The Abysmal Selection Faced by American Wine Consumers

Abysmal Wine FailureFor a few days now I’ve been staring at this study of “Concentration in the U.S. Wine Industry”. It has a spiffy graphic that I like. And I learned that three large wine companies with multiple brands account for 50% of all wine sales in the U.S. The point of the study comes down to the question the authors pose and attempt to answer: “What impact does this industry concentration have on consumer choices?”

The problem is the question is never answered in the paper. So let me answer it:

None.

The fact that three companies control 50% of sales in the U.S. has zero impact on consumer choice in the United States. In fact, the only factors that impact consumer choice of wine anywhere in the United States are 1) whether or not FedEx and UPS deliver to your address and 2) whether or not the state allows FedEx and UPS to deliver wine to your address.

Nothing else matters where consumer choice is concerned other than these two factors.

Here’s the thing, while I don’t know it for a fact, I’d be willing to bet that the U.S. wine marketplace is the most diverse in the world. In no other country are so many different wine products sold. And yet, the totality of that diversity is only available in the 14 states where it is legal for both out-of-state wineries and out-of-state wine retailers to ship.

In those states where no direct shipping is allowed (about 10) the choice of products is miserable compared with what it could be if direct shipping were allowed. In those states where only out-of-state wineries are allowed to ship (40), the only imported wines consumers have a choice of are the miniscule number the wholesalers in the state choose to put on the shelves. Only in those 14 states where out-of-state wineries out-of-state retailers may ship in is the total diversity of wines in this country available to consumers.

For the largest swath of wine drinkers in America, the wines that fill up the average supermarket shelves are diverse enough. There are more than enough wines at a variety of price points to satisfy this largest wine drinking contingent of low-price, uninterested wine imbibers. The thing is, the number of interested wine imbibers willing to pay a little more is growing. There may be enough for these folks based on what they find on grocery store shelves and in local liquor stores and wine shops. But increasingly, these folks want access to the full diversity of wines in America. And for the contingent of very interested, dedicated, core wine drinkers we know they want access to it all.

So, consumer choice comes down to the laws on direct shipping in a given state, not how concentrated sales are among a few companies.

A perfect example this is Maryland. Recently the Maryland Comptroller office released a study of direct shipping in that state since winery-to-consumer shipping, but not retailer to consumer shipping, was legalized. One of the ways they assessed the success of direct shipping was to look at how much access Marylanders had to wine now that wineries could ship.

To do this, the Maryland Comptroller looked at how many of the 2011 Wine Spectator 100 Top Wines were available to Marylanders. 55 of these Top 100 wines were imported wines and 11 of these 55 were carried by Maryland Wholesalers. 45 of the Top 100 wines were domestic wines, where 29 of them were carried by Maryland Wholesaler and another 13 of them were available from wineries that ship. The comptroller’s study shows that with out-of-state wineries now allowed to ship to Marylanders, still only 53 of the top 100 wines were available to Marylanders. Here’s the thing, if out-of-state retailers were allowed to ship to Marylanders, then 100% of the top 100 wines would be available to Marylanders.

The Maryland Comptroller’s office calls this a success and points to it as a real benefit to Maryland wine consumers. I call it an abysmal failure to provide Marylanders with real access to wine and real choice.


15 Responses

  1. Larry Chandler - January 8, 2013

    Consumer choice comes down to the laws on direct shipping, but anyone interested in wine choice will say “Law, what law?” In Maryland, many wine lovers would go to Washington, DC for greater choice. In Pennsylvania, wine lovers (in Philadelphia, anyway) would head to South Jersey where more was available. Even here in Southern Utah, we have lots of knowledgeable wine drinkers. Not everything bought in Las Vegas stays in Las Vegas.

    So people have more choices than are apparent. (And in Utah, if a wine doesn’t come into the state, the state will seek it out from the winery or importer if you ask for it.) That’s one reason there isn’t all that much pressure to open up. Most people truly don’t care. But for those who do, where there’s a wine, there’s a way.

  2. Tom Wark - January 8, 2013

    Larry,

    I disagree. When given the opportunity to change the law to allow easy, commonsense access to wine, consumers overwhelmingly support the change in the law. As for Utahans, let’s face it, there selection abysmal, Las Vegas is a long way to go for wine, and the efficiency of the Utah Alc. board in getting wines consumers want is without any merit.

    • Larry Chandler - January 8, 2013

      Tom. Most will choose direct shipping if given a choice but not everyone is demanding a choice. Utah may be inefficient but they will order a particular wine if you ask. And the selection is small but not abysmal though most stores don’t carry everything. A store will order a wine from the state warehouse. Southern Utahns do go to Vegas for more than wine (or to Mesquite which is closer.) It’s not that it’s easy but most don’t care. People travel 50 miles to the one good food store. Another 30 miles for a better wine selection is not a problem.

  3. Kurt Burris - January 8, 2013

    Is it legal to bring wines into Utah from out of state? That may still be illegal in Canada, where it used to (at least) be illegal to bring beer across provincial lines. I would like to see unlimited shipping, but for a nice $10 Alentejano the shipping costs would be prohibitive. This is why I think chain dominance of the retail market is bad for diversity. Safeway is not going to start stocking producer Cavas or the aforementioned Alentejano which makes it harder for the boutique distributor to survive. And losing out on the Rombauer Chard sale hurts the small wine shop. Do I want to go back to growing up under the Alberta Liquor Control Board regime? Not a chance. And I probably don’t want to give up on wine in grocery stores either. Sorry about resurrecting yesterdays thread by the way.

