Tuesday, July 7, 2009

How important is direct shipping, really?

Like most wine and freedom lovers, I strongly support direct shipping of wine, especially because the main opposition is an unholy coalition of monopolistic-minded distributors and religious fanatics.

But in the wake of the federal Court of Appeals decision upholding New York's ban on direct shipping, I'm wondering how much difference it really makes.

I had a conversation with Leslie Rudd on Sunday about direct shipping. Rudd is precisely the kind of winery that should benefit: it's small, and it makes wines that are expensive enough for the shipping costs to not seem too onerous.

But Rudd sells only a small percentage of his wines directly, and doesn't think it will ever amount to more than 5%. Even for a $125 Cabernet, adding $8 or more per bottle (shipping costs on a case usually start at about $100) is a turnoff for most people. Moreover, he believes most people prefer to buy wine from a trusted local merchant.

One of the main reasons I support direct shipping is I just don't like monopolies. If a distributor like Southern Wine & Spirits has total control of its market, it can dictate what you drink. Direct shipping allows alternatives.

That said, Rudd is right that direct shipping is not true competition for the three-tier system. You have to buy in quantity. You have to worry about shipping wine in the heat of summer, and being home for the UPS guy. It's great for the wine club member who wants to maintain an emotional connection to a winery he has visited. But it's not an effective way to put wine on the dinner table daily. And it's not going to support the business model of any but the tiniest wineries. We're probably going to see some mid-sized wineries go bankrupt in the next year, and direct shipping won't save them.

New Yorkers need to rise up and complain to their legislators that a ban on direct shipping is wrong, and they want it overturned. However, New York's legislature may be the only one in America that's more messed up right now than California's. This just isn't going to be the highest priority.

We could wring our hands and curse the distributors and evangelists. At some level, I am. But I also don't think it's the end of the world. Admittedly, from my perch in California where I can get pretty much any wine in the world delivered to my doorstep, that's an easy position to take. You want your boutique mail-order wine, New Yorkers? You know what they say in your town about the squeaky wheel.

No comments: