Interstate wine shipping: What's the deal?

© by John Juergens

Anyone who has been out to California or shopped for wine in a large metropolitan area knows that we have available to us only a tiny fraction of the wine that is on the market in other states. I get a lot of questions about ordering wine on the internet, through mail-order directly from wineries, and from the many discount wine clubs that have sprung up around the country. Although this might seem like a simple solution to quenching our parched palates, there is just one little aspect that can prove to be a bit problematic: It's illegal in most states.

According to the Mississippi Code of Rules and Regulations, the State has the sole right to import alcoholic beverages into the state in any kind of quantity. As with most other states, however, Mississippi allows small amounts of alcohol to be brought in for personal use, usually less than a gallon. The law is concerned primarily with the commercial shipments that are targeted for retail sale.

You might have heard that some other states allow consumers to import up to several cases of wine a year, but what you might not have heard is that still other states are cracking down on what is called "direct shipment" of alcohol by making it a felony offense. So what is this all about and what's the big deal if I want to order a case of Robert Mondavi 1990 Reserve Cabernet Sauvignon. Of course, it's money.

As in many industries, the wine industry is, for the most part, set up on a three-tier system, that is, producer, distributor/wholesaler, and retailer. As wine passes through the system, at each transaction the middle people take a cut of the action. Although it can get very complicated, there are two basic ways wine gets from the "haves" to the "have-nots."

In states like Tennessee and Louisiana, there are the normal wine distributors or wholesalers who contract with wineries to carry their products. In other states like Mississippi, called "controlled states," the state acts as the distributor/wholesaler and the retail wine shops purchase products from the state. In such states there is another critter lurking in the wine cellar called the broker. These are the people who act as the go-betweens or representatives for the wineries and the state alcoholic beverage control board, or ABC. Of course, these brokers get a bounty on each case sold, so in controlled states we have more of a four-tier system.

Beginning to get the picture here? There is a bunch of money to be made by middle people off of the tiered system, and this system is so competitive, almost to the point of being cutthroat in some markets, that those middle guys don't want to give up a single penny of what the law allows them to collect. But direct shipment of wine bypasses not only the middle people, but the state as well since you don't usually pay taxes on wine you receive directly from the winery or discount wine club.

You might ask, just how much money are we talking about here; it can't be that much, can it? Of course, no one really knows how much wine is shipped illegally directly to consumers, but the figures quoted in the lawsuits over this issue range from $350 million to $700 million a year. Regardless, direct shipping represents a lot of lost tax money and middle man compensation. And therein resides the meat of the issue.

The alcoholic beverage wholesalers are a very powerful lobbying group and could probably beat the snot out of the Teamsters and the UAW at the same time. They are the major force driving the draconian legislative reaction to direct wine shipping all across the country. However, the wine and spirits wholesalers don't argue on economic grounds since nobody would feel the least bit sorry for them. The thrust of their argument is that direct shipping is a real and present public health hazard since it will open the door wide to under age alcohol access. Yeah, right. Some seventeen year old kid is going to snatch his or her parents' credit card, call up or dial up on the internet a wine club, order a case of wine for $150 to $200, and wait patiently at the door so that no one else in the house intercepts the shipment a week later. This is absolute nonsense and just a smoke screen.

In this battle, wineries are the David to the wholesalers'Goliath, but David has some pretty big stones in his pouch to fight back with (double-entendre intended). The wine industry is taking a Constitutional approach arguing that the prohibition on direct shipping violates the Twenty-First Amendment, which prohibits states from taking actions that impede interstate commerce. Unfortunately, this battle is likely to continue for many years since it is being fought state by state rather than in Congress.

Now, I'm not encouraging anyone to break the law, but for the sake of education, let's take a look at the economics of ordering your wine over the internet or through mail order. Buying from the winery usually is not the best deal since they normally charge the full retail price for their wines. Why wouldn't they? However, discount wine clubs purchase large amounts of wine from wineries and get a much better price, which they usually pass on to the consumer. You just have to figure out if those savings are worth the risk of ordering directly.

For example, Kendall Jackson's regular Chardonnay sells locally for about $15. The average price from several of the wine club catalogs is about $11.50. Quite a savings, you say. However, you still have add tax to the local cost, in this case about $1.00, for a total of $16.00, and you have to add shipping to the wine club cost. Shipping charges vary from club to club, but average $2.50 to $3.00 per bottle. This brings cost of the club bottle to about $14.00. Still a savings of about $2.00 per bottle. Is it worth it? Maybe, maybe not. The other thing to consider is that you usually will have to buy a case of wine, 12 bottles, through mail order, which can be a sizable investment all at one time. Although you can order a mixed case of twelve different wines, you are still looking at something in the range of $150 at a minimum and probably more.

Where mail order economics really kick in are in the higher priced wines and imported wines you just can't get except in a very large metropolitan area. While your net savings on a $20+ wine might be as much as $4 or $5, it makes no sense to buy inexpensive wines through mail order that you can get locally since there will be no savings and you might end up paying more due to shipping costs.

You can find many discount wine clubs on the internet and you will have to decide for yourself if this is something for you. If you are going to venture into this practice, my recommendation is to check out a list of wines that you know and compare their prices plus shipping with what you would pay locally. Also, check to see if they even ship to your state; some do and some don't. If you find something you just can live without and actually place an order, then all you have to do is wait for it to arrive. During that time you can figure out how to assuage your conscience and sense of paranoia for breaking the law.

My wine pick of the week is Calera Central Coast Pinot Noir. This wine is so rich and luscious I had difficulty putting the cork back in and saving half for the next day; so I didn't. Drank the whole thing. It has all sorts of things going on in the aroma and flavors, and it continues to change in your glass. It is completely balanced in terms of fruit, acidity, and all its other components, and it is made in the style of the great Burgundy wines of France.