Saturday, August 6, 2011

Let The Revolution Begin

As a retailer in a Connecticut, I am bound by state regulations to purchase only those wines that are offered by Connecticut registered and licensed wholesalers. It is a destructive piece of legislation that stifles competition and allows mediocrity to exist in a marketplace that is both dynamic and presumptuous.

But the law does have its merits. The three tier system in the alcohol industry is a necessary evil. It protects everyone involved, producer, retailer, consumer. And let’s face it, how many retailers do you know that have the purchasing power to load up on 1000 cases of Veuve Clicquot? 1000 cases of Kendall Jackson? Did you know the New York metro area moves about 55,000 cases of Veuve Clicquot Yellow Label 750ml per year? Do you think that’s really possible without a distribution channel? Big brands need wholesalers to provide the necessary purchasing power to allow products to reach their markets at relatively similar prices intended by the producer. Without wholesalers price variations from store to store, market to market would be far too great. Add a lack of continuity in the market and you have a recipe for disaster. But that doesn’t mean we have to be happy with the system because it is far from perfect. Perhaps it’s time for forward thinking.

Here’s an example of an infuriating exchange that is all too common, almost weekly, in Connecticut retail wine sales:

Ms Smith: “My husband and I had our anniversary dinner at Artisnal in the city last night. We had the Konsgaard Syrah and absolutely loved it! We’d love to get a case. Can you get it for us?”
Us: “Ms. Smith we’d love to get this for you but unfortunately, the wine is not currently available in Connecticut.”
Ms. Smith: “Why not?”
Us: “Because it’s not currently represented by a CT wholesaler. And truth be told, the wine is fairly limited and I’m not sure it would be available anyways.”
Ms. Smith: “That’s a bummer. I’ll go online and see if I can get it.”

Once again, a wine retailer in Connecticut loses a sale to an out of state competitor who can source the wine, sell it online, and ship it to Connecticut. Of course, Connecticut losses the tax dollars on the sale as well. Perhaps the CT Legislature could help bring more business (and tax dollars) to Connecticut by making a change to the existing legislation. Now, before the wholesalers and their lobbyists cry “foul”, let me be perfectly clear, I am NOT advocating the destruction of the three tier system. As I stated previously, the system is necessary for the good of the industry. However, I AM advocating that the system is slightly flawed and needs to be tweaked. The laws were written in the 20th century. So much in this industry has changed. It’s time for the laws to change as well.

Here’s what I’m petitioning.

A holder of a package store, restaurant or cafe permit may purchase wines directly from a winery for re-sale so long as that winery:
  • Is not currently registered with a Connecticut wholesaler,
  • Its total annual production is not more than 5,000 cases.
  • No terms are extended to the permit holder. All transactions must be cash on delivery or pre-paid (I’ll address this one later).
  • The sale must be approved by the state prior to shipment.
  • The permit holder is responsible for all excise taxes. Taxes must be paid within 15 days of the wines arrival.

I’m not a lawyer. There are legal flaws above I’m sure. But perhaps there’s a government official that’s also a wine lover who can help draw this piece of legislation so it makes sense for everyone involved. Allowing retailers and restaurateurs to directly source small production wines increases competition, offers the consumer a greater selection, brings more business to Connecticut and increases much needed tax revenue. It’s a win for everyone so long as we can draw the right piece of legislation. Anyone in CT want to help? I’m a ready for a wine revolution. Are you?

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