Follow the Money…Then Sell Your Winery

It appears that Indiana’s wine wholesalers, in cahoots with the legislature, have successfully gobbled up more of the state’s wine market, while making it more difficult for Indiana consumers to purchase wines and Indiana wineries to do business.

And if you want to know just how successful the wine wholesalers were at putting the screws to the notion of competition, all you have to know is that the Indiana wholesalers are pretty happy with the outcome.

The new law, which must pass the Indiana House and Senate today (it’s the last day of the session):

-Only allows Indiana and out-of-state wineries to ship to Indiana consumers if the consumer has first visited and purchased wine at the winery.

-Removes Indiana wineries’ previously unfettered ability to sell and ship directly to retailers and restaurants and now makes them jump through extraordinarily complex hoops to do so, including creating their own wholesale company

-Limits the amount a winery can sell direct to consumers in a year to 3000 cases of wine.

"I think it’s the best
that we could have come up with under the circumstances,
" Dr. Charles
Thomas, owner of Chateau Thomas winery said.

"Under The Circumstances."

Let’s look at these. The state mandates that nearly every bottle of wine goes through the hands of a wine wholesaler before it gets to market. The wholesalers pay the legislators LOTS of money, year in ands year out. The Legislators take the money then pass a law giving the wholesalers an even larger share of the market. Doesn’t that sound like a bribe to you? It does to me. Because it is.

There exists no good reason, literally no reason, why a winery should be compelled to sell its wines to a wholesaler, rather than directly to a retailer or restaurant. Except, if this state mandated system of bribes and monopolies were dismantled you’d have an awful lot of politicians looking for campaign contributions elsewhere. On the other hand, you’d have a more vibrant market and economy for wine.

Over $700,000 was given by the wine and beer wholesalers to Indiana politicians in the 2004 election cycle, the last for which we have information. Over $700,000.

Next door, in Illinois, the wine & beer wholesalers were also successful in screwing the wineries and consumers. More than $1.8 million was delivered by the wholesalers bag men to state politicians.

The Institute for Money in State Politics reports that between 2004 and 2006 more than $21.2 Million was given by beer and wine interests to state politicians nationwide, and nearly every penny comes from wholesalers attempting to protect their privileged place in the states while simultaneously attempting to purchase more state-mandated favors.

In an earlier post I laid out a strategy for state wine industries to follow if they hope to beat back the onslaught of wholesalers’ attempts to stifle trade in wine. Given the obvious influence of money in this process I feel compelled to alter my advise:

Sell or liquidate your wineries in order to raise the money to fight the wholesalers’ money   and to feed the politicians. Once you no longer have a winery to worry about and have the cash on hand to donate to politicians you’ll be in a position to have similar influence in your state capitals   as the wholesalers have purchased.

One Response

  1. David Vergari - March 14, 2006

    Let’s get something straight: wine wholesalers do not care if their legislative shenanigans to prevent direct shipping result in the ruination of wineries. You don’t think so? Pick up a copy of The Wrath of Grapes. Go to the chapter titled “Relics of Prohibition” and read what one distributor said to Bill MacIver about the possibility that a mandatory three-tier system could drive small wineries out of business if enforced. For those of you who do not have access to the book, the distributor said, “Tough luck.” Since the MacIvers no longer own Matanzas Creek, perhaps Bill can “out” the individual in question. Not that it matters. We all know the score.

Leave a Reply