Grapevine – April 2006

Tim's Wine Market


(Before we start, there are new listings in the Spotlight and Classes sections – check ’em out!)

In a move that surprised many people, the State of Florida announced in February that it is now legal for wineries to ship directly to their customers. I have been interviewed many times by media sources about this issue so my position is well known, I am all for it. In college I studied macro-economics and I believe that markets are ultimately efficient without government regulation. By allowing wineries to ship into Florida this helps break down the three tier distribution system established post-prohibition, a benefit of all customers.

Most in this business do not remember what the industry was like in the 1980’s, before the state closed off shipments and California had to replant due to phylloxera. At that time most wineries had two ex-cellars prices (meaning the winery wholesale price), one for the west coast and one for the east coast. The east coast price represented a discount to offset the cost of shipping and taxes which are more common, and higher, here on the Atlantic side of the continent. When Phylloxera struck in the early 1990’s the supply of wine in California was cut so dramatically that most wineries eliminated the price differential because they did not have enough wine to go around and they adopted a “take it or leave it” attitude with distribution. Then in 1996 when the State of Florida closed its doors to direct shipments wineries really had no incentive to offset the shipping costs and that was the end of the two tier pricing.

So how much does this price differential mean to the average customer? The state imposes a $5.35 tax on every case of table wine that is shipped into the state, even more for sparkling wine. Even worse is the high cost of shipping. If the distributor is conscientious and ships the wine in refrigerated trucks, that adds an additional $8 per case. This means that for wines that sell for less that $10 a bottle, the cost to sell wine in Florida is 13.35% higher than it is in California, where there is no state tax and retailers and restaurants can buy direct from the source. As the price of a bottle goes up then this percentage falls to a point where a $50 bottle the difference is barely noticeable. For all of you who buy $50 bottles this argument is irrelevant, for the rest of us it makes a big difference. It is also important to point out that it costs almost $50 to ship a case of wine overnight, the closest consumers can get to shipping the wine refrigerated.

Now it is time for suppliers, distributors, retailers, restaurateurs and consumers to demand equality in pricing. It is time that California realizes that Florida is their second largest market and we should receive the benefits of volume buying. If they don’t want to offset the pricing, don’t sell the wine here. Believe me, there is no shortage of high quality wine and if fifty percent of the wineries in California stopped shipping here, no one would go thirsty. In the coming months you will see my newsletter dominated by wineries that realize that it costs more to do business in Florida and are willing to bare at least some of those costs. Again, there is no shortage of wine to buy so why support anyone who feels the burden is on the Florida consumer who is geographically disadvantaged.

I encourage all six thousand of you who receive this newsletter to support wineries that want to conduct fair business in Florida. This has nothing to do with buying direct, it is an issue of efficiency in the market place. Why, as a consumer would we expect to pay more just because we live in Florida? After all, the MSRP of cars is the same in California as it is in Florida, why should we pay more for our wine.