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 states.      

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. 

Lee Braem
31 Maplewood Avenue
Maplewood, NJ 07040