Some of the most important work I’ve done over the past year has been with the Specialty Wine Retailers Association where I began acting as executive director in January 2007. In that year I’ve had the chance to testify in a number of states on the issue of direct shipping, work with some amazingly talented folks and even bear the brunt of some of the wholesalers’ more nasty and snide remarks.
However, a good deal of that time was spent staring at numbers. Everyone knew that America’s wine wholesalers gained influence via their campaign contributions at the state level. But we never knew the extent of that largess. So I started looking…and looking…and looking.
All that looking resulted in the SWRA Report issued today called "Wholesale Protection" that breaks down the $50 Million dollars that American wholesalers and their associations have delivered to state politicians between 2000 and 2006.
The number is remarkable not only for its size but for the way in which it exceeds the amounts of money given to political campaigns by any other sector of the alcohol industry. In fact, in that time wholesalers have given more to politicians than all wineries, beer producers, spirit producers, restaurants and retailers—combined.
Many have suggested that these are amazing numbers but that there is no smoking gun. I suppose a "smoking gun" would be evidence of legislation in exchange for dollars. Of course, this has not been found and this sort of research could not find it.
However, consider that nearly every state has laws on the books that either protect wholesalers directly from competition or limit the access that consumers have to wine in a way that aids wholesalers bottom line. Better yet, consider these circumstances:
•Between 2000 and 2006 Illinois alcohol wholesalers contributed $5,731,776 to political campaigns. In 2007 the Illinois Legislature passed a law that protected in-state alcohol wholesalers by prohibiting Illinois consumers from continuing to buy wine from out-of-state retailers. Wholesalers also convinced the Illinois legislature to force large Illinois wineries to sell only to state wholesalers, rather than direct to retailers has they had been able to do.
•Between 2000 and 2006 Texas alcohol wholesalers contributed $6,976,104 to state political campaigns. The Texas Legislature has passed prohibitions on out-of-state retailers shipping to Texans and limitations on in-state retailers shipping to Texans, both moves protective of and supported by state alcohol wholesalers.
•Between 2000 and 2006 California alcohol wholesalers contributed $4,296,304 to state political campaigns. In 2005 California passed legislation protecting wholesalers from competition by prohibiting Californians from purchasing wine from out-of-state retailers, policy California wholesalers pushed for.
•Between 2000 and 2006 Michigan wine wholesalers contributed $2,099,319 to state political campaigns. In 2005 the Michigan legislature passed a wholesaler-supported law that protected in-state wholesalers from competition by prohibiting Michigan consumers from purchasing wine from out-of-state retailers.
•Between 2000 and 2006 Virginia alcohol wholesalers contributed $2,580,161 to state political campaigns. The Virginia General Assembly passed a wholesaler-supported law prohibiting Virginia wineries from continuing to sell wine directly to retailers and forcing them to sell their wine to wholesalers.
One wonders if all this is simply a coincidence.
Here’s what I know. This kind of largess buys access and influence. The lobbyists for the the wholesalers have open doors into legislators’ offices where the lawmakers are told that consumers don’t care about direct shipping, that retailers are bootleggers, and that minors are going to get their hands on alcohol via direct shipping.
These kinds of conversations lead to states like Illinois passing boldly unconstitutional laws even in the face of consumers begging it not be passed in the form of conversations, e-mails, letters and with the media writing over and over that the legislation stinks.
Now while I know this kind of legislation hurts the members of Specialty Wine Retailers Association, I know that it hurts consumers even more. In fact, I’m a bit surprised that there has not been the creation of a national organization that represents consumers on these issues because that’s really where the leather meets the road; when consumers are told that "no, we can’t ship you that wine."
The "Wholesale Protection" report is the first in a serious of steps that will expose the wholesalers, that will demonstrate conclusively that their rhetoric is not just rhetoric but actually damaging to the American wine industry and the American wine consumer. What they’ve yet to understand is that things will get a lot worse for them when consumers begin to get involved. They accuse me and the Specialty Wine Retailers Association of wanting "nothing less than the total deregulation of alcohol regulation in America."
