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For the latest in Direct-to-Consumer sales.  Featuring posts on compliance, direct sales tips and trends in the wine industry.

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Matthew Mann
 
April 22, 2009 | Matthew Mann

Age Verification: Kansas Model The Right Step

Kansas became the most recent state to adopt sensible, verifiable direct wine shipment when Gov. Sebelius signed a law passed by the Kansas legislature that would permit Kansas residents to purchase up to 12 cases of wine per calendar year from out-of-state wineries who obtain a Special Order shipping license for only $50. The law takes effect on July 1st.

Of significance the law includes an age verification requirement that will assure that only adults can make a purchase and a tax bond requirement to assure the state that the licensed winery will remit the appropriate taxes. It is a win-win across the board and is a model of the type of shipping laws states can adopt to allow wineries to sell to customers in their state without undue restraints yet still provide the level of security and accountability desirable to prevent wine from falling into the hands of minors and for the payment of excise and sales taxes.

Age verification is a relatively new wrinkle in the laws being promulgated by states entering the world of direct shipment and I think it is a good idea. Age verification services now make it possible to efficiently verify a potential purchaser’s age online for a transaction fee of around 40 cents each. Yes, it creates an extra burden on wineries shipping to the state. But it also gives assurance to states considering opening themselves to direct shipment and is powerful ammunition against specious arguments that teenagers will be able to order wine online. As more states adopt age verification requirements it is reasonable to expect these transaction fees to come down as the volume of orders using the systems increase.

It’s all about making wine available in more states and to more consumers who want that access. Age verification is a tremendous use of technology to accomplish that goal.
 

WineDirect Admin
 
April 17, 2009 | WineDirect Admin

Some people just GET IT… Period.

I’m spending some time in Florida, introducing Direct-to-Trade and some incredible wines to select accounts in Naples, Tampa and Orlando. I feel like I’m coming to a knife fight with a Bazooka! I’m taking the state by storm, armed with some incredible juice with incredible pedigrees; Lamborn Family vineyards, Jones Family Vineyards, Three Sticks and Olson Ogden just to name a few. In this rough economic climate, the smart people are looking for ways to survive, differentiation is one way, and Direct-to-Trade is the way to accomplish it.

This evening I walked into Absinthe Restaurant, a beautiful restaurant on the north side of Naples. It has an incredibly clean look without being sterile. The colors were soft, yet contrasting, white and a green you’d find after peeling a cucumber. I sat down at the bar and introduced myself to Armand, the owner/manager/bartender/husband/father which explains why he was attempting to wipe the exhaustion out of his eyes. We chatted for a quick minute as I explained the program and he responded with “Makes sense, let’s taste some wine.”

After tasting through the line up, he was blown away by the 2006 Three Sticks Chardonnay, and the 2006 Olson Ogden Pinot (which will soon be available exclusively in Naples at Absinthe, hence the differentiation) but now to the good part, I wanted to stay for a bite to eat. I asked him to pick two dishes, which is kind of a status quo for me, as I figure who better to ask than the people that eat the food on a regular basis, right?!

The first dish he brought was a julienned salad of apples and machengo cheese with copious amounts of fresh crab and a few caramelized onions… WOW!
Round two; two lamb sliders (which were more along the lines of mini burgers than sliders) with goat cheese and thinly sliced rounds of egg plant with a bit of arugula … Speechless. I live in the Napa Valley so I’m pretty spoiled when it comes to food, and I have never had a burger, lamb or otherwise, that has come anywhere near perfection as this one did, Thomas Keller take note (and I know I’ll be hearing from Thomas as he follows my blogs religiously). BRAVO my friend. Look, if you go to Absinthe, order the Lamb Sliders and don’t like them, send me an e-mail along with an explanation and I’ll refund your money.

Moral to the story? Armand gets it. In this economic climate you have to set yourself apart from your competition; whether it be through the food you serve, the wine you have on your list, or the service you provide, you need to do it and do it right. Armand has the food, he has the service, and now, thanks to Direct-To-Trade, he has the wine, Armand GETS IT….Period.
 

WineDirect Admin
 
April 15, 2009 | WineDirect Admin

Back to the Future

There’s been a lot of talk about the current state of the economy and how it effects the wine industry. On this blog alone there’s at least three recent posts dealing with the subject, so I figured I’d talk about something completely different - let’s leave the current situation for now and think about the future and the past. We’re in the business of trying to shape the future and make it better for wine producers and consumers. But will we ever be able to escape the kinds of constraints that the wine industry operates within today?

The Past Isn’t Dead. It Isn’t Even Past.
In January The New Yorker published a great article by Atul Gawande, where he describes health care systems around the world in terms of Path Dependence. Simply put, path dependence is the phenomenon by which a situation in the past continues to constrain the evolution of a system well after the original situation ceases to exist. I see this all the time when working with software. Why is Microsoft Internet Explorer by far the most popular web browser? IE achieved dominance in the late 90s thanks to (among other reasons) a competitor with scant resources (Netscape), a licensing deal with AOL, and greater support for emerging standards. Today none of these reasons is relevant but the “path” that led us here has helped maintain Microsoft’s huge advantage in market share.

