Wine Technology Blog @ WineWeb.com

Many wineries are focusing on the environmental impact of producing their wines, and while that's good, it's only part of the overall green effort. Wines & Vines published an article on a study prepared by a student in Nova Scotia that shows that a consumer going to the wine shop to buy a wine can add half to the overall environmental impact of that product. This raises a lot of questions in my mind, like what's the impact of making a special trip to buy one bottle versus a case, versus stopping by the wine shop on your way home from work, versus having wine shipped directly to you. It would be great to see an eco-conscious winery show the environmental savings (if there is any) from having their wine shipped directly to the consumer. Could "Go green, have your wine shipped" be a slogan in the near future?

OK, I admit this may be a bit of a stretch, but since this blog is about technology and wine, here goes.

News was released today that scientists have discovered more about the origins and functions of the Antikythera Mechanism, an ancient mechanical "computer" that dates to the 1st century B.C. Since its discovery by divers around 1900, much has been speculated about this advanced technology. Now, in addition to tracking astronomical events in the solar system, the researchers found that one of the dials was dedicated to tracking the 4 year cycle of the ancient Olympiad games. The month names on the 19 year calendar have now been determined to be Corinithian, which provides evidence as to its origin. Interesting stuff -- more details at the research project website.

Since wine has been a part of Greek culture for over 4,000 years, the chances are good that the ship carrying the Antikythera Mechanism was also carrying wine. While the sailors may have relied on the Mechanism for navigation, they very likely didn't require a "computer" to sell their wine in other locations. My how times have changed. Now, in our "advanced technology culture" we don't require a computer to travel from one state to another, but we need one to figure out how and where we can get wine from a winery to a person in another state, given the ever-changing laws restricting the free trade of wine.

So the question of the day: Has civilization progressed in this area in the past 2,000 years?

The way that sales tax is calculated to customers in Washington state will change on July 1. I just read a blog post at ShipCompliant that called it a streamlined style. While the tax reporting may be streamlined, the rate calculation is anything but. It's a destination-based tax, where the tax rate is based on the location of the customer. OK so far, as several states do that. The complexity comes into play as the tax rates are not based on county or city boundaries, but must be determined based on ZIP Code plus 4. All e-commerce systems and other order processing systems must be revised to either require entry of ZIP+4 for Washington customers or determine the ZIP+4 based on the customer's address. We've prepared for this change by enhancing our sales tax calculation routines and loading over 30,000 records that correspond ZIP+4 ranges to sales tax location codes.

We noticed that another wine e-commerce service launched a few days back, and maybe because it's getting close to Halloween, their take on sales tax spooked us a bit. They state that :...we ask which states you must charge sales tax. This is usually only the state(s) in which your winery holds a physical presence."

Here's the WineWeb's take on sales tax and how we've built it into our e-commerce service.

• Over 20 states require a winery to collect sales tax on direct shipments. In some states this rate is different from the tax rate that a customer would pay at their local wine shop on purchases.
• Some states have a flat sales tax rate, other states have varying tax rates based on the county and/or city.
• All states charge tax on the handling portion of the shipping cost. Some states (11) charge tax on the entire shipping cost.
• Some states (18) require sales tax on non-wine items that that winery ships into the state.

Here's how it works for a winery using the WineWeb's e-commerce service:

• The winery selects each state where they are allowed to ship. If that state requires sales tax to be collected, and the rate varies by destination, the winery can have the system determine the rate based on the customer's location. The winery could also elect to collect a flat rate in that state, mindful that all taxes collected must be remitted. If the state requires a flat rate, the system proposes the appropriate rate.
• The system computes the sales tax amount for all items that are taxable in that state, including shipping, handling and merchandise items. The winery does not need to remember or define these rules.
• When a customer places an order, the system uses the shipping ZIP Code not to directly determine the sales tax, but to determine the taxing jurisdiction (county or city). The sales tax rate is then retrieved based on the taxing jurisdiction. We believe that a ZIP Code match to a sales tax rate is error-prone as about 20% of all ZIP Codes in the country cross a county line. If the system senses that the ZIP Code crosses a county line, and if the tax rate or deliverability varies across those counties, the system prompts the customer to select their county, to ensure that the correct tax rate is applied. The county is then stored with the order data for compliance reporting.

