Tuesday, April 20, 2010

Wholesalers: Protectionism, and the art of self-destruction

While the 3 Tier system has been under attack quite a bit as of late, I've been considering how I feel about both sides of the issue. Then there's the whole State vs. Fed argument that I'm not even going to touch. The whole sales tax thing is a sham, so don't get me started on that. Without getting too deep into politics and fair trade laws, I thought I'd bring up some points that keep getting missed.

Wholesalers are, by in large, acting like HUGE MORONS. Direct shipping won't affect you nearly as much as, say the public backlash against the three tier system, which could theoretically start a landslide of sentiment to dismantle the whole system. Tread very lightly wholesalers, the wine buying public views you as middle men that take a greedy slice no matter what. On the other hand, they sort of have a point, sometimes.

Wholesalers, are actually still vital, no matter what happens with direct shipping. Preplanned wine purchases are great for consumers, but 98% (no data to back this up, don't bother checking) of wine consumers buy in a store for near term consumption. They also need the expertise of a knowledgeable wine staff, something you can't get from the winery, mainly because it's not unbiased. Oh, and what about sampling? If we allow retailers and restaurants to buy direct, how will they get to know the wines? Will they buy the minimum shipment just to sample new items? Who will organize trade tastings? Don't forget, any wine professional worth their salt has tasted thousands of wines, in the last few years alone. How does anyone expect this to continue if the 3 tier system is attacked? If consumers think they are going to get better pricing from the wineries, think again. Most will hold the retail price,and keep the full markup, just like they (justifiably) do in the tasting room.
The answer is, no one knows. Change is always unpredictable, and often scary. Laws of protection often fail, and in this case, who are they protecting? They are probably just protecting a small group that are too narrow minded and antiquated to see themselves adapting. All I know for sure is, wine consumption is on the rise. Wholesalers should quit worrying about rigging the system for their own self interest, and do a better job of promoting and educating. Don't you think Congress has better things to do than to protect the security of the big 6 distributors?


  1. I'm pretty sure that the big distributors and wine companies employ Master Sommeliers, Certified Wine Educators, and many other very educated people to help educate people about their portfolios and products.

  2. The big question is how you engage the average wine drinker to become an advocate of direct. If all they have ever known is the end result of 3T distribution, how will consumers understand the possibilities of an open and direct channel and voice their discontent for the lack of expansion?

  3. Thanks for both comments-Distributors certainly do address the education with MS's and CWE's. It is one of the biggest arguments for their survival.

    Stephen-It's a good question,and one that no one can predict. It will certainly be interesting to see how we (the wine industry) adapts to potentially changing consumer patterns

  4. The large wine distributors sell the wine from the "largest" not the best tasting wineries and corporate giants (Yellow Tail, Sutter Home etc). They do carry some very good wines for the high end restaurants but not matching the number of good wines out there.

  5. Kurt Burris, Madrona VineyardsApril 21, 2010 at 2:06 PM

    Unless you get "Parkerized" and every cork dork in the country is looking for your wine, direct shipping is never going to be more than a part of an overall sales strategy. But, direct shipping is a great way to maintain the connections we make (or try to) in our tasting room. People love a story to go with their wine and being able to talk about this cool little place they discovered on the back roads of wherever is a good one. Hands off Southern. Leave us our crumbs.

  6. Many of the wines and craft beers that I enjoy are produced by small family operations that the big wholesalers tend to ignore or do a lousy job of distributing. Consumers should have the freedom to choose from all of the products on the market. Most consumers, myself included, still buy many bottles that have passed through the 3 tier system. Direct sales are a drop in the bucket and have very little impact on the profits of the wholesalers.

    H.R. 5034 is about greed and control and any politician that supports this bill should be viewed as bought and paid for by the big wholesalers.