30,000 Cases And You Are Good To Go
In the never-ending direct shipping wars, the anti-consumer side (wholesalers) has taken up a new strategy to protect their previously legislatively-favored position. In various states, as legislators and consumers wise up to the notion of free trade, wholesalers are attempting to convince lawmakers to allow direct shipping of wine to consumers, but only by smaller wineries. They want to exclude large wineries from shipping direct to consumers.
In Massachusetts the wholesalers have suggested and the House is considering a bill that would allow direct shipping of wines from anywhere in the country by wineries that make 30,000 cases of wine annually or less.
Somehow, legislators have been given the idea that if BIG wineries are able to ship direct, fewer people will head off to liquor and wine stores to buy low priced wines and this will cut into the retailers’ and wholesalers’ business. Leaving aside the idea that retailers and wholesalers should somehow be protected from competing in a free market, the idea that large wineries shipping to consumers is simply silly.
The fact is, MA’s retailers are going to lose more business as a result of small wineries being able to ship direct to customers. People don’t buy $10 wines over the Internet. It’s far more convenient to purchase these wines at the local grocery store. However, it’s those $20 and up wines that people are willing to buy on-line. It’s the hard to find wines from small wineries that, while they may be distributed in MA in small quantities, people are willing to search for on the Internet.
That said, it strikes me that not allowing a 45,000 case or 1,000,000 case winery to ship direct bumps up against the admonition in the recent Supreme Court ruling that laws respecting direct shipment of wine need to be fair and equal across the board.
If I was a 50,000 case winery that also happened to make, say 500 cases of a single vineyard Syrah, I’d be pretty upset that I couldn’t sell direct to MA customers, but my competitor down the street, who makes 30,000 cases of Central Coast Cabernet is allowed to ship to MA. Great. More lawsuits.
Part of the problem, and the reason why legislators entertain these anti-competitive and anti-consumer proposals is that they simply are not educated on the issues at hand and how the wine industry works. If they are educated, it’s likely an education delivered by the wholesalers, who have, shall we say, a skewed perspective. It’s highly likely that entities like The Wine Institute, Free The Grapes and Wine America may also be doing a bit of education. But it’s hard to compete with the kind of teachers who are also offer campaign donations along with their course materials.
FYI, first of all, I completely agree with you. So if anything, you should accuse me of picking nits here, not actually trying to disagree.
But what I gathered from the Supreme Court ruling was that it was purely a matter of interstate commerce discrimination. I.e. if a state allows in-state wineries to ship direct, it must also allow out-of-state wineries to do so. If a state doesn’t allow in-state wineries to ship direct, then it can legally deny out-of-state wineries to do the same.
Thus, as long as Mass. sets up their law so that it treats in-state and out-of-state wineries the same, it’s likely going to stand up in court. If they restrict large in-state wineries from shipping direct, then they can restrict large out-of-state wineries from shipping direct.
I would think that quite a few other discrimination issues might come up if it were anything other than alcohol, but the 21st Amendment gives states wide leeway in their laws towards alcohol. So I doubt that there would much other grounds for attacking this legislation.
Part of the problem, and the reason why legislators entertain these anti-competitive and anti-consumer proposals is that they simply are not educated on the issues at hand and how the wine industry works. If they are educated, it’s likely an education delivered by the wholesalers, who have, shall we say, a skewed perspective.
On this note, I’d say this is true of most things done by any legislature. They rarely know a darn thing about what they’re doing. I was just watching C-SPAN yesterday with the heads of the various oil companies before the Senate, and you could tell that most of the Senators heads were devoid of any actual knowledge, only filled with political opportunism. I’ve never understood why we think people who only excel at one thing– getting people to vote for them– are trusted with the decisions that control our lives…
Sorry… The HTML code for italics didn’t work there. The second-to-last paragraph of the above comment was a direct quote from the original post… I should have put quote marks around it. My bad.