We maintain the sales tax rates, ZIP Codes and dry area so you don't need to spend time and effort to understand them. We also use a compliance company to help ensure that our information is accurate and up-to-date. Nothing spooky about that.

Not to beat up on the liquor wholesalers (as I've said before, they have their place in the market), but here's a quote from the Texas Attorney General James Todd that was just published in the Specialty Wine Retailers Association newsletter: "In the Dallas Region during the first Five Months of FY 2007, the TABC enforcement Division brought almost 1,200 criminal actions against permit holders for violations related to minors, of which none involved Internet sales or direct shipment and few involved wine."

As the wholesaler lobby has frequently used the argument that direct shipping provides wine to minors, maybe we'll now hear less of that. Maybe they could now argue for laws requiring proof-of-age and an adult signature on all alcohol sales at retail stores. Yeah, right.

The latest issue of Practical Winery & Vineyard (July/August) contains an article written by yours truly. It's entitled "Hosted services model for winery websites" and is based on a recent white paper I wrote. We've posted a reprint online, or if you're planning to attend the Wine Industry Technology Symposium on Tuesday, Practical Winery will be handing out reprints at their booth.

I don't want to get on a rant, but when someone's views are totally opposite of what you consider logical, reasonable and in the best interest of the consumer, it's hard not to. I just received this article in a newsletter from the Speciality Wine Retailers Association (WineWeb is a member of this organization).

---

In a recent interview at Wine & Spirits Daily , Craig Wolf, president of the Wine & Spirits Wholesalers Association, revealed a kind of stunning arrogance that can only be chalked up to looking at consumers as a pain in the neck. In commenting on the desire of retailers to do business with consumers in other states Wolf said:

"What the specialty wine retailers are saying is, ‘wait a minute you’re hurting the consumer,’ but that’s not true…. I guarantee you that there is virtually no product that any of these specialty wine retailers’ members sell that can’t be purchased directly from the winery.”

Either Mr. Wolf is advocating that consumers in Illinois purchase their rare, old-vine Shiraz directly from the Australian wineries or he has abandoned all pretense of understanding the nature of retailing in the Internet age or the nature of the wine industry today where small, hard to find products are often found not at the winery but in the most remote of retailer storehouses. But wait, there’s more...

“And I guarantee you secondly that there are substantial retail outlets in Illinois that have these products.”

Well, it’s good to know that Mr. Wolf is guaranteeing the Illinois consumer that Illinois retailers will NEVER run out of that small production Auslese or that cult Cabernet of which only 100 cases were produced.

But let’s be clear about what Mr. Wolf seems to be saying to Illinois consumers: "Can’t find the wine you want in your own state? Too bad. You’ll take what we give you and you'll like it!”

---

Here's another quote from the interview: "We’ve worked so hard to show how responsible and caring we are...". OK, enough bashing of the wholesalers for today -- they just want to keep their monopolistic, archaic system in place to the detriment of ... (OK, I'm really done, it's just that I've been in this since 1995 and it's hard not to say more.)

So, if you thought that the Supreme Court decision two years ago fixed everything for the free trade of wine, you would be mistaken. Here's a recent example: the Texas legislature just passed a bill that only allows wine to be shipped from a retailer to a consumer if the retailer resides in the same county. Think about this for a moment... I'm sure your local wine shop has a 1990 Henschke Hill of Grace, so you won't need to order it from one of our online merchants. What about your wine club shipments from K&L?

Get involved in this issue -- sign up for the Specialty Wine Retailers consumer email at http://www.specialtywineretailers.org/consumers.php

Our online age verification feature has been up and running for a few weeks.  We integrate with the age verification service from IDology, as they are certified in Michigan, the first state to require age verification. To get setup for this service, you'll need an account with IDology, then you provide us with the account information and a list of the states where you wish to check age.  There are no WineWeb fees for this service, above those charged by IDology.

Kentucky open to direct shipments of wine?  Could it be that the state that enacted the first felony law on wine shipments be open?  It appears so, at least until January.  On Tuesday a District Court judge in Kentucky struck down the law prohibiting out-of-state wineries from shipping to Kentucky consumers.  Small wineries (under 50,000 gallons) can get a permit from the state and begin shipping directly to consumers. A new law scheduled to take effect in January requires all wineries (including in-state wineries) to sell through a distributor.  A victory?  Yes indeed, but maybe short-lived.