    • Larry Chandler - January 8, 2013

      No it is not legal to bring wine back into Utah but many do. The state knows people do but they don’t put much effort into stopping it.

  4. Samantha Dugan - January 8, 2013

    Depending on what you’re looking for in some parts of this country not only is the selection atrocious, the law will come down on you should you try and get your hands on the wines you crave. My best friend was exiled to Dallas a couple of years ago, she was my assistant in the Champagne and French department and when she moved not only couldn’t she find the little crisp white and grower Champagnes she had gown to love, it was illegal for us to ship it to her. Okay, Plan B- get a box in Oklahoma and have the wines shipped there….not so fast missy! Texas found out that she was having wine shipped in to another state and she was driving it across state lines. They raked her over the coals, gave her the, “You ever heard Don’t Mess With Texas, well don’t mess with Texas!” garbage, (least we forget this is a tax paying educator just trying to find wines she can drink) and she had to sign a paper swearing that she would never have any liquids or powders..(really???!!) shipped to another state and driven into Texas. Horseshit, total horseshit. So now we just pack cases when we go for visits, check them on the plane and get her wines that way when we can. Just such a crock….

    • Larry Chandler - January 9, 2013

      Oklahoma does not allow direct shipping of wine either. Not sure how she was able to get her Champagnes shipped there. Also, how did Texas find out? Unless she publicly announced that’s what she was doing, that does seem odd.

      • Samantha Dugan - January 9, 2013

        She got a mailbox in Oklahoma at one of those storefront places, not a P.O. Box and they were the ones that insured her that it was legal, something we all now know is untrue. It was the postmaster general for Oklahoma that alerted whomever in Texas, not sure if it was an employee of the mail place or what but either way she got busted and pretty bullied, (she called me in tears she was so freaked out…poor thing thought she was going to jail as that was how they made it sound when they told her to come down) which just seems pretty shitty as she was just trying to buy wine. Just seem so weird, and unconstitutional by the way, to tell a tax paying member of society which wines they can and cannot buy.

  5. Terroirist: A Daily Wine Blog » Daily Wine News: Sparkling Vodka - January 9, 2013

    [...] on direct shipping in a given state, not how concentrated sales are among a few companies.” Some wise commentary from Tom Wark on the recent study from Philip Howard of Michigan State University on concentration in the wine [...]

  6. Larry Chandler - January 9, 2013

    While the selection of wines available in Utah is small (about 3,500 at last count) it isn’t abysmal. There won’t be a store that has all of them, but they do transfer bottles between stores upon request, similar to how library book transfers work. (If no store has it, then it has to be ordered by the case.)

    Also, Utah brings in about 60 different single malt Scotch.

    For what it’s worth, here is the current Utah alcohol list: http://abc.utah.gov/products/documents/AlphaPriceList.pdf

  7. RFR - January 9, 2013

    Shipping really? All I care about is quality. If they mass produce crap, they will be gone and they know it. Shipping–better use temp controlled vehicles. Know the transportation and know whether your product is protected or vulnerable.

  8. Rew Craig - January 9, 2013

    Pardon me – a little off story. Have any of you tried WTSO.com ? I love this site – and have shipped many boxes to my friends in Pa. Talk about a conservative state. That’s such an outrageous story about the OK/TX woman – unbelievable. I was a somm. in Pittsburgh and Philadelphia for many years then worked in San Francisco the last 15 and wow, what a difference. Serious wine people in Pennsylvania have never head of the Santa Lucia Highlands. Imagine what else they’ve never tasted or even considered. Albeit, they do get some decent French, Italian, and German wines. But as the largest purchaser in the Country (PLCB – Penn Liquor Control Board) their prices still are not better than in Calif. I guess they pocket a huge margin.

  9. Daily Wine News: Sparkling Vodka | Wine 2020 - January 9, 2013

    [...] on direct shipping in a given state, not how concentrated sales are among a few companies.” Some wise commentary from Tom Wark on the recent study from Philip Howard of Michigan State University on concentration in the wine [...]

  10. Fredric Koeppel - January 10, 2013

    In my guise as journalist, I just finished a story for the local newspaper about direct shipping compliance in Tennessee, which allows (since July 2009) direct shipping to residents of the state from out-of-state wineries but not out-of-state retailers. But as even the state legislator who wrote the bill told me, “People who want wine from retailers out-of-state have always gotten what they wanted and they always will.” Another problem is the proliferation of wine clubs that ship as retailers (especially imported wines) direct to consumers regardless of the regulations. A local retail store owner told me that the wine clubs ship into this state wines that he cannot get from local distributors because they’re not available here. In other words, this whole farrago of restrictive laws is a farce and surely an argument for unlimited distribution and shipping of wine.

    • Larry Chandler - January 10, 2013

      If a state allows some wine shipped in, it’s easier to get others in even if not permitted. In Utah, no alcohol ever can be sent to individuals, so it’s easy for UPS and FedEx to spot it, especially if there is a notice outside the box that there’s alcohol inside the box.

      The biggest problem with Utah is the suffering it inflicts on the hospitality industry. That’s a different blog post, but the state’s attitude is truly depressing for restaurateurs and for visitors, tourists and even locals who want to dine out.


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