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Online Service Allows Customers to Order Wine Directly From Wineries

Posted on: Tuesday, 10 January 2006, 21:00 CST

By Mark Harrington, Newsday, Melville, N.Y.

Jan. 11--Seizing on a less restrictive climate for direct wine shipments, a Napa Valley e-commerce company today is uncorking a new online service that allows New York restaurants to buy directly from local and California wineries.

Tens of thousands of restaurants with state liquor licenses will be able to order from a roster of more than 100, primarily California wineries using the system, said Kenny Rochford, business-to-business director at Inertia Beverage Group, which is launching a site called Rethinkwinetrade.com.

The system, which claims to be the first of its kind, draws strength from a recent federal court ruling in Washington state that found a law forcing out-of-state wineries to sell through wholesale distributors, while allowing in-state wineries to sell to retailers, violates federal antitrust law. Last summer, the U.S. Supreme Court ruled that laws in New York and Michigan that ban direct out-of-state shipments to consumers, but allow in-state shipments were unconstitutional.

Inertia's new system appears to be hedging its bets. Intertia spokeswoman Ilene Hollin noted that the ordering system complies with a New York law requiring that sales go through wholesale distributors. Inertia, she said, "uses a wholesaler who doesn't do anything but provide his license number."

Inertia gets a 5 percent transaction fee for each online order, a figure Rochford said was less than the double-digit rate traditional distributors charge.

A State Liquor Authority spokeswoman said the law covering sales to restaurants and retailers is clear: They must buy from a New York State-licensed wholesaler or manufacturer.

East End wineries yesterday said they'd welcome any means to develop direct sales contacts with clients such as restaurants to increase their exposure and sales, although some worry that additional middlemen generally mean lower profits.

"I think it would be a great thing if I had that opportunity," said Ron Goerler, owner of Jamesport Vineyards in Jamesport. Added Steve Bate, executive director of the Long Island Wine Council: "Smaller wine producers often don't have distributors. They have to do all the work themselves."

Restaurants traditionally buy wine via a three-tier system of wholesalers or distributors, but smaller wineries complain that those channels are too costly, inaccessible or inattentive for them to garner much success.

Inertia seeks to minimize the role of the wholesaler by creating a more direct link between restaurant and winery.

To order, restaurants must have a liquor license in New York State -- something Inertia's Rochford said some 26,000 already have. The site matches the liquor license number with the state's license records to make certain the restaurant is eligible for direct purchases, then handles compliance issues such as reporting and tax information to comply with state law, Rochford said.

Marc Matyas, co-owner of the Manhattan restaurant Nolita House, said a recent order he placed for Napa-based Humanitas-branded wines from California through the system were the first he's ever ordered directly from a winery.

"We like to support the lesser-known wineries," he said. "It's the sort of thing we like to bring to our customers."

As for retail stores, Michael Drexler, a co-owner of Post Liquors in Syosset, said he doesn't view Inertia's plan as threat. More likely, he said, "it would be a detriment to the wholesaler."

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Source: Newsday, Melville, N.Y.

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