Winery vs Retailer — It’s Not a Real Fight
“It’s an opportunity for consumers, and that’s the most important thing. Whatever’s best for the customer is going to be best for us in the end.”
These are the wise words of Belinda Weber, Duckhorn Wine Company Marketing Director, in a Napa Valley Register article that explored the impact of June’s Tennessee Wine v Thomas Supreme Court decision and its real potential to result in more states changing their laws to allow wine shipments from out-of-state wine retailers. But, the real point of the article was to explore the impact that expanded wine retailer shipping might have on wineries, which have significant interstate wine shipping rights.
“This [retailer wine shipments] will be better for the person who is online shopping and wants to buy many different wines from different wineries. But if that customer wants to have a relationship with one winery, we need to be thinking: how do we establish that? How do we reinforce it?”
Again, Ms Weber is correct.
Winery direct to consumer shipping has always been about two things: maintaining and cultivating a relationship with those who feel a connection to the winery and serving collectors who seek out access to coveted wines. None of this changes in any material way with more states open for retailer to consumer shipping becoming more common.
With that wisdom dispensed by Ms. Weber, there is no question that wineries possess some apprehension about more entities getting into the wine shipping game—or at least greater access to more markets by those wine retailer already in the wine shipping game. I hear this apprehension. I hear winery representatives, trade group representatives and winery advocates who worry the increased competition will impact their direct sales.
But the fact is, to-date very few wineries have benefited from unsolicited online sales of their wines at their websites. The vast majority of winery website transactions and the vast majority of direct to consumer winery shipments result from an on-site visit to the winery, from a wine club shipment or from an email offer.
One item from the Napa Register article by Sarah Klearman does need to be cleared up. Ms. Klearman writes:
“At the heart of the legal debate over out-of-state shipping is the 21st amendment, which protects the rights of states to regulate import of alcohol as they see fit – collecting appropriate taxes and regulating legal consumer access. The Supreme Court’s ruling [Tennessee Wine v Thomas] disallows the kind of protectionist laws meant to explicitly favor in-state over out-of-state industry, including online-based retailers.”
Not to quibble, but what the Tennessee Wine Supreme Court ruling makes clear is that it was the 2005 Granholm v Heald ruling that made protectionist laws against wine retailer shipping unconstitutional. The recent Tennessee Wine ruling only confirmed that. In other words, wine retailers are subject to the same protections as wineries when it comes to direct to consumer shipping that were laid out in the Granholm decision.
It was never a fight between wineries and retailers. It has always been a fight between suppliers and regulators (backed by monopolistic tiers). the result was that wineries experienced an advantage for a period that retailers didn’t enjoy, but the wineries were not the cause of that result.
Out-of-state wine retailers are subject to the same restrictions as wineries when a state does not allow in-state retailers to produce or distribute. There is nothing protectionist, and absolutely no discrimination.
@VVP – Two wrongs don’t make a right.
@Bill St. Croix – sure, they make a left.