Geerlings & Wade - Cutting Through the Vines (2,787 words)
Pearce explains, "Instead of the [usual] proposition where wineries advertise their wines to the public and drive people to retail outlets to buy the wine, we're a wine expert for our customers. We select the best wines from each vintage, offer them at great prices and make further recommendations in our mailings, on our Web sites and on the phones." Moreover, Pearce says, "We can sell large quantities [in lots of 10,000 cases at a time], which is attractive to the wineries. They seek us out, because we can sell a lot of wine for them."
Laws of the Land
The repeal of Prohibition in the 1930s was a welcome change for those who enjoy wine—but for those who sell it, the laws that followed posed new problems.
When Prohibition was repealed, a national "Three-Tier System" was established to regulate the sale and distribution of alcoholic beverages, in order to prevent monopolies and to promote tax collection in all states. In short, the system requires that before a consumer may own an alcohol product, three parties before them must have owned it inside the United States: Either a winery or importer owns the wine first, then has to sell the wine within the same state to a wholesaler, who then has to resell that product to the retailer, who then can sell it to the consumer.
Furthermore, the 21st Amendment to the Constitution gave the states the right to regulate their own alcoholic beverage laws and rules—which means 50 entities with different rules and laws. Some states decided to operate as monopoly or control states, meaning the state became wholesaler and retailer in one, disallowing any legal private sale of alcoholic beverages.
These special legal considerations, says Pearce, "drive our extraordinarily complex operations." More to the point, adds Gregg Kober, vice president of operations at the company, "None of the 1933 laws contemplated direct-to-consumer business."