I was in the fine wine business in multiple channels for close to 30 years. I was downsized at 59 in 2016, and gratefully ended up in Multifamily real estate. Every syllable of this article is true. The ground for this current layoff cycle was being laid even then, and there still aren’t enough non chain restaurants and independent retail accounts to soak up the flood of producers trying to enter the market any way they can. At some point the strategies of “increase market penetration” “find/manage a distributor” and line extensions to target the latest fad, will end, particularly if laws don’t change. Not a fun time to be in the industry. The washout is always painful. Ask any “vendor” in line at a Tuesday cattle call at your local retailer or restaurant. The buyers and decision makers have a thousand yard stare. The thrill is gone. The process to acquire a license to sell alcoholic beverages remains an expensive labyrinth. It’s a total mess and always has been, ridiculous non existent profit margins for everyone but major distributors. It’s still the only major “modern” industry where it’s considered normal not to be profitable. Now that I run my own non-wine business I just shake my head at how it goes on even today. Except of course, for the thousands of wine industry employees who got pink slips last week and going forward. I genuinely feel their pain and send a prayer up for new opportunities for every one of them. There is a life after wine. Trust me.
As small new brand trying to launch nationally I completely agree with your analysis. We have been using a national broker to create relationships with small regional distributors. That process has been painfully slow but we feel it is the only way into the marketplace in other states. Alternative channels such as LibDib seems like a god idea but they still rely on the mega distributors to actually fulfill orders and completely on the producer for sales and marketing.
Thank you Tom! The 3 tier system has been nothing more than an overpriced delivery system for over 20 yrs now. The franchise state laws add insult to injury, and at times we even ended up competing with our distributors' reps because they have "quota sheet" wines they must sell to keep their jobs. They would replace our wine with a quota sheet wine! The free bulk vodka deals and illegal gift card bribes are rampant. We need these changes you outlined!
We face challenges with the three-tier system here in North Carolina, and I often notice that my friends working for larger companies are completely burnt out due to quotas and performance metrics. While overall purchasing is down, I visited a more specialized wine bar on a Monday evening and found it bustling with people enjoying small-production wines chosen with care. I wish I could find the article I read about recent consumer habits to link it here.
The three tier system is not the problem. National chain stores with limited space are putting the independent stores out of business. This in turn puts the small distributors out of business, shrinks the large wholesalers, and puts many small wineries out of business. On top of this is the changing rates of consumption, marijuana legalization, inflation infringing of disposable income and various governmental interferences. This is just my perception of the retail side of the business.
Will: if you can't adapt to a changing market and out-innovate your competitors, maybe it's time to take up a new hobby...like playing the victim.
So it's not the three-tier system that's broken, but rather a complex web of external factors that conveniently absolves everyone involved in perpetuating the status quo? Who do you this have a very cozy relationship with chain stores? Large wholesalers with very deep pockets.
Your solution to this supposed crisis? To blame everyone but yourself, of course.
Funny how you conveniently leave out that suppliers and retailers have also consolidated over the last 20 years. Do you think they want to deal with 1000 different distributors around the Country? Talk about inefficient. Businesses have to evolve. Not hang on to some fairy tale of an industry from 20 years ago that doesn’t exist anymore.
Selling a few cases of wine isn’t going to keep the lights on in today’s landscape. Let me guess you think your brand should be in the top wine accounts because it won some random award. Get in line behind the 500 other brands. So that leaves selling 1cs to thousands of small accounts. Good luck without a salesforce. How much do you think it costs to import, store, ship (especially refrigerated) and pay a person to sell it? Especially in a Union state. It’s a numbers game.
Anon, I think wine brands should have the legal right to try to be in any accounts they want, whether they have a wholesaler or not. I believe that retailers ought to be allowed to buy directly from suppliers without going through a wholesaler. I believe retailers ought to be able to ship products to anyone in any state anywhere. Whether that will profit a supplier or retailer isn't the point. The point is it's time to untether suppliers from wholesalers and retailers from wholesalers.
The issue is that wine & spirits producers HAVE to sell through a fat-cat-useless middleman distributors and cannot sell directly to retail or the end consumer. Consolidation is hence the ultimate bottle neck.
If a distributor doesn't take you, slaps some ridiculous margin on top for being a glorified trucking business, a wine and spirits producer CANNOT sell its product.
