Arizona’s Pro Wine Cyber-Strategy

Posted by Tom Wark on Feb 23, 2006

The Arizona wineries have made a real game out of their battle with that state’s wine distributors who hope to shut off any growth opportunity for that state’s wineries. The state’s wineries have made headway in the legislative battle even though they face a huge disadvantage when it comes to resources. Their response, in part, has been to take it to the digital streets.

Todd bostock is the winemaker at Arizona’s Dos Cabezas Winery, a 3000 case winery that produces a number of wines from high altitude vineyards in the state. Faced with the threat of being cut off from their customers by the oppressive, self-serving and anti-competitive legislation pushed by the wholesalers, Bostock started contacting wine lovers across the country utilizing wine bulletin boards such as Mark Squires Bulletin Board on E-Robert Parker.

According to Bostock, the response of the nation’s talk obsessed wine lovers has played a key role in getting out the message to Arizona legislators that the kind of anti-competitive, anti-free trade legislation put up by Arizona’s wine distributors is supported by few consumers.

"The e-mails that legislators received after I asked for help at Mark Squires Bulletin Board were extremely helpful in framing the issue for them in simple, stark consumer-oriented terms," Bostock told FERMENTATION.

"When legislators hear from their constituents as well as others affected by this kind of legislation they stop and think twice."

Arizona’s legislators apparently got the message. Yesterday the wine wholesaler’s bill that would have virtually killed all direct shipping to consumer by Arizona wineries as well as prevent Arizona wineries from selling direct to retailers and restaurants (a right they’ve had since 1982) was killed in committee. That leaves the wineries’ proposed legislation (HB2500) the main bill making its way through the Arizona legislative process.

Arizona, like so many other states, was faced with amending its wine distribution laws after the Supreme Court ruled that a state can not discriminate between in and out-of-state wineries. Arizona wineries had the right to sell directly to retailers, effectively going around the distributors, while out of state wineries did not have this right. The state’s wine wholesalers’ response to this constitutional predicament was to ask the legislator to force all wineries to sell directly to wholesalers.

In the case of Bostock’s Dos Cabezas Winery, 95% of all their sales are directly to retailers and restaurants. Assuming they could get a wholesaler to represent them, and do it well, they would have to take an immediate 30% drop in revenue. That’s the kind of hit that puts you out of business.

The Arizona Wineries Association fought back by raising about $20,000 to hire a lobbyist to push their case in the legislature. Consider they are up against billion dollar wholesale companies who have contributed thousands of dollars to the state’s lawmakers. Still, they were able to see the distributors’ bill killed in committee yesterday.

"The battle is far from over," says Bostock. "We are going to have a hard time of passing our bill when it comes to the floor of the legislature, but we are in the process of trying to talk to as many legislators as possible between now and then.

Wholesalers across the country are now attempting to, or planning to try to, strip distribution rights from wineries in an attempt to preserve a system that is out of date, hamstringing economic activity, and highly anti-competitive. The same battle occurring in Arizona, as well as Virginia, Indiana, Illinois, Maryland, Pennsylvania and other states is going to continue.

The question that Bostock’s activities raise is can use of the Internet be used effectively to interact with sympathetic wine lovers to help the wineries make their case that the three tier system shouldn’t be state mandated; that their economic viability and growth potential is tied to their right to sell directly to consumers and retailers?

I think it can. Free The Grapes was a fairly instrumental organization in gathering support from wine lovers across the country as the direct shipping battles raged in the run up to the May 2005 Supreme Court decisions. The battles be fought now, particularly with regard to the wineries’ right to self distribute their product and to choose whether or not to use distributors, is a more complex issue than simply whether a state should allow direct shipping to consumers. A great deal more is at stake for both wineries and distributors. What’s needed is a "Friends of the Winery" type organization that is capable of accessing various networks of wine lovers on the net to come to the defense of wineries across the country when they need the help. I imagine an organization that can raise money to do the media relations work as well as the consumer organizing work. Perhaps this is Free the Grapes, but with an altered agenda. Perhaps it is a new organization.

What I know is that it is people like Bostock and the readers over at Mark Squire’s Wine Bulletin Board that need to stay involved to help push the agenda and lead the fight.