Children In the Wine Playpen Punished
The past four months has seen more deliberation over the issue of direct shipping than perhaps the entire past decade. All this a result of the Supreme Court’s ruling in May that states can not discriminate between the way in-state and out-of-state wineries are able to sell wine to consumers.
Overall, American wine consumers have seen a liberalization in the wine shipping laws. There have been some blips on the radar however with some states considering shutting down all direct shipping to consumers, others looking to stop all wineries from selling directly to restaurants and retailers as they’ve been able, while another state has seen fit to discriminate against retailers shipping wine. Still, all and all, consumers and small wineries are better off since the Supreme Court ruling.
The common thread that runs through every state where the direct shipment of wine is at issue is the desire of wine wholesalers to stifle competition in their favor. In nearly every instance wine wholesaler associations have suggested that there should be little or no shipping in order to….are you ready…"protect the children." It’s tempting to look at this obviously cynical ploy and say, "well yes, if you consider wholesalers the ‘children’ of the wine industry, their cynical plots as tantrums, and their actions the result of childlike motivations, then indeed it is all about the children."
Michigan has been the wholesalers’ biggest playpen since the May ruling. In that state they first tried to convince the legislature with campaign contributions that they should protect wholesalers’ interests. A fairly loud shout out from the media and opinion makes slapped down that effort. Then the wholesalers began to play the "children card" suggesting that their desire to see all direct shipping stopped was merely a result of their desire to keep the children and minors safe from demon rum. Again. this call was dismissed as the patently absurd idea it is. Minors don’t buy wine on the Internet. Finally, the wholesalers in Michigan lifted their veil and showed us what their real fear was. They demanded wineries be stopped from selling their bottles directly to restaurants and retailers. They figured that the Supreme Court’s ruling that in-state and out-of-state wineries be treated equally would mean that any winery anywhere (read: big wineries like Gallo, KJ, Constellation) would be happy to sell their wines directly to retailers, particularly the big box stores, and by-pass the wholesalers all together. Michigan wineries have been able to do this for years, but not out-of-state wineries The wholesalers have demanded a complete end to this practice. To this point, nothing has been decided by the Michigan Legislature in large part because the wineries have organized to make their voice heard and expose the cynical tactics of the wholesalers.
All this due to the Supreme Court ruling in May.
Yesterday U.S. 6th District Court Judge Bernard Friedman confirmed the Supreme Court’s decision and ruled that Michigan must begin to allow out-of-state wineries to ship wine to Michigan residents while Michigan wineries should retain this right. He noted that he was compelled to rule this way based on the ruling of the Supreme Court. It’s a temporary fix to the issue. It’s likely that the most substantial and immediate effect of Judge Friedman’s decision will be that the state of Michigan will be forced to pay upwards of $1 Million in attorneys fees to Robert Epstein, the attorney who took the case on behalf of Eleanor and Ray Heald, wine writers from Michigan who originally challenged the State’s law that let Michigan wineries ship to consumers but prevented out-of-state wineries to do the same.
The Michigan Legislature can still choose to stop all direct shipping of wine from any source. It can also choose to back the cynicism of the wholesalers and help destroy the Michigan wine industry by adopting a new law that will stop all wineries from selling directly to restaurants and retail outlets. This would devastate Michigan wineries, many of which sell far more wine this way than directly to the consumers via Internet or phone sales. But what’s a little economic and industrial destruction as long as the children are protected and given a monopoly to play in the pen?
There are Michigan legislators such as Michelle McManus, pro-consumer organizations like WineCam and opinion writers who will follow this issue and work to affect a fair outcome in the coming months. We can only hope the adults prevail.