As the wine world waits for the Supreme Court to, hopefully, put another nail in the coffin of the 3 tier distribution system, wine retailers and small wineries will benefit from another development—LibDib (Liberation Distribution) and Republic National Distributing Company, the second largest alcohol distributer in the U.S., are teeming up to expand LibDib’s online distribution model to 22 additional states.
Here is why this is an important development.
In the three-tier distribution system, which was deliberately designed after prohibition to be an inefficient market , with the exception of purchases made directly from the winery, a consumer can buy wine only from a retailer or restaurant. And a restaurant or wine shop can buy only from a distributor. If a retailer wants to offer its customers a boutique wine and their distributor doesn’t carry it, they are out of luck. (California is an exception allowing wineries to sell directly to restaurants and other retailers). Because of industry consolidation, most wine is sold by large distributors who want to deal only with large producers. Because they can buy large quantities from a large producer they get better prices, have fewer shipping hassles because they deal with only a few companies, and by working only with large producers they don’t have to worry about running out of a particular wine. If you’re a small winery these large distributors are simply not interested in promoting and selling your wines.
The result is that it’s impossible for retailers to get their hands on wines from small wineries who lack distribution.
LibDib (aka Liberation Distribution), a San Jose California company, was invented to solve this problem for retailers. It is an Internet distribution platform that levels the playing field for small producers by efficiently connecting producers with retailers and eliminating many of the pricing and marketing practices of the big distributors. Because it is a wholly online platform, LibDib doesn’t needs a large sales staff or warehouse space thus bringing down the cost of distribution. There is no minimum purchase and any winery regardless of size can have their product distributed through LibDib. The problem has been that, until this deal with Republic, LibDib operated only in California and New York.
By teaming with Republic, LibDib will have access to the 22 states in which Republic operates, and Republic benefits from the sophisticated web operation developed by LibDib.
As a practical matter, this means that if you’re a sommelier buying wine for a restaurant in, for instance, Colorado, and you taste a lovely Tempranillo on a visit to Texas, you can order it through LibDib if the winery has signed on to work with LibDib.
It is one of the greatest of ironies, that in a country so dedicated to “free markets”, when it comes to alcohol we let oligarchs supported by government policy dictate our choices.