As most wine lovers are aware, a huge shift has occurred in wine distribution over the last few years. In general, wine is available in more and more places, even at your front door. But at the same time, the sales channels are squeezing.
Let’s start with some numbers:
In 1995, there were 1,800 wineries in the United States and 3,000 distributors or wholesales that sold wine to the stores, restaurants and bars.
By last year, the number of wineries had grown to almost 10,000 but the number of distributors had shrunk to 675, obviously growing in the process. Now, the top four largest distributors control more than 60 percent of the market.
But that’s not the only concentration. The top nine wine companies (wineries and importers) supply 80 percent of wine volume and the top 10 retail grocery chains account for more than 50 percent of grocery sales (including wine).
It doesn’t take a statistician to see that this makes it harder for small wineries, including some selling millions of cases per year, to find stores and restaurants to sell their wine.
Most wineries are actually quite small, and most distributors can’t be bothered with them. Yet U.S. and state laws generally require a “three-tier” system, which was set up after Prohibition ended 70 years ago to keep a few companies (truthfully gangsters) from monopolizing the business.
The distributors are very powerful and donated vast amounts of money to politicians (as do beer and spirits distributors, sometimes the same people). The result is that most consumers have very limited choices in what wines they can buy.
A few decades ago, wineries looked to selling direct to wine lovers as a possible solution. Unfortunately, very few states allowed wineries to ship wine to their citizens and many of those that did restricted it to local wine.
Fortunately, long and intense efforts by the wine industry and wine lovers was aided by the explosion of wineries all over America, where all states now have wineries, many well over 200. Only half of the wineries in the United States are now in California, in fact, and a wine expert in Napa Valley can say that many states are making very good wine.
Now, citizens of all but a few states can receive wine shipped from wineries, though only 14 can legally receive wine from retailers, including via the Internet, though the latter laws are widely broken. And that means no foreign wine can be shipped except to those states.
That sounds good but there are still many restrictions on shipping wine, many instigated by distributors jealous of their business. In Illinois, for example, it’s not clear if wineries have to pay state taxes on shipping, and that has led to a flurry of lawsuits. In other states, a consumer can only receive a certain amount of wine, but how will wineries know if any wine has been shipped by other wineries?
Not surprisingly, lawyers who specialize in alcohol beverage law are very busy.
I don’t have any trouble finding wine I’m happy to drink, but it all must be very frustrating to a serious connoisseur or collector.
Paul Franson lives in Napa Valley, CA.