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Retail Ripples

Written By: Kasey Carpenter on Friday, February 29, 2008

Psychiatric help 5 cents - Good grief wine distributors.

Most of us by now are aware of the controversial methods wine.com employed recently to "enforce" the law against their competitors. And while this column isn't really geared towards opinion of those actions, as a collector I asked myself, what does this mean to me?

Nothing.

The End.

Okay, now for the detailed answer. The immediate answer is nothing in that any collectible and investment-worthy wine is just not bought via wine.com. Don't believe me? Well unless you are looking to buy the "allocated" wines of Silver Oak, a few bottles of bubbly, or the fairly common highly rated aussie shiraz, you are not going to find many snow leopards here. And when you do find them, get online, do a search, and you will find many bottles from many sources far less expensive.

So wine.com in reality has never been the place for the savvy investor to hunt down the bottle of wine that 1) remains elusive to the public, and 2) has an attractive enough entry price to promise some sort of return. It's kind of like buying proscuitto from Walmart - you can get it, but it ain't the 18 month aged stuff from Alto Adige, and it's just a few shavings cryovac'd for seven bucks. No real deal in either quality or pricepoint.

However, let us consider the longer term ramifications. Suppose these tactics do thwart the independent retailers? Suppose the buyers get a bit cold (less likely) and are left to only buy wine from their local sellers? Suppose those guys with proven track records of pricing and availability are left to only sell within their own state? What percentage of their business is now gone? These are recycled arguments that have been discussed on many a blog and bulletin board, but they bear mention.

Wine.com's actions set a dangerous precedent, if in fact any long term fallout goes so far as to threaten the independent retailer (which I doubt), but if they do, you now have retailers devoting a percentage of their time and money to "shopping" their interstate competitors, taking it upon themselves to keep the other guys honest. What's worse, what if they decide not to sell those Bordeaux futures to you? What if they tell you that they just don't wish to risk it?

I know it sounds far-fetched, but after having spent a few years in the retail world, especially during the boom of the Internet, I know that there are lots of dollars at stake, and there are those who place those dollars above all else.

Ultimately though, the battle for this to change will be fought between those who want wine to be freely traded, and those who don't - namely collectors and distributors. Collectors want free reign access to any bottle they can get, and they shouldn't be encumbered by some goofy state law. And the distributors run around in fear of the day that the whole world will start buying all of their alcohol direct (which will never happen) and to ensure this never happens, they too have done the same thing Wine.com has done and have cited examples of wineries shipping to underage (and undercover) recipients. Granted this is 1) entrapment, and 2) silly, because certainly all of can remember when we were 15 and we wanted a buzz, we decided to jump on a winery's waiting list and shell out a few hundred bucks for highly rated Pinot Noir. Yeah, that's what we all did right? Good grief.

Granted, I work with distributors, and they make me money in two ways 1) some are lazy/greedy to the point of prompting a winery to hire someone like me (because if the distributor did their job, there'd be no need for a broker) and 2) some actually sell the lion's share of the wine I send to them. However I realize that there is a LARGE segment of society, as well as retailers and restaurateurs that will ALWAYS buy from a distributor if for nothing else than for the convenience of not having to think for themselves and/or deal with shipping.

This is an area that we will see undergo some serious changes in our lifetime. Granted the lobbying power of the distributors is huge, and has defended their position thus far, all it's going to take is a few high-powered (read: well connect and wealthy campaign contributors) to get upset at this system and fire off a phone call, or an email or, and then its game on.

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