The Three-Tier System and Consumer Access To Wine

The three-tier system of having a “distributor” in between the producer of wine and the wine retailer was put into place after prohibition to prevent the abuses associated with “tied houses” prior to prohibition. Unfortunately this system has merely served to duplicate the corruption that it was created to fix.

Prior to prohibition, suppliers wielded so much power they could control retailers by threatening not to supply them. Retailers became “tied” to particular alcohol producers. The “tied” retailers were forced to sell a single manufacturer’s product. Producers also forced retailers to promote their brands without regard to public safety. These circumstances exasperated alcohol abuse problems and were often cited by Prohibition’s advocates as one of the key problems with alcohol in America.

To assure this measure of control and this kind of abject corruption would not happen after repeal of prohibition, most states mandated the “second tier” to sit between the producers of alcohol and the retailers of alcohol. They created the state-mandated monopoly known as the “wholesaler tier”.

Today, almost 75 years after the Repeal of Prohibition, every state has only a very small number of wholesalers that control the flow of alcohol. They determine which brands will be sold in wine stores and restaurants. The obscene power once wielded by producers of alcohol over 70 years ago today is in the hands of alcohol wholesalers.

Because most states mandate that alcohol flow from the winery to distributor to retailers, distributors find themselves in the enviable position having a monopoly on how wine is distributed in each state. This, for obvious reasons, has made them enormously powerful and wealthy. As the numbers of wholesalers in America has dwindled, usually as a result of buyouts and mergers, that enormous power has concentrated in a handful of distributors that operate in multiple states.

Additionally, because there are such a small number of alcohol wholesalers in each state that must, by law, be used by producers to get their wines to retailers and restaurants, the wholesalers are under no pressure to provide high quality service, as they would be if they were subjected to competitive market forces.

A number of consequences flow from these circumstances:

-In most states few wholesalers are responsible for “marketing” hundreds, if not thousands, of wines, which they are unable to do for all the brands with any care or success

-Retailers and restaurateurs are at the mercy of the small number of wholesalers who provide them with wine. The retailers and restaurants must choose only from the wines that wholesalers provide. This is despite the fact that there are many other wines they’d like to carry on their shelves and menus but are by law prevented from purchasing because they must deal only with wholesalers.

-Restaurateurs and retailers, just as in pre-prohibition times, often feel obligated to not criticize and follow the directions of the wholesalers for fear they will be “cut off” from the limited supply they actually have access to.

In essence, the corrupt circumstances that the three-tier system was meant to clean up after Prohibition ended now exist again, only with the wholesalers in charge.

While the corrupt circumstances of pre-Prohibition are with us again, much else has changed. Today there are upwards of 5000-plus wineries in the United States, with producers located in every state. America has become a wine-drinking nation with per capita consumption continually rising over the years and with America poised to overtake France in total consumption.

Yet, just as more wholesalers are needed to handle the demand and the growing number of producers, their number has been reduces to usually no more than three or four distributors in each state handling all distribution. In some cases, such as Texas, two wholesalers (Glazers and Republic) control 99% of the market.

An ‘hourglass” scenario has been created whereby the wholesalers occupy the squeezed middle of the glass. This position of enormous control has generated massive profits and has made them so powerful they are now able to completely control not just the distribution of wine, but the laws that are created to govern the distribution of wine.

Since 2000, Wholesalers, their political action groups and their associations have spent nearly $60,000,000 in campaign contributions on the state level. In addition, millions of dollars more have been spent on lobbyists on the state and federal level.

In 2006, for example, in Texas, alcohol distributors contributed more than $3,750,000 to political candidates and politicians. The only economic interests that outspent alcohol distributors in 2006 were Attorneys and Law firms, Oil & Gas, and Home Builders. Alcohol wholesalers outspent all unions combined in Texas, securities and banking interests, and insurance interests. Alcohol wholesalers in Texas outspent the combined contributions of gambling interests and casinos, retailer interests, all food and non-alcoholic beverage interests, tobacco interests, and tourism interests.

