AUTHOR: Dave McIntyre TITLE: The Dark Side of Direct Shipping? DATE: 3/14/2006 04:06:00 AM ----- BODY:

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 “three-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. “One 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. “This 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. “The 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 “small” 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 “market” 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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