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Wine: More on H.R. 5034

As I wrote in Food this week, legislation before Congress that would supposedly “reinforce states' rights” to regulate alcohol could have the effect of turning back the clock on direct shipping and make it impossible – or at least more difficult – for consumers to have their favorite wine sent directly from the winery to their homes.

H.R. 5034 also could put the kibosh on a number of companies that have sprung up on the fringes of traditional, post-Prohibition three-tier distribution. That producer-wholesaler-retailer system has come under assault by the changing marketplace of Internet commerce., the leading Internet wine retailer, recently announced it would sell futures of the 2009 Bordeaux vintage. This is the first time, based in California, has offered futures -- a step that ventures further into the usual brick-and-mortar wine store model. spokesperson Lisa Hempel said the company takes pains to meet the compliance requirements of all states that allow direct shipping, even to the point of maintaining warehouses in states that don't allow out-of-state shipments.

“This legislation is anti-consumer and anti-small business,” said chief officer Rich Bergsund.

One such small business that could be threatened is Plonk Wine Merchants, a new Internet business that retails value-oriented wines priced between $10 and $30 per bottle. Plonk Wine Merchants ships to 11 states and the District of Columbia, but not Maryland – which still prohibits direct shipping – or Virginia. Company founder Etty Lewensztain called Virginia's licensing requirements for out-of-state shippers “a nightmare,” requiring separate registration for each brand she carries. That may be manageable for a winery, but not for retailers, she said.

Lewensztain said the legislation now before Congress risks “making an already archaic system harder to navigate.” While noting that much of the discussion focuses on winery shipments, she said the bill could also threaten retailers. “Let's hope it doesn't pass.”

Another new online venture was recently launched by Destination Cellars, a Washington membership organization that focuses on luxury wine “experiences” for its paying members. In addition to arranging winery travel with VIP access, Destination Cellars has partnered with MasterCard World Elite to offer high-end wines and 2009 Bordeaux futures, according to company founder David Keuhner. In the first seven days after launch, Destination Cellars processed more than $200,000 of wine sales, Keuhner said.

From plonk to luxury cult wines, innovative ventures such as these expand consumer choices and create new opportunities for entrepreneurial types. They may nibble at the fringes of the three-tier system, but they really don't threaten its existence. Yet the wholesaler lobby would like to snuff them out with H.R. 5034.

This bill should not pass.

-- Dave McIntyre (Follow me on Twitter.)

By The Food Section  |  May 6, 2010; 1:00 PM ET
Categories:  Wine  | Tags: Dave McIntyre, Wine, legislation  
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