Sunday, September 19, 2010

Initiative 1100 or 1105 or To Booze or Not to Booze?

The Washington Wine Institute (aka Ste. Mickey's Good Ol' Boys' Club) is supporting the distributor sponsored bill 1105. The Family Wineries of Washington State (FWWS) is supporting 1100 (The Costco initiative.) (Truth in blogging: I am a member of the FWWS, mainly because I don't qualify for Ste. Mickey's Good Ol' Boys' Club. I'm a Bad Ol' Boy!) Frankly I don't know why either organization is supporting either bill. I think I will vote 'NO' on both.

I am in favor of getting the state out of the booze biz, but why tie wine to a booze bill? I don't buy a lot of booze anyway, so I don't care who sells it. If I ever decide to drink booze, I will buy a still.

Quantity discounts (1100) are a good thing. The state has no business in regulating the sales price of wine. We, at Bonair, just passed our state audit (with flying colors) and one of the things the auditor was looking for was consistent pricing of wine to all wholesale accounts. Since we use distributors, it was a no brainer. But, why not give someone a break when you drive 200 miles to deliver ten cases as opposed to one case?

Is charging for shelf space going to put Washington wineries out of business? A vintner was on TV the other night stating that if 1100 (or was it 1105? Even I get confused.) passes he will out of business in three months. It is probably true that he will be out of business in three months, but the real reason is that Washington has more wineries than it can support.

Here is an interesting (at least I think so) historical view of shelf space.,5851849&dq=safeway+wine&hl=en

John Cartales, a staunch neoprohibitionist, was the district manager of Safeway stores in the Northwest. He was promoted to head the Northern California region for Safeway. Scanning software had just been installed in stores and managers had new information. John Cartales led the charge to get devil rum off Safeway shelves.

Northern CA Safeway stores had the largest selection of wines at the time, but the problem was that the major brands were scanning better than lesser known offerings. So, as the article states, Johnnie C. (Go Johnnie, Go) removed wines that weren't scanning. The wine section shrank and you could only find brands like Gallo, Franzia, and Almaden. (What ever happened to Mad Al?) You want Napa Valley? Hey we got Napa Valley right here. CK Mondavi. It says St. Helena right on the label. California Hardly Burgundy? St. Helena is in the Napa Valley and the Napa Valley's in California, right?

So, as the wine section shrank and the remaining brands scanned well all should be right with Mr. Cartales and Mr. Safeway. A funny thing happened on the way to the grocery store. When people wanted a good bottle of wine they had to go to a different grocery store. While they were there, they tended to fill up their carts with stuff on the regular grocery list, the one that resides on the refrigerator door. (Unless you have (sigh) stainless steel (sigh) appliances, but that fad hadn't started back in 1994.) Overall sales (groceries, soap, and dog food) dropped at all Northern California Safeway stores. Mr. Cartales had to bring back non-scanning wines so the shoppers would return to shopping at Safeway.

The point? Costco wants to charge for shelving wines. So be it. Only large brands will pay stocking fees and the selection will dwindle. Costco, now the largest wine retailer, will find itself in the same place Safeway found itself way back in 1994. Our Costco in Union Gap has a lousy wine selection already. I can't imagine it getting any worse. (Imagine the worst. You will never be disappointed.) One whole wall is dedicated to Yellow Tail and the good wines are all overpriced - nothing under $11. Trader Joe's and Grocery Outlet have much more interesting selections.

Back to Safeway. As I write, our local Safeway store in Toppenish (take the 'h' off the end of Toppenish and you have TopPenis - go Wildcats! #1 in the league!) is in the process of reducing SKUs (Stock Keeping Units). Combine that with overpriced produce and I have basically stopped shopping there. Zillah Food Center, the local grocer, has added SKUs (dry salted capers - go Big John!) and has hired a new produce guy who sells the same or better produce for about 1/3 the cost of Safeway.

So will slotting fees destroy the wine industry. I think not. Anyway, don't Washington premium wineries only sell to "upper-end wine shops and restaurants, or is it upper-end restaurants and wine shops?" This whole boondoggle could be a godsend for wine shops who carry special wines!


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  2. Grumpy: Your logic against 1100 is flawed -- it will benefit wineries as well as many small businesses and consumers, and it will start, finally, bringing some needed reform to state government.

  3. I didn't say ll00 was all bad, I just don't like being thrown in with a booze bill.

    One point I missed is cash on delivery. Okay by me. I have one account and it would make my life easier to bill at the end of the month. The rest is my distributors problem.

  4. Grumpy,
    Get your facts straight. Safeway and most other large retailers charge slotting fees, but Costco does not. If you want to slam Costco, that's fine, but at least be accurate about their policies and their intent.

  5. Actually, I think I know what Costco really wants and it will appear in a future blog post. But thanks for the correction.