There is a temptation to believe that politics is corrupt, period. There’s even good reason to believe that one lobbyist and one lobbying organization is just like the other. They do their darnedest to pay for results.

It’s just not true. Some lobbying groups and some industries are more powerful by many degrees than most other industries.

The Wine Distribution industry is just such an industry.

The Portland Oregonian has published a story detailing the corrupt relationship between Oregon’s wine and beer wholesalers lobby and politicians. (hat tip to Craig at Wine Camp Blog for alerting me to the article.)

Consider the situation in Oregon:
-A three tier system of distribution exists in Oregon that has the state giving wholesalers a virtual monopoly on the sale of beer and wine

-If a winery agrees to take on a distributor to sell its wine to restaurants and retailers the winery can not drop the distributor without paying 1000s of dollars in….well, blackmail…no matter how badly the distributor sucks at selling its wine.

Is it any surprise that the head of the Oregon Beer and Wine Distributors Association would say of the distribution system in Oregon, "If it ain’t broke, don’t fix

How does this kind of highly favorable situation arise? Money. Since 2002 the  Oregon Beer and Wine
Distributors Association has given Oregon politicians over $1.2 Million in contributions, and that doesn count the free trips to Hawaii that a number of Oregon lawmakers took on the wholesalers’ dime (they are in a bit of trouble for not reporting that little bribe donation.

The wine distribution system across America is so fouled by money doled out by wholesalers that it is unlikely it can ever be fixed. However, if it were ever fixed, it would look like this:

-Any winery or brewery could sell its product to any licensed retailer or restaurant in the country

-Any Winery or brewery could sell its product directly to any adult in America

-Any Winery or Brewer could work with any distributor in any state they wanted to

-Wineries and Brewers could choose to define by contract how long an exclusive relationship with a wholesaler would last with no penalty for leaving after the contract is up

-Any licensed retailer could sell its stock to any adult anywhere in America.

Here is a description of a level playing field. And up until a year or so ago almost the exact opposite set of circumstances existed in most states.

The problem is this: when nearly every sale of wine, beer and liquor is funneled through a very small group of wholesalers across the country, those wholesalers became wildly wealthy and their wealth is directly attributed to the states’ support of their little clique. That wealth is used to purchase help politicians in the form of campaign contributions. These payoffs donations make the politicians indebted to the wholesalers meaning the current unfair state of affairs become even more solidified.

There’s a move afoot to change the law in Oregon to allow out of state wineries to sell directly to Oregon retailers and restaurateurs. This kind of law demolishes much of the significance of the three tier system of winery to wholesaler to retailer. You can bet the wholesalers will bring out their big guns on this one.

It will be interesting to see if temptation gets the best of Oregon politicians.

One Response

  1. Jim - October 22, 2006

    Economically speaking ANY state that has a three tier system is broken. The consumers are paying more for wines and wineries are getting less for their product.

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