Bad Wine Precedent

The Specialty Wine Retailers Association (SWRA) is opposing Illinois legislation that would prohibit all retailers across the country from shipping wine to consumers in that state. The legislation, HB 429, is expected to be debated in the Illinois legislature late this week. While the legislation has the support of numerous winery associations in California because it maintains winery shipping rights, SWRA believes this kind of anti-competitive legislation hurts the entire wine industry, not to mention Illinois consumers.

HB 429 creates a “winery shipping permit” in Illinois that may only be issued to out-of-state wineries. Since all out-of-state retailers are unable to obtain the permit they will be excluded from that market after 15 years of serving Illinois consumers.

SWRA believes HB 429 is blatantly unconstitutional as it prohibits out-of-state retailers from shipping into Illinois while in-state Illinois retailers are specifically singled out as still being able to ship wine to consumers in Illinois. The 2005 Granholm v. Heald U.S. Supreme court decision was clear that states must treat in-state and out-of-state wine shippers equally. Subsequent federal court decisions have reinforced that the ruling applies to retailers. HB 429 directly contradicts Granholm v. Heald.

It should be pointed out that retailers across the country are wineries’ most important partners. If winery trade associations support and see passed legislation prohibiting retailers from selling and shipping wine to Illinois residents, a significant source of sales and promotion will be lost to wineries in California and beyond.”

SWRA’s members alone sell and ship hundreds of cases of wine to Illinois residents annually. If HB 429 passes Illinois residents will lose access to hundreds of wine brands while wineries will find a significant source of sales lost, as well as secondary market support that helps current release pricing levels.

While we are working to let Illinois consumers know that they face the possibility of losing access to all out-of-state retailers if HB 429 passes, we are also reaching out to wineries asking them to support retailers regardless of how their trade associations choose to react to this ugly legislation.

It makes no sense to trade away wine retailers’ rights for the sake of poor legislation that sets a bad precedent and that is likely to prompt a legal challenge if passed. This legislation adversely affects the entire wine industry and consumers and SWRA will continue to oppose and or to change or nullify these types of anti-competitive laws.

Specialty Wine Retailers Association recently issued a statement on the pending threat to exclude the nation’s retailers from shipping into Illinois.

3 Responses

  1. razmaspaz - April 24, 2007

    Is the form letter Stephen sent me out there on the net somewhere to link to in my blog post on this?

  2. Stephen - May 9, 2007

    Interesting post Tom, as always. What strikes me, and as the new voice of SWRA I’m interested to hear your response, is the one sentence indicating that there is support for HB 429 from some CA winery groups. What is the SWRA doing to bring these groups into the fold, is Free the Grapes one of them? It seems to me that with the incredible lobbying advantage that wholesalers currently hold over advocates of freer trade, that both retailers and wineries lose out when they do not present a unified front and a unified voice. Why does it seem that wineries and retailers are acting as if they have vastly different agendas? Do they? Or is this a huge tactical error?

  3. tom - May 9, 2007

    I agree. Wineries and retailers should be working together for a number of reasons. In some cases they do. In others they don’t. Hopefully, down the road, wineries and retailers will be of the same mind on this issue.

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