What's the Deal with Amazon's Wine Marketplace?

FILED NOVEMBER 8, 2012

Dear Client:

As of today, Amazon.com went live with the much-anticipated Amazon Wine (Amazon.com/wine) marketplace. Your editors spent the day trolling the website and here's some things we noticed:

FINE PRINT: Online shoppers will have access to more than a thousand wines from around the country, according to Amazon. Shipping will be available in CA, CT, FL, ID, IL, IA, NE, NC, OR, WA, WY and DC with more expected in the future. Amazon will ship up to six bottles for $9.99. Though it looks like free shipping through Amazon Prime membership does not work with the new program. Note, Wine.com charges consumers a $49 annual fee for unlimited free shipping. Both the purchaser and the recipient must be 21 years old and require a signature at delivery.

WHO'S INVOLVED: Francis Ford Coppola appears to be the biggest label signed on to work with Amazon, but you can also find several mid-sized wineries like Amavi Cellars, Pacific Rim, Pepper Bridge Winery and J Vineyards & Winery. Stacy Bennet, vp of marketing for J Vineyards & Winery told WSD when she heard about Amazon�� s wine marketplace she thought, "That is a big deal and we have to be there."

"The benefit to the sellers is that you can reach this huge audience that you typically would have to go through the system to reach. It's just another example of how Amazon and this new social revolution that we're living in has leveled the playing field," she says.

There are a plethora of other brands available through third party sellers, so it is likely that an online shopper using the search function would not even notice who they are buying from.

But some wineries feel Amazon's reputation alone will benefit them. Shawn Bavaresco, creative director and domestic portfolio director for Pacific Rim's parent company Banfi told WSD: "Amazon is a very well respected brand with very high awareness. So being associated in the e-commerce world with a brand like Amazon reflects positively on Pacific Rim. It also helps us from an exposure and awareness perspective."

Even if the benefits aren't tangible right away, Shawn says investing in e-commerce pays off. "This Amazon thing is kind of our recommitment to grow our e-commerce business. Historically, when we have invested in [e-commerce], we have absolutely seen the dividends. In the past year, our investment was placed in other marketing and business building initiatives. We are now starting to reinvest in e-commerce and this is the first step in that."

As far as profit goes, wineries are still unable to reveal how much profit Amazon will make off each bottle of wine. Any thoughts or commentary on Amazon�� s reentry into the wine market? Email me at emily@winespiritsdaily.com.

GREY GOOSE SUPPLIES RUNNING LOW IN NJ

Damages from Superstorm Sandy have crippled Fedway Associates, the exclusive distributor for Grey Goose and Svedka vodka in New Jersey. The company said they are dealing with losses "in the tens of millions" after Sandy delivered a 10-foot surge of water into its Kearny warehouse last week.

They are replacing their fleet with 100 delivery trucks and have rented a 190,000-square-foot warehouse in order to resume business on November 19, reports Bloomberg. "We are making rapid and significant progress," said Neil Barnett, Fedway�� s president, on Facebook.

As Fedway scrambles to recover, retailers are feeling the squeeze of short supplies. "If somebody drinks Grey Goose, you can�� t replace with Smirnoff or Ketel One," says Sasha Vaynerchuk, owner of Wine Library in Springfield. And New Jersey law prohibits retailers from buying from out of state distributors. "On the wine end of it, it�� s not so difficult, because people will try others," Sasha said. "The customer has much more loyalty to spirits."

Don Carter, owner of Wine Seller in Ridgewood says the supply shortage comes at his busiest time of year. He is currently out of regular Grey Goose with only a "few" cases of Svedka. He's had to email his customers to give a list of products he's running low on and let them know it may take time to restock. Other brands he's running low on include: Cristal, Captain Morgan rums, Laphroaig and Graham's Port.

"I�� m dancing as fast as I can, and the shelves are getting pretty bare," he says.

RESTAURANT SALES STAGNATED IN OCTOBER

A snapshot of the restaurant industry shows same-store sales are relatively flat for October, which marks a slight rebound from a -0.8% decrease in September. Same-store traffic continued on a negative trend with a -2% decrease, reports NRN. The Southwest region of the country performed the best with a 1.7% increase in same-store sales, while the Mount Plains region did the worse with a -3.2% decrease.

"The industry continues to remain stuck in a mode of barely positive sales on average and it can�� t seem to pull traffic up to positive rates," says Bill Schaffler, coo at Black Box Intelligence and People Report, who conducted the survey. "We continue to emphasize top quartile performance as the measuring stick because as of right now, average does not excite anybody."

WSD BRIEF:

DIAGEO LAUNCHING MAPLE-FLAVORED CROWN ROYAL. Crown Royal Maple Finished is the brand's first foray in the flavored whisky category. It is already available nationwide for a suggested retail price of $24.99. Crown Royal Maple Finished will be supported through "a full marketing mix" including TV, print and online advertising.

YAO FAMILY WINES ENTERS US MARKET. The wine company formed by NBA star Yao Ming have launched two varietals in the US. They will distribute a limited supply of Yao Ming 2009 Napa Valley Cabernet Sauvignon and Yao Ming 2009 Family Reserve Cabernet Sauvignon in limited markets across the US. Distribution will be spearheaded by Regal Wine Company in California, as well as other wholesalers in additional markets. The suggested retail price for the Cabernet Sauvignon is $170, and $625 for Family Reserve Cabernet Sauvignon.

WLCB SEEKING INPUT FOR SPIRITS SALES AND DELIVERIES. The Washington State Liquor Control Board is seeking input on the proposed rules for Internet sales and delivery of spirits. Currently grocery stores and beer/wine specialty shops are allowed to sell beer and wine to consumers over the Internet and deliver the product to the consumer. Allowing this activity for spirits by a spirits retail licensee would be consistent with the new laws to treat spirits the same as beer and wine," writes the LCB. To see the full extent of the rules and where to comment, click here.

WSD PIC: Recently, the Supervisory and Executive Boards of Mast-Jagermeister SE joined their US importer Sidney Frank Importing Company Inc. for a market visit in Chicago and Dallas. At the end of the week, the group was joined by Southern Wine & Spirits of America for a private concert by the Chicago Philharmonic at the Art Institute of Chicago.




Until tomorrow, Emily

"What men prize most is a privilege, even if it be that of chief mourner at a funeral"
- James Russell Lowell

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