The Implosion Begins!

Let me see if I have this right…

On the one hand, wine retailers across the United States are telling alcohol regulators in every state that they’d like to enhance their operating budgets by paying an annual fee to ship wine to consumers in those states. They’d like to help fill their state’s coffers with funds resulting from the remittance of taxes on the wine they sell and ship to consumers in their state. These retailers would like to voluntarily submit themselves to the legal jurisdiction of a remote state as well as allow their books to be audited at the notice of the regulators.

On the other hand, the Wine & Spirit Wholesalers of America want alcohol regulators to commit a significant amount of their valuable time looking for an alleged band of adult wine lovers who are claimed to be committing the sin of buying wines they can’t find in their own state, from a retailer in another state. Further, the WSWA wants these alcohol regulators to spend their valuable budgets looking for these supposed scofflaws in their own states as well as tracking down the alleged sellers in other states. Of course, wholesalers aren’t mentioning that this would take significant time and resources away from actually carrying out the core mission of these alcohol regulators: making sure licensees in their state are following the law and attempting to assure licensees don’t over-serve their drinking patrons.

Get More Money for their states and their budgets…VS…waste time protecting wholesaler profits???

Hmmmm? Tough one, isn’t it.

Yet this is the silly suggestion that the head of the American wholesaler cartel actually made in the form of a press release today as well as in letters to Attorneys General, governors and alcohol regulators in 50 states.

In case anyone reading this has missed the point of the American Wholesaler Cartel, allow me to remind you: PREVENT AS MANY AMERICANS FROM ACCESSING ANY WINE UNLESS WHOLESALERS FIRST MAKE A PROFIT ON IT.

Damn the regulators and the efforts they make to maintain an orderly and safe market for wine and spirits. Damn the states and their need to raise revenue. Damn the consumers who only want to obtain the wines the wholesalers feel these folks don’t need to have. JUST PROTECT OUR PROFITS.

I wonder if WSWA and the wholesalers ever tire of being ridiculed?

I don’t think so. The American wholesaler cartel appears to never tire of having their face rubbed in it. They lose lawsuit after lawsuit. They get slapped down by the Supreme Court of the United States. They get caught in their misogynistic ways. Their arguments against direct shipping are put to bed with efficiency and ease by person after person. But none of this is enough for them it appears. Now, they whine like a little girl who just soiled their Sunday dress and run off crying to daddy asking him to put down his tools and stop doing his job, so he can clean the mess the little girl made all by herself.

If anyone is wondering, it’s only going to get worse for the wholesaler cartel as they continue to spin out of all control.

But what I’m really wondering is who in their right mind at WSWA gave the approval to issue a press release that actually criticizes the the most powerful newspaper in the land merely for an offhand quip a wine writer made in its pages? Is there no one at the helm at WSWA? All they have to do is call me and I can recommend a number of fine PR professionals who will tell them the utter depth of stupidity that move represented. But allow me to recreate this act of stupidity…just as an object lesson in how not to run a communications program.

To quote from yesterday’s WSWA press release that whines about the alleged "Illegal alcohol trafficking and open disregard for state liquor  laws":

"Wolf even cites a prominent New York Times wine writer openly
sympathetic to the unregulated-shipping cause, who recently opened one
column: “I have a confession to make.  I am a lawbreaker.”

Wolf in response to the remark: “That a newspaper of record would
publish such comments in the clear light of day, we believe, ought to
trouble any regulator, lawmaker or law enforcement official.”

Tell you what, if I ever recommend to one of Wark Communications’ clients that they criticize the New York Times in a press release, please have someone come to my home, drag me out of bed and beat me senseless.

Finally, I fear I’m forced, out of the knowledge that my good readers love a bit of humor, to quote from the letter that WSWA’s CEO Craig Wolf wrote and sent to alcohol regulators, the top law enforcement officials and the Governors (yes, the following quote actually ended up in a letter to GOVERNORS) in all fifty states:

"As you are well aware, the sidestepping of state-controlled alcohol
distribution channels causes a host of negative effects—the inability
to collect taxes, the absence of a face-to-face transaction that
addresses myriad regulatory aims, and the very real possibility of
introducing tainted or counterfeit product into your marketplace
, to
name but a few.”

Tainted Products? Now the American wholesalers are protecting us from tainted wine? I’ve got news for them. This is not 1926. No one is making tainted wine in a bathtub with grain alcohol and red food coloring, slapping a stopper in it and running it across the river to avoid Elliot Ness. And just when was the last time a wholesaler broke open a case of Opus or Dom Perignon or Russian River Valley Chardonnay to make sure it wasn’t "Tainted"?

I think we may be witnessing the end of a long sad saga as the implosion begins.

17 Responses

  1. Catie - February 27, 2008

    So, if I understand the American Wholesalers correctly – – they are saying that the BATF is not doing a very good job of protecting the consumers from tainted alcohol and they must swoop in and save us?
    My oh my, aint they a selfless bunch.

  2. Randy - February 27, 2008

    Attaboy, Tom! Glad to see you’re on your game tonight!
    I read the WSWA release myself and was amazed at the arrogance that supposes first of all that state regulators don’t already understand and comprehend the issues that were being addressed in the release; secondly, that the WSWA is somehow in a position to do something worth helping.
    In fact, it almost seems like Mr. Wolf took a page out of’s playbook in order to forward their own agenda. Imagine that, a wholesaler using a retailer’s idea to make a buck…
    Presidential primary? Huh, I hadn’t noticed, the battle royale going on here is much more interesting and pertinent!
    I for one can hardly wait for the Grape Radio thing. Positively salivating!