It is time we break the neck of the Three-Tier System, plus the ridiculous franchise-state laws. Systems you'd rather expect in countries like North Korea and philosophically, the most un-American approach to business imaginable.
Before the chains entered the Colorado Market, there were over 125 distributors in this state. We have seen a drastic drop in their numbers. We allow direct to consumer shipments in this state and have for years.
Cash flow allowed stores to carry 3 to 5 thousand wines. If major brands started to flex their muscles, we would bring in less known brands to remind them that there are other brands out there. In this era, eliminating major brands chases people to the high priced groceries. The influx of people who depend on chains for their wine has changed the landscape.
The only reason we are having this discussion is because of the chains. They do not allow chains, one person one license, you have lots of variety, lots of people making a living. retailers, salespeople, small businesspeople.
It is certainly correct that the large off-premise retail chains are causing enormous damage. And, to make things worse, the large retailers now all play the private-label game copying grocery stores' strategies, which, given we have a Three-Tier System, should not be allowable. Unless producers were federally allowed to sell to the end consumer, bypassing distributor and retailer.
That is an important, but different issue.
The problem is the Three Tier System itself. It was created to legitimize and legalize the distribution logistics that were set up by organized crime during Prohibition. Same trucks, same warehouses, same drivers that were the mob in 1932 were legit in 1934. And thanks to enormous amounts of lobbying money, every sale of any beverage alcohol product HAS to go through them.
It is the equivalent of not only legalizing what is today the illicit drug trade, but to make laws that any sale HAS to go through a Mexican drug cartel.
So fast forward a few decades, with the excessive consolidation that happened in the distribution tier, no supplier outside of "big alcohol" can make any money anymore. And small producers are not allowed to bypass the system.
Ok, in the world of wine, DtC is a little more developed than in spirits.
Anon22u - You're just mad that your antiquated business model is being disrupted by the changing landscape. And as for "businesses having to evolve," you mean like the ones that are still stuck in the past, clinging to outdated business models? The industry has indeed changed, but that doesn't excuse your lack of vision or willingness to adapt.
Consolidation of suppliers and retailers? That's a two-way street, my friend. The industry has been consolidating for decades, and it's time for distributors to adapt to the new reality. Your argument that 1000 different distributors would be inefficient rings hollow when compared to the millions of dollars in profits your company raked in by prioritizing your own interests over those of smaller producers.
And as for selling a few cases of wine, you're right - it's not going to put food on the table. But that's exactly what you're advocating for: a system where only the biggest and most established players get to thrive, while everyone else is left to fight over scraps. That's not "business evolution" - that's just good old-fashioned protectionism.
Let me guess: you're also one of those filthy thug distributors who thinks they can dictate the terms of sales to retailers and restaurants? How quaint. Meanwhile, producers are forced to pay exorbitant fees just to get their products on store shelves. Wholesalers have a history of exploiting small producers and suppliers to squeeze out every last penny of profit. The Union States may be expensive, but at least they have the decency to treat workers with some basic human dignity - unlike the soulless behemoths like yours that prioritize profits over people.
So, by all means, keep lecturing us about "business evolution" and the "numbers game" at least have the decency to admit you're out of touch with reality. We're sure your salesforce of clowns will continue to thrive in an industry where you can bully producers, retailers, restaurants, politicians, and consumers into submission.
Capital does not compete. Capitalism never competes. Capital is only ever deployed for two reasons: 1) to redirect income from labor into the coffers of capitalists, and 2) to engage in regulatory capture in order to better facilitate the redirection of income from labor to the coffers of capitalists.
Hi Tom, thanks for the great article. Do you know if anyone in CA is putting together the type of regulation you outlined? I'd like to follow it if it exists
This is an extremely bias article with an apparent lack of experience actually working for a large distributor. I have done so for 25 years and while yes bad things happen in the market from time to time in a point where people have lost their jobs, you also give no factual basis why it happened other than opinions. The market and culture of the wine industry has changed, it’s a simple facf, consumers drinking habits and tastes change. The market will not bear 1000 different Northern California Chardonnays, at least not Nationwide. As for as the blatant lie in a way, I hand sell products every day. Work with suppliers every day. No good supplier Rep would go around and sell in items, it’s technically illegal in most three tier states, you are circumventing the distributors. So please stop playing chicken little, wine has been sent around the known world since the Romans, it will survive. But some who only focused their careers on fine wine probably needed to diversify themselves professionally and learn how tequila was made
Oh, spare us the self-righteous indignation, Mr. Walsh. You've had a 25-year career in the wholesale industry, but that's not a badge of honor; it's a badge of shame and a testament to your poor character. Your condescending tone and attitude reek of entitlement.
