For more than 20-years, self-distribution was the norm in Virginia wine sales. Then, according to a Virginia Wine Lover article (http://virginiawinelover.com/issues/0808/unshackled.php), a court decision came and took effect in 2006. It stated that it was illegal for wine makers to sell wine directly because the sales process didn't utilize the three-tier system in getting alcohol to the market. In order to sell wine, a winery has to sell through a distributor.
Large wineries, who already distributed their many cases with a 3rd-party, pushed for this under the guise of "public interest" (public as in all wineries) because it would make it harder for non-Virginia wineries to distribute in Virginia. In reality, the ruling would bar existing low-scale Virginia wineries (creating a form of an entry barrier) as well as other wineries from neighboring states that would come into Virginia to sell their wine, from competing with the large distributors. This move would maximize large-scale winery profits (especially since they already worked with a 3rd-party distributor). These large wineries also made the argument for regulating all wineries with having to use a distributor by stating, "they got into this business to make wines, not to truck it around... [and it] allows wine-makers to better concentrate on their craft."
The article states that "wineries need to produce between 3,000 and 5,000 cases in order to make using a wholesaler financially feasible. [However,] the average production size at Virginia's wineries is about 2,500 cases." Further, large distributors don't care to do business with small wineries because the small wineries "couldn't provide them with a whole lot of stuff." It became cost-prohibitive to go through a distributor for many wineries.
To save the low-scale wineries of Virginia, the state established the Virginia Wine Distribution Company, which makes affordable 3rd-party distribution available to the affected wineries. Though the wineries need to pay fees to have their wine distributed, it may end up saving them.
Nevertheless, Big Wine Companies pushed for regulation in order to benefit themselves. It also doesn't hurt that the court ruling didn't really affect them (yes, I'm saying it again... they already worked with 3rd-party distributors) and they can bar some competition from other states who import wine to Virginia.
