"Pennsylvanians are very thirsty for options:" online wine dealer

There are 66 winemakers and shippers -- from New England to Florida to Washington State, but mostly in California's Napa and Sonoma Valleys -- who have signed up so far for the Pennsylvania state liquor monopoly's Direct Wine Sales program, which enables drinkers to order cases online, since the program rolled out two Christmases ago.

But just one site, Napa, Calif-based (corrected) NakedWines.com, accounts for most of the $1.6 million (140,000 bottles) shipped through the program. NakedWines moved 10,104 of 10,748 total bottles and collected $135,000 of $152,000 in registered Direct Wine Sales for November, according to Elizabeth Brassell, spokeswoman for the Pennsylvania Liquor Control Board. That's just a drop in the state's big bucket: State Stores sold wine worth more than $800 million last year.

"Pennsylvanians are very thirsty for options," says Ryan O'Connell, marketing manager (corrected) for publicly-traded (corrected)  NakedWines. He notes the Commonwealth still requires drinkers to pick up their online-ordered cases at the local State Store.

Which may protect the buyer as much as the State Store system: Thieves grab boxes off porches at much higher rates in December, when online wine sales (like much other commerce) doubles over usual monthly volumes. By Christmas Eve, delivery fraud jumps from the usual 1 in 100 packages, to 1 in 20, "as criminals take advantage of procastinators," says Michael Graff, head of the Fraud Technology Lab at eBay Enterprises in King of Prussia. 

Only 1 of the 66 licensed by-the-case importers is located in Eastern Pennsylvania. That's the B and B French Wine Club of Berwyn, founded by Bob Perkins, who on a visit with family and friends to the French wine center of Bordeaux a few years back "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 told me.

Perkins goes ot France annually to recommend wines to his club's 80 members, including 50 in Pennsylvania. To import cases legally, he got a federal import license, a Pennsylvania import license and the Direct Wine Shippers license. "We put your name, address and birthdate on the state's Web site, 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 send the order to the State Store. The member pays me, and then I pay the state," Perkins concluded.

NakedWines charges $40 a month, which can be applied toward purchases. NakedWines has signed up nearly 3,000 regular customers in Pennsylvania, enabling them to order online by the case, plus fees that can work out to $20 a case, and $4.50 paid to PLCB per order.

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

NakedWines says it paid Pennsylvania $218,000 in fees through October, up from $50,000 last year. Prices aside, for wine enthusiasts "it's a great way to get around the limited selection in stores," O'Connell claims.

Pennsylvania is a fast-growing market for the firm, but still small compared to what he sells in California and other West Coast states. He says his firm and other small distributors have moved quickly to use the online-ordering powers that larger wine firms have successfully won, in Pennsylvania and other states, through aggressive state-house 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," 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."

"This is a market tha thas grown significantly in the past year, and shows potential for continued growth," said PLCB's Brassell.