December 14, 2004

A Taste of E-Commerce in Wine Country

Continued from page 1

By Deborah Asbrand

Online commerce has emboldened consumers to expect more, and business proprietors to deliver more. The combination of the two forces compelled the small wineries and consumers to bring the current lawsuits.

"This is another instance in which the Net, which first allowed communications to cross borders more readily, is now increasing the ability of [physical goods] to cross borders," says Johnson. "It's always been possible to take a long trip and buy a case of wine in some remote location. But being able to decide who you want to deal with outside of a large distribution chain or advertising campaign is empowering for consumers."

It's especially empowering for contemporary wine drinkers, who, in wanting to purchase goods directly from retailers, found themselves stymied by the dust-bowl era restrictions of the 21st Amendment, which repealed Prohibition in 1933 and granted state rights over the distribution of alcohol.

Michael Froomkin, a law professor at University of Miami in Coral Gables, Florida, likens the roiling in the wine industry to the disruption over copyright that caused friction in publishing and music with the notable difference that the wine industry must deal with a Constitutional amendment regulating its trade.

If the Supreme Court sides with free interstate trade when it issues its decision next spring, wine lovers will have the same benefits of decentralization that the Internet has brought consumers in other industries.

Indeed, wine lovers want details on quality and bottling, and instant pricing information -- information that's far beyond what liquor stores can provide, says Alan Wiseman, an assistant professor of political science at Ohio State University who co-authored a study this year on market barriers in the wine industry.

Using a sample of wines identified by Wine & Spirits magazines annual restaurant poll, the report found that 15 percent were unavailable from retail wine stores within 10 miles of McLean, Virginia. Wiseman's report concluded that Virginias direct shipment ban, which has since been overturned by the state legislature, prevented consumers from purchasing some premium wines.

A recent poll by Motto Kryla Fisher, winery business advisors in St. Helena, Calif., found that less than one percent of wineries were selling using the Internet. Most relied on their websites as a means for communication while ringing up most of their sales from tasting rooms. Tincknell says his clients' e-commerce frequently consists of an online form that visitors fill in to request a phone call so they can place an order.

But Tincknell suspects there's a big party waiting to happen.

"If the Supreme Court rules in favor of wineries shipping to other states, a lot of small wineries will see an investment that pays off," says Tincknell.