Just because you've worked for a large distributor for 25 years doesn't mean you're immune from criticism or the need for growth. You claim that changing consumer habits and tastes are the reason for the layoffs, but what about the systemic issues within the industry itself? What about the price-fixing, market manipulation, and environmental degradation that's been going on for decades? Perhaps you choose to forget the history of your system being born out of bootleggers and gangsters.
And let's not forget your pathetic attempt to deflect attention away from the article's points by accusing it of being playing chicken little. Who does that in a professional setting? It sounds like you're more concerned with saving face than genuinely engaging with the topic. Your snide remark about fine wine enthusiasts needing to diversify professionally and learn how tequila was made is particularly rich coming from someone who can't even be bothered to fact-check their own arguments. Your desperation and deflection are rather impressive. However, you're not fooling anyone with your tired industry talking points. It's time for some real change in the wine industry, and that includes people like you who are clinging to outdated business models.
gen z has no interest in drinking megapurple-jacked bulk wine at a premium price with a backstory written by a d-list marketing shop. as the fine wine-loving public drinks less and drinks better, the more pressure gets heaped on giant suppliers and wholesalers. good.
inasmuch as underwriting fascist collapse is a “state thing”, i agree with you. but SGWS is in almost every state, and the president of the company- who lives in dallas- writes the checks to trump, so that’s a national thing…and it’s everyone’s problem (unless, that is, fascist collapse is your jam).
William, the point is that no matter what the market will bear, the right thing to do is to give supplies (domestic and imported) the opportunity to strike out as they like, via large or small distributor, via direct shipment or via self distribution. I"m not talking about getting rid of distributors. I'm talking about giving suppliers just a tiny bit of freedom after 90 years of the three-tier system. Maybe some suppliers want to circumvent distributors. Why shouldn't they be allowed to?
There is already ways to get wines in from independent suppliers in good business oriented states by finding a small to medium size wholesaler who picks up wines from warehouses and charges the retailer a clearing cost. The problem is finding retailers with the cash flows to buy their wares, especially in harder economies like this one.
What an incredibly biased and inaccurate piece writing (clearly not journalism). This screams confirmation bias ( the writer should google what that means) and is in quality and insight on the same level as opinion pieces in the LA Times or Wa Po. Any article with basic, basic typos does not deserve to be taken seriously.
Ken - That is an insult to the Washington Post and Los Angeles Times. This Substack should never be in the same sentence as some of the great US newspapers.
So now you're a media expert Ken? The Washington Post and LA Times have consistently won Pulitzers for their fact-based reporting, while your favorite outlets have been accused of spreading propaganda. Which great newspaper is that again?
This is why you are bad at your job. I didn't say what my favorite outlet is. Yet you magically know. You thinking that winning Purlitzer prizes in the last decade is a sign of great journalism shows how deep you are in the echo chamber. Plus your lack of understanding of the wholesale business is astounding.
I think it's interesting that you started by attacking the author's credibility and then quickly pivoted to criticizing reputable news organizations like the Washington Post and LA Times. It's clear that you're trying to shift the conversation away from your own opinions on journalism.
As for my "job," I'm just a regular person trying to have an informed discussion about an article. If you think I'm "bad at my job," perhaps you could try responding to the actual points I made instead of making personal attacks?
And as for your assertion that I'm 'deep in the echo chamber,' I think you're trying to imply that anyone who disagrees with you is somehow naive or uninformed. Critical thinking and nuanced discussions are what we should be striving for, not blind acceptance of any given narrative.
If you'd like to share your expertise on the wholesale business or provide some insight into why Wine Warehouse's layoffs might have been justified, I'm all ears. Otherwise, let's stick to discussing the article itself rather than making unfounded attacks on reputable news organizations and individuals who disagree with you.
The layoffs at mass wine wholesalers may seem like a blow to the industry, but for society, it's a welcome sign that the tide of excessive drinking and big-brewery dominance might finally be turning. As the demand for craft spirits and small-batch producers grows, it's clear that consumers are seeking more authentic, community-driven experiences - not just faceless, mass-market brands. Toasts to the innovators who are disrupting the status quo and paving the way for a healthier, more nuanced relationship with alcohol.
