Past PressPress
THE PRESS DEMOCRAT:
Reaping the rewards - Napa-based wine distributor likely to benefit from high court's verdict on direct shipping
By Kevin McCallum
May 22, 2006
The company, which emerged four years ago after the collapse of two online wine sales companies, is seen by many as one of the companies best positioned to benefit from an increase in direct shipping of wine. The company says it has fielded dozens of calls from its client wineries in the past week, reporting strong demand from customers in New York and Michigan inquiring when they can being receiving shipments.
Just as the merchants who sold jeans and shovels to the 49ers profited the most from the Gold Rush, so too might Wine Country shipping firms be well positioned to cash in on the new era of direct shipping of wine many see on the horizon.
The U.S. Supreme Court's decision last week to strike down direct shipping bans in New York and Michigan have many forecasting higher profits for small wineries, greater choice for consumers and the eventual crumbling of the nation's 60-year-old, three-tiered alcohol distribution system.
Those may all come to pass, though even the staunchest of direct shipping proponents sees such change happening gradually, and even then only after years of sustained marketing, lobbying and further litigation.
As those changes occur, however, some of the prime beneficiaries may be the behind-the-scenes players of the wine shipping world. The companies that store, pack, label, ship and deliver California wines to new markets are expected to share in any bounty reaped from any new openness.
"Right now, we're doubling our revenue every year, and the way things are going, with the interest that's been generated, we see that increasing this summer or the fall," said Kathleen Schumacher, chief executive officer and president of New Vine Logistics, the Napa-based wine shipping company.
The company, which emerged four years ago after the collapse of two online wine sales companies, is seen by many as one of the best positioned to benefit from an increase in direct shipping of wine. The company said it fielded dozens of calls from its client wineries in the past week, reporting strong demand from customers in New York and Michigan inquiring when they can begin receiving shipments.
The company's 130,000-square-foot warehouse in American Canyon is based around a state-of-the-art "pick and pack" system that automates and streamlines the process of shipping wine directly to consumers.
The company shipped 142,000 orders last year but has the infrastructure capacity to handle more than 10 times that amount.
Schumacher, a former shipping company executive, worked for wineshopper.com when it merged with Wine.com, which went bankrupt in 2001. She believed so strongly that the shipping system built by Wineshopper.com had "cracked the code" that she and a group of investors bought the heart of the system -- everything from computers to conveyor belts -- and started the new company.
The company helps wineries navigate the labyrinth of laws and alcohol regulations in 44 states. New Vine can ship wine to both reciprocal states, where shipping directly to consumers is allowed, as well as to states, such as New York and Michigan, where all out-of-state wine must flow through the three-tiered system of producer-wholesaler-retailer.
New Vine can ship into many three-tiered states because it has agreements with distributors and retailers, both of which must play a role in the transaction under New York law before any out-of-state alcohol can make its way to a wine drinker's home.
It's a complex system, Schumacher said, most wineries simply don't have the expertise or time to comply with.
"Wineries should be focusing on getting more sales and more customers, not on putting stuff in a box," she said.
While many wineries still handle their own direct shipping operations, that may be changing.