Anyone who has tried to buy wine over the internet may be well aware of the obstacle course of wine shipping laws tripping up oenophiles all over the U.S. today.
Unless you are fortunate enough to live in what is referred to as a “reciprocal” state, it may quite literally take an act of congress for you to buy a bottle of that great boutique wine you tried during your wine country vacation last year.
I know full well how frustrating this is, having lived in Massachusetts until recently. The tragic story typically (or in at least one case) goes something like this.
Irish Catholic kid from Worcester County in Massachusetts somehow gets in with the wrong crowd at Brandeis University and falls in love with French Burgundies, Bordeaux, etc. He becomes more interested in wine than class, to the point that he starts making annual trips to some of the great wine country regions in the U.S.
Ed. Note - Mom and Dad, this fictional person was already 21.
Early on, he visits the larger commercial wineries he knows by name because of their availability in New England retail shops: Mondavi, Beringer, BV, Merryvale, etc.
Commercial Napa has its charms, but eventually he tires of the Route 29 traffic and full-bodied Cabs, and hears talk of another less traveled path called Russian River Valley.
He explores this Nirvana of Pinot for days and has a revelation, falling head over heels in love with Rochioli, Williams Selyem, Dehlinger and Copain. He is excited to see them stocked in the local boutique wine shops in Sonoma, Napa and San Francisco.
The moment he gets home to New England, he runs out to his trusty local shop, and finds not a one of those labels on the shelf. Interesting. He scours the internet for terms like “Rochioli” and “Shop” and “Massachusetts”. Nothing. He searches forums, shop reviews, calls distributors, but nobody carries these labels. An incorrect assumption is formed. “These wineries must be playing favorites and only parceling out their gems to the local boutique shops. I’ll just order them online.”
“Operator. Get me downtown Sonoma on the double.” He calls the shop and places an order.
The shop girl sounds cute and very helpful until the topic of mailing address is discussed. “Did you say Massachusetts? Oh, I can’t ship there, it’s against the law.”
“What? OK, can you ship it to my aunt in Maine.”
“No, you’ll go to the clink.”
Hard time? For an adult to buy a bottle of wine???
To explain the shipping laws is ridiculously complex and varies by state so I won’t go there – if you do you will learn what vulgar terms like “non-reciprocal” mean. If you call state legislators you may hear a variation of this sentence: “What if a frat boy ordered a bottle of Latour over the internet? We can’t have that.” To learn more about your state’s bureaucracy at work start as www.freethegrapes.org.
To explain the reason the shipping laws are so anti-consumer is easy – as one state legislator told me “Who do you think supplies the wine for our end of session parties – the distributors!”
And it is clearly in the distributor’s best interest to keep wine passing through their hands. Not that all distributors are evil – they are just making a living and protecting their interests. Although I beg to differ that it is to their disadvantage to allow small wineries to ship direct – I believe that the more wine people are exposed to, the more wine they will buy, period – including in their local retail shop.
This is all sad and alarming, but to get back to the point of why you will rarely/never see a bottle of Dehlinger on the shelf in Boston, I should explain the economics of the three tier system. As I said earlier about my faulty assumption, none of this has to do with the winery’s desire to keep their stock only in local west coast shops. Instead, it is because the small winery who sells through distribution loses money. Profit = None. Less Than None.
Take a winery like mine (Kindred Wines). Our Amber Ridge Pinot Noir has a release price of $45. This is the price we sell direct to customers in California and reciprocal states. $45 is essentially enough to cover our burdened costs and make some margin to reinvest in the winery.
If I sell the wine to a retailer or restaurant in California, I have to discount the wine approximately 25-33% but do not have to pay a middle-man to pass through the wine. While this discounting still hurts and the end price barely covers our costs, the winery can at least pick and choose a few good restaurant and retail placements they believe will lead to direct customers, in the end making the transaction worth it. The idea is to build up your exposure until you can sell almost exclusively direct to consumer via the mailing list. That gets you recurring revenue, fair margins, and customer loyalty.
So, now let’s say as a former resident, I want to sell my wine to my favorite shop in Massachusetts. First off, I can’t deal directly with the shop; I have to find a distributor, hence the term “three tier system” – winery to distributor, distributor to retailer, retailer to customer. Some people have apparently never learned that the shortest distance between two points is a straight line.
Assuming the distributor even wants to bother with a small lot winery (there are some distributors who care about wine and are willing to help the small guys out), he will want to take a cut for doing a “pass-through” to get your wine to the retailer. Then the retailer expects a discount so that he can sell it for close to your release price and still make a decent profit. At the end of the day, if I want to go this route, I might end up getting $20-$25 for my $45 wine.
Mondavi, Beringer, BV – they can afford this. See last month’s article on Cheap vs. Expensive Wines for the kind of economy of scale at play here. But a small winery making single vineyards can not afford this middleman game and would lose money selling to these states.
Things appear to be changing on the direct shipping front; some recent legal decisions have fallen on the side of the consumer. Let’s hope the greater good finally wins out on this one.
Until the dust settles, visit California, it’s a beautiful state. And you can drink whatever wine you want here, not just what the distributors and politicians decide to allow you without slapping on the cuffs.