Winebits 381: Direct shipping, consolidation, Prosecco

? Lots of kinks to work out: Direct shipping, despite its successes over the past decade, is still a tiny part of the wine business, just single percentage points of the $17 billion in sales. One reason for that, of course, is three-tier, which makes it difficult for wineries to ship to consumers in different states. And three-tier has more to it than even those of us who think we know it can imagine; witness the lawyer suing Illinois wineries for not charging sales tax on shipping fees. This is perfectly legal in Illinois, where the law allows private attorneys to recover unpaid taxes on behalf of the state. Much of the coverage has been critical of the attorney, but that misses the point. Illinois law is vague on whether sales tax should be charged on shipping fees, so how how can direct shipping ever become more than a niche business if laws crucial to its success are as vague as the Illinois law? Because, given three-tier, this is certainly not the only vague, poorly written, or unclear law dealing with the subject.

? Retailer buyout: Majestic Wine, one of the biggest retailers in the United Kingdom, has bought another British retailer, Naked Wine. This is bigger news than it seems, since Naked Wine has a trendy U.S. division that sells what can best be described as craft wine on-line at discounted prices to its members. It means that Majestic, facing tremendous competition from grocery stores, is trying to find wine that consumers can’t buy at grocery stores. Given the increasing importance of supermarket wine sales in the U.S., this may be a sign of things to come in this country (within the confines of three-tier) as retailers look for exclusive products to fend off grocery stores. It’s also another indication that retailers want to get bigger to fend of the Costcos, Walmarts, and Aldis of the world.

? Nuts to Champagne: Prosecco has passed Champagne in sales at British grocery stores in news that is so shocking — given the British love affair with Champagne — that it should worry not only the Champagne business, but retailers around the world. If the British are buying Prosecco, the Italian bubbly that is at least half the price of Champagne, what does that means for retailers elsewhere? Has Champagne priced itself out of some markets? Do consumers prefer the softer, sweeter taste of Prosecco? Or are grocery stores playing a role in what’s going on? Even the story, from a British trade magazine, had a panicked tone.