Market Watch, September 2018

SEPTEMBER 2018 MARKETWATCHMAG COM MARKET WATCH 35in select markets That approach he says ensures quality and ensures local taxes are paid local jobs are preserved and product integrity is maintained When a bottle comes through the three tier system we know it went from a repu table supplier to a reputable wholesaler and then to a local retailer who then delivers it with ID checks and proper tax collection all through the system You get all the assurances of the three tier system but you also give the consumer exactly what they want when they want it Mel Dick president of the wine division and senior vice president of Southern Glazers Wine Spirits also stresses the importance of the traditional structure for wine sales The three tier system is still the most profitable and safest route Resistance At RetailWhile wineries are hitting their stride with direct shipping retailers are facing resis tance on the shipping front Since 2005 the retail tier has witnessed a decline in the number of states where they can legally ship from 18 states to 14 Where enforcement was once lax in states where direct shipping isnt legal most of those states are now toughening their laws or cracking down hard Last year UPS and Fedex announced they would end wine deliveries to all states except for the 14 where shipping is legal while Amazon announced its decision to drop internet wine sales In Illinois lawmakers have made it a felony for out of state retailers to ship wine into their state Meanwhile Johnson Ho owner of high end retailer Pantheon Wine Shoppe in suburban Chicago last year received a letter from state liquor control authorities in Maine threatening to confis cate any wines he ships there in the future Sending holiday gift bottles out of state was once a major part of Hos business but he was forced to end virtually all of it cutting nearly a third of his revenues If you lived in Maine and wanted Romanée Conti or Pétrus you came to somebody like me Ho says There wasnt much sold there by in state retailers But I can no longer serve those clients The leading Illinois retailer the 38 store Binnys Beverage Depot chain shut down all out of state shipping last year I believe in free markets and the free flow of goods and services across state lines Binnys owner Michael Binstein said at the time Everybody loses including Binnys and its customers when we get away from the gospel of free enterprise Not surprisingly wholesalers take a different view Craig Wolf who recently departed as CEO of the Wine Spirits Wholesalers of America WSWA acknowledges that the on demand economy is here to stay Wolf says the best way to serve customers is through the three tier system with sales through local retailers and options for home delivery Distributors arent fighting the same battle they fought 20 years ago he adds Theyre not looking to repeal any direct shipping laws that allow wineries to ship across state lines Theyll certainly point out the risks of interstate shipping but are not seeking to go back on that issue The WSWA is instead pushing a model that includes suppliers wholesalers and retailers with home delivery from providers like Drizly that promise delivery in under an hour CALIFORNIA30 COLORADO3 FLORIDAVIRGINIA3 PENNSYLVANIA3 NEWYORKILLINOIS4 TEXAS8 WASHINGTON5 OREGON3 5 6 DIRECT TO CONSUMER TOP TEN STATES BY VOLUME OF WINE SHIPMENTS 2017Top Ten Direct to Consumer Shipping StatesNADIRECT TO CONSUMER WINE SHIPPING STATES 2018D C RIHAWAIIALASKAWISCONSINOKLAHOMAALABAMAARIZONAARKANSASCALIFORNIACOLORADOCTDEGEORGIALOUISIANAMISSISSIPPINORTH CAROLINASOUTHCAROLINAVIRGINIAKENTUCKYTENNESSEEOHIOPENNSYLVANIAMAINENHVTMASS MDINDIANAILLINOISIDAHOIOWAKANSASMICHIGANMINNESOTAMISSOURITEXASUTAHNEW MEXICOSOUTH DAKOTANORTH DAKOTANEBRASKAWASHINGTONNEVADAOREGONWYOMINGNJMONTANAW VAFLORIDANEWYORKSource ShipCompliant by SovosDirect to Consumer Shipping AvailableDirect to Consumer Shipping Not AvailableMW0918_