Careful What You Ask For

An interesting new twist in the direct shipping battles is emerging in Massachusetts.

A direct shipping bill was passed in that state that allowed consumers there to buy wine from in and out-of-state wineries. However, it limited wineries that produced 30,000 gallons or less of wine to taking part in the program. If you owned a winery that made more than that, too bad, you can’t ship direct to consumers. It was, as it always is, a bill that protected the middle man. It assured the wholesalers that the big wineries couldn’t get around having to sell their wine to the wholesalers.

Well, Governor Mitt Romney vetoed the bill on the grounds that it was, simply, protectionist and anti-consumer. He was right. However, his veto was overridden two days ago and the new law is set to go into affect.

Romney’s spokesperson, Julie Te er, had this to say: "“The override is
disappointing because now wine lovers will no longer have the
opportunity to purchase the bottlings that they want and,
unfortunately, consumer choice will be limited."

Tracey Gleeson of The Coalition for Free Trade follow up with, "This is just another
form of discrimination."

Now, it appears there is talk of a lawsuit on the grounds that the bill discriminates against large wineries. No one would deny that it does. The question is whether this type of discrimination is constitutional.

The 21st Amendment has been interpreted to allow states to write nearly any kind of law pertaining to alcohol as long as the law promotes temperance or an orderly market. Clearly limiting direct shipping to  wineries making 30K gallons of wine or less has nothing to do with temperance. But does it speak to an orderly market? I’m no lawyer, but I can’t think of an argument that suggests letting small wineries ship direct but not "large" wineries does anything to promote an orderly market in alcohol distribution.

Now, I tend to be rather strident when it comes to direct shipping. I believe there ought to be a completely level playing field. I believe wineries should be able to sell direct to consumers or retailers or wholesalers. It should be their choice. However, I’m aware what is possible. The wholesaling middlemen have amassed so much power based on their payouts to politicians in every state that you have to take into account that a number of politicians simply are not going to go against what their paymasters want. This means that in some states to get some semblance of direct shipping or self distribution rights for wineries some compromise is necessary. Limits on the size of the winery shipping has been a common compromise.

My fear is that without having the size limitation to offer wholesalers, and politicians, as a compromise we will end up with absolutely no rights to ship direct.

The interesting thing is this: if the wineries, and in the case of MA, the Governor, choose to fight for all wineries being able to ship, then the politicians are put in a position of finding an argument for only allowing small wineries to ship. In essence, they have to make the argument for protecting the wholesalers against competition. They can’t use the "minors will get their hands on alcohol" argument because they have already agreed to allow some direct shipping. And, if their alternative argument is no shipping at all, then they have to explain why they are willing to hurt and, in some cases, kill off small wineries.

You have to respect the position Romney (who is considered a potential Presidential candidate in 08) is taking. It’s very pro-consumer. But I admit, I worry about what the outcome of such a lawsuit will be.

Posted In: Shipping Wine


One Response

  1. Joe - February 17, 2006

    While I agree that the wine wholesalers/distributors are a bunch of money-grubbing, self serving, anti-consumer bureaucrats, I think a bill such as this may actually have some merit, if only because it will allow for some direct shipping into MA and not close it off altogether. I mean let’s think about it for a second; if the price you pay for opening up direct wine shipments of small, family owned and/or hard to find wines is that wine shops/restaurants still have to buy their truckloads of Arbor Mist and Woodbridge Merlot from a wholesaler, is that such a bad thing? I would argue that MA consumers would start to see more diversity at their local “fine” wine shop or favorite restaurant. With few exceptions, wine wholesalers aren’t typically in the business of seeking out small wineries because it doesn’t represent enough margin for them so wine shops/restaurants have little to choose from. A bill like this would at least allow retailers/restaurants to directly source quality wines from small producers and offer them to their customers.
    And let’s not be too quick to give Mitt (what kind of a name is that anyway?) a slap on the back. If you ask me, killing this bill is the perfect way to ensure no bill at all gets passed and the wholesaler’s cartel is kept in tact. Clever way to appear pro consumer while protecting the interests of a future campaign contributor if you ask me. (It’s interesting to note that the Republican Governor of Rhode Island, [Sounds like an oxy moron doesn’t it? Sadly it’s not.] Don Carcieri, allowed the wholesaler’s to push a bill (sponsored by politicians on both sides of the aisle) through to restrict shipping both in and out without him even signing it. That’s legal? No, that’s Rhode Island politics.) As for Mitt’s presidential aspirations, fat chance. The US wouldn’t elect a liberal Vietnam veteran with a distinguished career in the senate, you think they’re going to vote for a New England, gubernatorial, wanna-be neo-con named “Mitt”? Rudy “where’s my White House cabinet position?’ Guiliani has a better shot of being the next president – help us all.
    I say better this bill than nothing at all. Beringer/Blass and Constellation still get to sell their truckloads of wine through the wholesalers into the state; while consumers can buy wines like L’Aventure and Crane Brothers that they might not otherwise have access to, short of taking a trip to California. Sometimes life is about compromise.

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