One of the ABC's requirements is that the winery control the money resulting from the sale of wine.

Last October, the California Alcohol Board Control issued an industry advisory on third party providers. I suspect this latest industry advisory is a direct result of the confusion and controversy caused by the June 2009 industry advisory in which the ABC “expressed concern about activities engaged in by unlicensed providers of certain services to licensees in connection with the sale of alcoholic beverages….”

I’m somewhat surprised it required more than two years of what was likely a deluge of phone calls to the ABC by wineries and entrepreneurs (I know I called them multiple times!) before the ABC deemed the matter worthy of further investigation and industry input.

Nonetheless, props to the ABC for finally delivering some clarity on “unlicensed third-party providers” who provide services commonly referred to as “marketing agent” to “licensees.” Just so we’re clear, for purposes of this post, “licensees” are wineries, and an “unlicensed third-party provider” is an entity, such as Indie Vinos Online Marketplace, providing marketing, promotion and facilitation of wine sales via the internet.

Wineries — not the marketing agents — risk the good standing of their licenses if they work with noncompliant marketing agents. As I’ve had the good fortune (yes, that’s tongue-in-cheek) of having practiced law for more than a decade and have mastered the interpretation of double-speak legalese, I hope what follows is an easier to understand summary of the ABC’s requirements:

1. Business Control. The winery decides which of their wines are offered on the marketing agent’s website and at what price they’re offered.
2. Fulfillment Control. The winery decides whether to accept or reject an order and assumes responsibility for fulfilling an order. The winery must fulfill and ship an order either from the winery’s licensed premises or from a licensed shipper authorized by the winery to fulfill and ship orders.
3. Control of Wine Sales Revenues. A marketing agent may collect funds for the sale of wines, but must distribute all revenues earned from the sale of wines to the winery. Only after the winery has received the wine sales revenues can the winery pay the marketing agent. The parties may use an escrow account in which the revenues are deposited and the marketing agent’s fees are distributed, but only if the winery has ultimate control over the account. Funds distributed electronically via the internet are OK, provided they meet the other requirements.
   
4. Advertising. A marketing agent may engage only in advertising and promotional activities that would be permissible if they were performed by the winery.
5. Reasonable Compensation. Any fees the marketing agent charges must be “reasonable.” Our attorneys have confirmed that “reasonable” can be up to 20%.

The advisory makes some distinctions about advertising-only sites vs. marketing agents and offers an explanation about trademark licensing, but we felt these weren’t relevant for purposes of understanding the ABC’s stance on the marketing-agent model whereby wine ownership passes from winery to consumer.

Even though this industry advisory technically applies only to California, we believe it will have significant influence on other states. Interestingly, as an Oregon-headquartered company, we first vetted our business model with the Oregon Liquor Control Commission, who blessed our model with the caveat that we follow exactly these requirements.

The only change we’ve made for the Indie Vinos Online Marketplace in response to the ABC industry advisory has been to implement a percentage-based service fee (15%) and scrap the flat per-bottle fee.

If you have any questions about our services, the Indie Vinos Online Marketplace or the industry advisory, please feel free to email me (karin at indievinos (dot) com or leave your question as a comment.

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Things are movin’. They’re cookin’. You have a ridiculous number of friends (one of my winery friends is closing in on 4,500), and you’re actively engaging with them. How dare I have the audacity to even remotely suggest you could be doing it wrong?

Well, because what you really need (and want!) are “Likes.”

Likes (pure Facebook-ese) are what you get when someone chooses to follow your winery’s Facebook Page. Facebook Pages are special profiles for organizations, businesses, bands and celebrities, and in fact, unless you’re a “real’ person, you’re not supposed to have a Facebook profile (or what is now known as a “timeline”). If you’re a business using a Facebook profile instead of a Facebook Page, you’re actually violating Facebook’s user terms. You run the risk of losing access to your profile and all  content associated with it, although I don’t know of anyone who’s been called on it.

But the better reason (Don’t tell my kids I suggested there’s a better reason than “following the rules!”) is that Facebook Pages offer your winery the opportunity to utilize many more robust features geared to growing your business. For example, Page Insights allows you to analyze reactions to content, as well as understand and analyze trends in your fan base demographics. Let’s say, for example, you’re a Washington winery and you discover 25% of your fans are from California. With a little additional information, you might find there’s sufficient interest in California to support getting a direct shippers’ license. That kind of information isn’t something you can get from a personal profile unless you go through each of your friends, one by one, to determine their current city.

Speaking of selling to those fans, you can sell your wines to them directly from your Facebook Page with a free app from VinTank. It requires that you set up a VinTank Social Connect (formerly Cruvee) account, but that also is free. Signing up for free accounts that help you promote your wines are what we call no-brainer decisions.

Managing your fan base is much easier and more “fan friendly” with a Facebook Page, too. Rather than having to request a friendship, Facebook users merely have to “Like” your page. Furthermore, you can integrate the Facebook Like button with other digital marketing tools. By putting a Facebook Like button on your website, your website visitors can become Facebook fans with a simple click. That “like” is also posted as your fan’s status update for his or her friends to see and check out.

For example, I did this (see the bottom line):

Which resulted in the following status update in Facebook:

There is a plethora of apps available to trick out your Facebook Page, reinforcing your branding and make it even more useful. Currently we’re using Constant Contact to capture fans interested in subscribing to email offers, a Fan of the Week app to reward those who actively engage with us, and North Social for various projects. To keep up with changes that Facebook makes or new apps available, we’re fans (both in the literal sense and on Facebook) of AllFacebook.com, which is a good resource for sound advice on making the most of your Facebook Page.

With a Facebook personal profile, you’re not only missing out on rich data available only to Facebook Pages, but you also can’t promote your personal profile within Facebook. If you want to use Facebook Advertising to promote your winery and grow your fan base (and thus potential customers), you have to have a Page.

But if you remain unconvinced that you need to convert your Facebook profile to a Facebook Page, here’s the zinger: Facebook profiles are limited to 5,000 fans. Not true with Facebook Pages. Witness Liquor.com’s Facebook Page with more than 200,000 fans. (Apparently there are a lot of people in need of cocktails!) Think you can’t possibly get to 5,000 friends? Think again. Remember my winery friend with nearly 4,500 friends? They’re located in a small town in Eastern Washington (not the town you’re thinking of), and I’ve never heard of them. With a Facebook profile, once you reach 5,000, you have to turn people away or unfriend some in order to make room for others. Oh, the horror!

Fortunately, Facebook makes it easy to migrate your current friends to a Facebook Page where they’ll become your fan and lead their friends to shower “likes” upon you. I highly recommend you start with the instructions at the Facebook Help Center. When you’re done, leave the URL for your Facebook Page in our comments, and we’ll be sure to “like” you.

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