My Neck Hurts

When you spend enough time watching wine politics play out, it becomes a real necessity to be able to laugh…otherwise you’ll spend your time at the chiropractor from shaking your head back and forth in dismay.

The wine politics playing out in Oklahoma are both hilarious as well as depressing.

This November, Oklahoma residents will, again, vote on the issue of winery "self distribution". "Self Distribution" refers to when a winery sells directly to a retailer or restaurant at a higher price than if they sold their wine to a distributor first, who would then sell it to the restaurant or retailer. When the winery sells direct to the retailer, the cost of the wine to the consumer is either the same as what it would be if the wholesaler sold it or potentially less.

For small wineries in particular (and that’s all Oklahoma has) self distribution is very important if only because it places the destiny of their business in their own hands, rather in the hands of distributors who may or may not distribute their brand and, if they choose to, may or may not actually sell it.

In 2000, OK voters agreed by a 2 to 1 margin to allow OK wineries to self distribute. Now, as you might imagine this didn’t sit well with OK wholesalers. Though the monetary loss they would suffer as a result of OK wineries not using them would be minuscule at best, it’s the principle of the matter: Free markets in wine just don’t sit well with wholesalers who have completely controlled wine distribution in OK for decades and liked it just the way it was.

So, upon passage of the self distribution law the OK distributors filed suit. Now get this:

They argued that the law DISCRIMINATED against out-of-state wineries that were not also allowed to self distribute into the state. And it was true. The law did discriminate against out-of-state wineries. They were not allowed, as OK wineries were, to sell direct to retailers and restaurants and bypass the wholesalers.

Before you start feeling all warm and fuzzy about OK distributors who appear to just be looking out for wineries, you need to keep in mind that this lawsuit was brought not to force the state to allow out of state wineries to self distribute, but rather to kill the new law altogether, making sure that OK wineries would be stripped of the right voters had just given them and would be forced, once again, to live under the thumb of distributors.

The irony of course is that distributors don’t care about fairness, the commerce clause or out-of-state wineries being able to access a freer market. So, give them points for creative duplicity.

Well, the voters of OK get vote again in November on the issue of self distribution for wineries. But if you look at this new potential law closely, I promise you’ll end up at the chiropractors office.

The new law would allow both in-state and out-of-state wineries making less than 4,200 cases of wine per year to self distribute to retailers and restaurants in OK. GREAT!!

However, the law says that they may only do so with vehicles that they own themselves. They may not use any other types of carriers.

In addition, the bill says that if any part of this law is deemed unconstitutional, the rest of the bill will be invalidated and wineries may no longer self distribute.

This potential new law is so clearly discriminatory against out of state wineries, and on a number of levels at that, that if challenged it should most certainly be invalidated by the courts.

So…Wait for it…..Do you think the OK distributors will challenged the law once the voters approve it?…And they will approve it!

Here’s the problem. The part of the law that requires wineries use their own vehicles to get wines to retailers is impractical for out-of-state wineries at best and, therefore, discriminatory at worst. When challenged, the state will have to argue that there is no less discriminatory way for Oklahoma to regulate the sale of wine in the state and no less discriminatory way for them to collect taxes on the wine sold. They won’t be able to show this. And the law will be invalidated.

Add to this the fact that the 4,200 case limit on those that are allowed to self distribute under the law and you have another reason to challenged the law since the vast majority of OK wineries fall under this limit. A similar limitation is being challenged in MA.

But here’s the real kicker. If anyone doubts that the requirement that wineries must use their own trucks to to deliver their wine to retailers and restaurants is not in place for purely discriminatory reason, all they have to do is read the following:

"Brad Naifeh of Central Liquor cautioned lawmakers against the bill.
Some large winemakers from other states, such as California’s E&J
Gallo, sell wines under hundreds of labels that produce less than 5,000
gallons per year, said Naifeh, and could use the proposed law to flood
the market in Oklahoma without using a wholesaler.

Morgan said the bill requires both in-state and out-of-state
wineries who sell directly to retailers in Oklahoma to transport their
wines in vehicles owned by the winery, and requires such deliveries to
be transferred directly from the winery to the retailer. Such vehicles
must obtain the necessary licensure and permits from the Oklahoma
Alcoholic Beverage Laws Enforcement agency. Morgan questioned if it
would be cost-effective for an out- of-state winery to drive a few
thousand gallons of wine all the way to Oklahoma."

