Good Grape Wine Company

April 10 2010

Different News, a Single Reality

I sense that the progress made on winery direct shipping and the three-tier system has reached its crossroads—a preaching of the choir to respective constituents without broader implications (or action) for the dynamics at hand.

Five years after Granholm and much progress has been made.  Yet, the Wine and Spirits Wholesalers Association (WSWA) convention this week indicated that the three-tier is digging in, not conceding to progress, and certainly not submitting to the slightest notion that the three-tier system isn’t just an ideological struggle—it’s a survival struggle for thousands and thousands of domestic wineries.

Put another way, in political terms, there isn’t any, “Reaching across the aisle.”

See the transcript from WSWA President Craig Wolf’s speech this week.

That reality is that there isn’t a single person in the wine business that is a proponent of dismantling the three-tier system.  None.  No, instead, it’s just the simple notion of access to market—where access is currently unavailable or unwieldy.

Yet, while winery shipping advocates are doing noble work, the time is nigh for a functional evolution from spreading the message to implementing action.

Over the course of the last two days, two pieces of news, while not connected, highlight this all-important point.

First, Wines & Vines magazine reports that the number of wineries in the U.S. has topped 7,000 with almost 30% growth in number since 2005.  California represents an increase of 670 wineries in that same period.

Yet, 76% of these wineries are categorized as producing under 5,000 cases of wine a year – the area that is most impacted by an inability to secure distribution.

In a stunning statistic that bears frequent repeating, according to Wines & Vines: 6% of wineries produce 93% of all wine by volume.  If you look at that from 180 degrees, 94% of wineries produce 7% of wine by volume.

While the WSWA wants to push rhetoric about the three-tier not being a broken system, the cold, hard facts indicate that this is as classic of a case of Main Street versus Wall Street as you’re likely ever going to see.  The sheer numbers indicate that this is akin to the conversation about Wal-Mart and the destruction of the family business. Period. 

Now, I understand the argument that many wineries start their business without a clear understanding of who and how they are going to sell their product within the constraints of the current system, and that there are more domestic wineries than there is market to support them, yet I still can’t get beyond the fact that not only is the three-tier system an artifact of a different era that requires evolution in philosophy if not application, but it’s also a system that is governed by dollars and cents instead of sense.

In a separate news release, winery trade association WineAmerica announced an advancement of an alliance with shipping compliance company ShipCompliant, offering turnkey registration and management of compliance needs for direct shipping in 32 states, called “Easywinelicensing.”

Much of the debate on the three-tier system versus wineries consists of a requested support for advocacy by various groups.  While noble and helpful, the revolution has to start within the winery community itself, one winery at a time. 

By analogy (and pardon the indelicate nature of said analogy), if you have cancer you’re sure as hell not writing checks to the American Cancer Society to support research and advocacy, you’re getting treatment for yourself to get better.

94% of the wineries that produce 7% of wine by volume need to treat themselves like a sick patient, which is certainly more important than supporting advocacy that appears to be at loggerheads. 

While not inexpensive, I can’t imagine a better investment than a small winery stepping up to the plate to secure ease of paperwork administration and compliance by using ShipCompliant for direct-to-consumer sales and then heading over to Inertia Beverage Group for access to market for direct-to-trade sales.

The reality is that without individual progress that marks itself as a broad movement for direct-to-consumer and direct-to-trade sales, and use of the tools for wineries to heal themselves, all of the advocacy in the world isn’t going to matter.

Only when the WSWA and the three-tier system see a fomenting movement that makes up a collective whole that requires them to sit-up, take notice and amend a system that is currently predicated on preservation instead of progress will we see real change.

And, while, we’ve all been drinking in a lot of hot air from all points, I prefer something that sits in my glass.

Posted in, Wine: A Business Doing Pleasure. Permalink | Comments (1) |

Print

Comments