REUTERS – INTERNET WINE SALES WILL CREATE A LARGE BUSINESS. MORE THAN HALF OF U.S. CONSUMERS MAY SOON BE ABLE TO TAKE ADVANTAGE OF A BETTER SELECTION OF WINES AT BETTER PRICES

Amazon, the online retailer known more for its book sales than for drinks, is now proposing its entrance onto the American wine market, a move that could change the distribution and the price of wine in the United States. “Amazon may change the rules of the game”, stated Tyler Colman, author of the book “The Politics of Wine. How the Government, environmentalists and critics influence the wines that we drink”.

“The winemaking companies will have a much wider array of clients”, explained Colman, and estimated that consumers will see a decrease in prices of 20% because Amazon will, “eliminate an entire step in the distribution system”. Mike Veseth, economist at the University of Puget Sound in Tacoma, Washington, thinks these savings may even be higher.
“Distribution is the only bottleneck in the wine market”, noted Veseth, pointing out that this alone makes up 50% of the cost of a bottle of wine.
Amazon has not said much about its projects. The director of the wine program, Michael Gelvin, an educator and certified wine consultant, refused to respond to any questions. But “Wine Spectator” the monthly magazine whose motto is “Learn more, drink better”, has noted that the proposal and contract with the wineries proposed by the Amazon offices in Seattle offered winemakers not only an opportunity to lower their prices, but also that of increasing earnings by 47%.

Under the current system in the United States, wine producers receive about one third of the price paid by consumers.
“If a distributor sells wine to a retailer for 10 dollars, it means that he paid 5 dollars. Successively, the retailer, in order to have an earning margin, increases the price by another 5 dollars”, explained Veseth.
Following the period of prohibition in the 1930’s, laws remained that restricted winemakers from sending their products across state lines, but a Supreme Court decision in 2005 allowed these rules to become more lenient. And though there are other restricting laws, most states now allow consumers to buy wine online.
The American wine market is worth about 25 billion dollars per year, according to Rich Bergsund, the General Director of currently the largest online retailer, Wine.com. He welcomed the entrance of Amazon onto the market, noting that, “it is a good thing. Online wine sales represent only 1 or 2% of the market”.

Bergsund explained that online retailers like Wine.com allow consumers to access a vast selection at excellent prices with the possibility of home delivery and enough information to ensure them of their acquisition.

Therefore, it appears that in a short time, American consumers will be able to order not only glasses of wine but bottles of wine at much lower prices than are currently being paid.