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Wine Business 101

Posted by on August 18th

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The wine business has unique traits without parallel in other markets. Wine is an agricultural product, but it’s also a lifestyle commodity; in some cases, wine bottles are collectible items, in others, merely quaffable thirst-quenchers for Sunday evenings.

Wine Economics

Wine is one of the few products that can cost a few bucks per bottle or a few thousand retail. There are over two million wine brands available in the US. Internationally, over seven billion gallons of is produced annually.

Young handsome brunette bearded man happily looking away with wallet in hand in restaurant outdoor

Wine is here to stay; it’s been around for thousands of years and is now made in all corners of the globe. With dozens of grape varieties and a handful of wine styles, wine is both unmeasurable and undeniably engraved in today’s society.

Wine Certification

Mosts wine professionals do not opt for a university degree. Instead, they seek out certification from a wine school. Looking to become part of the wine trade? Check out our wine courses. All professional certification is via the National Wine School.

wine diploma

Wine Labels and Regulations

Every country has its own laws; after all, this is an alcoholic drink. Legislation typically has two main functions. The first is to protect the consumer. The second is to protect wine producers from counterfeiters. The European Union developed the AOP system (Appellations of Origin) to guarantee the quality and provenance of its most famous wine styles.

Red wine bottle label mockup

The US has a similar policy in place, the AVA (American Viticultural Areas). In a nutshell, the information on the label must be accurate, and the government monitors this closely. Understanding labeling wine laws is essential to grasp the wine business, but so is understanding the laws that regulate the surrounding market, from producers to the end consumer.

Wine Sales and Distribution

To sell wine in the US, you must first go through a special path called the three-tier system. Set in place soon after the repeal of prohibition, the three-tier system controls the commercialization and consumption of alcoholic drinks.

Three-Tier-System

A producer typically can not sell its products directly to a consumer in another state; A wine distributor typically has the right to sell the product to licensed retailers. Only a retailer (a wine shop, grocery store, or restaurant) can sell alcohol to the consumer.

State Laws

The system is more complicated than that, every state has its own rules, and municipal governments often have a say in the process. Some states have relaxed their alcohol laws a bit, but others are as strict as dictatorships.

Direct to Consumer

Laws vary widely from state to state, and what’s totally OK in some, might be strictly forbidden in others. This is why we advise careful examination of your local laws.

Warehouse or storage with wine boxes on a pallet. Logistics and mail delivery concept. 3d illustration.

Illegal in Some States

Wine producers in many states can’t sell their wine to customers across a state line. These are the alcohol control states, This includes Utah, where the government holds a monopoly on all alcoholic beverages, both as wholesalers and retailers.

Liberal states like California allow producers to make on-site sales to visitors, making the wine tourism industry a significant part of the producer’s bottom line. The same states also allow wines to be shipped directly to consumers.

Retail Wine Outlets

Online Wine Shops

Online wine sales have been flourishing. The three-tier system holds online wine sales back, as it’s virtually impossible to ship wine across the country, again, because of control states.

Big retailers have circled the strict laws establishing local distribution centers that comply with local laws, while other online wine stores don’t give service to certain states.

Woman using a wine app at the restaurant, she is scanning a wine label on a bottle, wine tasting and technology concept

On Premise Sales (AKA Restaurants)

Restaurants are an important part of the wine business. Once with a valid license, they can serve their customers, which leads us to the next question: How is wine priced?

Bottles Of Wine On Display In Delicatessen

A restaurant might sell a bottle of wine two, three, or even five times what they paid for the bottle. A winery might sell its bottles of wine to distributors for as little as $5; the same bottle you end up buying at a restaurant for $30.

Wine Shops

The classic way to buy wines. If you live near Philly, we maintain a list of the best local wine shops.

Wine Producers

These are the wineries and wine import companies that supply the wine to all of us.

Wine Taxes

Taxes play a big part in the wine market’s inefficiency. Most states charge a per-volume fee that can go as little as 0.20 cents per gallon (California) to as much as $3.26 per gallon (Kentucky).

Why The Complexity?

All of this might seem a little unfair, but it’s all the result of a lack of moderation in the first half of the 20th century. Alcohol consumers, including wine lovers, are known for over-drinking now and then, but education and social responsibility are quite different today compared to a century ago.

Perhaps it’s time for the government to cut us some slack?

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