Wine.com Engenders Major Scorn Amid Shipping Sting

Wine.Com has taken the esoteric and somewhat archaic direct wine shipping laws into their own hands. At the very end of last year Wine.Com, took direct aim at competing online wine retailers by engaging in their own “sting operation” to flush out competing retailers that flout the direct wine shipping laws. Wine.com claims to spend millions in an attempt to satisfy these laws for their own business needs.

This was first reported in the Wine Market Report 12/27/07, where they actually published some of the letters that Wine.Com wrote to state governments detailing these non-law abiding retailers, complete with order confirmations and receipts as evidence of the wine that was shipped illegally to Wine.Com’s “sting operators” in each requisite state. The Wine Market Report was immediately credited and re-told by Alder Yarrow in his venerable Vinography blog on 01/04/08 and the report itself, was archived at the Specialty Wine Retailer’s Association (SWRA) site here.

Since Alder’s post, the issue has exploded across the blogosphere and into more traditional print magazine sites, with both Wine Spectator’s Eric Arnold and Wine Enthusiast’s Jim Gordon reporting on the issue, in their own manner. Jim Gordon had the most interesting take, with an intelligent (and a reluctant) defense of Wine.Com’s tactics and spelled out many of the issues that I have considered while trying to sort out my feelings on this event. Comments have been piling up on the comment section of the post, as well as across other wine discussion outlets across the web.

I initially posted some brief harsh comments about Wine.Com immediately after reading about this story and I still stand by those comments, but have chosen to give my rationale on my blog. Other posters have included Wine.Com executives in rebuttal and many different bloggers around the web as well as wine retailers. Some of the most interesting posts have included a very creative insult/marketing push by Winemonger and a gentleman who canceled an $11,000 order after reading about the the tactics.

While I understand Wine.Com’s frustration with other competing retailers that don’t spend the capital to legally ship to the states where Wine.Com conducted its operation (Gordon’s well-constructed argument and Wine.Com’s angle), these types of “ratting out” activities just do not sit well with my own set of ethics. Rich Bergsund (CEO) and Mike Osborn (Founder) of Wine.Com rationalize that their own activities were necessary to bring the illegal shipping of their competitors to the eyes of state alcohol regulators. Yet, using illegal tactics to point out the illegal tactics of others just strikes me as completely unethical and counter-productive, not to mention just plain asinine.

Feel free to read more about the background on this issue on Vinography, that includes much of the history of this issue since the 2005 US Supreme Court Granholm Decision, or do your own research at SWRA site and Free The Grapes! Perhaps the best silver lining that I can add to this issue is that it has *certainly* re-sparked some major discussion and debate on this important topic and issue facing the wine industry, which can only be a good thing.

Vinopanion: Ward Kadel - @drXeNo

View posts by Vinopanion: Ward Kadel - @drXeNo
Ward Kadel - @drXeNo is the founder of Vinopanion wine blog, former West Coast Ambassador & Staff Blogger for WineLog.net and former Le Wine Buff for Bordeaux.com (CIVB). He will try any and all wines and tends to write about the parts of his life that include wine...like virtually all of it! He and his wife grew up in Napa and Sonoma and they still live in the Napa Valley. Check out the wines he's recommended with his WKBadges. Follow him on Twitter, Instagram and Like #Vinopanion on Facebook. Contact him: "Ward at WineLog.net". Ward happily accepts samples but does not guarantee a review, positive or negative.

3 Comments

  1. Jason
    January 15, 2008

    I was very surprised to hear about this. While I sympathize with Wine.com for having to spend so much money (and miss out on so much business) due to regulations, it was undoubtedly a bad PR move for them.

    Like some others have said, I would much rather of had Wine.com spend their money in other ways to fight “the man” on this issue… ways that would benefit the entire industry rather than just impede their competitors. Because really, I’m unsure of how this helps Wine.com unless they force some of the implied competition to go out of business.

    If site X is shipping to PA, while Wine.com isn’t, _Wine.com wasn’t going to get that business anyway_. But when site X goes out of business (either due to legal fees or the same expenses Wine.com incurs to work with the regulations), those users are going to have shop elsewhere. And many of them will go to Wine.com.

    Maybe I’m a softy, but I’m not a fan of these kinds of business tactics.

    Also by sending these notes to the state governments, Wine.com is indirectly implying that they agree with the laws… when really they don’t. Wine.com would love to legally ship wine to me in Pennsylvania. They would love to avoid the money they spend dealing with the patchwork of regulations. They may be hindering their opportunity to work with these governments in a more positive way.

    At the same time, as you point out, this is going to do a lot to get discussion going again.

  2. Ward
    January 15, 2008

    Another addendum to this on-going story:

    Decanter Magazine has just published one of the most complete retellings of the whole story that I have yet seen. Check the article out here.

  3. Michael H. Kogan
    January 16, 2008

    Wine.com is still living in the past. They have built a huge and expensive infrastructure based on the way their business needed to be set up back in the late 1990’s. They are continuing to operate as such rather than changing with times, stream lining operations and modernizing. This sting is purely self serving and smells of desperation in order to substantiate the millions of dollars of investor capital that they have burned over the years.

    There is no question that the laws in many of the states that the retailers in question are shipping into are grey. In many cases the laws are structured so that wineries can sell their goods at retail directly to the consumer bypassing the middleman of the antiquated three tier system. The reason why none of the states have taken issue is because testing this in court would most likely result in a waste of time and tax payers money.

    As soon as a winery fulfills a “retail” order then they are indeed a “retailer”. What court is going to attempt to create and enforce different classes of “retailers”? The importance of these laws is to insure that wine delivered directly to a consumer is received by an adult, not to protect the antiquated business practices of Wine.com.

Comments are closed.

Scroll to top