Mr. Wark’s opinion about alcohol beverage wholesalers in the United States is well known and this article continues that stance.
However, Mr. Wark fails to mention the consolidation over the past thirty years at the supplier level. Let’s review quickly the behemoth wine suppliers of Constellation, EJ Gallo, Ste. Michelle Wine Estates and Terlato as examples. Thirty years ago, these same wine suppliers made or represented only a few wineries – Canandaigua (Constellation) and Richard’s Wild Irish Rose, Ernest & Julio Gallo and Hearty Burgundy, Stimson Lane Vineyards & Estates (Ste. Michelle Wine Estates) – Chateau Ste. Michelle and Paterno Imports (Terlato) importing Santa Margherita Pinot Grigio. Over the years, these same suppliers began to purchase other wine brands and grew their portfolios. Many of those brands were the same small brands Tom mentioned, where, “wholesalers would work with brands, take brand representatives around to potential accounts, use sales collateral to promote brands, create events, and pour wines to help sell even small and medium-sized brands. It was these kinds of efforts that supposedly justified the wholesalers’ high margins.’”
Over the past fifteen years, these same large wine suppliers agreed to multi-year exclusive contracts with large wholesalers, and as a result lowered wholesaler gross profit margins. These same contacts also stipulate that the wholesaler fund a high number of positions withing the wholesaler network to promote and sell that supplier’s wines within the wholesaler network. Why do you think all the layoffs from SGW&S were from their Fine Wine and Craft Division? None of these big suppliers with these types of exclusive contracts are sold in those divisions.
In addition, Mr. Wark fails to mention the high gross profit margins that small wine suppliers make (30%-40%) selling their wines to existing wholesalers, whose gross profit margins are much lower. And finally, Mr. Wark does not mention many of these same, small wineries employ Direct to Consumer avenue of sales directly to consumers, bypassing the wholesaler tier completely. Wanna guess what those gross profit margin levels are?
It's kinda hard to take seriously your implied criticism or Whataboutism concerning producer margins when producers are REQUIRED BY LAW to use a wholesaler. Poor, Poor Wholesalers. They have laws mandating that suppliers must sell to them. They have laws requiring retailers to only buy from them. They have laws enforcing franchises. And as for consolidation, the number of wineries has increased every single year or the past few decades. Meanwhile, wholesaler numbers decrease...every year. And again, meanwhile, RNDC, SGWS and the other top ten wholesalers around the country fund lobbying campaigns to the tune of millions of dollars to STOP DtC shipments by brewers, distillers and retailers. We know that when they are successful in stopping these commonsense reforms it is due to their campaign contributions because we know it's not due to their arguments against this practice: "minors will die from drinking cabernet and retailers might ship tainted or counterfeit wines." So please, spare us.
Your response is disappointing. You fail to admit, acknowledge or respond to my comments and instead deviate your response to your frustration with current laws employed by each state under the 21st amendment. DTC continues to this day, last time I checked. And these same small winery brands you epitomize make a much higher gross profit margin than a wholesaler, especially those that use current DTC channels. Try again.
Your comments are a perfect example of missing the point. Mr. Wark didn't bring up the laws requiring producers to sell through wholesalers as a justification for their business practices, but rather as an observation about the industry landscape that seems to favor large wholesalers.
You're right that small winery brands can make high gross profit margins selling directly to consumers or using DTC channels. But that doesn't necessarily mean they're doing so at the expense of wholesalers, who are struggling with declining sales and profitability due to changing market conditions.
It's possible for multiple stakeholders in the industry to have different interests and business models, but still coexist and operate within a functioning system. Instead of dismissing Mr. Wark's concerns or deviating into tangential topics, wouldn't it be more productive to engage directly with his arguments and explore potential solutions that benefit all parties involved?
someone should familiarize the entire universe of giant suppliers and wholesale behemoths with the term “garbage in, garbage out”. whatever they perceive “the market” to be, that market ain’t buying what they have to sell.
