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04.2008

Massachusetts Beverage Business

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archivedOnWineReport

Amazon “On Wine”

Amazon, the world's largest online retailer, will start selling wine in the US, entering a business fraught with regulatory complexities and littered with the wreckage of previous failures. Amazon is looking to recruit a senior wine buyer, whom it says will be responsible for “the acquisition of a massive new product selection” for its site. The wine sales will augment a rapidly expanding non-perishable groceries business that Amazon launched two years ago. The supposed potential of online wine sales drew millions of dollars in investments during the internet boom but a series of start-ups struggled in the face of strict state-by-state restrictions on wine shipping. Amazon itself invested $3Om in 1999 in a 45 percent share of Wineshopper.com, a start-up that expired the following year. Wine.com, now the largest US online wine seller, sells food gift baskets via Amazon’s site, but not wine. Wine.com has a long history of financial problems, illustrating the challenges of dealing with state restrictions on shipping wine shaped in the 193Os after the end of Prohibition. The retailer can ship wine to customers in only 26 states and is obliged to operate 1O different warehouses that buy from state-licensed wholesalers, increasing its costs. A 2OO5 Supreme Court ruling has led to an easing of restrictions on shipping by vineyards. But Tom Wark of the Speciality Wine Retailers Association said new legislation required by the ruling has led some states to tighten restrictions on out-of-state online retailers. Some smaller ecommerce sites have been shipping wine to customers in defiance of state laws, taking advantage of the difficulty state regulators face in identifying unmarked small shipments to individuals. Amazon declined to comment on its plans. The description of its new senior wine buyer’s job includes working to build an “entirely new selection from the ground up” through direct contacts with vendors. It has also said it will add wine and beer to a pilot fresh grocery delivery service, Amazon Fresh, that it is currently operating only in its home city of Seattle. Chris Adams, an executive at Sherry-Lehmann, a leading New York wine retailer, welcomed Amazon’s interest, saying it lent support to the view that states would ease restrictions. “It is a nod to the fact that the laws of the land are changing and that open markets will win the day,” he said.

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