Basic Math

Posted by Tom Wark on Jun 30, 2008

Believe it or not, it has been over a decade since I’ve been anywhere near the city of Chicago. And even my last foray to this neck of woods didn’t take me into vicinity of the city. Now, having been here for a short while, and having taken some time to move around Chicago, I can say without hesitation is is one magnificent metropolis.

This is what a city should look like. The skyline is remarkable, studded with stunning testaments to man’s artistic sensibilities. They Chicagoans have taken great advantage of the water nearby in the form of lakes and rivers and their parks are accessible and used to the hilt.

As for atmosphere, I’ve never been in a more masculine city. It just gives that impression. If they ever enclose this city in a dome, that dome will be lined with red leather and mahogany and girded by steel. And I swear, you can not take ten steps down a street without tripping over steakhouse. Add to all this the fact that they have 2 baseball teams and at one point in the plane’s descent into O’Hare I was able to lay my eyes on ten different golf course…and that from from just one side of the plane.

The only problem is weather: thunderstorms, snow and humidity. Ouch.

My purpose for being here is outlined in the previous post. I just a moment ago finished sitting on a panel with Craig Wolf, president of the Wine & Spirit Wholesalers Association where he and I debated whether or not UPS drivers were capable of looking at an Identification card, finding the date of birth and then doing the math. I suggested the drivers were quite capable of this remarkable bit of mathematics. Craig was not so sure and thought it best to err on the side of caution by not allowing any delivery of wine to a home.

To be sure, the discussion in front of America’s alcohol regulators was a spirited one. Despite my slide into sarcasm on the issue of basic math, I think I was able to communicate to the audience that wine retailers merely want to be regulated. They want the opportunity to subject themselves to states’ legal and regulatory jurisdiction, they want to pay taxes on wines sent into the states, they want to file reports and all for the opportunity to serve the increasing market for fine wines that wholesalers have either no interest or no capability of serving.

And speaking of an increasing market in fine wine, the general counsel for FED EX who took the podium after Mr. Wolf and I confirmed that between 2005 and 2007 their wine shipments have increased 94%. I’ve got news for them…that’s just the beginning.

I did learn something, however. Regulating retailers appears to be a daunting task for America’s Alcohol Regulators. They see the potential of hundreds of thousands of retailers applying for permits if they allow out-of-state retailers to obtain permits to ship wine to consumers in their state. This is a case of their greatest fear being as far from the truth as possible. The fact is, in states where both wine retailers and wineries may ship direct, more than 80% of the permits issues are held by wineries, not retailers. This figure is consistent in every state where this set of licensing circumstances exist. This fact must be driven home.

One thing became clear as Craig Wolf and I went back and forth: wholesalers make their arguments against direct shipping on the basis of fear. Their strategy is to instill fear into the minds of legislators, regulators, police and healthcare workers. If these folks can be convinced that all hell and serious death will break forth if wine lovers are able to have their $40 Zinfandels delivered to them, they figure, they can stave off further direct shipping inroads. Nearly every statement Mr. Wolf uttered was fashioned to instill fear into the mind of the regulators in the audience.

For my part, I tried to talk about two things: 1) The necessity of bringing retailers inside their regulatory orbit so that state regulators could in fact monitor direct shipments from retailers as well as collect much more tax revenue and 2) stand up for consumers, who’s interests and desires are almost never discussed in either regulatory or legislative forums when direct shipping is the topic.

I explained that if their concern is unregulated and illegal shipments, they should probably get over their fear because there is very little they can do to stop consumers from doing whatever they have to do to get that simple bottle of wine not available locally but available in another state. The reason for this is that consumers simply have no respect for laws that they view as arbitrary, protective of certain financial interests and that actually serve in no way to protect the welfare of heath of the citizens of states. At some point, regulators and legislators are going to have to take consumers’ interests to heart. They are, after all, the people the regulators are their to serve. I explained that if they do not take into account consumers’ interests, they will continue to see the laws they enforce, their own enforcement efforts and the legislators that enact these laws ridiculed and dismissed as tools.

I am still convinced that in all but a few cases, consumers will end up earning the right to access the wines they want via direct shipment from retailers only as a result of litigation that forces states to change their laws. What a shame that millions of dollars must be spent on court proceedings only to find out that a far less expensive route could have been taken with simple legislation.

I hope to see a great deal more of this city over the next three days. It is a magnificent place to be.