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01.04.2008

Wine.Com Gives Retailers (and Consumers) The Finger

Vinography may be the last place you expect to see discussions about the esoterica of interstate wine shipping laws and the ongoing legal battles around them. But once in a while, dear readers, someone in the industry does something so outrageous that even I have to dip my toe into the pool, and start yelling "bullshit" along with all the other folks.

The latest offenders? Wine.Com, the internet wine retailing giant, whose lawyers have just sent tattle-tale letters to state governments around the country trying to convince them to take legal action against Wine.Com's competitors.

First, a little background.

Most of you know, some of you painfully so, how much the American interstate shipping laws are screwed up when it comes to alcohol. Because regulations are set on a state-by-state basis, and because many states run government-controlled liquor distribution monopolies, it's effectively impossible for a winery or a retailer to sell wine to every customer that wants it around the country. Indeed, a whole industry has sprung up of companies that do nothing but help those who want to ship wine across state lines manage the red tape for each and every state, or at least those states which don't expressly forbid shipping wine across their borders.

But the wine industry has a bit of a dirty little secret -- people break the rules all the time. Wineries and retailers (especially retailers) and the consumers that buy from them have all sorts of ways of getting around the shipping regulations. From shipping wines labeled as "samples" to using third party shipping companies, to simply "forgetting" to label their boxes with the required "Contains Alcoholic Beverages" stickers, among other things.

And you know what I say? Good for them. If the state governments of this country are too close minded to pass sensible laws that let adults buy wine on the Internet from out of state AND they are too bureaucratically challenged to enforce those laws, then screw 'em. Which is precisely what thousands of retailers, and in particular, Internet retailers have been doing for years -- discreetly helping wine lovers buy the wine they want to buy.

Those who don't want to break the rules, however, must be resigned to opening operations (distribution centers, offices, etc.) in every restrictive state in order to be able to sell wine to consumers in that state legally.

Which brings us to Wine.Com, which has, of the course of many years, gone to the trouble and expense of opening distribution centers all over the country in order to be able to completely abide by the letter of the law when it comes to shipping wine. As a large corporation, backed by heavy institutional investors, that would certainly be the prudent thing to do.

But now, like the goodie-two-shoes kid on the playground, Wine.Com is sending letters to state government agencies telling them the names of specific retailers who they claim are breaking the aforementioned state laws, and requesting that the state take legal action on those companies. Which is sort of like taking down the license plate numbers of cars that are going more than 65 miles per hour on the freeway and reporting them to the highway patrol. Can you imagine?

To quote a letter sent by Wine.Com's lawyers, Davis Wright Tremaine, LLP, to the Washington State Liquor Control Board:

"...the following retailers continue to state on their websites that they can sell and ship wine directly to Washington State residents. In some cases these retailers have indeed sold wine again: [names retailers directly].... As these retailers are dismissing [your] earlier direction to cease sales and shipments into Washington without a license, we respectfully request that you consider taking further action against them.

In addition, during the past few days, the following retailers sold wine over the internet that has been or will be shipped to a Washington resident. Copies of the shipping confirmation e-mails are attached.... [names retailers]...."

Yes, you read that correctly, Wine.Com or their friends are ordering wine from these retailers, having it sent to them in Washington and then turning the retailers in to the government. It's their own private sting operation against their competition.

The wine industry, while competitive, is generally marked by a real collegiality, and it's despicable to see such shallow, backstabbing behavior on the part of Wine.Com. Shame on them. It's mean spirited from a competitive standpoint, and it has the indirect effect of screwing ordinary consumers.

While I have purchased wine from them in the past, especially as corporate gifts for my clients, Wine.Com can no longer consider me a customer moving forward.

For more on this topic, please see the report today from the Specialty Wine Retailer's Association, which is a reprinting of an article from the Wine Market Report (8k PDF)



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