Oakland — In preparation for our March 5 House Economic Matters
Committee hearing, we wanted to answer some of the questions raised by
direct wine shipping legislation opponents.
Myth No. 1: Direct-to-consumer wine sales will hurt Maryland retailers.
Fact: Wine shipping is an entrepreneurial opportunity for those
retailers that want to take advantage of it; for the rest, it is
Maryland is one of a few states that prohibit chain store sales of beer
and wine, which means that a Maryland liquor licensee must a) be a
Maryland resident; b) not have a liquor license in another state; and
c) only hold one liquor license in their name. As a result of the
franchise exclusion, Maryland liquor stores have only one option for
expanding their bricks-and-mortar business: going online. Of the 1,581
liquor stores in Maryland, most of which are urban and neighborhood
liquor stores, the overwhelming majority do not sell fine wine which is
usually defined as wine priced above $20 per bottle.
We estimate that only about 100 to 125 fine wine stores exist in
Maryland. These stores are distinguished by a large focus on wines,
with hundreds priced higher than $20 per bottle, and a customer base
that draws from a broad geographic footprint. A typical fine wine store
offers extensive wine education to its staff and customers through
tastings, organized visits to wine-growing areas and winemaker visits.
As these stores specialize in harder to find selections, they are most
apt to take advantage of consumer internet sales for the discriminating
buyer looking for low-production wines. Many fine wine stores already
have online presences and are waiting for legalized wine shipping to be
able to take advantage of it. With a multi-jurisdictional customer
base, these Maryland stores would finally be able to service their far
away customers while gaining new ones from other states.
Another reason that fine wine stores want shipping is because their
customers are already being forced to shop out-of-state due to
Maryland’s felony ban on shipping. These patrons have wine shipped to
D.C., Virginia and West Virginia addresses or buy wine not sold in
Maryland from retailers in those jurisdictions that carry them. Many
fine wine retailers would rather have consumers receive shipments from
wineries directly so that they would not have to develop relationships
Lastly, only about 15 percent of all American wineries do business in
the state of Maryland due to their size and lack of distributor
representation. Maryland already has a permit that allows small
wineries to ship directly to Maryland liquor licensees called the
Non-Resident Winery Permit.
Currently fewer than 50 wineries hold one because Maryland’s felony
statute is so well known that they do not want to risk running afoul of
it. With the passage of consumer direct shipping, many retailers
anticipate that they will be able to satisfy their and their customers’
desires for hard-to-find boutique wines through increased adoption of
the Non-Resident Winery Permit. These highly allocated wines will most
likely never be distributed by liquor wholesalers because of their
small production, but they are exactly the edge that fine wine
retailers are looking for to distinguish themselves in the competitive
For fine wine entrepreneurs, legalizing retailer shipping is an
opportunity. For average small business liquor store owners, retailer
shipping is irrelevant to their customers and to them.
Marylanders for Better Beer & Wine Laws