Amazon.com, the nation’s largest online retailer, may soon be selling wine.
The trade publication Wine Industry Insight reports on its website that Amazon is recruiting wineries in California’s Napa and Sonoma counties for online wine sales to launch before the Christmas shopping season. The wineries will handle the shipping, with Amazon leveraging its power to obtain favorable shipping rates from UPS, the report said.
If Amazon succeeds, it could be a blow to the traditional “three-tier” system that filters wine from producers through distributors to retailers. Direct-to-consumer shipping has chipped away at the system, helping wine lovers gain access to wines that can be hard to find. But progress has been fitful. A patchwork of state regulations, fees and registrations makes compliance difficult.
Wine Industry Insight also reported that the online retailer had reached an agreement with WineDirect, a company that helps wineries navigate the compliance thicket, to ensure sales are legal.
U.S. wineries shipped nearly 3 million cases of wine directly to consumers in the 12 months ending in July, an increase of 7.2 percent over the previous year, according to a recent report by Wines and Vines, a trade magazine, and Ship Compliant, another company that helps wineries comply with the myriad of state regulations. Overall wine sales increased only 2.9 percent in the same period.
Why the increase? Of the 7,415 wineries in the United States, 78 percent produce fewer than 5,000 cases of wine each vintage, totaling only 2.2 percent of U.S. production, the report said. On the other hand, a mere 50 wineries produce 83 percent of all U.S. wine. Those huge companies dominate the three-tier system.
Coupled with consolidation in the wholesaler industry, smaller wineries are often squeezed out of normal distribution channels. Those smaller wineries are driving the direct-to-consumer movement.