It is difficult to correlate campaign contributions with favorable treatment in the halls of government. However, it should be noted that in numerous states, legislation that can only be called favorable to alcohol wholesalers is regularly introduced and passed.

This trend is particularly clear in the areas of consumer access to wine. Alcohol wholesalers have proven to be advocates of the consumer, but only as long as the consumer is purchasing alcohol that wholesalers first made money on by distributing it to retailers and restaurants.

Throughout the 1990s and 2000s, as the number of wineries in America skyrocketed, consumers became interested in buying the wines produced by these new producers. The products of small, specialty wineries in particular were coveted. However, a large number of these wineries could not find a wholesaler to distribute their wines. And even when they were distributed, wholesalers in individual states usually only bought very small amounts of the wine.

Yet with the advent of the Internet and the consumer’s ability to use search engine technology to locate the wines they wanted from wineries and retailers, it became possible for a wine lover to track down the wines they wanted. However, purchasing directly from wineries and retailers located outside the state in which the consumer resided meant that wholesalers in those states where wines were being shipped into would not make any money on the transaction. Alcohol wholesalers responded to this development by instituting a massive campaign to stop direct shipments of wine.

At alcohol wholesalers’ requests, a number of state legislatures passed felony laws aimed at vintners and retailers who were shipping directly to the consumer and who were filling the growing demand for wines that wholesalers were incapable or unwilling to distribute.

The all-out attack on direct sales of wine by the wholesalers came with dire warnings that if it were allowed to continue minors would eventually start ordering alcohol over the Internet—even though that meant paying the additional cost of shipping and waiting at the door for the delivery in order to hide the purchase from their parents. The Wine & Spirit Wholesalers Association, a national association of alcohol wholesalers headed by one-time pro-tobacco activist Juanita Duggan, led the campaign to prevent consumers from obtaining the wines that wholesalers could not or would not supply.

The wholesalers were met by stiff consumer and winery-led opposition. Wineries and consumers argued that wholesalers were merely fighting to preserve enormous profits made from being at the center of a monopoly-based system that could no longer serve a market that had evolved considerably since the end of Prohibition in 1933.

Eventually wineries led by the newly formed Coalition for Free Trade, and consumers l
ed by an advocacy organization called Free The Grapes followed a litigation strategy that focused on using the Commerce Clause of the Constitution.

Throughout the 1980s and 1990s, states besides California began to sprout their own wine industries. Oregon, Washington, New York, Virginia, Michigan and many other states found themselves with burgeoning wine industries. The states, wanting to cultivate these new industries that added value to agricultural pursuits, attracted tourism, and brought prestige to the state, enacted exceptions to the three tier system that allowed its wineries to sell directly to consumers rather than forcing them to always sell to wholesalers. By doing this, the new wineries were able to produce greater revenues for themselves by selling their wine at full retail price, rather than reducing the retail price by half when sold to a wholesaler, who then tacked on their cut when they sold to retailers, who in turn tacked on their cut when selling directly to the consumer.

However, this “direct-to-consumer” exception in the law was rarely extended to out-of-state wineries.

Legal challenges to this blatant discrimination against out-of-state wineries started popping up around the country. In court battles across the country the argument was made that a state may not allow its own wineries to ship to its state’s residents, yet prohibit out-of-state wineries from doing the same. It was a matter of the Commerce Clause of the Constitution and its demand that states not hamper interstate commerce, trumping the states’ ability to regulate the distribution of alcohol based on the second paragraph of the 21st Amendment.

The issue finally made its way to the Supreme Court, which in May 2005 rendered a 5-4 decision favoring the wineries and free traders in its Granholm v. Heald decision.

There was an immediate assumption that states across the country would loosen their laws to allow consumers to buy wine from out-of-state wineries. Many reports heralded a new era in consumer access to fine wine.

While a number of states did change their laws, the era of free trade in wine was not quite at hand.

