Online Wine

Online wine sales could be big for Connecticut vineyards. (Staff Illustration / October 23, 2012)

Amazon is reportedly gearing up for another jump into the multi-billion-dollar world of Internet wine sales. Google wine searches are soaring. Funky electronic wine clubs get big-time headlines. More than 400 out-of-state wineries now have permits to sell via the Internet and ship their fermented grape juice directly to Connecticut wine lovers.

Yet all this frenetic, Internet-driven activity seems to have had very little impact on this state's network of 38 wineries.

"We've never sold a bottle of our wine over the Internet," admits Jamie Jones, owner of Jones Winery in Shelton. He also happens to be president of the Connecticut Vineyard and Winery Association, and Jones says the question of web retailing just isn't something that's high on the radar of his group's members.

"We never talk about Internet wine sales," Jones says of the conversations he usually has with other state wine makers.

Part of the reason is a simple issue of size. Connecticut wineries are tiny and produce itty bitty amounts of wine compared to the big-time players in the industry. California alone produced an estimated 638.4 million gallons of wine last year and accounted for 61 percent of all U.S. wine sales, according to the Wine Institute, a trade association of Californian wineries.

Most Connecticut wine (less than 300,000 gallons last year by one estimate) is sold right at the wineries' tasting rooms.

Some of the more established wineries, like Hopkins Vineyard in New Preston and DiGrazia Vineyards in Shelton also have in-state distribution networks focused on selling their wines at Connecticut package stores.

But the biggest roadblock continues to be the rats' nests of individual state permits, tax forms, regulations, packaging and shipping costs involved in web wine sales. Some states ban Internet sales completely; some individual counties in some states are "dry," meaning no alcohol sales are allowed.

The complexity of complying with all these differing requirements is one of the reasons Amazon's first two efforts (in 2000 and again in 2009) to create an Internet wine sales operation floundered, according to some experts.

Here's how Claudette Carveth of Connecticut's Department of Consumer Protection, explains the complex system most Internet "wine clubs" operating in this state use to get their wines to members.

The clubs work with an out-of-state importer to make sure all the wines are registered for sale in Connecticut. The wine is shipped to a state wholesaler for inventory and tax registration. The wholesaler sends it to a retailer who pays state sales taxes and gives the wine to a licensed "liquor transporter" who finally brings it to the consumer's door, making sure someone age 21 or older signs for it.

For many Connecticut wine makers, the time and expense involved is just too big a freaking pain in the ass to bother with. "At some point, you just throw up your hands," says Jones.

Mark Langford, one of DiGrazia's owners, says each individual county in California requires its own tax forms. He says it can take days to fill all that paperwork out to pay the $30-40 in local taxes he might owe on the few bottles of wine he ships to that California county each year.

Langford estimates his winery's Internet sales amount to less than five percent of DiGrazia's annual production. Even Hopkins Vineyard in New Preston, one of Connecticut's oldest wine producers, sells only a "very small amount" of their wine over the Internet, says Hilary Hopkins Criollo, one of the owners.

The added cost to consumers is another reason why so little Connecticut wine is being sold on the web.

Internet wine buyers tend to go for higher-end wines. The average cost of a bottle of wine sold over the Internet is $37, the Washington Post reported recently. While Connecticut wines have improved greatly over the years, they're not often listed in the same category as the stuff that comes from big-name California vineyards and boutique wineries.

Langford says most of DiGrazia's wines go for $15.99 a bottle. Packaging and shipping costs to send six bottles of wine to Florida (where a lot of retired Connecticut folks end up) can boost that per-bottle cost to $20.

Carroll Hughes, a lobbyist for the Connecticut Package Store Association, believes the whole convoluted mess surrounding Internet wine sales is probably costing Connecticut taxpayers a lot of money.

Hughes argues that this state's system for collecting taxes on Internet sales isn't geared toward keeping tabs on the multitude of wineries (more than 7,400 in the U.S.) that could eventually get involved in the Internet wine trade.

He says state officials are traditionally focused on collecting taxes from the big dogs in the market. If the seller is some sort of small boutique winery, he says it becomes tough for state tax dudes to get the information they need. "It's very difficult to audit these small players," Hughes says.

Some industry experts believe the Internet is exactly the way little niche wineries, like many in Connecticut, can best market their wines.

Some entrepreneurs are focusing on discount offers to lure Internet wine buyers. There are new apps to let you search for local wine buys on your phone. Wine-snob sites like Garagiste now boast of annual sales of $30 million a year, according to a company called Strategy Plan One that tracks that sort of thing.

Jones says the time may be ripe for Connecticut's little wineries to try and take advantage of the web sites that are being created to market wines directly to consumers.

"We're certainly not ruling it out," Jones says. "The potential is there."

 

ghladky@hartfordadvocate.com

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