Amazon Gives Up Adding Wine To Its Offerings

TW: Some may have heard Amazon was strongly considering adding wine to its product offerings. It recently decided against the move. Alcohol sales in the U.S. for the most part go through a 3 tiered system of suppliers/distributors/retailers. The entry of Amazon threatened that structure. The reactions from industry participants are interesting. Note much self-interest and little big picture analyis. A metaphor in other words for most political decisions.

Understand the tier most threatened by Amazon was obviously the middle distributor/wholesaler tier with retailers not far behind.

From Wine and Spirits Daily:
"Wine marketing consultant: "Regardless of the driving force to cease their operation, others will step forward to continue to push against state laws written in the 1930's to control the flow of alcohol with an inefficient & costly structure that ultimately punishes the consumer with a lack of true choice. Oddly, the states are limiting their own revenues by holding on to the outmoded model that restricts trade of their own in-state businesses."

Wholesaler: "Amazon exiting the wine business merely highlights beverage alcohol's special place in our society. The Three-Tier System has nicely balanced societal, regulatory and commercial needs for 75 years. Yes, it has its complexities but those are embedded for the "greater good" (e.g., taxes and fees collection, under-age drinking prevention, preclusion of tied houses of the past, etc.). If we were talking about books, small appliances or music, it would be a completely different matter. Alcohol deserves special, more-careful treatment."

Distillery: "It certainly hurts us "little guys" in the short term. We currently are set up to distribute only locally. A shift of consumers to purchasing online could open many doors, and I believe still will eventually happen."

Attorney: "AmazonWine's withdrawal is an example of the inefficiency and anti-competitive results that follow when every transaction is forced to go through the 3-tier system. Wholesalers serve a purpose and will never be obsolete but there is room in the industry for more than one path to get product to consumers."

Negociant: "Any channel that can provide direct wine shipments lawfully is a plus to the ailing wine industry. Far too many small (boutique) wineries have no equitable distribution networks. The three tier system is dominated by a handful of powerful distributors...who give attention to the mega wineries and their depletion/promotional dollars. In the end, the consumer loses and the small wineries lose. Eventually we'll have a handful of distributors and an equal number of large wine companies producing vanilla products for the masses."

Distributor association employee: "As a parent, I don't want my children to be able to click and purchase. As the spouse of a UPS driver, I don't want my husband's livelihood being challenged because he has been turned into a convenience store or liquor store clerk and may have missed a license check. Amazon has no business being in the wine selling business unless they plan to deliver it themselves, using their own employees and equipment. Wineries don't need Amazon to compete, they need to develop sound and viable business plans and quit "just being passionate" about making wine."

Winery, fulfillment: "No kid was ever arrested for driving drunk in a car, while drinking Broman Cellars Cabernet Sauvignon or Chateauneuf du Pape. With all this said and done...its' coming...direct sales to consumer...it's just a matter of time."

Retailer: "As a retail wine store, I can't compete with Amazon or any other large internet wine shipper. All can get better prices on the wine they sell because they are able to buy in large quantities - a lot of the protectionism you see in this industry is the legislators concerns, not about greedy wholesalers, but about local businesses. There is nothing to stop the consumer from tasting at my wine store and then going on line and buying the wine from some out of state retailer, who pays less in license fees, and does not assume the liability that I as a local business do. Internet wine sales, is a death knell for small business, and for the employees of the small business."