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Free Trade Could Mean Higher Prices

James Laube
Posted: February 3, 2000

Free Trade Could Mean Higher Prices

By James Laube, senior editor

Brace yourself; culture clash ahead. Free trade meets the Internet: two superhighways merging into one?

There are many assumptions and unanswered questions about what free trade and the future of Internet wine sales might mean for us, regardless of where we live. In a roundabout way, I see the two as curiously interrelated, and unless I'm wrong, all of us will be affected by these two phenomena.

The point at which free trade and the Internet connect is our potential ability to order out-of-state wines online and have them shipped directly to our doorsteps. Some of us already enjoy this luxury. Most of us don't. If you live in a state where it's legal to purchase wine and have it delivered to your home, you're eventually going to have much stiffer competition for those in-demand wines. As more states pass laws allowing wine to be shipped, more consumers will take advantage, joining in the hunt.

If you reside in a state where it's illegal to have wine shipped to you, there's a new day coming. As laws change -- and they will -- you'll be able to enjoy the same freedoms.

Unfortunately, the freedom to have wine shipped across state lines won't solve the more acute issue, which is supply. There are several wine worlds orbiting in our universe. There are mass-produced wines, packaged in jugs and boxes, that are sold in just about every kind of store, convenience shop or minimart out there. Then there are supermarket brands. These are wine brands made in large-enough quantities to fulfill the needs of giant grocery chains or discount clubs. These stores need wines with huge case volume to fill their aisles. Now, my intention isn't to denigrate these stores or wines. On the contrary, it's wonderful to find enough variety to allow buyers to choose from a high-quality assortment of brands. Some of the biggest stores don't stock just inexpensive wines. Their bins are full of prestige brands, some that you might think would be in the next category, the rarities.

These are the vineyard-driven, limited-production wines that seemingly everyone wants to buy. While many of these wines are indeed worth the extra effort -- and money -- to obtain, just as many aren't. Still, if you can't buy rarity X, then maybe rarity Y will do. In California alone, we're witnessing an unprecedented growth in the proliferation of single-vineyard wines. Winemakers who were once content with making three or four different wines, and perhaps a reserve bottling here and there, are now churning out multiples. It reminds me of the old days, when it was common for wineries to make 10 or 20 different wines. I'm not sure if all these wines will find happy homes. But the wineries are making them, and they're starting to flood the market.

That brings us to the Internet. Many of us love to browse through wine shops and may find the point-and-click shopping world too impersonal and detached. Still, many of us are growing accustomed to the convenience of ordering books and CDs online and having them delivered the next day.

Then there's this stark possibility: As Internet sales expand and more free-trade states emerge, will the Internet turn into one gigantic cyberspace garage sale, where wines are bought, sold, bid upon and traded as if they were in a live auction? Ebay, the online trading center where you can buy or sell just about anything, has already bought Butterfield & Butterfield, one of the finest wine auction houses around. It is only a matter of time before cyberspace wine bidding, buying and auctions grab a bigger hold of the market.

The big winners in all of this? Wineries should gain greater distribution as free trade and the Internet expand. Wine lovers should have better opportunities to buy wines they can't normally get, but prices may be higher, reflecting wider demand. I don't think the traditional distribution network, the so-called "three-tier system," will collapse, though they're the ones fighting free trade the hardest. Wineries will still need distributors to hand-deliver wines to stores and supermarkets.

Free trade on the Internet may indeed provide greater buying opportunities, but freedom almost always carries a price.

This column, Unfiltered, Unfined, features the opinionated inside scoop on the latest and greatest in the world of wine, brought to you each Monday by a different Wine Spectator editor. This week we hear from senior editor James Laube. To read past Unfiltered, Unfined columns, go to the archives. (And for an archive of James Laube's columns written just for the Web, visit Laube on Wine.)

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