Amazon gets serious about wine
The e-commerce giant may be close to launching a wine marketplace.
The e-commerce king is planning to launch an online marketplace for wine in the coming weeks, according to The Wall Street Journal. That's going to be a challenge, considering that it's illegal for wineries to sell "off-site," directly to consumers, in about a dozen states. Wine sales are restricted in many other states under prohibitions that date back to the Prohibition era. Whether the Seattle company will be able to help break down those barriers remains to be seen. But the timing seems right for such a venture in the $32.5 billion U.S. wine business.
Data from the Wine Institute, a trade group, shows that wine volumes have grown for 18 straight years. Sales hit a record 347 million cases in 2011, an increase of 5.3%, far exceeding the performance of beer, which has been lackluster for years. Anheuser-Busch InBev (BUD) recently reported that it had increased sales of beer in the U.S. for the first time in three years. Consumption of distilled spirits gained 3.6% in 2011, according to the Distilled Spirits Council.
Wine attracts a wide variety of consumers, from those ages 21-34 to baby boomers. Amazon's venture may hold with sales of mid-priced vintages that would have difficulty otherwise expanding outside their home markets. The company may drive down wine prices much as it did with books. There are already plenty of wines available for under $15 and a wine sold under the Charles Shaw label at Trader Joe's gained fame as Two-Buck Chuck for both its price and taste.
Participating in Amazon's venture won't be cheap. The company is reportedly going to charge vintners both a 15% commission and a $40 monthly fee. Many will find it's worth the bother.
Jonathan Berr does not own shares of the listed shares. Follow him on Twitter@jdberr.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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