Tag Archives: Amazon

Winebits 509: Ancient wine, direct shipping, Amazon

ancient wineThis week’s wine news: Very ancient wine, about 5,000 yeas old from Italy, plus on-line wine sales run into more snags

• Older than before: Italians may have been drinking wine since the fourth millennium BC – more than 5,000 years earlier than previously thought. Researchers found large storage jars in a cave in Monte Kronio in Sicily that date to the Copper Age that tested positive for wine residue. No word yet on whether the wine was red or white; further tests are planned to figure that out.

• Only in Pennsylvania: The blog has followed the hilarity and hi-jinks of the state store system in Pennsylvania – grocery store wine vending machines! – and this story fits in nicely. State law currently allows consumers to buy directly from distributors, which is illegal in most of the country. The only catch is that consumers can’t have it shipped to their house, but have to pick the wine up at a state store. However, once the state liquor bosses and the distributors realized what was going on, they immediately made changes to the program to make it impractical for consumers. The state wants to raise the price of a bottle of a wine to include shipping, so that a $15 bottle could cost $30, while the distributors will start to limit wines that can be sold to consumers. Not to worry, also, if this seems too convoluted for those of us who aren’t liquor law attorneys. It’s probably confusing to most in Pennsylvania, too.

• Not even the retail killer: W. Blake Gray, writing on Wine-Searcher.com, bursts another bubble for anyone who thought Amazon’s purchase of Whole Foods meant easier on-line wine sales. He delves into the magical realism that is called tied house, part of the the three-tier system, and which he explains as well as anyone can who isn’t paid by the hour. Suffice it to say, the system restricts what Amazon can do with Whole Foods and its on-line wine sales.

Amazon, Whole Foods, and wine prices

amazon whole foodsDon’t expect the Amazon-Whole Foods deal to change wine prices for the better at the upscale grocer

Know one thing first – no matter how much wailing, gnashing of teeth, and rending of garments we’ve seen in the cyber-ether, Amazon’s purchase of Whole Foods will mean almost nothing for wine prices or the wine business.

There are a variety of reasons for this, but the three most important are:

• Amazon bought Whole Foods for reasons that still puzzle people who understand grocery stores. Whole Foods has about 440 stores in the U.S., hardly enough to matter against Walmart’s 4,200 or Kroger’s 2,800. The best guess why the deal happened? Whole Foods’ 400-some warehouses, about four times a many as Amazon has.

• Whole Foods is not a wine retailer; it’s a grocery store that sells wine, and does so at higher markups than most retailers because it’s an expensive grocery store. The days are long gone when I went to Whole Foods to find a deal. This is the store that sells the $5 Rene Barbier for 40 percent more than most Dallas retailers.

• Our old pal three-tier, which restricts how Amazon can sell wine through Whole Foods. Again, the couple of high-profile Amazon wine projects that got so much attention recently weren’t about Amazon selling wine, but about Amazon listing the wine for sale and then sending you to another website to make the purchase.

In fact, my most recent visit to Whole Foods reminded me why the chain was in such trouble before the Amazon sale. It’s still pricey, despite all the cost-cutting publicity; $2 for a container of yogurt is three times the usual grocery store price. And a Gascon white wine I bought elsewhere for $10 was $13. In this, it reminded me of the Neiman Marcus department store chain, whose customers aren’t supposed to care about price, either. And Neiman’s is in trouble, too.

Winebits 251: Wine prices, Amazon, Champagne fraud

? Never trust the media? Lew Perdue at Wine Industry Insight must have a wonderfully dark sense of humor. On the same day last week, he posted these two links on his daily e-summary: ?U.S. wine producers reporting 'epic' 2012 harvest ? and ?End to cheap wine prices is near. ? Both, obviously, can ?t be true, but there they are. This points to the serious flaw in most of the reporting about the decline in the world grape supply. What is the demand for grapes? If demand is increasing, then prices will rise. But if demand is flat or shrinking, which could well be the case given the recession in Europe and the near-recession in China, then prices won ?t do much at all, regardless of supply. This is basic reporting, and it ?s depressing that so few people writing about the subject bother to do it.

? Amazon ?s direct shipping plan: My pal Dave McIntyre has a very even-handed assessment of Amazon ?s latest foray into the wine business ? an example of good reporting. Dave hits the high points in what Amazon is trying to do, and also notes ? which even I overlooked ? that the plan will benefit mostly smaller and mostly Napa Valley wineries, which do the most direct shipping. This may well be the key to what seems like a very limited and modest effort by Amazon ? pluck the most profitable and easiest part of the direct shipping market, and worry about the rest later.

? Why we need the French: Because any culture that really cares about wine should be appreciated. Can you imagine a U.S. prosecutor calling anyone who perpetrated a wine fraud despicable? Can you even imagine a U.S. prosecutor filing a case like that? But that ?s happened with a $2.6 million fraud case in France, where a Champagne producer tried to pass plonk off as vintage bubbly. So if they want to be a little cranky about wine names, who are we to criticize?

Is Amazon getting back into the wine business?

Amazon wine direct shipping

Amazon, the world’s largest on-line retailer, wants to insert itself into the wine direct shipping picture without actually shipping any wine.

The on-line retailer isn ?t commenting. But Wine Industry Insight and the Wall Street Journal reported last week that Amazon will allow some California wineries to participate in its third-party resellers program, in which Amazon lists the items for sale but doesn ?t actually sell them itself.

Needless to say, the wineries were agog at the opportunity to be part of Amazon, which is the fifth most visited website in the U.S. and does almost $13 billion a year. Lew Perdue at Wine Industry Insight wrote that he was contacted by ?numerous ? producers who wanted to know who to call at Amazon so they could sign up.

The legal experts I talked to were less enthusiastic. They asked not to be quoted by name, since they didn ?t know exactly how Amazon wanted to put the program together — though it is apparently based on a 2011 decision by California Alcoholic Beverage Control to allow this sort of thing.

But all agreed that the program could still encounter any number of problems, given the complexity of the three-tier system, which governs alcohol sales in the U.S.; the legal quagmire that is direct shipping law, with 50 laws for 50 states; and newly aggressive state regulators, who might be inclined to sue Amazon just because.

Said one high-profile liquor law attorney: ?It has a lot of moving parts and there are lots of semi-vague statutory commands buried in there, and so lots of problems to work through with even the best intentioned regulators. For those who just don ?t want it to work, there are lots of opportunities to provoke expensive and time consuming litigation. ?

Which, of course, was the reason Amazon got out of the wine business in 2009, after a mostly failed test program that showed just how complicated direct shipping was. Why the company decided to do it again, given those difficulties, could be even more interesting than actually doing it.

Drawing courtesy Appellation America, using a Creative Commons license