At the end of December, Amazon will end it’s wine marketplace. Here’s some information on why, as well as another chance to blame Al Capone for the sorry state of wine shipping laws in America today.
All right guys, Mark Aselstine with Uncorked Ventures. Really quick, so Amazon announced today that their wine marketplace is shutting down, which is a shame. Amazon’s had this long, drawn out history of trying to sell wine on the site.
There’s been different iterations and rumors about Amazon doing wine club over the years. It’s never come to fruition, in large part because Amazon’s not a winery, and the only way to do 51 out of 51, as the lexicon goes, is to be a winery itself. Even then, states like Utah don’t allow direct shipments of wine, so Amazon is going to be skirting a regulation here, or there, or somewhere along the route anyway.
They’re shutting down their wine marketplace and a lot of people have asked why. They don’t ship wine, so if you’re a winery, you can’t send wine to Amazon, and have it be a part of their Prime program. Why shut it down? They’re just collecting marketing dollars.
The answer why is in this archaic rule that we have in the three-tier system here in this country. The three tiers are the producer, the distributor, and then the retailer. Amazon is a marketing company at its core, but they also now own Whole Foods. There’s some debate if these …
There’s something called a tied house rule, and the tied house rule came into practice after prohibition, in an effort to clamp down on drinking. There’s stuff like, “Come in, have a beer, get a free lunch.” They thought that doing a tied house rule would lessen the consumption of alcohol, and that actually might be true.
In the 21st century, in large part, we’ve seen a couple things happen. So first, we’ve seen wineries … if you’re having a pouring event at … let’s just use BevMo! as an example, since they’re a large national chain. If your winery is having a pouring event at a local BevMo!, they can’t tweak that out and say, “Come on in and buy a bottle at this BevMo! location, because we’re there pouring our wine.”
To me, that seems like a perfectly reasonable thing for a winery to do, but they’re actually not allowed to do that, because then as a producer, a winery talking about only one retailer, skirting the middle tier of the system. That’s what the tied house rule says, is that it says that producers and retailers are not supposed to work together to exclude other producers, or other retailers, if that makes sense.
There’s some other things that happens because of this. Terre Rouge, Bill’s project out in the Sierra Foothills came into being after he sold his wine store here in Albany, California. There’s a bunch of stories like that, of people that wanted to open a winery, but they had to sell their retail business first, and then often go a couple years without a paycheck before doing so.
There’s kind of all these 21st century infringements on this law that was really created 80 plus years ago, if not longer, if we use the British version, which is what ours is based on. A lot of places around the world have gone away from this tied house rule.
Australia’s a great example. They’ve really pushed our consumer sales from wineries, and it’s made a healthier wine industry in Australia. I hope that’s something we can do in the country too. I think there’s some common sense legislative changes that we could go down, but that’s a topic for a different day.
Once again, Mark Aselstine with Uncorked Ventures. We’re sorry to see the Amazon marketplace close. I know a lot of wineries and small wine makers were using Amazon as an easy way to set up a website. Then even if they were having to fulfill the orders themselves, it was a centralized location, with traffic, and with an easy checkout process that didn’t involve them making a full e-commerce based website.
So yeah, that’s a little disappointing. Unfortunately, it’s also not surprising. Hopefully in five or 10 years, we’re not having these same kind of discussions. Hopefully we get some legislative changes along the route.