The parallels in the wine industry are clear. The three tier system is a perfect example of path dependency. It came into being in a time when government wanted a limited distribution network in order to make taxation easier and keep organized crime out of the business. Today technology has made taxation of goods much easier and organized crime is not a concern when it comes to trafficking wine and liquor. But the three tier system remains because economic and political entities have grown up around it and have an interest in maintaining the status quo.

Talking ’bout a Revolution?
So are we forever trapped in the past? Why not throw off the shackles of path dependence and create a new system? While that sounds exciting it’s not likely to happen. Massive institutional change is often messy, time consuming and expensive. Revolutions are rarely bloodless. But the news is not all bad. It is possible to change a situation without escaping the constraints of path dependence. To extend my web browser analogy, although Microsoft maintains browser dominance Firefox and Safari have chipped away at its market share and also innovated in ways that Microsoft has been forced to adopt in IE, making the browser market better for consumers overall.

The Same but Different
If change is going to happen it’s probably going to be within the current system. Inertia and other companies have spent a lot of time making the three tier system work as well as possible for wineries and consumers. Even though this is difficult, it’s probably still easier than investing in trying to completely change the system. Institutional change does happen – if Iowa can allow same sex marriage then anything is possble – but its progress is often slow and unpredictable. We’ve had a lot of success building programs on top of the current regulatory structure. I believe the future of the wine industry, even when dependent on history, is going to look much brighter than its past.

WineDirect Admin
 
April 14, 2009 | WineDirect Admin

It’s A Tough Market Out There

As part of the Inertia Direct-to-Trade (DTT) initiative, I’ve recently spent time on the street in various markets calling on restaurants and retailers, introducing our DTT program and, ultimately, selling wine. As you all know, it’s a difficult market right now.

To give some perspective to my comments, I’ve been selling wine for 31 years, starting with carrying a bag for a Gallo wholesaler. I’ve called on thousands of accounts, selling wines of all prices, and this is hands down the toughest market I’ve seen. Okay, so you already know this. The question is, what to do about it.

First thing to keep in mind is that consumers are still buying, drinking, and enjoying wine. There was a study done in 1981, the last of the Carter years, that said that consumption of alcohol beverages will only decline when unemployment exceeds 11%. Last I saw current unemployment is around 8.5%, so we are good there.

However, while volume of consumption doesn’t decline, price point does. The consumer is buying less expensive wines today than they were a year ago. No great revelation. But again, what can you do to keep your wine moving?

If you have distributors, I’m sure they are telling you that the market is awful. My suggestion is don’t take their word for it; they are selling wine. In many cases, they are decreasing their inventory, so while they are selling wine, they’re just not buying as much. Your job is to make sure they sell your brand, not just the other brands in their portfolio. How? Be aggressive. Make market visits. In tough times, it’s all about getting distributor share of mind.

Next, I would consider adding markets you’re not already in. Is there a market or state that you have no representation in, but would like to? Maybe the Inertia Direct-to-Trade program could help. In the same vein, make an effort to sell to trade accounts in your area. Right now the trade is in control. Give them attention, feed their egos. They still need wine to sell.

The other avenue to consider is your Direct-to-Consumer business. Inertia will be holding a Workshop for our clients on May 14th, specifically focused on how to grow your Direct-to-Consumer business in these tough times. If you are an Inertia client, look for announcements on the dashboard of your RTE.

Lastly, this is a time to be patient. However, being patient doesn’t mean accepting current results without trying to counteract the trends. And, it does mean not damaging your brand by selling wine at prices so low, you’ll never recover from. At all costs, you must protect your brand equity.

My guess is that we are in an inventory correction right now, and by holiday 2009, we will start seeing a return to recent form. At least I hope so.
Good selling.
 

WineDirect Admin
 
April 2, 2009 | WineDirect Admin

Launching the Enhanced DTT Wine Distribution Platform

Many years of planning and one year in the making, WineREvolution.com has officially gone live! While still in its Beta form, WineREvolution.com provides one of the industry’s only ecommerce wine distribution channels, allowing wine suppliers access to wine buyers in up to 12 states, or over 50% of the American wine marketplace. With the site, wine retailers and restaurateurs have access to a selection of boutique, artisan and limited-production wines not widely available through traditional distribution channels. Currently over 60 brands, and 300 SKUs are featured.

WineREvolution.com is one product within Inertia’s Direct-to-Trade program, and aims to provide a complementary channel through which suppliers can market their products directly to the trade. For trade buyers, the opportunity is to gain access to wines not currently in their market, and assist in differentiating their wine selections. For suppliers, finding access to new and desired markets is one of the greatest challenges – our program helps overcome those barriers. For both buyers and sellers, our program provides the ability to build desired direct relationships.

This is a big day for Inertia and, we believe, an exciting day for the wine industry at large. Thanks to everyone who made the launch of this exciting product possible: friends, wineries, sommeliers, our loyal trade buyers, and, of course, the entire Inertia team.

Stay tuned for more great things: enhanced functionality, more states available, and many, many more amazing products in the portfolio!