Amazon and the Three Tier System of Wine Distribution
When a company of the size, power, influence and lawyering capacity of Amazon.com can't figure out how to get into the wine business, you have to ask yourself, what's wrong with the wine business?
Let me tell you what's wrong: It's the death grip that is the Three Tier System. It's one thing to have each and every state deliver different regulations for the sale of wine. But it's an altogether different thing to have that regulation be in the form of the stifling, archaic, competition dampening, discriminatory, corrupt and barely useful of the Three Tier System.
I have no insight on the deliberations that went on inside Amazon.com that would lead to them scrapping their program, but I'd bet case to bottle that it had everything to do with the over-regulated structure of the three-tier system that serves the purpose of propping up by state mandate the profits of a tired wholesale tier at the expense of entrepreneurship, consumer access to wine, economic development and the entire wine industry in general.
Take for example the case of shipping wine. Only 13 states allow out-of-state wine retailers to ship wine to their residents, making real access to wine for consumers a joke. And why do most states prohibit this activity? There's no policy basis behind the prohibitions. There is only an obstinate, slavish, pandering dedication on the part of politicians to the money that wine distributors give them in order to keep their out-dated place as the bottleneck inside the three tier system from collapsing under the weight of the reality of a modern communication economy.
Had 50 states allowed direct shipment of wine to consumers from retailers, Amazon would have been in business a year ago and states would have been shoveling tax dollars into their coffers. But no. We need to make sure this doesn't happen. You see, wine is a "special product", as America's wholesalers like to call it. We can't just be carding people at their home then give them the wine they ordered and paid for. UPS and FED-EX drivers are just too dumb to read a drivers license. It's too dangerous.
Another example of the absurdity of regulation in the wine business is the determination by the California Alcohol Beverage Commission that a company that takes a "commission" on the sale of a winery's products for having found and delivered the buyer, is committing a crime. Rendering clarity from that bit of interpretive leap frogging demands the services of a sophist.
There is a wine industry in the United States despite the fact that the three tier system still exists in most states. The fact that Amazon appears to have dropped its plans to enter the wine business in the United states likely happened because of the Three Tier System. The fact that many states will and are foregoing significant tax revenue is due to the Three Tier System. The fact that consumers can get some of the wines they want happens despite the three tier system.