The Dark Side of Direct Shipping?

Is there a dark side to direct shipping?
Is it possible that the ability of consumers to purchase wines directly
from the winery is not always to the consumers‚€™ advantage?
Consider this: There are several wineries that use direct shipping not
only to supplement their sales when they cannot achieve distribution
through the traditional ‚€œthree-tier‚€ system of
producer-distributor-retailer, but are marketing their wines exclusively
through their private mailing lists. These wines tend to be in short
supply, very expensive, and perhaps with high point scores from
influential wine writers (ie., not me) ‚€“ therefore they are in high
demand from affluent collectors who like to boast that they have wines
that you don‚€™t. There is often an active resale market for them on
eBay or wine blogs.
Free market, you say? Supply and demand? Maybe. But have these wines
really been subjected to the free market? When I purchase a wine from my
favorite retailer, it has been vetted for me ‚€“ by an anonymous
distributor who decided it was worthy of adding to his or her portfolio
(or in the case of foreign wine, by an importer whose name is most
likely on the label as a guide to the wine‚€™s quality) and most
importantly, by the retailer I‚€™ve learned to trust. The wine may not
be to my liking, unless I‚€™ve tasted it in the store before buying it,
but I can be confident that it is a quality wine, because I trust my
retailer.
Now, I‚€™m all for direct shipping, but even if I can have my favorite
Finger Lakes Rieslings (or other wines not available in my market)
delivered to my door, I‚€™m still going to buy most of my wine through
the three-tier system.
The idea that mailing-list exclusivity is bad for consumers has become a
rallying cry of Jim Arsenault, managing partner of The Vineyard,
a small but classy wine shop in McLean, Virginia, that specializes in
small production, artisan wines. Arsenault is well known in the
Washington area for his career in retail and wholesale, for his
tremendous palate and knowledge of wine, and for his outspokenness.
‚€œOne of the best things about the three-tier system in the wine
industry is the costs of wine are negotiated in every tier of the
system,‚€ Arsenault wrote recently in his store newsletter. ‚€œThis
process actually creates lower pricing so that consumers get the full
benefit of a competitive market place. The mailing list phenomenon takes
this part of the industry away from the consumer and gives the entire
selling price directly to the producer who has set an arbitrary price
without competing in the open market.
‚€œThe price holds no real value in a competitive market place other
than the price goal or the random value placed on the wine by the
producer without competition. This aspect flies in the face of a
spirited market place where quality-and-price ratio builds reputation
and long-term success. What are these people afraid of? Are they really
producing a product worthy of your consideration or just over priced
wine sold to a chosen few?‚€
Arsenault is expressing the frustration of a retailer whose customers
brag about their mailing list wines ‚€“ or who offer to flip him a few
bottles for a ‚€œsmall‚€ profit ‚€“ but he makes an interesting point
that merits discussion. We advocates of direct shipping are all about
the free market and competition, quick to slam the wholesalers for
limiting our selection of available wines. Yet here is an example where
the free market arguably may not work to the consumer‚€™s benefit.
Ultimately, of course, the ‚€œmarket‚€ here is much narrower than
Arsenault‚€™s perspective. If a winery can sell its entire product to an
exclusive list at the price it sets, well then, more power to it. And
if the people on that list like the wine and are eager and willing to
part with their money to get it, well I say go for it. I‚€™ll read
about these wines on the blogs. I don‚€™t care if I never taste them.
There‚€™s plenty of wine for me.
The Vineyard is located at 1420 Chain Bridge Rd., McLean, VA. 22101. Phone (703) 288-2970. Web site : www.thevineyardva.com .

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