LCB Program a Hit

So far, 66 vintners and shippers - from Connecticut, Florida, Washington state, and mostly from California's Napa and Sonoma Valleys - have signed up for the Pennsylvania state liquor monopoly's Direct Wine Sales program, which allows consumers to order online cases of wines they might not find in the State Store catalog.

Two Christmases ago, the state rolled out the program as a sort of compromise in the long struggle between Harrisburg supporters of the Pennsylvania Liquor Control Board and its central purchasing, sales, and labor relationships and those who would rather buy from private vendors, now that online and smartphone orders can put all vintages in reach.

It's still tiny. Last month, just one website, Napa, Calif.-based NakedWines.com, moved more than 90 percent of the 10,800 bottles sold and collected $135,000 of the $152,000 paid for all registered Direct Wine Sales, according to Elizabeth Brassell, spokeswoman for the LCB.

That's just a drop in a big bucket: State Stores sold wine worth more than $800 million last year.

"Pennsylvanians are very thirsty for options," says Ryan O'Connell, the marketing manager for publicly-traded NakedWines. He notes that the commonwealth still requires buyers to pick up their online-ordered cases at local State Stores.

Which actually might protect the buyer along with the State Stores: Thieves grab boxes of all kinds off porches at much higher rates in December, when online wine sales (like much other commerce) double over usual monthly volumes.

By Christmas Eve, delivery fraud jumps from the usual one in 100 packages, to one in 20, "as criminals take advantage of procrastinators," says Michael Graff, risk manager at the Fraud Technology Lab at eBay Enterprise in King of Prussia.

NakedWines targets aficionados and corner-restaurant-sized/large-Italian-family-sized wine consumers. The service charges $40 a month, which can be applied toward purchases.

It has signed up nearly 3,000 regular customers in Pennsylvania, enabling them to order online by the case, plus a $20-a-case handling fee, and $4.50 paid to the LCB per order (which can be a case or more).

The fees are more than offset by lower prices, O'Connell says: By selling direct, he says, he can list prices "40 to 60 percent" below retail.

Only one of the LCB's 66 licensed by-the-case importers is in Southeastern Pennsylvania. That's the B and B French Wine Club of Berwyn, cofounded by Bob Perkins. On a visit with family and friends to France's wine export center a few years back, he "got to thinking: There's 8,000 wines made in Bordeaux every year, but we only see 100 in the stores back home. There's got to be a better way to get them in," Perkins tells me.

He goes to France annually to recommend wines to his club's 80 members, including 50 in Pennsylvania. To import cases legally, Perkins' club got a federal import license, a Pennsylvania import license, and the Direct Wine Shipper license.

"We put your name, address, and birth date on the state's website, and the name of the wine, and the price of the wine. The website creates the order and calculates the tax. We fax the order to the warehouse. It sends the order to the State Store. The member pays me, and then I pay the state," Perkins says.

NakedWines says it paid Pennsylvania $218,000 in fees through October, up from $50,000 last year. Prices aside, O'Connell says he attracts enthusiasts hoping "to get around the limited selection in stores." Pennsylvania is a fast-growing market for his firm, but it's still small compared with what he sells in California and other West Coast states.

O'Connell says his company moved quickly to use the online-ordering powers that larger wine firms won here through aggressive statehouse lobbying - though many of the big companies have moved slowly to exploit the programs, he adds.

"But we expect the industry to catch up very quickly," he says, now that his firm and a few others have gotten their feet in the door.

O'Connell has found a way to work within the system. "A lot of wineries don't want to waste all the time" satisfying state sales rules, says Scot H. Ziskind, head of South Jersey-based ZipCo Wine Cellar Services, whose clients include restaurants and rich wine collectors. "It's some progress, compared to a few years ago."

Says the LCB's Brassell: "This is a market that has grown significantly in the past year, and shows potential for continued growth."

NOTE: NakedWines' headquarters location and O'Connell's position with the company have been corrected.

JoeD@phillynews.com

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