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Tag Archives: direct shipping

Winebits 311: Direct shipping, wine snobs, wine trends

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Wine by mail: The U.S. Postal Service, which sees wine shipments as a key to its survival, is one step closer to putting wine in your mailbox. Influential U.S. Senator  Charles Schumer (D-N.Y.) endorsed the idea recently, saying the proposal would allow the postal service to better compete against UPS and FedEx and add $225 million to its annual revenue. The Wine Curmudgeon has his doubts about whether the postal service can deliver wine effectively, given his past experiences with the agency and its failure to deliver his mail. Hence Schumer’s enthusiasm doesn’t do much for me. Plus, his estimate of $225 million in revenue is almost five times the original postal service estimate. But it looks like the agency will get the authority to deliver wine sometime next year.

More than expensive wine: Charles Antin, a wine expert who has tasted most of the world’s great wines, has a confession: Expensive wine ain’t all it’s cracked up to be. “But just as I think that if you’re not drinking aged wine, you’re missing out, I think that if you’re only drinking collectible wine, you’re also missing out.” Or, as Antin notes elsewhere in the article, he was so busy chasing thousand dollar bottles of wine that he didn’t drink rose. And he was the worse for it. The piece, if a little jargony, is well worth reading, for it points out that wine is about more than what the wine snobs say it is. It’s also about sharing the joy of wine, and that it doesn’t matter how much the wine costs then.

Slower economic growth? The wine industry is recovering from the recession, but not the way it wants to. That’s the consensus from a recent wine business seminar, as reported in the Press Democrat newspaper. Baby Boomers, who drove the explosive growth of the U.S. wine industry in the 1990s, are retiring and will be progressively less able to afford expensive wines, analysts said. Younger generations have other interests, including spirits, and the  Millennials are often more burdened with debt than older demographic groups. The article, mostly an overview of what we’ve been writing about on the blog for the past several years, is notable because it quotes leading industry experts offering their wisdom. Which means there’s a chance the wine business might start paying attention.

Winebits 295: Liquor stores, riesling, Canada

Prepare for a rant: Marketwatch, which usually does a decent job of covering the business world, decided to do one of those “Let’s write a story because it sounds good even though it isn’t much true” pieces – “Could liquor stores go the way of bookstores?” The difference, regardless of anything else, is that wine sales are regulated and books sales aren’t, something that isn’t mentioned until the fourth from the final paragraph of the story. There’s also the cost of shipping, which isn’t mentioned at all. Sometimes, I wonder what assignment editors are thinking of when they do these stories. This piece is so bad that it immediately becomes a finalist for a Curmudgie.

Getting a handle on riesling: Mike Veseth at the Wine Economist has a nice look at the dilemma facing riesling, which is sweet but not popular, made in weird places, and known pretty much only to Germans and wine geeks. He did a panel where they tasted great riesling from Idaho. Ah, go Drink Local.

Love those Canadian liquor laws: Canada, which did not have Prohibition but still ended up with a highly regulated retail liquor system, always offers a good example that makes us feel better about three-tier. Witness this, from a study that says the Ontario provincial store system drives up beer prices by as much as C$9.50 a case. To make the results even more ironic, the study was paid for by a convenience store trade group that wants to sell beer. And we know how cheap beer is at convenience stores, don’t we?

The Postal Service’s plan to get into the wine business

Postal service wine delivery

I can deliver wine. Really.

Which ultimately may make about as much as sense as the Postal Service’s sponsorship of a professional cycling team.

 Nevertheless, a top postal official floated the idea last week that the agency, facing a gazillion dollar deficit and not having any other real ideas, should get into the booze delivery business. “There's a lot of money to be made in shipping beer, wine, and spirits,” said the official, who estimated it could be worth $50 million a year to the agency.

This was big news, given that it’s currently illegal to ship alcohol via the mail. A Dallas TV station was so enamored of the idea that it ran the story, complete with video of drunken college students. One regular blog visitor asked, hopefully, if this was the beginning of the end of the three-tier system.

Of course not. It may not even be especially lucrative. First, very little in the way of spirits is shipped in the U.S. each year, says Jeff Carroll of Ship Compliant in Denver, which helps wineries automate the compliance process. That's because spirits can't be shipped to consumers across state lines — laws that  eliminate one part of the Postal Service’s potential market. Beer, apparently, is still trying to figure out direct shipping, and is hampered by even higher shipping charges than wine. So that eliminates the second potential part of the market.

Which leaves wine. And, according to my calculations, the Postal Service would have to capture one-third of the wine direct shipping market to make that $50 million – an ambitious target for a startup competing with UPS and FedEx. That number is based on the Postal Service charging $4 a bottle (a standard price) and that 38 million bottles of wine were sold via direct shipping in 2012.

More worrisome is that the Postal Service doesn’t seem to understand the legal niceties involved. Why would someone be quoted as saying they would ship spirits and beer when there was no market for it? It's also not clear from the stories I saw whether the anyone at the Postal Service understands the three-tier system and its restrictions — that 10 states don't allow direct shipping and that licences and approvals would be needed in most of the other 40 for the Postal Service to get legal status as a shipper.

And finally, given that gazillion dollar deficit, what difference is $50 million going to make? Better to sit down with Congress to figure out its future in the Internet Age than waste time and money on something that seems so hit and miss.

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