The ever enlightening Jeff Lefevere at the Good Grape just completed the Top Ten issues plaguing the wine world and has provided counter arguments to each, which I thought was quite clever. One such item that grabbed my attention was the subject of Direct Shipping or sometimes called Direct to Consumer (DTC) transactions. Living in Georgia we have had a really tough time with alcohol legislation and to me, it seems like a no-brainer.
I threw in my two cents last night by commenting on Jeff’s post, but, then it got me thinking more about it and maybe I rushed to my conclusion too soon and thought we could extend the discussion on just this topic and see what everyone thinks. If the 21st amendment as it relates to alcohol regulation governed by each state was relaxed, it seems to me that increased choice and availability for the consumer would result. Additionally, it seems that wineries’ profits should increase by removing the middlemen and this also allows all of the smaller wineries to play in the reindeer games too. So, this sounds like a win-win all the way around, no?
Now, if I try to put those 10 credits of Economics (enough to have a Minor) to use, assuming I can remember any of it, this will also increase supply, which should result in lower prices: good for consumer, maybe not so good for wine, or is it? Again, due to disintermediation, wineries get to keep more of the money. But, maybe this also increases demand as consumers have more wine to enjoy and learn about, but this should lead to decrease in supply which will result in the opposite of what I just said. Hmmm… What do you think? DTC is good or not-so-good?
The (Nutty) Professor.
Last time I checked this was a democracy in which the majority rules…..or at least “should” rule. Relaxed legislation is good for the consumer and good for the wineries but bad for the distributors. I would also argue that it’s good for the government as it provides addtional tax revenue which the politicians are eager to get ther hands on and waste…..but I digress here so I will stick to the point. In summation, the tally is 3 to 1 so nuff said !!! With regard to less profits for the wineries due to an increase in supply, I would argue that the additional revenue stream, volume sales and additional margins (elimination of the “middleman”) would more than offset a potential decline in prices. However, the real litmus test would be, “Does it make me happY ?” and the answer to that my frieinds, is HTTY !!!
Direct to Consumer has to expand. All antiquated obstacles for obtaining wine should be removed.
Ash
Mr. Magoo… hmmm.. that “HTTY” statement sounds awfully familiar… thanks for the comment.. and Ashley, I agree wholeheartedly… so, where are those nay-sayers?
I could play the role of a nay-sayer, if you like, as I think you may be preaching to the choir here in politicking for relaxed DTC legislation.
Of course, I would need script approval and my entourage is getting a little pricey since I added a personal sommelier. But your people should totally call my people.
I replied over at Good Grape on the DTC issue asking, “Who does it really protect?” Isn’t the youth argument a bit stale and unrealistic in this day and age? How many underage youths dream of ordering alcohol online, paying for shipping and then waiting for it to show up?
Or is the DTC argument more about the quantity of supply that the states have or something less apparent?
Thanks Todd for taking on the role. Other than Mr. Magoo who mentioned some interesting pros to the intermediaries I had an interesting conversation with on of my employees at Thursday happy hour about his take on this topic. He reads my blog, so I hope he changes his mind and replies. Basically, as a business owner in a previous life, he found real value in intermediaries in the supply chain and listed some very good arguments including ability to get price breaks for volume, ability to reach broad segments of the marketplace, etc… there was much beer consumed so I can’t remember them all… plus, I’d like him to post : )
Cheers
To add more fodder to the conversation, Josh at Pinotblogger.com aluded to some concerns around DTC in the wake of the Amazon/NVL situation @ http://www.pinotblogger.com/2009/06/04/inertia-buys-new-vine-revelations/
Is there a real concern in the model being able to function properly in this industry?