Friday, March 20, 2009

Obit written again on Md. direct-shipping bill

The note came Friday morning from Adam Borden, who became one of the principal spokesmen for a bill that would allow Maryland wineries to ship their product directly to home. It was brief, to the point.


And so another attempt to allow Maryland wineries to ship wine by mail was denied. How many of there been? Might be 11 years; might be 12. Certainly it's an issue that has come up numerous times, found intense resistence by the Maryland wholesalers and retailers, and died on the vine. Borden wrote later that he's know more by the end of the weekend or the first of next week about how close they came and how much progress they made over last year. Any gains, he suggested, will help prepare for another fight next year.

Kevin Atticks is the executive director of the Maryland Wine Association. Reached earlier this week, he had lost some of the optimism he had before the hearings began. That when he was talking about Maryland being one of five states that were reviewing their direct shipping laws. Another is
New Jersey. He was hopeful that by the end of the wrangling, all five bills would pass and the total of states that permitted direct shipping would reach 40. Well, make that 39 now. Actually, if you want to acquaint yourself with how each state handled the issue of direct shipping, click on this link.

"It's a wait and see," Atticks said on the phone on Monday. "No news in this business is not good news. We're just waiting [to hear]."

The news ended a whirlwind month for Borden, who said a couple of weeks ago in an initial conversation that he runs a venture capital fund that invests in specialty food companies. While he was taking the reins of this grassroots movement to overturn the wine laws, Borden was also waiting for news from home that he pregnant wife was going into labor. On Feb. 18 he was testifying in the Senate until around 6:30 p.m. The baby was born the next day, before noon. Mom and child came home on Sunday, the 22nd, he said. On the 23rd he was back in Annapolis giving more testimony.

Bosden's predecessor, Atticks said, left the state and moved to Texas, "a beautiful wide-open state where you can get anything [shipped] you want." Speaking to Borden a few times over the past few weeks, he obviously has learned a lot nis his first year directing this consumer effort, particularly about the obstacles that exist when it comes to getting free shipping passed. What galls him the most are the figures that show how much he says the state is losing, let alone what the wineries aren't getting in revenue and what consumers are being denied in terms of convenience.

The current process, he said, is so convulated that "in the six years that this program has been in effect, there have been six wineries that have participated in this program, none I've ever heard of, and the state has collected a whopping $140 [in fees].

"Just to put in perspective, New Hampshire last year alone collected $520,000 via is direct ship program and that doesn't even include a sales tax because they don't have one," he said, his voice more awah in frustration the longer he talked about the past few weeks. "So that's just permit fee and excise tax. So it's clearly been very unsuccessful . . . and it has been so because of the process. No one in their right mind would go through this process."

A day to reflect on the states of wine law

I've been slowly gathering enough material to allow for several consecutive posts about the business of selling wine and some of the issues that are arising in the mid-Atlantic. In New York, legislators are talking about changing the law to allow supermarkets to begin selling wine.

Dr. Vino, acknowledged as having the best wine blog in the country, has been posting on the issue the past couple of weeks. Sharing a couple with you. This one was posted this morning.

The budget battle in Albany looms on the calendar–and with it a decision for a possible overhaul of New York wine retail law that would expand wine sales to supermarkets. (See backgrounders here and here.)

In an op-ed in yesterday’s NYT, wine shop owner Marco Pasanella makes the case that he and other independent shops should be allowed to expand to have more than one location and be able to sell bread, cheese, microbrews, and, yes, recyclable bags, which they are not allowed to currently sell. I’ll drink to that! In fact, it is absurd that this corollary is not in the proposed reform legislation and should be corrected immediately.

I stopped by Pasanella & Son last week for a book signing. It is a handsome shop with an antique Fiat on the floor; the wine selection is excellent. The staff did a fantastic job setting up the event and it was great to see so many people, particularly from the neighborhood turn out. In his op-ed, Marco says that the staff at a local shop will remember a customer’s name. In fact, one woman there that evening told me that the staff member actually remembered which wine she had bought on her previous visit when she couldn’t. Bet that won’t happen at D’Agostino.

Also check out their clever and popular free wine and movie nights, Sip ‘n Cinema!

And here's one he posted on March 5.

Christy Frank of Frankly Wines–last seen in front of her cork wall–returns with some answers to a few of my questions about the possible changes NY wine retail.

Size of store: 320 sq feet, possibly the smallest in Manhattan [66 West Broadway; Tribeca]
Style of selections: well-edited! My version of the well-stocked wine closet: including daily essentials, quirky finds, and higher end treasures. Selection skews toward the Southern Hemisphere.price average: 50% of stock is $20 or less

A cool bottle: “Syrocco” Syrah 2006 (Zenata, Morocco) - eye-rolling aside at the clever, rhyming name, the wine is a great value at $16.99. Alain Graillot of Northern Rhone fame is the man behind this project.

Date store opened: December 14th, 2007

Position on proposed reform to allow food stores to sell wine: There’s a Whole Foods around the corner, so the possibility that this will pass, combined with the current economic environment does worry me. Prior to opening my wine store, I ran the national business for several wine brands, so I understand that independent wine/liquor stores can co-exist with large, corporate grocery chains that also sell wine. However, given the current economic environment, this is probably not the best time to test the entrepreneurial spirit of the existing independent retail base to adjust to a drastically changed regulatory landscape. What I find interesting about this proposal is that the benefit (or possible lack of benefit) to the consumer barely enters into the discussion. The proposal was issued as a way to raise state funding, and as such, I think the financials need to be given real, detailed scrutiny.

I’ve seen top-line numbers from both sides, but the devil is in the details - and the only detail I have seen is the written testimony submitted by Whole Foods on 11/30/07 in preparation for last year’s budget (found herein pdf). I hope that unlike the scenario in that document, the State’s calculations take the negative consequences of existing store closures into account. I hope that “700 full-time-equivalent jobs” are enough to off-set the jobs lost due to those closings. And I hope that if passed, the actual franchise fee per location isn’t actually 10% - 0.2% of location sales for small stores ($500K or less per year) and only 0.05% - 0.06% of sales for the largest stores.

My suspicion, although I welcome hard numbers that firmly indicate otherwise, is that this plan will transfer wine sales from small, local retailers to large, corporate chain grocery stores at the time when these retailers have the least chance of success to successfully adjust their business models.

What you might do differently if passed : I already focus on smaller, boutique brands and offer a very high level of service. Ideally, the legislation would allow me to sell high-end beer and a small selection of gourmet goods - without turning myself into a full-on grocery If a grocery store gets to tag wine onto their existing business model, I should think I should have the opportunity to tag beer and cheese onto mine.

And if grocery stores are now allowed to sell wine in multiple locations under the same corporate license, shouldn’t wine stores be given the same ability to gain scale and compete? I’d love to see Frankly Wines logos in locations across the city….I bet I can pick up some old Starbucks leases on the cheap…if only I could find the funding.