Crony Baloney: Online Wine a Tough Sell

Online retail sales this year are thought to be 12% of total sales, and it’s not surprising why online sales keep growing. Buying online is convenient, selection is ever growing, and you don’t ever have to visit a crowded mall.

But one industry isn’t having much luck expanding their online sales. The wine industry isn’t anywhere near that 12% number, in fact, they are closer to 1%. It isn’t for lack of trying; as this Wall Street Journal article (subscription required) explains, there have been many attempts by both wineries and distributors, even including retail powerhouse Amazon, to sell wine online. Most have ended in failure.

Why has this been such a hard sell? Because of all the laws and regulations governing the sale of alcohol in the states. While these rules are ostensibly for public health and safety, many are blatantly in place to protect the local distributors and keep out any competition. For examples, the article states:

Violating wine-shipping rules and limits can lead to fines, suspension or, ultimately, termination of a winery’s license. Because of laws favoring local distributors, the wineries themselves can’t ship directly to consumers in 11 states, including Massachusetts, Pennsylvania and Oklahoma, according to advocacy group Free the Grapes…

Rich Bergsund, chief executive of Wine.com Inc., has experienced those vagaries firsthand. The San Francisco-based online wine merchant has been fined by New York state for shipping wine in gift baskets stuffed with food; state law mandates food and alcohol be shipped separately. It has had to build seven separate warehouses to satisfy differing sets of state regulations.

Wineries should be able to sell their wine online, and state laws shouldn’t protect local distributors at the expense of consumers. I give this two baloneys:

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