The Senate is likely to pass a measure to have retailers collect sales tax for orders shipped out of state. The issue has been a hot-button issue since many big-box retailers perceive that online-only retailers have an unfair advantage and they have brought their largesses behind this tax equalization issue at the federal level. How would the Marketplace Fairness Act affect wine sales?
The answer is: probably not much.
Although wine e-commerce (hello, 1990s term!) has been growing, it is still hamstrung by regulations. Wineries can only ship to 36 states while retailers, who have much broader and more compelling offerings, can only legally ship to 12 states.
The other factor is shipping. If you buy a few bottles on the way home, you pay sales tax. But if you poke around online and throw some items in your virtual cart, you have to pay shipping even if you don’t have to pay sales tax currently. Let’s say the store charges $20 a case shipping, which is customary in the northeast for in-region shipments. If you’re buying $10/bottle wine, shipping is 16%, so it is almost prohibitive (unless the deal is extraordinary). If you order more than $300 worth of wine to have the shipping be less than the sales tax (assuming 7% sales tax). (Still, the online price may well be a lot cheaper than the in-store price, a phenomenon we have discussed before so it could be worth it.) If you’re ordering $300+ cases of wine, paying 7% sales tax is probably not a deal-breaker.
Such a law would therefore stand to impact wines north of $25/bottle and stores in New Jersey. Why sotres in New Jersey? Because if you do an online search for a wine, one from the Garden State usually is one of the cheapest available. Maybe there would be more shipping discounts in the wake of sales tax collection? But some of the lowest-price retailers are already extremely lean margins.
What do you think–how would the proposed sales tax bill affect your wine purchases? Or the wine industry writ large?
What has one end go down a little while another end pops up? It’s not a seesaw; judging by recent data, the answer to this riddle is Champagne.
Champagne sales fell 4.4% last year to 308 million bottles but were flat by value according to data released by the CIVC last week. France and the rest of the EU popped fewer bottles of bubbly by 5.6% and 7.1% respectively; together, they comprise 80% of Champagne sales. The official press release highlighted strong sales in Japan and Australia as well as growth in emerging markets.
Sales in the US market were not released but Shanken Daily News reported, presumably from their own data, that sales of Champagne fell 16% by volume and 25% by value in the first half of 2012.
I spoke with a representative at a leading importer of grower champagne who said their sales surged 20% last year. In fact, their Champagne portfolio is what is drawing new accounts for them as buyers are attracted to champagne from small producers who have a link to the land. Wine shop managers have also told me about strong interest in grower champagne at the retail level. Grower champagnes clearly represent only a niche in the bubbly market but it is a growing niche. Will the big houses take heed and start focusing more on site-specific wines?
Maybe the sluggish economy is causing brand-oriented champagne consumers to switch some purchases to Prosecco. Or they are following instructions from hip-hop artists and dabbling with Moscato.
A wine club whose profits benefit the NRA has triggered outrage: Yalumba of South Australia has requested their wines removed from the club’s wine shop.
“Philosophically, I’m not disposed towards the NRA, which runs counter to my family’s, and I would think all my employees’, positions on gun laws,” CEO Robert Hill Smith was quoted in Australia’s Herald Sun. He is taking steps to remove the four Yalumba wines offered on the site. This incident underscores the mediated nature of sales in the wine industry where a winery may not even fully realize the final points of sale of their wines.
Profits from the wine club benefit the NRA. In a signed welcome letter, NRA Executive Vice President Wayne LaPierre writes, “Your purchase will directly benefit the NRA’s continuing support of America’s Right to Keep and Bear Arms and the other basic freedoms of the American Culture.”
The wine club is run by Vinesse, which operates several wine clubs. This club raises several questions: which types of organizations should (or should not) profit from the sale of wine/alcohol? Do other wineries know that their wines are among the 476 offered on the site and will they follow Yalumba’s lead and seek to have them removed? A smattering of selections follows after the jump: Read more…
Philip Howard, a professor at Michigan State specializing in food systems, has led a team to assemble a superb infographic that depicts just how big is Big Wine–and how few companies control choices at supermarkets.
