State wineries relish cheaper 'middleman'

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The low-cost Virginia Winery Distribution Company Inc. launches today, nearly two years after Virginia wineries lost the right to self-distribute

Date published: 4/17/2008

BY CATHY JETT

Potomac Point Vineyard & Winery is about to follow the advice of an old Geico commercial.

It will "cut out the middleman" by dropping its distributor in favor of the Virginia Wineries Distribution Co. Inc., a private, nonprofit state wholesaler that begins operation today.

"That's why we're so excited about this," said Cindi Causey, co-owner of the new Stafford County operation. "It's a great opportunity for Virginia wineries."

Potomac Point is one of 70 wineries around the state that have signed up to use the VWDC as their distributor for a nominal $5 charge per transaction, regardless of whether it's for a single bottle or several cases.

"That's significantly less than the average wholesale fee, which is about 30 percent per case," said Terri Cofer Beirne, lawyer for the nonprofit's board.

Potomac Point plans to use the VWDC to get its award-winning Richland Reserve Viognier and other wines into local wine shops, then onto wine lists at area restaurants.

"Finally, a support mechanism from the state," said Causey. "It's very nice."

Virginia wineries lost the right to self-distribute nearly two years ago after the U.S. Supreme Court ruled that state laws allowing in-state wineries, but not out-of-state businesses, to deliver products themselves was discriminatory.

States had to level the playing field, and Virginia decided not to allow wineries to sell directly to stores or restaurants. That hurt the many small wineries throughout the state that didn't have enough wine to attract or afford a distributor, or who were delivering small orders themselves to retailers and restaurants.

The General Assembly's solution was to create the Virginia Winery Distribution Co., which will process paperwork, collect payments and remit taxes, while participating wineries perform marketing and delivery functions for up to 3,000 cases per winery.

But it took months for logistics to be worked out and state funding to become available. In the meantime, a few small distributors sprang up, including Barbara Carpenter's KBC Distributing Co. in Westmoreland County.

"I started it primarily for Ingleside [Vineyards in Oak Grove], because they took away our right to self-distribute," she said. "Then I thought, well, I can help some of these other wineries as well. Now I have four, including Ingleside."

Date published: 4/17/2008