“The Big Lie” About Virginia Wine

I read something Interesting Today:

"The laws that underpin our alcohol controls established a three-tier
system to eliminate corruption and chaos predominant before
Prohibition. For more than 70 years, this system has served the nation
well. What has been called an antiquated system and monopoly, by some,
provides a broad selection of affordable products and an orderly market.

This system should evolve, but citizens must be careful not to
dismantle it solely for those with recently emerging business interests
or those few who are outraged at not being able to find a specific
bottle of wine. We must try to accommodate them, but the system was not
established to rain on anyone’s parade. It has a larger, more important
James Archer
Executive Vice President, Sales and Marketing—Blue Ridge Beverage Co (wine distributor)

It has been a long time since I’ve seen such a profound and perfect example of "The Big Lie".

"The Big Lie" is a a phrase that refers to a statement that, though false, is offered up over and over and over again until it becomes accepted as the gospel.

In this case the BIG LIE is the idea that anyone, be they wineries, consumers or retailers, are looking to "dismantle" the three tier system of alcohol distribution.

Archer heads up a wine distributor in Virginia, a state in which wine wholesalers were instrumental in removing wineries’ 20+ year old right to sell direct to retailers and restaurants rather than being forced to sell their wine to distributors at a much lower price, who then sold to the same retailers and restaurants. Virginia wineries, which exploded in number while able to distribute themselves, now find themselves in dire straights because of the lost revenue directly resulting from the new law that prohibits them from selling to retailers and restaurants.

And Archer claims that people want to "dismantle" the system that keeps HIM in cash???

How could such a law that is so positively detrimental to the Virginia wine industry be passed? Simple.

Between 2003 and 2005 Virginia Wholesalers contributed approximately $1.67 Million to Virginia politicians. James and his company were happy to pony up more than $21,000 in that same time frame. And that doesn’t count the 1000s of dollars they contributed to the Virginia Wine Wholesalers Association who gave LOTS of money to politicians.

So let’s be clear about what James Archer is talking about. He and his fellow wholesalers are involved in a conspiracy to dismantle the system that allowed Virginia wineries to flourish. When he writes that the 3 tier system of selling only through wine wholesalers "has a larger, more important
he’s correct. That purpose is to provide wine wholesalers with as much profit as possible.

If Virginia wineries were given back the right to sell directly to restaurants and retailers, the Commonwealth of Virginia indeed would have to give that same right to out-of-state wineries. Archer and the wholesalers have convinced Virginia’s legislators (and how hard is that sales job after $1.6 Million in campaign contributions) that such a turn of events would mean the dismantling" of the 3 tier system.

Not So. Not even close.

All it would mean is that the Wholesalers would have to demonstrate their value in a free market economy where wineries have alternative ways to get their wine to market besides wholesalers. Furthermore, the State of Virginia would have no problem collecting any taxes and fees they’d like to impose on wineries shipping to retailers and restaurants from out of state. It’s called electronic transfer. Hell, I’m sure out of state wineries even possess checkbooks.

The only folks capable of dismantling the Wholesaler’s Monopoly called the "3 Tier System" are the wholesalers. If they can’t demonstrate they offer a valuable service in the midst of a free market then the system will die on its own.

In the meantime, Archer and his fellow wine wholesalers will continue to contribute millions of dollars annually to assure they don’t have to face a free market, while at the same time pleading for calm among the Virginia wineries who are currently seeing their 20 year battle to establish their industry dismantled by the checkbooks of the wholesalers.


12 Responses

  1. Megan - December 29, 2006

    Sigh. I get a bit more depressed each time I visit your blog and read more about this terrible turn of events in VA. In my nearly 4 years of living here, VA wines have been plentiful and cheap in both wine shops and many restaurants and I am deeply saddened by this turn of events that may or rather, in my opinon, will cause a decline in a wine region that seemed to just be coming into its own. Many of these wines (especially some of the whites) are a fantastic value at the $6-$15 range they currently command, but I’m not sure how well they will do with a significantly higher price tag.

  2. Winehound - December 29, 2006

    My advice to “depressed in VA”: don’t underestimate the raw power that consumers like yourself have in these battles. Send this link to the media in your state, and send it to your lawmakers and let them know that you think that laws should reflect the will of the people, not money of entrenched monopolists that made lawmakers carry their water.

  3. tom - December 29, 2006

    Winehound nails it!
    In taking on entrenched interests one has to evaluate the tools at your disposal. No one is going to compete when it comes to money. However, a very loud consumer voice is enormously powerful. Investigate what happened in Michigan, for example. In addition, a well thoughtout and organized media campaign can yield tremendous results. In the end it is about organization.

  4. Megan - December 29, 2006

    Thanks for the tips. I posted a link to your article on my blog Tom, I hope you don’t mind. I just moved to this particular part of VA a few months ago and haven’t found any new wine buddies yet. Though I did just join a local wine tasting group, so hopefully I can get them interested in fighting this law.

  5. David Graves - December 31, 2006

    And then there is the continued existence in Virginia and other states of the so-called franchise law. Let’s say you are a winery that sells to a wholesaler in a particular state. Let’s say you the winery for perfectly reasonable business reasons want to change to a different wholesaler so you get better representation. What if you could *not* because of state law. That’s right, you can’t do what any other business would be able to do. Just because you sell *alcohol*.

  6. Megan - January 5, 2007

    Just wanted to point out this article from yesterday to you. More about the VA wine issue: http://www.wtopnews.com/?nid=600&sid=1022739

  7. Tricia Houston - January 24, 2007

    The Big Lie about Virginia Wine is also The Big Lie about Kentucky Wine. The Kentucky wine industry, just a foundling next to Virginia’s long established wine industry, held the right to self-distribute for the past ten years. Last year the legislators of the state took away that right. It was a brutal and devistating annihilation where the wineries were soundly whipped and sent packing by the mighty wholesalers. We tried reasoning with the legislators, asking them to slow down and take some time to understand all the ramifications (we have a very short session so if it was not passed by March it would have been tabled). No such luck. The wholesalers had 11 lobbyists and tens of thousands of dollars in contributions on thier side. On ours, just three small associations without benefit of lobbyists or the ability to make grandiose campaign contributions. Your comments succinctly mirror our position, and like Virginia, we are going to try to get the issue back on the table during this legislative session. Not that we hold out much hope, but we have to try. We need to get the consumers involved, and are gearing up a grassroots for that. We’re rooting for Virginia…and Kentucky, and all the other states that either took away the wineries right to survive and conduct business or never granted it in the first place.
    Tricia – Northern Kentucky Vintners & Grape Growers Assoc.

  8. Adman - August 6, 2007

    I need some guidance. After spending my life on the west coast, I just moved to Virginia where I am realizing that I failed to do my research. I have collected about 24 cases of wine which are still sitting back in Oregon waiting to make their way east. In hopping online, it is leaving me feeling like the task of getting my wine out here is a herculian one.
    Does anyone have any experience, suggestions or loop holes that I can explore?

  9. ... - December 31, 2007

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