This week’s wine news: Two of the world’s biggest booze companies are in yet another lawsuit. Plus, $128,000 might have bought you a bottle of wine and Nevada restricts direct shipping
• Bring on the attorneys: How do you know when a business isn’t growing enough? When the word’s biggest companies start suing each other. That’s the case with Anheuser-Busch InBev, the world’s biggest brewer, which has filed a second lawsuit against rival Constellation Brands over Modelo beer. The drinksbusiness website reports that Busch is suing Constellation – which we know here as the home of Mondavi wines – as part of its long-standing dispute over who actually owns the name and rights to the Corona and Modelo beer brands. I won’t even pretend I can explain what’s going on; it’s one of those disputes that will cost each side millions in an attempt to stop the other from taking away tiny percentages of market share. Ain’t consolidation grand?
• Yes, expensive: If you had HK$1,000,000 (about US$128,000), you might have been able to buy a 15-liter bottle of Chateau Mouton Rothschild 2000 at an auction in Hong Kong last week. It’s not enough that the 2000 was anointed the vintage of the century by Robert Parker and the Mouton is supposed to an exceptional wine. To quote: “The commemorative bottle alone is a collector’s item. … the glass was adorned with an ‘Augsburg Ram.’ paying tribute to a chased silver-gilt drinking vessel created around 1590 by Jakob Schenauer, a German master goldsmith.” Which, of course, means no one will ever drink it.
• Nevada says no: Nevada, once one of the most liberal states for direct shipping, has changed its mind. Breweries, distilleries, and retailers can no longer ship directly to consumers in Nevada. The change seems to be part of the growing backlash against more open shipping regulations brought on by the pandemic. The new law is so restrictive that it’s illegal for a retailer in one part of the state to ship to a customer in another (though local delivery is still legal).
“Do you see that Walmart wine that the WC needs to buy?”
This week’s wine news: Even Walmart is scared of three-tier, plus direct shipping for spirits, and Big Food dominates even more than Big Wine
• Not in Arkansas? The email from the Walmart marketing person wanted me to review its new $10 Winemakers Selection Reserve Series wines. But when I talked to the woman, she said I would have to go to Walmart to buy the wines. Arkansas law forbids the company – one of the largest retailers in the world, the inventor of the post-modern supply chain, and the subject of more academic studies than Wine Curmudgeon has rants – from sending samples. Is it any wonder I worry about the future of the wine business? I mention this not to be upset and bothered that I have to go to Walmart to buy wine; regular readers know I buy about two-thirds of the wine I review, and have bought much Walmart wine in the past. Rather, it’s to note that it’s difficult to get products reviewed when it’s illegal to send the product to reviewers. Which, of course, happens in almost no other business in the world.
• Bring on the spirits: Several trade groups are lobbying for direct shipment of beer and spirits, which is currently illegal. If they succeed, you’ll be able to buy craft beer, whiskey, gin, and so forth directly from the producer, just like we do with wine. This means they’re heading for a showdown not only with the various states, but with the all-powerful Wine & Spirits Wholesalers of America. It opposes all direct shipping, even of wine. The groups say that even though 46 states plus the District of Columbia allow direct shipments of wine, only nine states plus D.C. permit direct shipping of spirits, despite “despite broad consumer support for the latter.”
• Big Food: Dwight Furrow, writing in Edible Arts, talks about the human, environmental, and agricultural cost of Big Food, the companies like Kraft Heinz, General Mills, Conagra, and Unilever that are even more dominant in their sphere than Big Wine is in its. “For those of us who have been watching consolidation in the wine business, this will come as no surprise. But the situation is much worse in the food industry,” he writes. It’s a clarion call to anyone who worries about consolidation in wine and how it affects something we dearly love.
If Congress allows the postal service to deliver beer, wine, and spirits, we not have to post signs like this in front of our homes.
Will UPS and Fed Ex — which are notorious for slipshod service and non-delivery deliveries — finally have competition?
Regular visitors here know the wine world’s frustration with UPS and Fed Ex, which view wine deliveries as something they do only when they feel like it. Service has improved during the pandemic, but there’s no guarantee things won’t return to normal – because, as one reader left in a comment, “They like to just beep their horn and take off.”
Now, we may have hope – competition from the U.S. Postal Service. A bill with 19 sponsors was introduced in May in the House of Representatives to allow the postal service to ship wine, beer, and spirits just like UPS and Fed Ex do.
This time, though, says Tresize, the bill has a better chance of success “due to some important changes [in the legislation], more bipartisan support, and the dire financial straits of USPS, which could use some new business. … Wine is a bipartisan beverage, and we want to keep it that way.”
The bill also has the support of 12 trade unions and 14 beer, wine, and spirits groups, including the Distilled Spirits Council. The alcohol industry, what with the pandemic and the Trump tariff, has remained surprisingly united in advancing progressive liquor legislation.
