This article was posted on linkedin by Mark Norman.
Mark is the Director of Marketing and Business Development for the Wine Society (a web site devoted to helping buyers and sellers of vintage wines).The latest version of Bill HR 5034 is causing a real debate. It will give added powers to individual states to outlaw any out of state wine shipment, including from any out of state online retailer.
What no one has mentioned is Wine Clubs. If any other form of direct to consumer (DTC) becomes illegal, then wine clubs will also fall into that category of illegal wine shipments. For the most part, the only choices for wine lovers will be to buy wine from wineries within their own state or the local liquor store. The latest stats that I have seen are that 54% of American wineries use DTC exclusively to get their wine to customers. Only 17% use the traditional 3-tier system to deliver wine to retailers across the country. These would be the very large massed produced wines that generally are not the wines that attract wine lovers.
Do the math!
Another 29% of American wineries use DTC to some extent…and since the value they receive for each sale of wine in the traditional system is approximately 2/3 less, my assumption is that much of the profit they make come from DTC sales. If they lose this sales channel how many will be able to stay in business?
We need both systems. The 17% use only use traditional sales channels are the wineries that mass produce their wines. They could not exist if the traditional sales channel suddenly disappeared. They would not be able to use the DTC sales channel and remain profitable.
Again, do the math.
We may see as many as 70% to 80% of the wineries become so unprofitable to operate that they close their doors…certainly at least 54%! These are small, family run wineries. At a time when unemployment and under-employment is so high do we need to add tens of thousands of more people to the unemployment lines?
Personally, as a wine lover I do not want to see my options for wine so severely curtailed. If you feel the same please use this link to reach your congressional representatives. The process is simple and takes less than 3 minutes to complete.
http://www.capwiz.com/freegrapes/issues/alert/?alertid=14948676
What no one has mentioned is Wine Clubs. If any other form of direct to consumer (DTC) becomes illegal, then wine clubs will also fall into that category of illegal wine shipments. For the most part, the only choices for wine lovers will be to buy wine from wineries within their own state or the local liquor store. The latest stats that I have seen are that 54% of American wineries use DTC exclusively to get their wine to customers. Only 17% use the traditional 3-tier system to deliver wine to retailers across the country. These would be the very large massed produced wines that generally are not the wines that attract wine lovers.
Do the math!
Another 29% of American wineries use DTC to some extent…and since the value they receive for each sale of wine in the traditional system is approximately 2/3 less, my assumption is that much of the profit they make come from DTC sales. If they lose this sales channel how many will be able to stay in business?
We need both systems. The 17% use only use traditional sales channels are the wineries that mass produce their wines. They could not exist if the traditional sales channel suddenly disappeared. They would not be able to use the DTC sales channel and remain profitable.
Again, do the math.
We may see as many as 70% to 80% of the wineries become so unprofitable to operate that they close their doors…certainly at least 54%! These are small, family run wineries. At a time when unemployment and under-employment is so high do we need to add tens of thousands of more people to the unemployment lines?
Personally, as a wine lover I do not want to see my options for wine so severely curtailed. If you feel the same please use this link to reach your congressional representatives. The process is simple and takes less than 3 minutes to complete.
http://www.capwiz.com/freegrapes/issues/alert/?alertid=14948676
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