Online wine sales to offer bargain for consumers

Tue Oct 21, 2008 6:03am EDT
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By Leslie Gevirtz

NEW YORK (Reuters Life!) - Consumers in just over half of the United States could soon be getting a better selection of wine at a cheaper price -- online.

Amazon, the online retailer better known for books than beverages, is set to enter the U.S. wine market in a move that could alter how wine is distributed and priced in the United States.

"Amazon is a game changer," said Tyler Colman, author of the book "Wine Politics. How Governments, Environmentalists, Mobsters and Critics Influence the Wines We Drink."

"Wineries will have a much wider reach," he added, estimating that consumers could see a 20 percent drop in prices because Amazon "would eliminate a whole tier of the distribution system."

Mike Veseth, an economist at the University of Puget Sound in Tacoma, Washington, thinks the savings could be even higher.

"Distribution is the biggest single bottleneck in the wine market," he said, adding that it adds about 50 percent to the cost of a bottle of wine."

Amazon has kept mum on its plans. The head of its wine program, Michael Gelvin, a certified wine educator and wine consultant, declined to answer any questions.

But Wine Spectator, the monthly magazine whose motto is "Learn More, Drink Better," has reported that the Seattle-based Amazon's marketing proposal and contract to wineries offered vintners the opportunity to not only set their own price, but recoup 47 percent of the sale.   Continued...