I was in the fine wine business in multiple channels for close to 30 years. I was downsized at 59 in 2016, and gratefully ended up in Multifamily real estate. Every syllable of this article is true. The ground for this current layoff cycle was being laid even then, and there still aren’t enough non chain restaurants and independent retail accounts to soak up the flood of producers trying to enter the market any way they can. At some point the strategies of “increase market penetration” “find/manage a distributor” and line extensions to target the latest fad, will end, particularly if laws don’t change. Not a fun time to be in the industry. The washout is always painful. Ask any “vendor” in line at a Tuesday cattle call at your local retailer or restaurant. The buyers and decision makers have a thousand yard stare. The thrill is gone. The process to acquire a license to sell alcoholic beverages remains an expensive labyrinth. It’s a total mess and always has been, ridiculous non existent profit margins for everyone but major distributors. It’s still the only major “modern” industry where it’s considered normal not to be profitable. Now that I run my own non-wine business I just shake my head at how it goes on even today. Except of course, for the thousands of wine industry employees who got pink slips last week and going forward. I genuinely feel their pain and send a prayer up for new opportunities for every one of them. There is a life after wine. Trust me.
As small new brand trying to launch nationally I completely agree with your analysis. We have been using a national broker to create relationships with small regional distributors. That process has been painfully slow but we feel it is the only way into the marketplace in other states. Alternative channels such as LibDib seems like a god idea but they still rely on the mega distributors to actually fulfill orders and completely on the producer for sales and marketing.
Thank you Tom! The 3 tier system has been nothing more than an overpriced delivery system for over 20 yrs now. The franchise state laws add insult to injury, and at times we even ended up competing with our distributors' reps because they have "quota sheet" wines they must sell to keep their jobs. They would replace our wine with a quota sheet wine! The free bulk vodka deals and illegal gift card bribes are rampant. We need these changes you outlined!
We face challenges with the three-tier system here in North Carolina, and I often notice that my friends working for larger companies are completely burnt out due to quotas and performance metrics. While overall purchasing is down, I visited a more specialized wine bar on a Monday evening and found it bustling with people enjoying small-production wines chosen with care. I wish I could find the article I read about recent consumer habits to link it here.
The three tier system is not the problem. National chain stores with limited space are putting the independent stores out of business. This in turn puts the small distributors out of business, shrinks the large wholesalers, and puts many small wineries out of business. On top of this is the changing rates of consumption, marijuana legalization, inflation infringing of disposable income and various governmental interferences. This is just my perception of the retail side of the business.
Will: if you can't adapt to a changing market and out-innovate your competitors, maybe it's time to take up a new hobby...like playing the victim.
So it's not the three-tier system that's broken, but rather a complex web of external factors that conveniently absolves everyone involved in perpetuating the status quo? Who do you this have a very cozy relationship with chain stores? Large wholesalers with very deep pockets.
Your solution to this supposed crisis? To blame everyone but yourself, of course.
you just described the business equivalent of a snake eating itself from the tail forward.
Funny how you conveniently leave out that suppliers and retailers have also consolidated over the last 20 years. Do you think they want to deal with 1000 different distributors around the Country? Talk about inefficient. Businesses have to evolve. Not hang on to some fairy tale of an industry from 20 years ago that doesn’t exist anymore.
Selling a few cases of wine isn’t going to keep the lights on in today’s landscape. Let me guess you think your brand should be in the top wine accounts because it won some random award. Get in line behind the 500 other brands. So that leaves selling 1cs to thousands of small accounts. Good luck without a salesforce. How much do you think it costs to import, store, ship (especially refrigerated) and pay a person to sell it? Especially in a Union state. It’s a numbers game.
Anon, I think wine brands should have the legal right to try to be in any accounts they want, whether they have a wholesaler or not. I believe that retailers ought to be allowed to buy directly from suppliers without going through a wholesaler. I believe retailers ought to be able to ship products to anyone in any state anywhere. Whether that will profit a supplier or retailer isn't the point. The point is it's time to untether suppliers from wholesalers and retailers from wholesalers.
You hit the nail on the head. The issue is what is causing consolidation?
The issue is that wine & spirits producers HAVE to sell through a fat-cat-useless middleman distributors and cannot sell directly to retail or the end consumer. Consolidation is hence the ultimate bottle neck.
If a distributor doesn't take you, slaps some ridiculous margin on top for being a glorified trucking business, a wine and spirits producer CANNOT sell its product.
It is time we break the neck of the Three-Tier System, plus the ridiculous franchise-state laws. Systems you'd rather expect in countries like North Korea and philosophically, the most un-American approach to business imaginable.
Before the chains entered the Colorado Market, there were over 125 distributors in this state. We have seen a drastic drop in their numbers. We allow direct to consumer shipments in this state and have for years.
Cash flow allowed stores to carry 3 to 5 thousand wines. If major brands started to flex their muscles, we would bring in less known brands to remind them that there are other brands out there. In this era, eliminating major brands chases people to the high priced groceries. The influx of people who depend on chains for their wine has changed the landscape.
