- The Washington Times - Monday, May 16, 2005

The Supreme Court ruling allowing wineries to ship directly to consumers is good news for small wineries, even for those in Maryland where the ruling does not apply.

However, it’s not good for retailers in jurisdictions including Virginia and the District that could lose customers to the Internet as more wineries in other states are given permission to ship across state lines.

Yesterday’s 5-4 ruling pertains to states that allow wineries to ship directly to consumers in their own states. Those states now must allow out-of-state wineries to ship to those residents, too.

In Maryland’s case, wineries are prohibited from shipping to consumers either in state or out of state, so the ruling does not affect them.

But Kevin Atticks, executive director of the Maryland Wineries Association, says the ruling is what state legislators need to get the ball rolling on changing the law.

“Direct shipping to consumers will very quickly become status quo,” Mr. Atticks said. “The market will put immense pressure on [Maryland] to change.”

The wine industry across the country is applauding the Supreme Court’s decision.

“This benefits the smaller and midsized producers who have trouble getting attention of distributors,” said Herb Schmidt, partner at Wine Colleagues, an advocacy and advisory firm for the wine industry. “And it’s great news for the consumer.”

For retailers in places like Virginia and the District, it could mean a dip in sales as customers turn to the Internet.

“It might hurt us,” said Charles Miller, store manager of the Wine Specialist in the District. “But it should even itself out.”

Mr. Miller said it probably will be signifuicant at first. But customers still will have to go to stores for the vast majority of their wines, including last-minute purchases.

The ruling doesn’t have much effect on larger wineries that use distributors to get the massive quantities of their product on store shelves.

Bonny Doon Vineyard, which sold 335,000 cases last year, uses distributors to sell the majority of its wines across the country and doesn’t intend to alter that if a state’s rules change.

“[The ruling] will have some impact but it won’t completely change our business model,” said John Locke, senior creative director of the Santa Cruz, Calif., winery.

The ruling means that the winery’s specialty wines — not distributed by a wholesaler because they are too small — could be purchased by consumers in other states.

“Hopefully, this will make people more enthusiastic wine consumers,” Mr. Locke said.

The Wine and Spirits Wholesalers of America Inc., which represents the industry’s wholesalers, says it supports states’ efforts to strengthen alcohol laws by making all producers play by the same rules.

The Supreme Court’s ruling “means states have a choice between supporting face-to-face transactions by someone licensed to sell alcohol or opening up the floodgates,” said Juanita D. Duggan, president and chief executive officer.

Rob Deford, president of Boordy Vineyards in Hydes, Md., said his winery is well distributed, which has led to 99 percent growth this year, and that a direct-to-consumer channel would enhance sales.

“It’s a very nice adjunct to a marketing plan, but it’s not the core marketing plan,” he said. “It’s a basic right wineries should have.”

And Mr. Deford, whose winery sold about 21,000 cases last year, said he welcomes the competition if wineries are allowed to ship to Marylanders someday.

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