Morgan is Rep. Danny Morgan, the Oklahoma State Representative who originally introduced the bill that will be considered by voters in November. Rep. Morgan comes straight out here in the article from the  Oklahoma City Journal Record and says that the bill will discourage out-of-state wineries from self distributing. The bill is clearly written specifically to deter out-of-state wineries from self distribution, even though on its face it allows it. If challenged, it’s going down…and everyone knows this.

Oklahoma wineries are generally supporting this new law and recommending its passage. And why shouldn’t they? It gives them the most basic right any producer of a product should have: the ability to control the sale and distribution of their own product. But they should know that they are heading for a surreal situation where once again the OK distributors end up stripping this basic right away from wineries on the premise that it is discriminatory against the very out-of-state wineries that distributors will do whatever it takes to discriminate against. Has anyone asked OK distributors if they plan to challenge this law in court if it passes? Someone should.

My neck hurts.


17 Responses

  1. Robjob - September 24, 2008

    So the way around this is for the OK wineries to sell directly out of the tasting rooms and work on large wine clubs and reach a greater audience there. See, no more worrying about distributors and no more worrying about out-of-state wineries. I think the wineries are pretty close to major markets so that restuarants can drive to the winery to pick-up. Hey, they will have a even bigger market now that the S****le Supersonics have moved into town so the rich players can buy the wine. No Worries!

  2. jane - September 24, 2008

    Oklahoma and other states have been driving me nuts, too. I’d like to write about them for, but until something is decided, it’s not really news. Wish they’d make up their minds so we could report something concrete.

  3. Morton Leslie - September 24, 2008

    I think most wineries could afford to fore go selling wine in Oklahoma. It is not much of a market. It has about 1% of the U.S. population, they are spread over a wide area, and in retail buying they spend less per capita than Arkansas. It’s going to remain a backward state and a sluggish wine market. Why fool with them? (Okay, spirits and beer? Fool with them.) But really!, they are many cities in California that are far bigger wine markets than the whole state of Oklahoma.
    If wineries would get smart they would sell their wine and spend their time in Texas, Colorado, and New Mexico and give the Okies a pass. Those states (most states) are more prosperous and enlightened. In time, the wine customer will find a way to get what they want at the state border and sales will rebound. But your winery would not be partnering with the idiot distributors. That alone is worth 1% of sales.
    I know someone will point out that not all Okies are ignorant and backward. That is true, but just look at the stupidity of this legislation. They actually think they are being clever. Whew!
    The wine drinking Okies I know and love, buy their wine at the winery, store it locally, and bring it into the state themselves.

  4. Dan Cochran - September 25, 2008

    This insulting law is just part of a larger problem; the government at ALL levels just doesn’t listen to its citizens (or should I say, “subjects”?). Why? Lobbyists! Until lobbyists are banned from every state capital as well as Washington, DC (good luck!), the average voter will continue to be frustrated by their lawmakers.

  5. Tish - September 26, 2008

    Tom, are any of the wine magazines covering the direct shipping issue well, in your opinion?

  6. Tom Wark - September 26, 2008

    Consumer wine publications don’t cover the direct shipping issue. So, it’s not that they don’t do it well.
    It would be appropriate, I think, for the major wine magazines to have a special “Wine Politics” issue every few years. But my experiences is that they generally stay away from these issues.

  7. Craig Woods - September 26, 2008

    We are not quite the backwoods hillbillies being portrayed. Oklahomans can buy plenty of California wines– they just can’t be shipped directly to us.
    The law is a way to allow local small wineries distribute in state. Could it be better? Yes. But is it better than nothing, by all means. But as you say, this is politics.
    And I’m not so sure that the law won’t stand up to legal scrutiny. Yes, a California winery may find it a burden to drive a truck to Oklahoma just to sell to a restaurant– but is it an undo burden? A neighboring state small wineries may not are on the same footing as ones in Oklahoma. Post in Arkansas has no more/less of a burden delivering to Tulsa, then a winery. In fact the distance is probably abut the same. And I’m sure with a little digging I could find other laws that limit the distribution of products based on quantity.
    Yes, distributors may again raise a fuss about a law they help craft. But I suspect they are pretty happy with this. It throws the local wine industry a bone who could end up being a huge thorn in their side if they ever became truly organized– again the public is on our side, all we need is a big bad villain to make this a compelling story for the media– and it beats back the big out of state wineries that would put a crimp in their business.