The only reason we are having this discussion is because of the chains. They do not allow chains, one person one license, you have lots of variety, lots of people making a living. retailers, salespeople, small businesspeople.
It is certainly correct that the large off-premise retail chains are causing enormous damage. And, to make things worse, the large retailers now all play the private-label game copying grocery stores' strategies, which, given we have a Three-Tier System, should not be allowable. Unless producers were federally allowed to sell to the end consumer, bypassing distributor and retailer.
That is an important, but different issue.
The problem is the Three Tier System itself. It was created to legitimize and legalize the distribution logistics that were set up by organized crime during Prohibition. Same trucks, same warehouses, same drivers that were the mob in 1932 were legit in 1934. And thanks to enormous amounts of lobbying money, every sale of any beverage alcohol product HAS to go through them.
It is the equivalent of not only legalizing what is today the illicit drug trade, but to make laws that any sale HAS to go through a Mexican drug cartel.
So fast forward a few decades, with the excessive consolidation that happened in the distribution tier, no supplier outside of "big alcohol" can make any money anymore. And small producers are not allowed to bypass the system.
Ok, in the world of wine, DtC is a little more developed than in spirits.
socialize losses; privatize profits. that is the murican way of doing business…then, now and forevermore.
Anon22u - You're just mad that your antiquated business model is being disrupted by the changing landscape. And as for "businesses having to evolve," you mean like the ones that are still stuck in the past, clinging to outdated business models? The industry has indeed changed, but that doesn't excuse your lack of vision or willingness to adapt.
Consolidation of suppliers and retailers? That's a two-way street, my friend. The industry has been consolidating for decades, and it's time for distributors to adapt to the new reality. Your argument that 1000 different distributors would be inefficient rings hollow when compared to the millions of dollars in profits your company raked in by prioritizing your own interests over those of smaller producers.
And as for selling a few cases of wine, you're right - it's not going to put food on the table. But that's exactly what you're advocating for: a system where only the biggest and most established players get to thrive, while everyone else is left to fight over scraps. That's not "business evolution" - that's just good old-fashioned protectionism.
Let me guess: you're also one of those filthy thug distributors who thinks they can dictate the terms of sales to retailers and restaurants? How quaint. Meanwhile, producers are forced to pay exorbitant fees just to get their products on store shelves. Wholesalers have a history of exploiting small producers and suppliers to squeeze out every last penny of profit. The Union States may be expensive, but at least they have the decency to treat workers with some basic human dignity - unlike the soulless behemoths like yours that prioritize profits over people.
So, by all means, keep lecturing us about "business evolution" and the "numbers game" at least have the decency to admit you're out of touch with reality. We're sure your salesforce of clowns will continue to thrive in an industry where you can bully producers, retailers, restaurants, politicians, and consumers into submission.
not for nothing, but SGWS and other big players temp control only a fraction of the inventory in their possession.
Capital does not compete. Capitalism never competes. Capital is only ever deployed for two reasons: 1) to redirect income from labor into the coffers of capitalists, and 2) to engage in regulatory capture in order to better facilitate the redirection of income from labor to the coffers of capitalists.
“Competition is for losers.” -Peter Thiel
Hi Tom, thanks for the great article. Do you know if anyone in CA is putting together the type of regulation you outlined? I'd like to follow it if it exists
This is an extremely bias article with an apparent lack of experience actually working for a large distributor. I have done so for 25 years and while yes bad things happen in the market from time to time in a point where people have lost their jobs, you also give no factual basis why it happened other than opinions. The market and culture of the wine industry has changed, it’s a simple facf, consumers drinking habits and tastes change. The market will not bear 1000 different Northern California Chardonnays, at least not Nationwide. As for as the blatant lie in a way, I hand sell products every day. Work with suppliers every day. No good supplier Rep would go around and sell in items, it’s technically illegal in most three tier states, you are circumventing the distributors. So please stop playing chicken little, wine has been sent around the known world since the Romans, it will survive. But some who only focused their careers on fine wine probably needed to diversify themselves professionally and learn how tequila was made
Oh, spare us the self-righteous indignation, Mr. Walsh. You've had a 25-year career in the wholesale industry, but that's not a badge of honor; it's a badge of shame and a testament to your poor character. Your condescending tone and attitude reek of entitlement.
