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D2C Wine Shipping Challenges

The document discusses issues with direct-to-consumer (D2C) wine shipping in the United States, including state bans that existed in 37 states in 2002. It notes that lifting the bans could increase online wine sales by 25%. Several problems are outlined, such as wholesalers opposing direct shipping and states adopting a three-tier system requiring alcohol to pass through distributors and retailers. Alternatives like legislative changes or legal challenges are mentioned but have downsides in terms of costs and implications of challenging differing state laws.

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ramneetskalra
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73 views9 pages

D2C Wine Shipping Challenges

The document discusses issues with direct-to-consumer (D2C) wine shipping in the United States, including state bans that existed in 37 states in 2002. It notes that lifting the bans could increase online wine sales by 25%. Several problems are outlined, such as wholesalers opposing direct shipping and states adopting a three-tier system requiring alcohol to pass through distributors and retailers. Alternatives like legislative changes or legal challenges are mentioned but have downsides in terms of costs and implications of challenging differing state laws.

Uploaded by

ramneetskalra
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Free the Grapes...

Tarun Sethi # 05 Rajiv Kumar Jain # 16 Ramneet Singh Kalra # 36

Direct To Consumer
Direct to Consumer : The model in which the role of middlemen like Wholesalers, Retailers, Shopkeepers is not there. This results in cheaper prices and ensures better delivery and availability to the consumer. Demerit: The only demerit is that the customer cannot see/ touch or feel the product beforehand.

The Biggest Hurdle


Will Mr. Foster be able to free the grapes ??????? California wineries were welcoming 14.8 million visitors each year majority of them for Cabernet Sauvignon

D2C Shipping Problems and Issues


In 2002; Wine shipping directly was either banned or almost banned in 37 states. Since all the wines were not available everywhere, and the Internet became a huge interactive media resulting in birth of e commerce. Online prices were less and thus more sales were expected. The state bans were part of a comprehensive regulatory system. Following the repeal of prohibition 1933, most states adopted a three-tier system. However, 30 states permitted in-state wineries to ship directly to consumers while banning out-ofstate producers from doing the same.

D2C Shipping Problems and Issues


State Bans in D2C Online wine sales could account for 5-10% sales And removing these bans could result to 25% sales 1994-1999, consumers spent approx $500 million on online sales or 3% Vines took 3 years and Ravenswood had taken 15 years to go into profit Laws were from after prohibition after 1933

Problems and Issues Cont


Only 12 states had reciprocal sales and shipping pacts in 2002 even though Interstate direct shipment legislation was advocated in 1980s. Laws were passed that made inter-state shipment of wines a felony. Florida state was proclaimed as a Felon State.

21st Amendment enforcement act allowed states to sue wine makers in federal court over direct shipping violations. Wholesale distributors opposed direct shipment. They argued that the three-tier system prevented underage drinking, helped to control the market & protected states against the loss of revenue.

3 Tier Architecture. Issues and Results


Alcohol had to pass through state listed distributor and a retailer 2002- 12 states had reciprocal sales and shipping pacts 15% of these wines available online couldnt be purchased from stores Lower prices online 18-20% less prices Distributors handled several 100 brands as well and were stocked enough. Distributors were politically active at state and local level

Alternatives
Legislative Approach Aimed to change the laws that prohibited direct shipping. This may have serious implications as all States had Different Laws and legal cases against 50 would have serious repercussions.. This approach would have high costs. Outlays included lobbying expenses, campaign contributions & media spending. Take the issue of state bans to courts The state bans may lose in the Supreme Court. Winning a suit might end up damaging the interests of small producers.

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