  8. Dylan - September 26, 2008

    Thanks for bringing me up to speed on this situation. This reminds me of the 2 AM shows you can see on the streets of Boston on the weekends; as fun as it as to laugh at, at its core it is kind of sad.
    I hope that a real law can be passed instead of stubborn parties leveraging loop holes for themselves.

  9. Tish - September 26, 2008

    Kudos to you for keeping the flame in absence of established wine media. You would think that if the wine mags were truly looking out for their national readership, they would be more interested in direct shipping. THe fact that they are not even reporting, let alone advocating change, makes their tireless efforts to review every wine in the universe a bit more pathetic, yes? In an ideal world, every wine reviewable in a national magazine should be buyable. Yes, we are not ther yet, but there is no GOOD reason why we can’t hold this as an ideal. Someday…

  10. fashionhause - October 17, 2008

    chanel handbags
    chanel handbags replica
    replica handbags
    replica handbag
    replica watches
    Rolex watches replica
    Louis Vuitton Handbags
    Louis Vuitton Handbags replica
    Please check out our website: There are top quality of replica handbags for sell
    with perfect weight, feel, and like the originals.or email us : [email protected]
    Fashionhause offers wholesale Louis Vuitton and wholesale Chanel replica purses, wallets, and
    handbags. Our products are made with the utmost attention to detail and can be a great addition
    to your inventory of products. Our wholesale Louis Vuitton replica bags and purses are made to
    be functional, durable as well as attractive. Similarly our line of wholesale Chanel replicas
    are also feature high quality materials and craftsmanship.fashionhause

  11. Dianne Jones - October 18, 2008

    We are one of Oklahoma’s small wineries. When I questioned our distributor as to why they hadn’t purchased any wines from us for several months even though our customers kept telling us they were asking for it and the liquor stores were saying they couldn’t get it. The distributor said when I removed the obstacles (meaning gravel road and bridge)they would send me an order. Since wineries are an agribusiness, many of are located on these types of roads in Oklahoma. Of course Fedex and UPS and other truckers don’t seem so deterred.

  12. Roger - November 4, 2008

    I just voted on State Question 743, and I had a real tough time making a decision. I agree that all wineries in Oklahoma should have the freedom to sell to any consumer, whether it be a local restaurant, an Oklahoma liquor store, or directly to a consumer. The problem with this law is the clause that requires the winery to deliver the product in their own vehicles. Hopefully the producers will be able to form a co-operative to assist each other, but the law doesn’t seem to allow that.
    Oklahoma has some really backward ideas about liquor, beer, and wine. I’m sure that other states which allow wine and beer to be sold in regular grocery stores make considerably more in tax revenue than the State of Oklahoma does.
    Dianne, I’ve been to your place, and I can understand the comment by the wholesaler about the gravel road and the bridges! You live…… “off the beaten track”. Not that that’s a bad thing!! Still, it seems like he would want to carry your products if he were truly interested in Oklahoma.

  13. Ketel - November 5, 2008

    The issue isn’t the availability of the wines. The main issue is the four-tier system in Oklahoma. The state set the system up poorly from the beginning, but everyone must play by the rules.
    In Oklahoma wineries are required to sell to a Broker who makes 20%. The Broker sells to an independent Wholesaler who makes 20%. The Wholesaler sells it to the Restaurant/Store who make 20%. That adds 73% to the cost of the wine. By allowing local wineries to self distribute, they effectively put all other wineries at a disadvantage.
    It’s my opinion that if the wine were the same quality as other wines in the same price range, this wouldn’t be an issue. There is something to say about buying locally, and supporting Oklahoma companies even at a premium. But what is fair about Oklahoman wineries selling a bottle of wine for $10.00 that competes with an out-of-state winery that sells for $17.28?
    There is more to this than just helping local business.

  14. houston security systems - January 28, 2011

    It’s very dissapointing to see politicians failing to achieve their agenda.

  15. Clara - August 13, 2013

    Excellent beat ! I would like to apprentice while you amend your site,
    how could i subscribe for a blog website? The account aided me a acceptable deal.
    I had been tiny bit acquainted of this your broadcast provided bright clear idea

  16. e cigarettes quit smoking aid - January 6, 2014

    Piece of writing writing is also a fun, if you be acquainted with after that you can write
    otherwise it is difficult to write.

  17. vapor cigarettes - March 19, 2014

    You could certainly see your expertise in the article you write.
    The world hopes for even more passionate writers like you who are not
    afraid to mention how they believe. At all times follow your heart.

Leave a Reply