A Government Sposored System of Corrupt Wine Laws

The state of Illinois has been through a lot of turmoil this year over its direct shipping policies and in its attempt to update its wine regulations in the wake of various legal cases.

Earlier this year the Illinois wineries were willing to give up their right to sell directly to restaurants and retailers. The deal they worked out with distributors, who feared that left in place this privilege would mean out-of-state wineries would also be given the right to bypass the distributors, eventually fell apart when a number of the state’s wineries balked at the compromise. No deal was done.

Now, an Italian winery has filed suit saying the existing set of circumstances in which Illinois wineries still have a right to bypass wholesalers is unfair because out of state wineries are mandated by the state to sell first to wholesalers who then sell the wine to retailers and restaurants.

Villa Monteleone Winery was right on the mark when they argued earlier this week that:

This self-distribution privilege constitutes
pure economic protectionism; there is no rational basis for the
different treatment of Illinois and non-Illinois wineries."

It is of course nothing more than economic protectionism, but not for the states wineries. It’s economic protectionism for a well-heeled industry of wine distributors who have in no way earned the kind of protection that a mandated 3-tier system of distribution grants them.

What’s interesting to me however is the response from one Illinois winery that in response to the suit said:

"Some foreign company from Italy is going to
tell the state of Illinois what’s unconstitutional and kill an
industry. Whoever is doing this would be better served
by sitting down with the Illinois wine people and fashion something
that doesn’t put them out of business."

I guess what I’m wondering is how, if wineries outside Illinois are permitted to sell wine to Illinois restaurants and retailers without using a distributor, will this put Illinois wineries out of business.

Why if retailers can buy wine directly from a winery in California would they buy less Illinois wine?

The assumption being made here is that to deal with this obvious discrimination, Illinois must revoke the Illinois wineries’ right to sell direct to restaurants and retailers. Instead, the state of Illinois should open up the right of wineries to "self distribute" to all wineries nationwide.

By taking this simple step a number of results occur:

1. Illinois wine drinkers will have access to far more wines in their local stores and restaurants
2. It will prove a boon to entrepreneurial wine sellers wanting to enter a huge wine market
3. Selling more wine in Illinois means more tax revenue for the State of Illinois
4. The state will no longer be burdened by the corrupt nature of a mandated 3-tier system
5. The move will inspire other states to take the same liberalizing approach to wine sales

One Response

  1. marco raimondi - August 9, 2006

    You ask:
    “Why if retailers can buy wine directly from a winery in California would they buy less Illinois wine?”
    The answer is: it appears that in its law-suit against the State of Illinois, Villa Monteleone winery is NOT asking that out-of-state wineries be allowed to sell directly to retailers (as in-state wineries are able to now do) rather, the relief that the Italian winery wants is for the courts to force ALL wineries (both in & out of state) to have to go through distributors!!!!
    Read this well-written article about what’s actually going on, and why small Illinois wineries feel so threatened by this suit:
    Why would a winery (as opposed to a distributor) ask for this kind of relief??? It appears that the Italian winery is acting as a pawn for the distributor; note, incidentally, that the Illinois distributor admits to having referred the winery to law firm.

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