Two-hour wine delivery continues to be rolled out in new US markets. By Liza B. Zimmerman | Posted Friday, 29-Jun-2018 Working in tandem with its newly acquired brick-and-mortar Whole Foods stores, marketing executives at the Seattle-based Amazon are swiftly adding to the number of markets in which consumers can easily order wine and beer with their groceries. They have even surprisingly added a number of Texas cities to their roster including Dallas, Ft. Worth, Houston, Austin and San Antonio. Texas is both one of the most lucrative and yet most legally challenging markets to navigate in the US wine sales market. It is riddled with dry counties and virtually has a fourth sales tier. Food delivery has also been launched in Baltimore, Boston, Philadelphia and Richmond. Neither Amazon nor Whole Foods would confirm if wine delivery would be available in those cities, or comment for this article. "Once those Whole Foods stores got a wine and beer retailing license, this was predictable. I doubt Amazon cares about these little tech start-ups, this is aimed at brick-and-mortar who do most of the online wine sales," shares Barbara Insel, principal of the Sonoma-based Insel & Co. The chain is operating legally in the Lone Star State by acquiring Texas Alcoholic Beverage Control Permits (TABC) for all their warehouses, notes Chris Porter, an Austin-based TABC spokesperson. "The Amazon TABC license/permits were issued in early- to mid-April and they have multiple permits in each of the five cities where they've rolled out the program," he says. The Prime Now application delivers orders of a minimum of $35 within a two-hour window for free and within an hour for $7.99, according to a company press release. Once ordered in Texas, wine deliveries are then pulled through the five warehouses and "each warehouse holds a wine-only package store and a beer/wine retailer's off-premise permit and the drinks can be delivered to a customer living within the county where the warehouse is located", the release said. Having had copious experience in the alcoholic-beverage delivery field, the chain has added an extra layer of security. "Amazon has trained its drivers to inspect an adult's ID when the alcohol is delivered, and an adult's signature is required. If those criteria aren't met, the delivery is not completed," shares Porter. One-stop shopping clearly has an appeal that only continues to grow among today's time-starved consumers. "There is clearly a convenience factor in ordering all of your meal items and getting them all delivered to your door versus needing to go to the store for wine or beer separately," says Rob McMillan, the Napa-based executive vice president and founder of the Silicon Valley Bank Wine Division. "People are already getting used to ordering food, groceries and just about any other supply online. Alcohol fits neatly in that same realm," shares the Houston-based sommelier Sean Beck, who oversees a group of fine dining restaurants including Carcarol and Backstreet. As of yet Amazon's new services are "generating little waves in the larger Texas cities where much of the alcohol is sold." A natural evolution Retailers and analysts have long been wondering how the Amazon-Whole Foods marriage would finally move forward in the wine-delivery arena. When Amazon sold wine online, prior to the acquisition, a lot of its sales formats were less than engaging and sales were sluggish. "In the past, they haven't been successful in their wine initiatives and as a consequence of regulatory issues, abandoned those attempts last year when they purchased Whole Foods," continues McMillan. As a result, "Direct wine delivery through Whole Foods puts them back in the direct wine-delivery business and will have them competing directly with wine shops and more limited-scope retailers in markets where they can get licensed." Texas is just a starting point, but checking all the legal boxes and getting all their warehouses and licenses in a row currently gives Amazon a competitive advantage over the competition, notes the Napa-based Jon Moramarco, a partner in number-crunching firm Gomberg & Fredrikson. What is more, Amazon Prime and the retail giant also have the advantage, McMillan notes "of having the ease of access to a client base". Amazon has an advantage "over pure delivery apps that need to work with a retailer for the front end of inventory availability and pickup. They are already a retailer." © The Business Journals | The promise of providing both stock and fast delivery could place Amazon head and shoulders above other competitors.  Who's at bat and what's ahead Almost all the analysts I spoke to said they thought that this type of delivery service tends to attract millennial consumers. Hence it is deemed more likely to take business away from delivery apps – such as market leader Drizly, which, according to its website, is active in 101 markets – rather than regular retailers. "Drizly is one of those limited vertical product delivery and sales companies. Those type businesses will have to compete on product selection versus Amazon when they are serving the same markets," shares McMillan. Beck agrees that the demographic for the new wine delivery service skews younger. "My guess is they are going after the 40-and-under audience. Although, frankly, I think it will expand beyond that, particular when it comes to people who like to entertain. The ease of access and ordering makes it easy to invite friends over and have all your supplies delivered," he says. Many established retailers didn't seem concerned about losing business to Amazon. David Jabor, president of the 80-plus location Twin Liquors, says that, "There has not been any identifiable sales pattern change since they launched." He concurs that Millennials are more likely to be Amazon's focus and that in the long run, he notes that: "The service will most probably take share from apps, but as delivery becomes more commonplace, consumers will experiment with alternative shopping experiences." As the chain enters more markets its sales are only likely to grow. "They will definitely begin to grab a [larger] share of the market. As selections expand and people get comfortable using the app it will only get bigger," notes Beck. "This will become most notable during holidays and party season when people are already busy and just have to hop on their phone to arrange delivery." Almost everyone in the business expected the new Amazon/Whole Foods partnership to knock sales out of the ballpark. "Amazon is light years ahead of most liquor stores and grocery stores when it comes to online ordering and search engines," says Beck. "Just imagine the tracking and apps and emails Amazon could send you when they know your brand of wine or beer is doing a new release or sale!" How well the chain does in the future will depend in great part on the wine selection it has and will continue to offer, says Moramarco. While Whole Foods' wine prices can be higher than average, Moramarco says that, "People who value the convenience and expediency will be willing to pay for the service. The retail market has been evolving for decades," he notes. "This is just another piece of the market."