Tag Archives: three-tier sysem

Winebits 531: Two wine rants and three-tier reform

three-tier reformThis week’s wine news: Two wine analysts may be even less optimistic about the future of wine than I am, plus Internet retailer Wine.com calls for three-tier system reform

Napa Valley worries: Author James Conaway, who has written three books about California’s most prestigious wine region, is “pessimistic and alarmed about the valley’s state and direction.” That’s the word from Mike Dunne in the Sacramento Bee. Conaway is afraid Napa will morph into a “viticultural Disneyland, vineyards as sideshows, wineries as thrill rides.” “I don’t see any hope,” he told Dunne. “It’s too late for it to become an agricultural Yosemite.” That’s as gloomy a view as I’ve heard, but not surprising given the news out of Napa in the past decade as the region tries to decide how to manage its unprecedented growth. When land costs as much as $1 million an acre, it’s difficult to sustain an agricultural vision.

Boxes, bulk wine, and blends: Or how about a wine business where what we drink is made like juice boxes, and varietal character is as quaint as the blacksmith? Elliott R. Morss, PhD, isn’t quite that alarming, but it’s not far from what he writes to that scenario: “The growth in blends is also notable. It means customers are focusing less on specific grapes and region and trusting more on the bottler. As the blend demand grows, so will the demand for bulk wines. …” The blog article is a little geeky, but the trends that Morss outlines apply to all of us who want our wine to taste like the grape and region it came from.

Three-tier Ecommerce? Wine.com, the largest Internet wine retailer in the U.S., wants to reform the three-tier system to make it 21st century e-commerce friendly. You won’t learn much more that that – if that much – from this very poorly written news release, which combines PR-, wine-, and supply chain-speak to create a language that even I had trouble understanding. The point, though, is that the retailer sees U.S. wine sales declining and wants to do something to make it easier for consumers to buy wine. Says one Wine.com official: “Limiting the market size of your own customers is not a recipe for growth.”

Winebits 483: Chenin blanc, Two-buck Chuck, three-tier

chenin blancThis week’s wine news: Dry Creek releases its 45th consecutive vintage of chenin blanc, plus the history of Two-buck Chuck and a loss for three-tier

Keep it coming: Dry Creek Vineyard has released its 45th consecutive vintage of dry chenin blanc, which the winery says is a record for California. Given how little respect chenin blanc gets, and especially in California, that’s probably true. In fact, the Dry Creek chenin is a marvelous wine, a regular part of the $10 Hall of Fame, and an example to the rest of the wine world that you don’t have to make chardonnay, chardonnay, and more chardonnay. But what else would you expect from a winery that ends the news release about the chenin with this quote? “Instead of getting sucked into the increasing corporatization of the industry, we are bucking the trends and are an increasingly rare breed.” No wonder I like the wine so much.

Cheap wine: The Thrillist website recounts the history of Trader Joe’s Two-buck Chuck, the first ultra-cheap “premium” wine. The piece is mostly well done, and includes quotes from Chuck Shaw, who started the winery whose name – sold for $27,000 to Bronco Wine – was eventually used on the first $1.99 offering from Trader Joe’s. And, for the most part, the story confirms my most recent assessment of Two-buck Chuck: Where’s the antidote?

Three-tier takes a hit: The state’s supreme court has struck down a South Carolina law that said no one could own more than three liquor stores. The court ruled that the three-license law “limits are arbitrary and do not promote the health, safety or morals of the state, but merely provide economic protection for existing retail liquor store owners.” This matters not just for South Carolina, but in every state that limits the number of stores one person can own, which includes Texas. It’s not legally binding outside of South Carolina, but it does offer a precedent for judges to to use elsewhere. Also worth noting is that the suit was brought by the Total Wine chain, which has sued other states to overturn three-tier laws. Finally, if I may pat myself on the back, this appears to be part of a trend I wrote about last month, noting that a new generation of judges and regulators sees liquor law differently than their parents and grandparents did.

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

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 454: Judgment of Paris, wine pricing, low alcohol wine

Judgment of ParisThis week’s news: An analysis of the scoring at the legendary Judgment of Paris, plus retailer Total Wine sues to lower prices, and a low alcohol wine brand.

It’s all in the scores: David Morrison, writing on the Academic Wino site, discusses the scores given to the wines at the Judgment of Paris, where California bested France and established the U.S. as a top wine producing country. It’s a fascinating post, and the math isn’t too difficult to follow. In this, it shows just random the experts’ scores seem to be. As Morrison writes, “Instead, the differences among the judges were much larger than among the wines. Of the 11 judges, it seems that 5 were fairly consistent among themselves as to which wines they thought were high quality, while the other 6 were not, and these two groups provided rather different scores from each other.” And yet we use scores to continue to determine wine quality, despite all these limitations.

Lawsuit for lower prices: Retailer Total Wine has sued the state of Connecticut, saying that state laws that set minimum prices for alcohol violate federal law. Connecticut prohibits liquor retailers from selling wine and spirits below cost in almost all cases, the only state in the union that does so (though other states have minimum pricing laws). The Total lawsuit, one more in a long line filed by the fast-expanding retailer, is yet another challenge to the three-tier system of regulation that has governed booze sales since the end of Prohibition. Ironically, the Connecticut law is only 35 years old, but was passed to update minimum pricing laws that had already been in place, and may have been there to regulate alcohol consumption as much as to protect retailers.

Less alcohol, same taste: In the on-going debate over high alcohol wines, those who like high alcohol argue that it’s the only way to get big fruit flavors. That’s where a New Zealand producer says it has found a way to get those fruit flavors, but at lower alcohols. The idea sounds goofy to me – rocks in the vineyard that hold heat from sunlight – but Stoneleigh Vineyards says it can get fruit flavors and alcohol levels at less than 10 percent, about one-quarter lower than normal. The lower alcohol wines aren’t available in the U.S., so I can’t tell you whether they’re any good. But I will keep an eye out for them.

Direct shipping and underage drinking

Rebecca Williams may have taken on Big Tobacco, but that experience didn’t prepare her for her recent adventure in the wine business. Williams is the lead author of the May study that looked at whether minors could buy alcohol on line. It found, not surprisingly, that they could, and Williams found herself on the receiving end of some less than complimentary comments.

As one Winestream Media stalwart described her: Someone who did the study for no other reason than to burnish her resume.

“It’s not the same kind of backlash when we did tobacco studies,” says Williams, “and I don’t know that I’ve seen a lot of it. What was surprising were all the questions about where the money came from to fund the study. I was surprised that people thought the study was paid for by wine distributors, that we would do that.”

Ah, the naivety of the academic (who got her money from a legitimate public health foundation). Williams, who thought she was doing public health research, walked right into the biggest controversy in the wine business today — the debate over the future of the three-tier system.

She wanted to find out if it was easy for minors to buy booze over the Internet, and instead found herself in the middle of the fight between the distributors and wholesalers who want to strengthen three-tier and those who want to reform it. How this happened and what it means, after the jump:

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