Lee Harvey Oswald, Aliens and the Wine Wholesalers
I hate to keep bringing up the cynicism of wine wholesalers (yea….right) but it occurs to me that the new Michigan Direct Shipping legislation that passed the Michigan State House and that the Governor is about to sign might just be the result of truly conspiratorial and cynical thinking and maneuvers on the part of wine wholesalers.
The law, while it allows any winery anywhere to ship direct to Michigan consumers, only allows Michigan wineries to sell direct to retailers. Out-of-state wineries may not. Now, also in the law is language that says, according to Crain’s Detroit, "if a section of
Michigan’s liquor-control code that deals direct shipping to retailers
is found unconstitutional, then that entire section would be repealed
and replaced with a new section that would prohibit all direct sales to
restaurants and retailers."
Let’s keep in mind that Wholesalers, beyond anything else, want to assure they are the only ones who can sell to restaurants and retailers. Let’s recall that the Michigan wine wholesalers pushed Michigan lawmakers as hard as they could to outlaw Michigan wineries from selling direct to retailers, a privilege Michigan wineries have had for some time. The compromise was Michigan wineries may continue to do this but out of state wineries may not.
Most legal minds that look t this provision of the new law believe it is clearly unconstitutional. However, it will stand until challenged.
So here’s what I’m wondering. How long will it be until the Michigan wholesalers convince a friendly retailer to challenge the law, have it called unconstitutional, and thereby shut down all sales from wineries to retailers?
Yes, it’s true. I believe Lee Harvey Oswald was a patsy and in UFOs. But I KNOW wholesalers are the most cynical group of people in the wine business.
Hey Tom…you see this?
http://www.newsday.com/news/local/wire/newyork/ny-bc-ny–wineshipments1207dec07,0,6592898.story?coll=ny-region-apnewyork
I’m sure someone is already lined up to bring the lawsuit. It’s a foregone conclusion and only “smart business” really. Sad.
While it’s undeniable that distributor owners are a cynical and arrogant lot, I know a number of upstanding and devoted wine lovers who work at the businesses they own.
In a previous life I worked at the second largest distributor in the U.S. for a number of years and found that while there are inept managers and greedy salespeople in about the same proportion as you find in the general population, the good solid citizens were in far greater numbers than exit in the major suppliers.
It’s simply wrong to assume that the major suppliers would throw off the yoke of the distributors and sell wine directly to consumers if given a chance.
None of the suppliers want the head aches that come with that territory and are more than willing to keep distributors so they don’t get their hands dirty.
That’s an opinion not widely shared in the the retail or consumer communities, but look carefully at who actually has power in the world of wine sales and it’s not distributors
Zinman
Zinman,
You are right. Mainly. Certainly if the big box retailers could get a better deal from the larger wineries, they’d probably do it. And this is what most distributors/wholesalers rightly fear. And yes, you are right about the salespeople.
As a wine wholesaler in a large midwestern state, we have been the front line in the process of building wine sales to roughly 1700 retail and on-premise accounts that would rather sell Bud Light. Your comments are humourous and naive in the real world of wine sales in the land between the Coasts. We’ve been doing this for over three generations, and are proud that we’ve managed to get restaurants to pour wine by the glass, try some great Aussie Shiraz’s, and grow sales beyond White Zins and Lambruscos.
Our payroll supports over a hundred families, and I would like to think we’ve added to the quality of life in our 14 county market. Doing business in all types of accounts, from Club Store and National Chain to Mom and Pop tavern and local Gas station is our obligation and reward to being appointed exclusive representative to many brands. And in spite of what you may think, wholesalers like ourselves are the brand builders in the business, the guys who always get their hands dirty, delivering wine daily to the retail market place, and ensuring that if you get stuck somewhere in fly-over land, there’s a good chance you can find a passable North Coast Cab, a tasty Aussie Shiraz, or maybe even a the latest 2003 Cotes du Rhone. Cynical? I don’t think so.
As another wine wholesaler, in another midwestern state, who also deals with Michigan, I don’t worry at all about consumers purchasing wine from wineries. At the present, giant big box discounters don’t dominate like they do in California, and maybe we’re overdue. As wholesalers, we need to be most concerned about how the ability to enjoy great wines is made easier and cheaper for consumers. If we are running around trying to enact legislation, then it’s just energy and creativity wasted. As long as wine comes from 2000 miles away or more, consumers, retailers, and restaurants will always need educated, professional and honest distributors to consistently supply them with product, information, education and input. We need to view ourselves as partners, and quit hiding behind legislation. Additionally, wine is just the canary in the mineshaft, the real concern, in certain states, is liquor. If direct liquor shipping ever happens, that will truly affect distributors in their sales of a their most profitable product that is completely stable, predictable, and consistent.
Zwineguy,
I don’t think I’ve ever denigrated the wholesaler’s salespeople on the street, other than to lump them in with retailers and PR guys like me to lean too heavily on shelf talkers and such.
Furthermore, I’ve never in my wildest dreams thought that direct sales to consumers or by wineries to retailers would ever replace a three tier model. It just can’t be done.
However, your comment seems to suggest that wholesalers ought to have some special protection from competition, due I suppose because wholesalers have helped develop the market and employ a good many people. While this is admirable, it’s hardly a good reason for state-sanctioned protection from competition.
As for the Wholesaling tier being cynical, I don’t know how else it can be described. Your national organization, WSWA, as well as numerous state-based associations, down to the owners of various distributorships have spent over a decade trying to convince legislators that direct to consumer sales will lead to minors buying wine on the net in droves. Yet there is not study to suggest this and there is no anacdotal evidence. It was a cynical ploy to head off competition and allow consumers to purchase products they can’t get on their local shelves.
In Michigan, Louisiana and other states wholesalers have used their muscle to attempt to stop local wineries from selling direct to retailers. Why? Competition. These attempts at stoping direct sales to retailers by producers has nothing to do with th common good. Yet, wholesalers suggest they do. That’s cynicism.
I disagree with Zwineguy.
Distributors don’t “build” accounts, they service accounts that are licensed to buy adult beverages and are in all probability going to buy them from one distributor or another.
Consolidation has made giant distributors with 60 to 80 percent Market Share common, but its that consolidation at the supplier level, not great work by a diestributor, that accounts for the growth.
Distributors should be fearful that major suppliers will eventually get their wish. That is: distributors reduced to delivery and invoicing with all other aspects of the job that distributors think they do driven by major suppliers. They will barely give the disteributor 10% for that.
On the other hand Adam appears to be on the right track to me. Distrubutors who actually add value to the transactions will be able to survive and flourish, but it takes a lot more than focus on today’s margins and protecting your state granted franchise.
Zinman
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