Winery, distributor, retailer — how wine is distributed in Oklahoma

The state's three-tier system demonstrates how a bottle of wine travels from the winery to store shelves, incurring price increases all along the way.
BY JENNIFER PALMER jpalmer@opubco.com Modified: June 15, 2012 at 7:24 pm •  Published: June 16, 2012
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On its journey from vineyard to dinner table, a bottle of wine will trickle through the state's three tier system, facing price hikes at each stage along the way.


Some in the industry say the system — which takes the product from winery to distributor to retailer — gives too much control and profit to the distributors or wholesalers in the middle. But Oklahoma wineries can choose to self-distribute, bypassing the second tier entirely.

Public perception is that the distributors' markup on wine and liquor is high, said John Maisch, an attorney for the Alcoholic Beverage Laws Enforcement Commission. Every two months, distributors anonymously file their intended markup with the ABLE Commission and are given an opportunity to see the others' posted percentages and amend theirs, if desired.

Maisch said the markup has fluctuated in recent years. In April 2010, domestic wine was at 22 percent markup from what the distributors paid for it, then it dipped to 15 percent until January of this year.

Currently, it ranges from 16.75 percent to 17.75 percent on domestic wines, depending on the distributor.

Of the 62 Oklahoma wine producers, about 25 percent self-distribute. A constitutional amendment granted in 2008 allowed winemakers who produce 10,000 gallons or less to sell directly to liquor stores and restaurants.

“That was absolutely the best thing to happen to us in recent years,” said Andrew Snyder, president of the Oklahoma Grape Growers and Wine Makers Association.

However, Snyder said, the self-distributor license fee of $750 is cost prohibitive to some mom-and-pop operations and there have been proposals to reduce the fee.

Self-distribution

Before the change, many wineries were having difficulty getting their products on store shelves. Distributors choose which products they carry and will often forgo stocking products with low sales volume.

Whether it's self-distributed or not, consumers often won't notice a difference at the cash register, explains Snyder. For example, a bottle of wine that costs $11.25 at his winery is sold to a liquor store for $8.25 — then marked up about 30 percent and sold to the consumer for the same price of $11.25.

Winemakers who use a distributor will sell them products at 50 percent of the retail price, allowing the distributor and liquor store to each mark up by 25 percent.

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Oklahoma ties

Current number of winemakers: 62

Number of distributors: 8

Number of retailers: More than 650 liquor stores and 2,000 restaurants and bars

Source: ABLE Commission

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