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

9 thoughts on “Will anyone notice that Amazon Wine is gone?

  • By George Christo - Reply

    Wait, was Amazon Wine a thing? 😉

  • By Jeff Swanson - Reply

    I think King Estate, which produced a wine that was developed specifically for Amazon will notice.

    • By Wine Curmudgeon - Reply

      No doubt, and details are here — http://fortune.com/2017/07/06/amazon-winemaking-king-estate/. That occurred to me as I was writing the piece, but it wasn’t quite the consumer focus I was taking. No doubt some wineries sold wine through Amazon and will lose business (though many told me it was a bust for them).

      Even more interesting, if you read many of the stories about the King Estate wine, they shower Amazon with praise for “developing” the wine and selling wine through the Internet. In fact, this shows how little most business writers know about the wine business and three-tier. A friend of mine, who has little use for three-tier, is convinced that’s one reason we’re stuck with it. He says the media does such a lousy job of explaining three-tier and because of that, consumers don’t understand show it restricts competition and causes higher prices.

  • By Donniella Winchell - Reply

    But they bought Whole Foods…………….guessing there is more of this story to come.

    • By Wine Curmudgeon - Reply

      Donniella, your reputation is such that when you say there is more to come, maybe there is. But given Whole Foods’ tiny part of the grocery business, which not enough people understand, I don’t see how. And I’m convinced Amazon wanted Whole Foods’ warehouses more than it wanted Whole Foods.

  • By Justin Perry - Reply

    Amazon Wine was the first democratizing marketplace in the world of wine. Meaning the best product, with the best price and reviews wins. Any brand who had wine licensing could participate. It gave small brands like us Fete Wine an opportunity to compete. So much so that our Amazon success gave us the opportunity to sell our wine in Total Wine. Amazon Wine is a big loss for consumers and gives the large distributors who rely on wine brands to pay them to play a big win. The three tier system is an archaic law and needs to be eliminated so consumers have more choice. #freethewine

  • By Timothy McDonald - Reply

    Simple answer NO.

  • By Dan Tudor - Reply

    Tudor Wines sold a fair amount of Santa Lucia Highlands pinot noir from the site. Probably because when shoppers searched pinot noir with 90 points or above and 1 cent shipping on 3 btls or more Tudor pinot had about 1/3 of the first page listings. Hopefully those same buyers will go to www. Tudor Wines. com now !

    • By Wine Curmudgeon - Reply

      Thanks for this, Dan. When Amazon Wine started, I asked my grocery store expert if free shipping mattered, and your answer demonstrates his point.

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