Issue link: http://winesandvines.uberflip.com/i/131907
Access Practical Winery & Vineyard article archive online: practicalwinerylibrary.com TECHNICAL RESOURCE FOR GROWERS & WINERIES 58 How much microbiology do winery personnel need? By Lisa Van de Water, Vinotec 62 Guidance for assessing whether a new label approval is necessary By Ann Reynolds 65 Wineries achieve control of mold growth By Tina Vierra wine marketing U N C H A R T E D W AT E R S Using third-party providers to GROW wine sales BY John Trinidad, Dickenson, Peatman & Fogarty, Napa, Calif. T here are a number of online marketing tools to help wineries tap into the rapid growth of directto-consumer sales. Third-party marketers, also referred to as third-party providers (TPPs), for example, offer wineries the opportunity to reach an engaged group of online wine consumers and increase sales. This unique and relatively new business model has perplexed state liquor authorities. Some have questioned whether TPPs are unfairly exercising privileges normally reserved for alcoholic beverage license holders who are legally authorized to sell to consumers. Wineries, importers and other suppliers wishing to work with TPPs should be aware that rules and regulations governing these types of businesses are still being formed. Although the California Department of Alcoholic Beverage Control (ABC) issued an advisory in 2011 to help wineries interested in working with TPPs comply with California's alcoholic beverage laws, many other states have offered limited or no guidance. In New York, one of the largest direct-to-consumer wine markets in the United States, the New York State Liquor Authority (NYSLA) recently concluded that certain TPP transactions facilitated by in-state wholesalers and retailers violated state law. The NYSLA made clear that it would continue to review TPP activities and would eventually issue its own guidelines. This article provides a short overview of how the alcoholic beverage agencies in California and New York are tackling the issues raised by TPPs. California TPPs provide marketing and technology services that connect consumers and licensed suppliers and facilitate the sale of wine. TPPs allow consumers to submit an order through their websites, but instead of processing, fulfilling and shipping the wine to the consumer, the TPP forwards those orders to licensees, has the licensee accept or reject orders and fulfill any accepted orders before it collects a fee based on sales facilitated through the TPP's website. The end result is that the TPP model obviates the need to keep inventory or actually "sell" the wine. In September 2008, Amazon.com announced that it had partnered with a fulfillment company to offer consumers the opportunity to buy wine online. With the largest online retailer jumping into wine sales, and after receiving a number of other inquiries regarding TPPs, the California ABC decided to take a closer look at online alcoholic beverage sales. In June 2009, the ABC issued an industry advisory noting its concern that TPPs were "engaging in activities for which a license is required" and warning that any TPP-facilitated transaction that violated ABC regulations would subject the participating licensee to disciplinary action.1 The ABC also made clear that it considered any company "soliciting orders of alcoholic beverages for or on behalf of licensees (to be) engaged in the 'sale' of alcoholic beverages," thereby requiring it to "hold a license issued by the department." That fall, Amazon abandoned its plans to offer wine on its website. Two years later, after receiving multiple requests for clarification and following a series of meetings with stakeholders, the ABC issued another advisory, this time stating that TPPs may continue to conduct business without a license, and also setting guidelines that needed to be followed by licensees working with TPPs.2 Specifically, the guidelines describe what types of sales-related activities TPPs can engage in, how the flow of funds from a TPP-assisted transaction should be structured and how TPPs can be compensated for facilitating a transaction. First, although a TPP can receive orders from customers and transmit pr actica l win ery & vin eya rd JU NE 20 13 55