Just because you've worked for a large distributor for 25 years doesn't mean you're immune from criticism or the need for growth. You claim that changing consumer habits and tastes are the reason for the layoffs, but what about the systemic issues within the industry itself? What about the price-fixing, market manipulation, and environmental degradation that's been going on for decades? Perhaps you choose to forget the history of your system being born out of bootleggers and gangsters.
And let's not forget your pathetic attempt to deflect attention away from the article's points by accusing it of being playing chicken little. Who does that in a professional setting? It sounds like you're more concerned with saving face than genuinely engaging with the topic. Your snide remark about fine wine enthusiasts needing to diversify professionally and learn how tequila was made is particularly rich coming from someone who can't even be bothered to fact-check their own arguments. Your desperation and deflection are rather impressive. However, you're not fooling anyone with your tired industry talking points. It's time for some real change in the wine industry, and that includes people like you who are clinging to outdated business models.
gen z has no interest in drinking megapurple-jacked bulk wine at a premium price with a backstory written by a d-list marketing shop. as the fine wine-loving public drinks less and drinks better, the more pressure gets heaped on giant suppliers and wholesalers. good.
that the top guy at SGWS writes fat campaign checks to donald trump renders me totally uninterested in helping him continue to do it.
This is a state thing.
inasmuch as underwriting fascist collapse is a “state thing”, i agree with you. but SGWS is in almost every state, and the president of the company- who lives in dallas- writes the checks to trump, so that’s a national thing…and it’s everyone’s problem (unless, that is, fascist collapse is your jam).
If you are worried about fascist politicians then Trump should not be your focus.
i don’t take suggestions from magat imbeciles like you.
William, the point is that no matter what the market will bear, the right thing to do is to give supplies (domestic and imported) the opportunity to strike out as they like, via large or small distributor, via direct shipment or via self distribution. I"m not talking about getting rid of distributors. I'm talking about giving suppliers just a tiny bit of freedom after 90 years of the three-tier system. Maybe some suppliers want to circumvent distributors. Why shouldn't they be allowed to?
There is already ways to get wines in from independent suppliers in good business oriented states by finding a small to medium size wholesaler who picks up wines from warehouses and charges the retailer a clearing cost. The problem is finding retailers with the cash flows to buy their wares, especially in harder economies like this one.
What an incredibly biased and inaccurate piece writing (clearly not journalism). This screams confirmation bias ( the writer should google what that means) and is in quality and insight on the same level as opinion pieces in the LA Times or Wa Po. Any article with basic, basic typos does not deserve to be taken seriously.
Ken - That is an insult to the Washington Post and Los Angeles Times. This Substack should never be in the same sentence as some of the great US newspapers.
They used to be great newspapers. They are trying to create news rather than report news
they just torched what shred of credibility they had left by trying to appease donald trump
So now you're a media expert Ken? The Washington Post and LA Times have consistently won Pulitzers for their fact-based reporting, while your favorite outlets have been accused of spreading propaganda. Which great newspaper is that again?
This is why you are bad at your job. I didn't say what my favorite outlet is. Yet you magically know. You thinking that winning Purlitzer prizes in the last decade is a sign of great journalism shows how deep you are in the echo chamber. Plus your lack of understanding of the wholesale business is astounding.
Ken,
I think it's interesting that you started by attacking the author's credibility and then quickly pivoted to criticizing reputable news organizations like the Washington Post and LA Times. It's clear that you're trying to shift the conversation away from your own opinions on journalism.
As for my "job," I'm just a regular person trying to have an informed discussion about an article. If you think I'm "bad at my job," perhaps you could try responding to the actual points I made instead of making personal attacks?
And as for your assertion that I'm 'deep in the echo chamber,' I think you're trying to imply that anyone who disagrees with you is somehow naive or uninformed. Critical thinking and nuanced discussions are what we should be striving for, not blind acceptance of any given narrative.
If you'd like to share your expertise on the wholesale business or provide some insight into why Wine Warehouse's layoffs might have been justified, I'm all ears. Otherwise, let's stick to discussing the article itself rather than making unfounded attacks on reputable news organizations and individuals who disagree with you.
reminder; the la times and wapo have both committed seppuku in the last seven days.