That’s the good news. The bad news? There’s little indication that GOP post office hard-liners in the Senate will back down; the bill did not have a Republican co-sponsor in the upper chamber at the end of May. In addition, the powerful Wine & Spirits Wholesalers Association, which opposes any form of direct shipping, has opposed the bill. And the neo-Prohibitionists will likely lend their support against it, arguing that it will lead to more underage drinking.
So e-mail your member of Congress (both House and Senate) in support of the USPS Shipping Equity Act and hope for the best. We’re not asking for anything special – just competition. And how bad can that be?
Let’s celebrate — we’re getting drunk while drinking less!
This week’s wine news: World wine consumption declined for the third year in a row, plus legal weed is a hit in Illinois and Internet wine prices
• Just go pass out already: World wine consumption sank to its lowest level in almost 20 years, falling 2.8 percent, according to a study from OIV, the International Organisation of Vine and Wine. In the U.S., total wine consumption was unchanged. Yes, yes, I know – we’re all passing out drunk from boozing it up during the pandemic, according about a million medical studies conducted over the past year. So, somehow, we did that while drinking less wine. Pretty impressive, yes? The report, released annually, was about as depressing as it gets for the wine business – not only was consumption down, but wine production was up, and the average price of wines exported worldwide dropped. Tariffs were much of the reason for all three – the U.S. levy on European wines in particular.
• Who needs booze? Illinois took in more tax dollars from marijuana than alcohol for the first time ever, according to the state’s revenue department. From January to March of this year, Illinois generated $86.5 million in adult-use marijuana tax revenue, compared to $72.2 million from liquor sales. This is not exactly an apples to apples comparison – higher taxes for legal weed, for example – but that doesn’t mean it’s not significant and ironic. Alcohol’s three-tier system exists because Al Capone – yes, that Al Capone – controlled production, distribution, and retailing in Chicago during Prohibition.
• Lower prices: E-commerce was a savior for the wine business during the pandemic, except when it wasn’t. A study from Sovos ShipCompliant, a consultancy for legal alcohol shipping, says direct-to-consumer volume from wineries was up more than 25 percent – but prices for that wine dropped significantly. There was a 9.5 percent drop in average bottle price while shipments of wine costing less than $30 increased more than 40 percent. In other words, as more of us bought from wineries over the past 12 months, we bought less expensive wines – a dynamic that stands conventional wine industry wisdom and premiumization on its head.
This week’s wine news: We’re buying less expensive wine via direct shipping, plus the demand for low alcohol wine and Brexit wine woes
• Prices drop: The pandemic, which has boosted sales for wine on-line and via direct shipping from wineries, has also cut the average price of wine bought the latter way. Ship Compliant, a winery shipping consultancy, reports that the average price of a bottle of wine bought directly from the winery dropped 9 1/2 percent in 2020. That’s the first decrease in at least a decade. Meanwhile, the dollar value of all shipments increased 14 1/2 percent last year. I wonder: will anyone in the wine business pay attention? Lower wine prices translates to more sales. The average DTC price remains high, about $37 a bottle, but that’s mostly because direct to consumer wines are more expensive to begin with.
• Lower alcohol: One leading wine analyst says the way to boost U.S. wine sales is though lower-alcohol products, like wine spritzers and wine with some alcohol removed. Martin Pasco writes that “Brands should offer lower alcohol wines, i.e. 5-9% [alcohol], to trigger permission to indulge for U.S. Millennials.” This is part of a larger trend in the U.S. wine business, which we’ve noted before on the blog. This could be the first time, though, that I’ve seen the low alcohol trend used to target younger wine drinkers.
• Brexit booze woes: Just when you think the U..S. alcohol laws are the goofiest in the world, someone goes and shows we’re not alone. Amazon had to stop selling some beer, wine, and spirits from its Northern Ireland web site because of the mess surrounding Britain’s departure from the European Union. Reuters reports that new custom rules may make selling alcohol too complicated and too expensive for the on-line retailer to deal with, including double taxation.
“Quick — get the wine unloaded before anyone spots us.”
The Wine Curmudgeon buys wine from an out-of-state retailer – even though it’s illegal
A case of Domaine Tariquet was delivered via Fed Ex to Wine Curmudgeon international headquarters in Dallas this week. The shipment violated the laws of two states – that of the retailer who sold me the wine, and Texas, which forbids shipments from out-of-state wine retailers. Welcome to the sham and hypocrisy that is the three-tier system.
Why a sham? Because the liquor cops in Texas and in the retailer’s state both know I bought the wine, since Fed Ex and UPS send so-called common carrier reports to the agencies. The Texas Alcoholic Beverage Commission received the electronic paperwork saying the order was shipped to my house; the retailer’s state alcoholic enforcement agency got the same thing when the order was shipped.
I’m not going to name the retailer or its state; let the liquor authorities do their own investigating. Click the links to see the address label and the alcohol warning label that said the package wasn’t olive oil. Also, everyone quoted in this post was given confidentiality, since I committed a crime with my purchase.
