Cynicism and Consumers Win in Michigan Wine Shipping Saga
The battle over direct shipping in Michigan appears to over after Michigan State Legislators voted 104-0 for a law that would allow both Michigan and out of state wineries to ship 1500 cases a year to Michigan consumers.
CONSUMERS, OUT OF STATE WINERIES AND WHOLESALERS WIN
The big winners are the out of state wineries, Michigan consumers and the wholesalers. Out of state wineries, particularly California wineries, can now ship legally into Michigan. Prior to the Supreme Court’s ruling in May and the passage of this new law they had been shut out of the state. Consumers win, of course, because they now have real choice in the wines they can buy.
Wholesalers also got what they wanted. While the wholesalers fought hard in the early going to ban all direct shipping, it appears that position was either a knee jerk reaction to the idea of direct shipping or a ruse from the beginning. What the wholesalers got in this new law was a total ban on the ability of out of state wineries to sell direct to Michigan retailers. However, in state wineries can continue to sell direct to retailers just as they always have.
Wholesalers have always feared large retailers like Costco, Sam’s Club and large grocery chains buying direct from large wineries such as Gallo, the Constellation conglomerate of wineries and Kendall Jackson. This is where their cash flow resides. Under the new law wholesalers will continue to monopolize the direct to retail business.
The law clearly discriminates against out of state wineries and everyone knows this and admits it. This includes the Michigan wineries. Kristyn Sorenson, a spokes person for 42 Michigan wineries responded to the discriminatory aspects of the new law saying, ""No one is going out there right now clamoring to fight this."
The 1500 case limit on how much wineries can ship in total to consumers is also a win for wholesalers. This severely limits wineries that would choose to follow a business model that turned on direct sales to consumers.
CYNICISM WINES OUT
Let’s be clear, real clear, about what happened in Michigan. The State House chose to enact a law they believe is unconstitutional in order to accommodate a small group of businesses that contribute mightily to their campaigns.
But they didn’t stop there. The new law apparently includes a provision that states if the law is declared unconstitutional, then there will be no sales by any wineries to retailers. This includes Michigan wineries. The law effectively pits Michigan wineries against all other out of state wineries. Michigan wineries sell far more wine direct to retailers than they do direct to consumers. They would fight hard against any attempt to open up the state to free and fair trade that met constitutional requirements.
I’ve personally very pleased the Michigan wineries will be able to maintain their ability to ship to consumers and sell direct to retailers. They fought hard to maintain these rights. And consumers stepped up to. WineCam, a Michigan group composed of consumers and wine advocates formed in the midst of the fight and played a huge role in alerting the public and media to the power grab the wholesalers cynically attempted.
The best that an honest advocate of free trade in wine can hope for out of this chapter in the wine shipping wars is that the Michigan experience becomes not a model for other states that need to change their wine laws, but rather a model for the cynicism that is built into the current model for campaign financing.