Scoop or poop? Who knows?
With the Supreme Court decision concerning interstate shipping, get ready for another rash of articles questioning the role of the wholesaler as it pertains to the delivery of not only wine but all forms of alcohol.
I came across this article from the L.A. Times (subscription needed but is relatively painless). It is pretty well written and as per usual, the L.A. Times affords the article a decent amount of ink. Something that I find generally lacking. And as per usual, I have a few problems with some of the things put forth:
In talking to some of my clients that currently order wine direct from wineries, it seems that they aren't really saving all that much money in doing so, as opposed to buying the wine through the normal channels. Of course, the initial bottle cost looks attractive but once you add in the shipping rates it almost evens out. It seems the biggest advantages to ordering direct are two-fold:
1. The buyer is more or less guaranteed to get whatever single-vineyard or special cuvée that they desire.
2. The buyer will more than likely get said bottles before one who goes to the local bottle shop. That said, I'm not sure what the value is for being the first on the block.
In light of these two points, it seems that the wineries have figured out a simple truth: If you're willing to pay $60 for some wine at your local bottle shop, you're probably willing to pay the same straight from the horse's mouth. But I thought this was about the evil wholesalers lining their pockets? - you say. Well, I would freely grant the idea that some of the wholesalers (at least here in Georgia) are most definitely evil and are making very good money. But to suggest that in their absence the overall pricing is going to dramatically fall is wishful thinking at best. Rather, I suspect that one might see a minor change in pricing with the majority of the 'wholesale mark-up' going to one of the tow remaining parties. One less check to cut, so to speak.
With all of this said, I don't think for a second that the wholesalers are going anywhere fast. Their roots go too deep and regardless of the Supreme Court's opinion, whatever changes are to come, they will be nominal at best.
I came across this article from the L.A. Times (subscription needed but is relatively painless). It is pretty well written and as per usual, the L.A. Times affords the article a decent amount of ink. Something that I find generally lacking. And as per usual, I have a few problems with some of the things put forth:
"Some of the country's largest retailers and beverage companies are challenging the wholesalers' power in courts and state capitols. Some want to deal directly with each other, cutting out the middleman, which they say will lead to lower prices for consumers."Before reading the rest of this, put aside whatever politics you believe in and think this through. I would agree that on face value, the absence of a wholesaler (middle man) should lead to lower prices for the consumer. But there are not so subtle differences between should, would, and could.
In talking to some of my clients that currently order wine direct from wineries, it seems that they aren't really saving all that much money in doing so, as opposed to buying the wine through the normal channels. Of course, the initial bottle cost looks attractive but once you add in the shipping rates it almost evens out. It seems the biggest advantages to ordering direct are two-fold:
1. The buyer is more or less guaranteed to get whatever single-vineyard or special cuvée that they desire.
2. The buyer will more than likely get said bottles before one who goes to the local bottle shop. That said, I'm not sure what the value is for being the first on the block.
In light of these two points, it seems that the wineries have figured out a simple truth: If you're willing to pay $60 for some wine at your local bottle shop, you're probably willing to pay the same straight from the horse's mouth. But I thought this was about the evil wholesalers lining their pockets? - you say. Well, I would freely grant the idea that some of the wholesalers (at least here in Georgia) are most definitely evil and are making very good money. But to suggest that in their absence the overall pricing is going to dramatically fall is wishful thinking at best. Rather, I suspect that one might see a minor change in pricing with the majority of the 'wholesale mark-up' going to one of the tow remaining parties. One less check to cut, so to speak.
"Because Washington adheres to the three-tier system, it prohibits direct purchases from breweries and wineries outside the state. Moreover, it requires wholesalers to charge all retailers the same price, whether they are buying the products a case at a time or by the pallet load. And it doesn't allow Costco to purchase on credit, despite the chain's healthy credit rating from Standard & Poor's." (emphasis T.t.S)These two statements are incredible. Maybe things are different in Washington State but here's how it works in Georgia. First off, the pricing is not the same for everyone. Restaurants generally get a different pricing than the retailers do, even more so if the wine is being poured BTG (by the glass). Secondly, when a joint is buying a pallet load of wine, you can be damned sure they aren't paying top dollar for it. Or they very well may be, this article just doesn't talk about the other 1/2 pallet that shows up free of charge. That's right, the wonderful world of free goods. Remember that next time some clown gives you the old line about '10% off case purchase'. They didn't pay for a fair bit of the 100 cases of Yellowtail they have stacked up to the ceiling. They're not doin you any real favor. They're making money on top of money. Or better said, 'free money'. Secondly, I don't know of anywhere that permits alcohol sales to be recieved 'on credit'. It may exist but I've never heard of it. I would think the reasons for this to be relatively obvious, but may be not. It's easier to get a gun in most states than a retail wine license, so why would you think you could just whip out the old AmEx and instantly stock your wine shop. Suppose you go out of business?
"Alcohol has to be treated as a special product because when it is misused it causes devastating social consequences," she said.WTF?!?!? Could anyone, and this is an open invitation for anyone to explain to me how the presence of a wholesaler effects the potential 'mis-use' or 'excessive consumption' of anything much less alcohol?
Mark Anderson, executive director of the Ohio Liquor Control Commission, said "preventing excessive consumption of alcohol" was one of the considerations behind his state's regulations.
"I don't think anybody wants to see a situation in the alcoholic beverage industry where there are 15 brands on the floor and no one else," she said.Is that what you really think? At the risk of sounding like Mr. Nossiter (and I haven't seen the movie yet), just wait. That time is just around the corner. Between the consolidation in the industry and the total lack of soul and passion that most wineries seem to have these days, it's simply a matter of time.
With all of this said, I don't think for a second that the wholesalers are going anywhere fast. Their roots go too deep and regardless of the Supreme Court's opinion, whatever changes are to come, they will be nominal at best.
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