So why did my reverse sting operation work? Because each state doesn’t always enforce the interstate retail ban, according to a prominent liquor law attorney.
“It’s not high on the list of priorities,” he told me. “Most of the time, unless someone objects to that kind of sale, they don’t do anything about it. It’s like enforcing the speed limit on a highway. The police may not enforce it for a long time because they have other things to do – until someone complains about speeding, and then they set up a speed trap.”
And, now – hypocrisy
Interstate retail shipping is banned in most of the U.S. in the interest of “public health and safety” – the legal doctrine that has overseen liquor law since the end of Prohibition. Yet, more than a century later, state regulators and legislators still insist that it’s not safe for me to order wine from a retailer in another state. Yet, if it’s so dangerous, why isn’t it enforced more often?
The answer can be found in the July 8 decision by the Ohio attorney general to sue Wine.com and six other interstate retailers for selling wine to Ohio residents in violation of the state’s interstate shipping ban. Yet, according to two people with knowledge of the attorney general’s suit, Wine.com has been selling wine in Ohio in violation of the ban for more than a decade – and the Ohio Division of Liquor Control knew it was doing so and exchanged letters with the company acknowledging the practice.
The July 8 lawsuit, says the prominent liquor attorney, fits a pattern – interstate shipping bans are often enforced only when wholesalers and distributors press the issue. In Ohio, Wine.com and the other retailers weren’t buying from Ohio distributors, as required by law, but from distributors in other states. This lost business, combined with the dramatic drop in restaurant wine sales during the COVID-19 pandemic and increasing legal direct-to-consumer wine shipments in Ohio, probably had the wholesalers “crapping in their pants,” e-mailed an Ohio wine business consultant who has worked with the state’s distributors. No wonder, he wrote, that they pressured Ohio authorities to sue the interstate retailers in an attempt to redirect the lost business and revenue their way.
So where’s the public health and safety?
And, in fact, the news release announcing the lawsuit barely mentioned “public health and safety.” Instead, it emphasized lost tax revenue and lost retail sales, quoting an Ohio retailer and distributor. In addition, the Wine & Spirits Wholesalers Association, the national distributor trade group, issued a news release saying the same things. The attorney general’s spokesman didn’t respond to two requests for an interview for this post.
Keep in mind that this post isn’t about defending an illegal practice. If anyone violated the law, they should be punished, whether Wine.com (which is a long-time supporter of the blog) or me. And this post doesn’t advocate selling liquor without regulations — we certainly need regulation, but regulations that are fair and efficient.
Because selective enforcement isn’t either. If interstate wine shipping is truly dangerous, then the ban needs to be enforced. Because if the ban isn’t enforced, then it follows that interstate shipping isn’t as dangerous as it’s supposed to be. And if that’s the case, why have the ban at all?
This week’s wine news: Will the pandemic finish off premiumization? Plus, turmoil in Pennsylvania’s state wine stores and the favorite DTC grapes
• Is premiumization over? A top wine business analyst has told the industry that its drink less, but drink “better” mantra – premiumization – could be ending thanks to the coronavirus pandemic. Spiros Malandrakis, industry manager for alcoholic drinks at Euromonitor International, told the Harpers UK trade magazine that premiumization is at a crossroads: “What we saw in the recession of 2008 was that even if people that could afford more expensive wines or niche varietals, they didn’t buy them because it looked crass. The context has changed. I’m not saying the industry is over. What we know from history is that people will always continue drinking. It’s not the end of the world but it will be a different world to the one we’re used to.” In this, he’s not the first to predict premiumization’s end. But it is one more voice suggesting that the new normal in the new future could be $10 wine.
• More fun in Pennsylvania: Pennsylvania’s state liquor store system has come in for much fun on the blog. And why not, given wine vending machines? But the decision to close the state stores during the pandemic has met with serious opposition, not the least of which is the loss of state tax revenue. Even in New York, the center of the U.S pandemic, liquor stores have remained open. Apparently, the state is reconsidering its decision, and may allow limited Internet alcohol sales. April 2 update: The state did reopen its online liquor sales system, but the system will be quite limited.
• Favorite DTC grapes: This is a contradiction that seems difficult to explain: Why is chardonnay the best selling wine grape at retail, but cabernet sauvignon is the best seller when consumers buy directly from the winery? That’s the result from a recent SOVOS/Ship Compliant study (via Wine Industry Insight), where cabernet was the best seller with 17 percent of volume, almost twice as much as chardonnay. Typically, chardonnay accounts for about 20 percent of retail sales. Any thoughts would be much appreciated.
This week’s wine news: Two of the world’s biggest booze companies are in yet another lawsuit. Plus, $128,000 might have bought you a bottle of wine and Nevada restricts direct shipping
This week’s wine news: We’re buying less expensive wine via direct shipping, plus the demand for low alcohol wine and Brexit wine woes
