Online wine sales: Retailers matter

by on December 9, 2009 · 0 comments

Wine lovers in 37 states can now order wine online from out-of-state sellers and have it shipped to their homes. But if you’re thinking of laying in a nice California red to celebrate the holidays, you could have to pay more if your state law only allows you to order online from wineries.

This topic came up yesterday while I was testifying before the Tennessee General Assembly’s Joint Study Committee on Wine in Grocery Stores. Rick Jelvosek, a Tennessee wine consumer who testified on behalf of Tennessee Consumers for Fair Wine Laws, asked lawmakers to allow out-of-state retailers to ship to Tennessee consumers, so consumers could have access to a greater variety of wines than they can get from the 160 wineries currently licensed to ship wine to consumers. (Video of the hearing is available here.)

Letting retailers ship directly to consumers also lets consumers save money. In 2002 and 2004, Alan Wiseman (now at Ohio State University) and I gathered data on the prices and availability of a sample of popular wines from online sellers and in Nothern Virginia retail stores.   For most bottles, the lowest online price was offered not by the winery, but by a retailer. Usually a California retailer offered the lowest price, but for a few bottles the low-price retailer was in Illinois, New York, Washington DC, Missouri, or Texas.  We suspect the reason is that California allows wineries to bypass wine wholesalers and sell directly to retailers if they choose. The tabulations are in this article.

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