Costco’s Wine Guns Part II: The Rise of Capitalism
In the first piece of this series, I tried to provide an understanding for the creation of the Three-Tier System. Now that Costco is attacking this system, and winning, where is the industry going? What will change for the consumers? Will you finally be able to buy wine for any retail shop in America? The following is my view of what could happen for consumers when wine becomes just another product for sale.
To reiterate, Costco has sued the State of Washington to fight the laws that require out of state liquor producers and sellers to use a distributor inside the state. Last month, the Washington courts ruled in favor of Costco granting them the freedom to bypass Washington distributors. Just yesterday, Gov. Chris Gregoire signed a bill enforcing this ruling. Yet another big victory for the wine industry.
What does this mean? What will change for the consumer who wants to buy wine at discount prices? Well… probably not much at first or for some time. But this is the first time since 1919 that the wine industry might have price competition on a national scale. No longer would you be subject to the offerings and prices of your local wine shop. In fact, you should be able to come to WineFetch, find and compare prices for the wine you want to buy, and have it shipped to you from any store in any state. For the first time, wine has to the possibility to become part of the internet game.
With the internet, price competition and free market forces will level wine prices for all Americans regardless of what state you live in. Let’s take a look at the prices for a 750ml 2003 Château Lafite. The prices range from as low as $300 a bottle to upwards of $600 a bottle. Where’s the free market? If you happen to live a state that doesn’t allow shipping and has the bottle for $600, you’re SOL. Here’s another example, the Caymus 2003. Prices range from $60 - $80, not that big of a difference right. But if you buy a case, that’s a $240 difference. I don’t know about you, but I’d take that money any day.
So what’s the hold up? Why is this utopia for wine lovers taking so long? Ironically, its for the same reason the government ended Prohibition…. TAXES!!! There are laws upon laws for taxing wine from outside states and why? Why liquor? Why not DVD players or books? If all goods in America had the same issues that wine has, the internet boom in the late 1990’s would not have happened on such a massive scale. I’m not sure if these taxes will ever get abolished but if free markets have their way, they should.
In time, wine hopefully will become just another good for sale. Prices will vary from store to store, from offline to online, and from state to state. The difference, Americans will have a choice! They will be able to go online, find the best price, and purchase from retailers anywhere in America. Ebay and Amazon only survive because they can sell all of their goods to anyone in any state. Maybe one day, we could say the same about wine. A wine professional once told me that liquor is the second most regulated industry in America next Nuclear Power, and though I laughed at the time, he was right.
In part three of this series, I’ll take a look at the effects of these changes for the winery, the retail shops, and the distributors.