Who Owns The Market for Wine?

Posted by Tom Wark on Aug 16, 2006

Reading through a news article describing the two State and Federal court battles over direct shipping of wine to consumers in Arkansas, I cam across a statement that gave me pause:

U. S. District Judge Wright has ruled that Arkansas’
distributors and retailers do not have legal standing to intervene in
the federal case, because they could not show how their property rights
would be affected if outof-state wineries were allowed to ship directly
to Arkansas consumers.

Distributors and retailers say they want
to protect the threetier system that, as in some other states, requires
producers to sell and ship only to wholesale distributors, and the
distributors to sell and ship only to the retailers. Under the
three-tier system, retailers may in turn sell only to consumers.

At its most base level what we have here is wine distributors arguing that THE MARKET for wine is THE PROPERTY OF THE DISTRIBUTORS.

In Arkansas, with the exception of a handful of state wineries that sell their wines directly to restaurants and retailers, only wines that wine distributors choose can actually be sold in that state. If a distributor chooses NOT to sell the wines from a CA or OR or TX winery those wines simply don’t get into the stores and restaurants there.

The Arkansas judge rule that local distributors and retailers (who support this system of monopoly) don’t have standing in the Federal case because they can’t show how allowing out of state wineries to sell direct to consumers would affect the property rights of distributors. That judge is clearly wrong.

The fact is, the way the 3 tier system (producer to distributor to retailer) is set up, distributors clearly doe OWN the Arkansas market for fine wine.

This case is about Arkansas wineries being able to sell direct to Arkansas retailers and restaurants and out of state wineries being prohibited from doing the same. Distributors want to put a stop to Arkansas wineries do this so that fairness doesn’t kick in and out-of-state wineries are allowed to bypass wholesalers and do the same.