wine over the Internet. The pilot, called AmazonWine, would have allowed consumers to buy wine like we buy everything else from the Internet giant. Search, click, and wait for it to show up at the door – and likely with free delivery for Prime customers.

So consider this: The world’s largest Internet retailer, whose technology, efficiency, and clout have changed the way we shop, says it can open a store without an employee working a cash register. Which is mind boggling. But it has never been able to figure out how to sell wine given the antiquated, decades-old regulatory system that governs alcohol sales in the U.S. — 50 laws for 50 states, and the requirement that almost every bottle of wine pass through a distributor licensed to sell wine in that state.

Ain’t three-tier grand?

Amazon “sells” wine today, but it’s a tiny part of its business and is nothing more than a way for wineries to sell directly to consumers. All Amazon does is charge wineries a fee to appear on the Amazon website, and the wineries do the rest of the work, just like they do when selling directly from their own websites.

And, because I do appreciate irony so much, one last thought. Not only did Amazon give up trying to sell wine, it apparently never made an effort to change the laws. What does it say about three-tier is when it’s easier to invent a store without a cash register using technology that didn’t exist a decade ago than it is to change laws that are almost a century old and mostly obsolete?

Winebits 277: Direct shipping edition

? New York decision: There is a lot of legalese in this blog post from the California firm of Dickenson, Peatman & Fogarty, but the gist is that New York state ? based on a recent liquor authority ruling ? will apparently make it harder for third parties, like Amazon, to participate in Internet wine sales. Specifically, says the post, the New York decision (which we ?ve discussed here) and a 2011 California liquor board ruling aren ?t consistent in several important areas. This is crucial, since Amazon is basing its business model on the California ruling. I ?ve been told by my liquor law sources that what happened in New York is not surprising and that there are still many unknowns as Amazon tries to expand into the two-thirds of the country where it doesn ?t do business.

? Welcome to Texas: Amazon, on the other hand, scored a victory here when it announced five Texas wineries will participate in its wine marketplace. The Texas liquor board decision to allow Amazon into the state was a close run thing, I was told, but the result is that consumers in the 15 other states (plus the District of Columbia) that Amazon serves will be able to buy some very nice wine. If you need any recommendations, click on the blog ?s Texas wine category link. Also worth noting: I talked to several Texas winemakers, and they said Amazon sent employees to the state to taste wines before launching the program. Now there ?s a job ? wine scout for Amazon.

? Who needs Amazon? Not the British, where two entrepreneurs have a plan to let retailers sell excess inventory on the Internet. GrapePip.com, reports the Harpers trade magazine, was set up by Caspar and Victoria Bowes, who run fine wine merchant Bowes Wine. Their goal is to sell almost $400,000 worth of wine in their first year, using an eBay-style auction system.

Winebits 275: James Tidwell, Amazon, national chains

? Appreciating wine: James Tidwell, who works for the Four Seasons in suburban Dallas, is not only one of the most knowledgeable people in the wine business, but one of the nicest. So I'm particularly happy to note this interview with James, where he talks about what it's like to taste some of the world's great wines: "I knew food and wine went well together, but this transcended all conceptions of how they can be paired. It really has influenced my understanding of what can be done with food and wine."

? Making the Amazon model work: A rare look at how and what Amazon is doing with its wine marketplace, courtesy of Wines & Vines magazine. Peter Faricy, the executive in charge of the wine marketplace, wouldn't discuss sales or how many wineries are participating, but did note that the Internet giant is "super pleased with the reception so far. ? More importantly, he said, Amazon is working as fast as possible to add other states to the current lineup — 15 plus the District of Columbia, while ensuring complete compliance with the various local liquor regulations. It charges wineries 15 percent of the sales price to be part of the marketplace, but is waiving some fees.

? Want to be a national chain? Then offer better service, says the man in charge of Total Wine & More, whiich is agressively expanding across the U.S. ?If we can have the best people, we win. You ?re not going to find those people in Walmart or anywhere else, ? said president and co-owner David Trone. This is, of course, easier said than done, and I've heard it about a zillion times in the two-plus decades I've written about business. I once spent 40 minutes in a Dallas Total Wine without an employee even looking at me, and the one employee I watched wait on another customer didn't seem all that interested. But maybe that's a small sample size.