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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.

  • Jim

    I wouldn’t knock US Postal service of wine completely. There is a market. In my case, I would be happy to purchase a PO Box, and pick up good wine there. Not sure why you seem so confident that USPO can’t figure where they can deliver to and where they can’t. Besides, willing to guess a fair among of wine goes through USPO illegally. Maybe under book rate.

  • http://profile.typepad.com/jeffsiegel Jeff Siegel

    I won’t include the postal service’s incredible inability to deliver mail to my old P.O. Box, Jim, since that’s a small sample size (and no one would believe the stories anyway).
    Rather, it’s about money. Can a startup that has never delivered a heavily regulated product compete with two well-run and profitable companies that have experience delivering that product? I can’t believe it’s worth the cost in time and money to find out. Can you imagine the mess when I take wine to my local branch to mail, with the long line, and the clerk has to consult a list or computer or whatever to tell me if I can mail it?

  • http://www.fermentationwineblog.com Tom Wark

    Probably more like 57 million bottles when you include retailer shipments. But admittedly, that’s just a guess.
    Also, the idea of allowing the USPS to deliver alcohol is part of the 2013 Postal Reform Act, as it was part of the 2012 Postal Reform act. IF the postal reform act is passed, I’m betting the delivery option stays in it.

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