He’s put the graphics on his web site. Now you can find out just which brands Gallo and Constellation own! (Not to pick nits, but it’s not clear why Pam Bay and W.J. Deutsch get separate boxes than two of the brands they import, Cavit and Yellow Tail, respectively.)
The US wine industry has been quite concentrated in much of the post-Prohibition era, especially compared to France or Italy, which are dotted with small vignerons. This corporate concentration is most on display at the drug stores (!) and grocery stores that the Michigan team visited (those store buyers buy from distributors–a graphic of wine distributor consolidation would be really fascinating and probably more enlightening about wine consumer choices.) Fortunately, even if Big Wine is pretty big, there is a tasty countermovement underway in California (and elsewhere) as new, small labels are popping up–one of my exciting trends to watch for 2013. The hardest part is finding the wines, which is where specialty wine shops are invaluable.
Click through and zoom to learn which wine brands Altria, the cigarette maker, owns. Also check out Howard’s graphics on beer and coffee industries!
Martine Saunier started a wine import business in 1979 because she “couldn’t find anything exceptional to drink.” As of last week, she sold that company. Unlike another major transaction this month in the wine world, the buyers are identified and there’s a very professional press release.
Saunier, 78, built the business based in Novato, CA to include such venerable estates as Henri Jayer, Chateau Rayas, and Domaine Leroy. She has been hailed as a “rock star of the wine world” and an “importer extraordinaire.” She and many of her producers will be featured in a documentary entitled “A Year in Burgundy,” due out next year on DVD.
The buyers are Gregory Castells and Kate Laughlin. Castells had a career in wine service in restaurants, including as Head Sommelier at the French Laundry but has most recently been at Soutirage, a Napa-based wine retailer while Laughlin was in advertising and operations, most recently at Soutirage. As I said, the press release is very thorough (apparently, she started out in public relations). The company, also a distributor, will continue to be called Martine’s Wines.
Jon-David Headrick Selections, an importer specializing in wines from the Loire Valley and beyond, is teaming up with Eric Solomon (European Cellars), which concentrates on southern France and Spain. Headrick, 39, was the general manager at European Cellars before starting his own import firm with stylistically different wines.
“Not really an acquisition but yes, European Cellars has been named as the US marketing agent and importer for the JDHS book,” Headrick tweeted to me when queried about the new relationship. “My producers deserve wider distribution and attention and EC has a great team to make that happen,” he continued. “My growers are excited to have more hands on deck. I’ll continue to source and manage the portfolio as before.”
Amazon’s first foray into wine had the potential to change the way Americans buy wine, shaking up the archaic set of laws that limit wine choices and boost prices for consumers, particularly those in states that do not have a vibrant culture of wine retail and distribution.
But this sequel seems less than earth-shattering. While the details are still emerging, the Wall Street Journal builds on reporting from Wine Industry Insight to paint a picture of a glorified “marketplace” system. In it, Amazon will expose their enormous customer base to offers from wineries, which will fulfill the orders themselves with Amazon receiving a fee of 15%, according to the WSJ. There’s no mention of how much shipping will be, including whether the orders would qualify for Amazon’s “Prime” service that has free two-day shipping. If they do qualify, some wineries may turn to Amazon instead of flash sites to unload any surplus inventory.
Since wineries can ship to about three dozen states if they have the proper paperwork on file, this has the potential to affect a lot of consumers. But there are a lot of drawbacks too since consumers would apparently have to order from one winery at a time since there is no warehouse fulfilling the orders. Also, wines will likely be at a higher price to justify the shipping charges and there will be no imported wines available. (Retailers, by contrast, can only ship to about a dozen states legally.)
So while it is better than nothing, Amazon’s foray into wine this time seems less ambitious. That’s a pity since the retailer and logistics champion could have been the wine consumer’s greatest ally in the battle over interstate shipping. Perhaps one day…
What do you think–is this a big deal? Would you be more likely to order wine from California wineries via Amazon?
Picture yourself at a wine trade tasting: there are hundreds of wines to taste but you have to juggle a bulky tasting notebook, a pen, and a wine glass while swirling, spitting and dodging fellow tasters who may be heading to the spit bucket. Wouldn’t it be so much easier if you could see the tasting book on your smart phone, sort by style or wine region, and take notes in a profile?
That’s what I did yesterday Read more…