A Primer on How Wineries Can Lose 25% of their Profit
If there are any wineries out there who are looking at the prospect of losing their right to self distribute their wines to retailers and restaurants, they should read THIS STORY about the impact of such a turn of events in Virginia.
Wineries facing this possibility should also ask themselves:
-How much of your profit margin should you give to wine distributors to do a job you can better?
-Who is best at representing your wine: a commissioned based distributor sales rep or you?
-What would be the impact of immediately losing 25%-30% of your revenue?
To consumers who like the idea of having access to a wide variety of wines and to wine retailers who like the idea of offering the wines they really WANT to offer, you need to ask yourself if you are willing to sit still as open markets for wine are shut down for the economic sake of a very very small sector of the wine industry: distributors.
There should be a very simple goal in the minds of wineries, wine retailers and wine consumers: A well-regulated, free, open national market for wine.
Virginia wineries lost access to a free and open market for wine sales even in the their own state.
And now Kentucky made the same mistake. Here’s a quote from an article in the Lexington Herald-Leader today about a new law taking effect in January:
“The new law will eliminate a provision in Kentucky law that allows small wineries to ship their product directly to retailers rather than having to use the services of a distributor.”
How can such an anti-consumer piece of legislation be approved by elected officials who answer to the consumer? Here is the link to the full story: http://www.kentucky.com/mld/kentucky/news/state/16325488.htm
This was an interesting decision. Yes, self distribution is gone. But the judge throughout a provision that forced the wine to be bought at the winery before it could be shipped, saying it was a discriminatory aspect of the law. So, wineries outside KY can ship into that state.
However, he found the gallonage provision constitutional. The gallonage provision is showing up in a variety of places. In KY it’s 50,000 gallons (21,000 cases) per year. It so happens that this production limit assures that all KY wineries make the cut.
But now here is the bizarre part. When the KY Assembly passed the bill stopping self distribution for KY wineries I read a quote from a legislator that suggested they passed the law to protect KY wineries from competition from wineries outside the state.
That quote was followed up by a quote from a winemaker along these lines: “Uh…wait a minute…”