H.R. 1161 and What Wine Wholesaler Really Think

Posted by Tom Wark on Jun 2, 2011

If by this point wine producers, beer producers, spirit producers and alcohol retailers haven't learned that their "wholesale partners" disrespect them and think them incapable of grasping what is at stake with the politics of wine, then they just aren't listening.

Consider the following from the latest issue of Beverage Media, an alcohol beverage trade publication:

"The most consistent thing about this business has been the wholesalers. The suppliers have had an enormous rate of turnover over the years and often lack a real perspective on the industry’s history and the unique complexity of state laws."

"If one segment gets too greedy, or thinks they can live without the other, the system is jeopardized. I caution our supplier friends about slicing the pie too unevenly. The wholesale tier has a huge investment in people, trucks, warehouses, selling systems, information technology and inventory and there needs to be a fair return on that investment. Without such a return, the middle tier will not be able to reinvest and improve to meet the ever-changing and increasing demands of suppliers and retailers.”

"Many suppliers are afraid of the CARE Act, but I believe very few really understand it. We need to help everyone in the industry understand why this is so important; it will eliminate all these individual lawsuits which seriously distract us from doing our business.”
Bill Goldring, Chairman, Crescent Crown Distributing and recipient of the Wine & Spirit Wholesalers of America's 2011 Lifetime Achievement Award.

How condescending can one person get? This kind of smug departure from reality could only be issued fourth from a person who has spent too much time being subsidized and protected by government mandates that shield them from operating in an honestly competitive marketplace.

How does someone conclude that only wholesalers understand H.R. 1161—federal legislation that would strip wine stores of all Commerce Clause protections under the Constitution and set up producers to see severe restrictions on their right to ship wine into states?  And what other chairman of a company would make the case that the very fact of investing in their businesses somehow ought to get them some sort of guaranteed profit? And did Mr. Goldring really suggest that suppliers and retailers are incapable of understanding the complexity of state alcohol laws.

It just goes to show that when you have industries that are protected from competition, you really have no need for executives with any real depth of understanding in order for those businesses to succeed. It also goes to show just how comfortable a recipient of government welfare, like Mr. Goldring, can be. After all, what kind of executive of a business would come right out and call his clients stupid and unable to understand the complexity of the business they operate in.

But wait, there's more.

In the same issue of Beverage Media we have an interview with Bobby Harmelin, Executive Vice President, Allied Beverage Group and incoming WSWA President. Get this:

"It was disappointing that DISCUS members did not attend [the recent wholesalers convention]. I don’t think they understand what we are trying to accomplish with the CARE Act."

Again, more accusations that their supplier partners are just plain stupid; that distilled spirit producers, who oppose HR 1161, simply can't understand the legislation that is put forward. I can't remember the last time I called my partners and clients stupid. Oh, wait….I never have.

But wait there's more. Responding to a question about what it will take to get H.R. 1161 passed, Mr. Harmelin responds with this:

"The process would go a lot smoother in Washington if there weren’t any industry objections, so our hope is that our supplier partners who may not be in favor of the act will simply remain neutral."

Now who doesn't understand? Given that every beer, wine and spirit producer organization has come out publicly and forcefully against H.R 1161, and give than retailers are against seeing their basic Constitutional protections stripped from them, does Harmelin really believe that anyone is going to remain neutral in the face of a full frontal attack on their ability to conduct business? Really?

Upon reading these sort of absurd comments by wholesalers I am reminded of a few things that I hope others in the wine industry take to heart:

1. Wholesalers are so comfortable with the government protections that they are willing to say in public the kind of things those in other industries would dare only think to themselves late at night

2. Wholesalers believe they have a God-given right to take a profit—even if their services are not needed

3. Wholesalers seem convinced that if the three-tier system is altered to make it a level playing field for producers and retailers, their frequent uselessness will be revealed.

4. Wholesaler think members of the other tier are stupid

5. It's no wonder that the positions of America's beer, wine and spirit wholesalers are NEVER supported by the media disconnected from their tier.

6. Wine, beer and spirit producers and wine retailers are kidding themselves if they believe wholesalers want anything else other than to put the rest of the industry under their thumb.