Date: 10/07/2002 09:05 pm
Subject: Comments regarding ecompetition
Dear Sir or Madam:
I am submitting comments in support of
FTC action against state regulation which inhibits or restricts wine
sales over the internet.
I love cooking, gourmet meals and wine
and enjoy all when traveling to California's wine country. Through
these interests and travels, I have come to learn about many small
production or family wineries that make great wine. Unfortunately,
these wines are not available to me at retail stores in my home state
- New Jersey.
I can visit the websites of these
wineries and learn all about the wines, but as soon as I try to order
wines through the internet, when I type in my home state or zip code,
I am not allowed to order wines. Some of the web sites are now
sophisticated enough to detect a banned shipment state as soon as you
type in your mailing address. Thus, you can look at the wineries and
their wine, but, in a sense, you cannot touch.
Some websites, such as wine.com, offer
shipments of wine to a number of states. However, that still does not
the problem of resticted access to premium or individually prized
wines over the internet. When you visit wine.com, you are asked to
enter the state where the wine will be shipped. If you type in CA,
your wine selection is significantly larger than the selection of wine
offered if you type in NJ. The selection of wines available over the
internet is just not anywhere near what is available
through normal retail channels. The FTC could directly compare wine
availability in different states by looking at sites like wine.com and
selecting different shipping addresses to compare the type and amount
of wine offered.
Many of these small and family run
wineries that I have grown to appreciate and value cannot get into the
current three-tier wine distribution system. They are not big enough
to get into these restrictive systems who will only handle larger
volumes for the mega-wineries. And the number of competitors
in the three-tier system continues to get smaller. These distributors
will never have incentive to open their system to smaller wineries.
Besides severely restricting access to
wines that could be available to an educated wine consumer with an
internet connection, the current system also drives up shipping
costs. Some consumers may purchase wine and have it delivered to
someone they know in a state that accepts shipments. They pay twice
to ship the wine, instead of being able to have it shipped directly to
their home. The cost to ship one-half case can be around $40 and a
case about $60.
When I asked several California
wineries if they would ever work with some of the new entities that
are trying to set up wider distribution systems, e.g., Wrap-It Transit
or New Vine Logistics, under or within the three-tier network, they
said they would not: participating in such a system is too
expensive, would bring up their wines to a
new price point, and wouldn't pay in the long run.
If tax revenue is a big concern for the
states, there is a solution in direct shipping bills like that pending
in New Jersey, S920. It allows a winery to register with the state
and allows the state to tax wine sales. I understand that other
states have created similar revenue mechanisms. All deliveries of
wine should also require an adult signature upon delivery.
I do not believe that going towards
"reciprocal" statutes for delivery of wine is the answer. This is not
as advantageous because it would only allow for wine shipments to and
from states that afford each other the same reciprocal privilege.
According to a letter I received from State Senator Gerald Cardinale,
the sponsor of New Jersey direct shipping bill S920, going with a
reciprocal option in legislation would limit the ability of New Jersey
consumers to receive direct shipments from non-reciprocal
I appreciate the opportunity to voice a
opinion in this important matter. I value the work of the FTC in
opening up competition on the internet, especially as it relates to my
ability to exercise choice in the products I buy and enjoy.
31 Maplewood Avenue
Maplewood, NJ 07040