What they don’t understand is that I and SWRA would never advocate such a thing. However, American consumers will not just advocate it eventually, but they’ll demand it.
Frankly Tom, at this point I’d start looking out for a horses head in your sheets. Or some fish wraped in newspaper.
The last thing this world needs is a presumptuous prick like you telling everyone else that a system thats worked great for 70 years is corrupt.
You think you’ve got this figured out don’t you. If there weren’t any wholesalers you and your faggy California vintners would be up shit creeke.
You think drinkers and your precious SWRA will win against distributors then think again. You don’t stand a chance and it’s not cause of few mllion doallars. Its because no one wants to buy 100 dollar bottles of wine ovr the Internet. And it’s because states don’t want kids ordering booze.
Why don’t you take your shitty blog, your shitty SWRA and leave the work to the big boys.
Sounds like things hit a little too close to home for Josh.
The point is not that nobody will buy $100 bottles of wine over the Internet, but that people can. It isn’t about kids ordering $100 bottles of wine, either.
It’s ridiculous that wholesalers are concerned about self-distribution because the vast majority of American wineries cannot get decent distribution through the “big boys.”
As I always say, follow the money.
The one thing the states learned from Prohibition is that those who trafficked in alcohol during the period were onto something big. After Repeal, when the mealy Congress handed the states an opportunity, many states grabbed at it by giving the traffickers legal protection, and we all know that you have to pay for protection.
It’s not that wholesalers and distributors aren’t necessary; it’s that they operate under a regulatory system that is an invitation to corruption plus, they seem to be working hard to become unneccessary.
Just to be clear here Andy, the profane rant you reference was posted by an Anonymous Coward going by the name “The Big Boys.”
I wrote the thing about the horse head and fishies.
And by the way, if you’re going to call yourself “The Big Boys” shouldn’t you at least write in the first person plural? In addition to an ethics transplant, these wholesalers need someone who loves them to buy them a copy of Hooked On Phonics.
I took that “Big Boys” poster in a whole different way. I thought he/she/them was being facetious, spelling out the wholesalers’ collective attitude.
Thanks for pointing that out. You are correct. The horizontal rule between the comment and name threw me off.
As someone who is soon to be commercial I look at anyone who wants 50% of my hard and passionate work in the same vein as war profiteers. I will do every thing I can to give them zero of my money as well as a finger.
My list of topics to blog about in 2008 includes aspects related to the price consumers pay for wine. Some of these aspects originate in the vineyard itself (such as crop thinning… more on this some other time). Other aspects are not so “romantic”… lik…
Great research Tom! Thank you for sharing. I have made a post on my own blog including links to your post here and the SWRA report. I also single out the data which pertains to my state of Massachusetts so that my local readers can gain an understanding of this issue.
Tom, this is a potent report and one I hope leads to further weakening of the wholesaler cartel. Thanks.
I’m in MA like Marco (Happy new year Marco I hope things are well) and would point out that the $4,269,895 in graft given to politicians by the wholesalers in 2006 is the largest of any other state in any of the years chronicled. That year there was a ballot initiative about whether wine should be allowed to be sold in supermarkets. This initiative failed 56% to 44%, in large part because the cartel was able to flex its muscle and convince voters that every kid across the state would be able to walk in to Stop & Shop and pick up a bottle of vino without being ID’d. So, if there is anyone out there that still doubts that the money is not real, look again, when it comes to protecting their turf the cartel will spend its ass off to remain in the drivers seat.
Sounds to me like Mr. Big Boys is a bit of a Muppet.
If state monopoly alcohol sales were not protected by archaic (in the sense of the marketplace) laws, they would fold up under competition. And that’s because their business model is crap.
And in a free marketplace, crap business models just wouldn’t make it.