Issue link: http://winesandvines.uberflip.com/i/892087
28 WINES&VINES November 2017 Viewpoint E arlier this year, I was having lunch in Boston with a key account manager from our Massachusetts distributor. We were talking about what I'd done during my last visit, which included a really cool dinner at Blue Ginger (sadly, now closed) that had such a large consumer response they had to move the dinner into a larger room. I also conducted a sold-out tasting seminar at the terrific retailer Gordon's in Waltham. I mentioned that we'd sent news about the events out to our mailing list and wine club members, and that I thought this was a big reason why we'd gotten such a good turnout for the events. His response took me by surprise, though it shouldn't have. He said, "I know, we oppose direct ship- ping, but I guess it can have its uses." I've been meaning ever since to write about how mis- understood direct shipping is among most actors in the wholesale market, and how short sighted their opposition to it is. After all, our wholesale business in Massachusetts is up 38% this year and was up in 2016 and 2015 after nearly a decade of essentially flat sales. Our Massachusetts wholesaler is on pace to sell 55% more wine than it did in 2014. Most businesses would kill for this sort of perfor- mance. So, what turned things around? I would submit that the biggest factor was that in February 2015, a new law brought Massachusetts into the growing majority of states that allow direct shipping of wine. At first, it seems counter intuitive that opening up a state to shipments from wineries in other states should help the sales of that winery's wholesaler. Doesn't each sale offset another in-state sale? Not really. Here's why the ability for a winery to ship to a state should generally increase their wholesale sales there: Wineries are better able to make and cultivate fans This, I think, makes a lot of sense, and it works in at least a few ways. Each year, a winery like ours sees visitors from every (or nearly every) state. Of course, more are from Califor- nia than anywhere else, and a disproportionate number are from the larger western states, but we see a few hundred visitors from a state like Massa- chusetts each year. • If these visitors can't sign up for our wine club and can't order wine from us, it's a lot harder for us to establish a meaningful connection with them. That means that when these people return home and see a Tablas Creek wine on a wine list or the shelf of a wine shop, we're less likely to have developed enough of a connection with them that they choose that wine over others. • They are also less likely to bring Tablas Creek to friends' houses, and therefore the critical peer-to- peer market is harder to activate. • I also believe (though this would be difficult data to gather) that shipping bans discourage wine tour- ism from those states, since those consumers are likely to experience some degree of frustration in getting any new discoveries home. The wines that people order are not the same wines they buy at retail The idea that consumers will exchange a purchase at their local shop for a purchase of the same bottle online is pretty far-fetched. Consider why: • Wine is expensive to ship. It's heavy and perish- able, which means that even if (like us) you sub- sidize the shipping costs, a consumer will see added prices of at least a few dollars per bottle for cross-country shipping. Because wine is alcohol, all packages have to be signed for upon delivery, and the con- sumer will have to wait at least a few days to get their wine. Add to this fact that wineries have to jump through sig- nificant legal and compliance hoops to get shipping permits, and the net result is that it's not worth it to ship inexpen- sive wines—or wines that have good representation in distribution—di- rect to consumers. The average price of a bottle of wine sold in the United States is about $7. Even with growing n JASON HAAS Direct Shipping Is Not a Zero-Sum Game