  3. Jeremy - February 28, 2008

    Wow, that is simply embarrassing on so many levels! It is my belief that the absurdity of what’s written in a press release is directionally proportional to the internal and external strife an organization is facing. Implosion??…maybe, I would characterize it as more of a disintegration, kind of like when matter is ripped to shreads as it approaches the singularity of a black hole.

  4. John Gavin - February 28, 2008

    haha… yeah if you’re on the list and you buy your just-released two-pack of 2005 Screaming Eagle direct from the winery, who knows what might be in the bottle. $2 Chuck? Welch’s Grape Juice? Antifreeze? But if you run down to to the Corner Bottle Bin and pick up one of their 2005’s you can be sure it’s the real thing.

  5. Morton Leslie - February 28, 2008

    I won’t comment on the WSWA. We refer to their annual meetings as the “lucky sperm club” for the number of third generation wholesalers who don’t work for a living meeting to figure out how to get a bigger piece of the action.
    What interests me are retailers vocal about wanting to access out of state markets. I live in the Napa Valley. I buy European wines regularly from New York retailers in case lots. The prices are 25 sometimes 50% less than San Francisco or Los Angeles for the same wine, they charge no sales tax, and shipping adds less than $2 a bottle to the price. Better selection, better price, don’t have to leave home; it’s a no brainer. What I don’t understand is what these retailers are worried about. I would keep my mouth shut and continue shipping.

  6. Arthur - February 28, 2008

    I thought the WSWA move was pretty lame and transparent. The motivation is not all that different from that of when they did their little sting operation in WA state….

  7. 1WineDude - February 28, 2008

    Ugh… just… **maddening**!!

  8. Gourmet Gift Baskets - February 28, 2008

    Wow, what a story.

  9. TH - February 28, 2008

    Oh Alfonsoooooo…?

  10. Steve - February 28, 2008

    Despite the fact that I think their efforts are futile, it doesn’t really bother me. Companies and organizations in every industry try to use the regulatory environment to their advantage. Why should wine be different? At least, in contrast to the debacle, they didn’t set anyone up prior to sending out their letters.

  11. Tish - February 29, 2008

    It is only a matter of time (I’d put the over/under at a year) before a mainstream news organization makes major mincemeat out of the direct shipping issue. The three-tier system is archaic; the wholesalers are crystal-clearly bad guys; and wine is more popular and the industry more vibrant than ever. It’s a recipe for change, eventually, but a precursor will be some genuine mainstream outrage. As I’ve said before, however, the lack of outrage as of today is due mostly to the fact that so many retailers ARE shipping happily if not-quite-legally. THis issue is not going away, and the more exposure it gets, the worse WSWA will look.

  12. Epicuria - February 29, 2008

    In my usual fashion let me be the contrarian. TH is right. The WSWA, like, did exactly what any group would do to protect their turf. It’s done in every business sector in the capitalist world. Despite TW’s self serving outrage, the press release is one he would write if the shoe were on the other foot. It was hard hitting and pointed out the flaws of the current system which will continue unless there is enforcement.
    But enforcement there won’t be a la Mr. Bar-booty. States have too much else to worry about. Yet if I were a wholesaler I would certainly be pushing for targeted efforts to ferret out shipments that “violate” the law of the state.

  13. Tom Wark - February 29, 2008

    I don’t think anyone familiar with the debate would suggest the WSWA’s approach is hard to understand. If there were a law in place that all wine-related blog posts must first be submitted to Fermentation for publishing and that Fermentation would get paid for publishing them, I think I’d find any number of “reasons” to defend this law. I might even spend $50 million to defend it.
    However, I have no doubt that the reason I offer up in defense of the Fermentation Protection Act would be every bit as silly as those offered up by wholesalers in defense of the various Wholesaler Defense laws.

  14. Lee Stipp - February 29, 2008

    Let’s not throw all wholesalers under the bus, just the one’s who don’t believe in competitive advantage to gain profits. Believe it or not, I know plenty of wholesalers who add value to the sales equation. For them, I am happy to partner with. Just trying to temper the flames a bit. Otherwise, Tom, you are right on again. Nice bit.

  15. Tom Wark - February 29, 2008

    I can’t agree with you more. First, wholesalers provide a critical function in this industry that is really irreplaceable. And I know a few wholesalers who are willing to take an opposite position from WSWA. However, I know but one wholesaler who is willing to actually stand up publicly and say direct shipping is necessary. Until the rest of the “Good” wholesalers stand up, they’ll be painted with the same black brush that soils the majority of wholesalers.

  16. Alfonso - March 1, 2008

    Might I suggest to all the direct-shipping retailers this experiment? Stop buying wines from the wholesalers.
    And to the wholesalers I would also suggest this: Stop selling to the direct shipping retailers.
    As a trial in eliminating co-dependency on each other. Clear the decks.
    Try this for a month, starting April 1; let’s see how things flesh out.

  17. Tom Wark - March 1, 2008

    You crack me up, Al.

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