The layoffs at mass wine wholesalers may seem like a blow to the industry, but for society, it's a welcome sign that the tide of excessive drinking and big-brewery dominance might finally be turning. As the demand for craft spirits and small-batch producers grows, it's clear that consumers are seeking more authentic, community-driven experiences - not just faceless, mass-market brands. Toasts to the innovators who are disrupting the status quo and paving the way for a healthier, more nuanced relationship with alcohol.
bingo.
Mr. Wark’s opinion about alcohol beverage wholesalers in the United States is well known and this article continues that stance.
However, Mr. Wark fails to mention the consolidation over the past thirty years at the supplier level. Let’s review quickly the behemoth wine suppliers of Constellation, EJ Gallo, Ste. Michelle Wine Estates and Terlato as examples. Thirty years ago, these same wine suppliers made or represented only a few wineries – Canandaigua (Constellation) and Richard’s Wild Irish Rose, Ernest & Julio Gallo and Hearty Burgundy, Stimson Lane Vineyards & Estates (Ste. Michelle Wine Estates) – Chateau Ste. Michelle and Paterno Imports (Terlato) importing Santa Margherita Pinot Grigio. Over the years, these same suppliers began to purchase other wine brands and grew their portfolios. Many of those brands were the same small brands Tom mentioned, where, “wholesalers would work with brands, take brand representatives around to potential accounts, use sales collateral to promote brands, create events, and pour wines to help sell even small and medium-sized brands. It was these kinds of efforts that supposedly justified the wholesalers’ high margins.’”
Over the past fifteen years, these same large wine suppliers agreed to multi-year exclusive contracts with large wholesalers, and as a result lowered wholesaler gross profit margins. These same contacts also stipulate that the wholesaler fund a high number of positions withing the wholesaler network to promote and sell that supplier’s wines within the wholesaler network. Why do you think all the layoffs from SGW&S were from their Fine Wine and Craft Division? None of these big suppliers with these types of exclusive contracts are sold in those divisions.
In addition, Mr. Wark fails to mention the high gross profit margins that small wine suppliers make (30%-40%) selling their wines to existing wholesalers, whose gross profit margins are much lower. And finally, Mr. Wark does not mention many of these same, small wineries employ Direct to Consumer avenue of sales directly to consumers, bypassing the wholesaler tier completely. Wanna guess what those gross profit margin levels are?
Bud,
It's kinda hard to take seriously your implied criticism or Whataboutism concerning producer margins when producers are REQUIRED BY LAW to use a wholesaler. Poor, Poor Wholesalers. They have laws mandating that suppliers must sell to them. They have laws requiring retailers to only buy from them. They have laws enforcing franchises. And as for consolidation, the number of wineries has increased every single year or the past few decades. Meanwhile, wholesaler numbers decrease...every year. And again, meanwhile, RNDC, SGWS and the other top ten wholesalers around the country fund lobbying campaigns to the tune of millions of dollars to STOP DtC shipments by brewers, distillers and retailers. We know that when they are successful in stopping these commonsense reforms it is due to their campaign contributions because we know it's not due to their arguments against this practice: "minors will die from drinking cabernet and retailers might ship tainted or counterfeit wines." So please, spare us.
Tom,
Your response is disappointing. You fail to admit, acknowledge or respond to my comments and instead deviate your response to your frustration with current laws employed by each state under the 21st amendment. DTC continues to this day, last time I checked. And these same small winery brands you epitomize make a much higher gross profit margin than a wholesaler, especially those that use current DTC channels. Try again.
Bud,
Your comments are a perfect example of missing the point. Mr. Wark didn't bring up the laws requiring producers to sell through wholesalers as a justification for their business practices, but rather as an observation about the industry landscape that seems to favor large wholesalers.
You're right that small winery brands can make high gross profit margins selling directly to consumers or using DTC channels. But that doesn't necessarily mean they're doing so at the expense of wholesalers, who are struggling with declining sales and profitability due to changing market conditions.
It's possible for multiple stakeholders in the industry to have different interests and business models, but still coexist and operate within a functioning system. Instead of dismissing Mr. Wark's concerns or deviating into tangential topics, wouldn't it be more productive to engage directly with his arguments and explore potential solutions that benefit all parties involved?
someone should familiarize the entire universe of giant suppliers and wholesale behemoths with the term “garbage in, garbage out”. whatever they perceive “the market” to be, that market ain’t buying what they have to sell.
no irony in the fact that SGWS’ chief’s main interest lies in writing campaign checks to donald trump…
The president has no influence on this issue. so your comment is immaterial.
are you this obtuse through naïveté or on purpose?