Tuesday, April 20, 2010

Health Care Reform For Wine Distributors

If the nation's wine and beer distributors get their way, we'll know precisely when the latest "good old days" began and ended. They began in the spring of 2005, when the Supreme Court of the U.S. interpreted the Constitution's Commerce Clause to mean that states can't discriminate against out-of-state wineries in the shipping of wines direct to consumers. Since then, nearly four of every five states have set up systems whereby wineries can ship wines directly to the homes of customers. This bypasses the cumbersome, antiquated and difficult three-tier method of wine distribution, which since the repeal of Prohibition required wineries to distribute their wines through wholesalers. That's still the way most wine is distributed, but wholesalers want all consumers all to themselves.

Not surprisingly, they haven't sat idly on the sidelines while this significant shift in wine marketing has developed, and from one statehouse to another they relentlessly have fought efforts to open up distribution channels, often unsuccessfully. Now, apparently tired of those skirmishes, distributors are supporting a newly proposed Congressional bill - HR5034 - to effectively hobble enforcement of the Commerce Clause. If and when the bill is enacted, that's when we'll know that the latest stretch of "good old days" has ended. Soon thereafter, distributors eager to resecure their virtual monopoly on the distribution of wine will start to pressure state legislators to rewrite bills in their favor. If you are a fan of riesling from small wineries in the Finger Lakes region of New York, and have to rely on direct shipping to get them, you might as well kiss those good times goodbye.

George Orwell would love the euphemistic language the bill's sponsors and supporters are using to get it rushed through Congress. For one, it's called the "Comprehensive Alcohol Regulatory Effectiveness (CARE) Act of 2010," as if social consciousness and not economic greed were at its root. In backing the measure, the country's beer distributors talk as if passage of the bill would promote "responsible consumption," when there's nothing to suggest anything of the kind. Wine distributors are even more loose with the language, suggesting that in helping preserve the three-tier system of wine distribution the measure would promote temperance and enhance tax revenues.

The bill, introduced last week by a small group of lawmakers from states without much of a wine trade, seems to have taken proponents of direct shipping by surprise, but they're reacting fast, and within days a Facebook site had joined the issue with spirited comments. For the most comprehensive look at the matter, check out Robert Taylor's feature from The Wine Spectator. And for continuing coverage, visit Tom Wark's frank blog Fermentation.

1 comment:

  1. I think this is a straightforward, easy-to-read explanation of what's really going on. Thank you for writing and posting this.

    ReplyDelete