Ask any winery to identify their biggest headache and you’re likely to get the answer “shipping.” Shipping and fulfillment of direct sales cost more than customers think it should. It is tough to get accurate service from 3rd parties. Wineries must depend on mother nature to not freeze or boil the wine in transit. And finally, compliance with all the state and federal laws provides a minefield that is difficult to negotiate without a specialist.
It just got even tougher for over 200 Napa Valley wineries.
On June 1, Wine Business and others reported that New Vine Logistics (NVL) in Napa suddenly suspended operations because it had “abruptly gone into a state of financial crisis.” Those 200 wineries who depended on them for order fulfillment suddenly were left in a lurch. Not only was NVL not taking any shipping orders, but even orders in process where stopped. Most of those wineries probably even had some level of inventory with NVL too. What would happen to that inventory?
Ironically, it seemed that New Vine Logistics had been setting the standard on what services to offer a winery, especially to a small one. A winery would have inventory in place with them, NVL would receive orders straight from a winery’s online ordering system, accurately process the orders including checking the shipment for legal compliance, and get them out the door via UPS or FedEx. Special and international shipments were supposedly no problem. In fact, NVL even had a service which helped a winery operate “directly” in many 3-tier states. (A 3-tier state is where a winery can only sell through a distributor, i.e.no direct sales.) Note, I don’t know the exact details of how NVL accomplished this, but I believe they or their partner served as a winery’s distributor in said state and legally (and briefly) took ownership of a shipment before forwarding it on to the customer. NVL would also provide the necessary information back to a winery for compliance reporting or could even completely take care of the legal compliance reporting for a winery. Sounds great, right? I’ve taken a tour of NVL and heard several presentations from them. New Vine Logistics did seem too good to be true. They have a huge temperature controlled warehouse and much of their process is automated, supposedly reducing mistakes. It’s a small winery’s dream to be able to concentrate on production and sales and have someone else accurately and affordably take care of fulfillment and shipping tasks. NVL certainly looked very impressive with their computers, scanners, conveyor belts, etc. No wonder Amazon.com selected them to provide fulfillment for their upcoming wine sales venture. NVL must have looked very familiar to the big online retailer.
When we first got in the business, we asked around for suggestions on shippers. I basically discovered it would be a choice not of whom my peers liked, but of whom they hated the least. I was tempted by New Vine Logistics but found their costs prohibitive. I ended up selecting WW Shipping Solutions and have had a love-hate relationship with them ever since. They’ve made more mistakes than I thought were acceptable, and yet they’re always so darn nice and bend over backwards to fix their mistakes, that I’ve never quite gotten to that tipping point and fired them to make a change. Ironically, the change I would have made was to go to New Vine Logistics.
I can only imagine the sleepless nights of early June for the small winery owners who were depending on New Vine Logistics. Word is they were getting very little information from NVL. What would it be like, especially under already-difficult economic conditions, if your most profitable sales channel suddenly froze?
So how will it all end? Perhaps happily. On June 12 it was reported that New Vine had started shipping wine again because of a deal where Inertia Beverage Group infused cash and assumed NVL debt. Those 200 wineries must be breathing a bit easier but I think we all got a warning on how vulnerable one’s business can be if even the most in-demand, cult wine can’t get to the customers’ hands. I’ll keep an eye on NVL and post if there are other interesting developments. Hopefully new management can be brought in to still provide the needed services in a profitable way.
PS. One can’t talk about shipping difficulties in the wine industry without at least mentioning the #1 reason it is so complicated and expensive. Many of the laws governing the distribution of our favorite beverage are left over from the days of Al Capone and prohibition. And these days, even though anyone over the age of 21 should be legally able to purchase wine from their source of choice (i.e. our winery) it rarely painlessly works out that way. The federal and various state governments provide many a roadblock to control or limit the sale and distribution of alcohol. In this regard, fine wine is treated no differently than moonshine. Fortunately, the legal situation is getting better. Supreme Court decisions and bold action by some state legislatures and governors over the last few years have made it easier for wineries (and you) to ship wine legally… at least in some states. For more information about wine shipment issues, see the websites Free the Grapes and Specialty Wine Retailers: Wine Without Borders.