As many of our readers will remember, the California Department of Alcoholic Beverage Control raised concerns about so called unlicensed third party service providers in a July 2009 industry advisory, putting the industry on notice it had concerns about marketing agent models for selling wine online.
ABC cited regulations prohibiting producers, distributors or importers from giving anything of value to retailers in addition to laws banning cooperative advertising by suppliers and retailers. ABC has concerns about companies profiting from sales of alcoholic beverages who aren't licencees of the department.
Many ventures act as marketing agents selling wine online, including clubs associated with such publications as the San Francisco Chronicle and Wall Street Journal. Amazon.com considered a run but threw in the towel; mass merchandiser Buy.com is the latest.
What ABC will ultimately do on the issue remains to be seen but for some reason the first venture it has chosen to go after is Bottlenotes.com and founder Alyssa Rapp. The company operates an online wine community where wine enthusiasts can learn about, share, explore and buy wines picked by Bottlenotes wine experts.
Deputy Division Chief Chris Albrecht of the Trade Enforcement Unit said representatives of Bottlenotes have been in contact with ABC but wouldn't say if an investigation is pending.
According to industry sources, however, ABC has been seeking information from various parties that have conducted business with Bottlenotes.com for more than a year. The investigation appears to be related to Around the World in 80 Sips, a series of public events.
What’s more, ABC filed a complaint on October 13, 2010 against an outfit with a public warehouse license, New Vine Logistics, for “shipping a bottle of wine to a consumer on behalf of Bottlenotes, an unlicensed entity.”
Ironically, New Vine Logistics, as readers will recall, was dissolved in 2009. The company doesn’t exist anymore. The warehouse New Vine once owned has been operated by Inertia Beverage Group for a year-and-a-half.
ABC’s October 13 complaint against New Vine (file 14-438959) states that:
“… on or about March 24, 2009, respondent-licensee shipped one (1) bottle of Castello Banfi Fumaio Chardonnay-Sauvignon Blanc to a consumer on behalf of Bottlenotes, an unlicensed entity in California, thereby exceeding their licensed privileges and causing and permitting the sale of an alcoholic beverage by an unlicensed entity in California, thereby exceeding their licensed privileges and causing and permitting the sale of an alcoholic beverage by an unlicensed entity in violation of Section 23300 and Section 2355 of the Business and Professions Code.”
James Seff of Pillsbury Winthrop Shaw Pittman, who represents Bottlenotes, confirmed “the relationship with the ABC has been difficult.” He said Bottlenotes has been in contact with the ABC and is confident about its business plan; and that ABC’s issues are related to how Bottlenotes constructed some tastings.
All of this comes at a somewhat delicate time for people who deal with the ABC. The scuttlebutt is that a new director has been selected (but not yet appointed - rumored to be from the Attorney General’s office). There’s anticipation there could be some adjustments of ABC’s engagement priorities and actions going forward.
“The ABC’s present position is antithetical to business and electronic commerce,” one source said of the marketing agent issue. “ABC is stuck with trying to fit an early 20th century law into a 21st century economic environment. They need to do something to fix it.”