If wholesalers found the courts a difficult venue to try to protect their economic interests, legislatures proved a more fertile ground for them. From 2005 through 2007 states legislatures began re-writing their wine shipping laws. In the course of doing so many of the laws contained wholesaler-requested restrictions that kept direct shipment of wine limited.

Some laws allowed direct shipment, but only if the winery produced very small amounts of wine. These “production cap” restrictions were aimed at California, Washington and Oregon, where most wineries resided. The production caps were usually set just high enough to include the largest of a state’s wineries (often no more than 5,000 cases annually). The caps prevented medium and large wineries from shipping into states that had these restrictions and forced them to stay in the three-tier system if they wanted to sell wine in that state.

Other types of restrictions were also created at the behest of wholesalers in a variety of states. Wineries and consumer advocates have begun to challenge them in court, setting off a new round of court battles.

In the meantime, alcohol wholesalers across the country began to work to exclude retailers from shipping direct to consumers altogether. In many cases the prohibition they sought on retailer-to-consumer sales were pushed as part of legislation that opened up states to wineries. California, Texas, Ohio, Oregon and Illinois all passed or have attempted to pass legislation that at once allows out-of-state wineries to ship into their state, but exclude out-of-state retailers from doing the same.

While no good estimates are available as to the amount of wine that is purchased direct from retailers and shipped over state lines, many observers of the wine industry agree that far more wine is being purchased by consumers via the Internet from retailers than direct from wineries.

Retailers, led by the Specialty Wine Retailers Association, are now fighting the wholesalers largely on the same legal grounds as wineries did. In many cases in-state retailers are still allowed to ship to consumers while their out-of-state brethren are prohibited from doing so. Wholesalers argue that the principle of a level playing field for both in-state and out-of-state interests explained in the Granholm decision does not apply to retailer-to-consumer transaction, but only to winery-to-consumer transactions.

Lawsuits challenging discriminatory legislation were introduced in Michigan, New York and Texas. While positive outcomes have resulted from these lawsuits, this has not guaranteed positive changes where consumer access to wine is concerned. In Michigan, for example, a Federal District Court Judge ruled that the state unconstitutionally discriminated against out-of-state retailers by barring them from shipping wine to Michigan consumers, but allowing in-state retailers to do so. Immediately, the Michigan Liquor Control Commission, working in concert with the Michigan Beer & Wine Wholesalers Association and supportive legislators who had received significant campaign contributions from Michigan wholesalers, introduced a bill that barred all shipping of wine to Michigan consumers by retailers, whether located in-state or out.

This move in Michigan highlighted another issue affecting the cause of retailer-to-consumer shipping: collaboration between alcohol regulatory agencies and wholesalers. In the case of Michigan, the Michigan Liquor Control Commission lobbied for passage of an anti-shipping bill, advocated that it be passed quickly and without debate, and made arguments in favor of the bill without presenting supporting materials. It should be noted that alcohol regulatory agencies are not generally thought of as policy-making bodies, but rather agencies that carry out the will of the legislature. This kind of alliance between agency and wholesaler is not unusual.

In the case of the retailers’ battle against the wholesalers, a new dynamic has emerged. Unlike the wineries’ battles that usually had the support of wineries across the country, retailers often take a provincial position, with the hope of keeping out-of-state retailers from shipping into their own home state and thereby protecting themselves from competition. Also, many retailers are not willing to fight on behalf of free trade in wine for fear they will be retaliated against by their state’s wholesalers who supply them with products. Ironically, the situation is identical to that which existed with Tied House retailers prior to Prohibition, but with the pressure now being put on by the wholesalers rather than by producers.

The power that exists in the hands of a very few (no more than 10) alcohol wholesalers operating in markets across the country cannot be underestimated. In nearly every state few wholesalers control the entire apparatus of alcohol distribution. Legislatures continue to enact laws that favor wholesalers to the detriment of retailers, wineries and consumers. In nearly every state wholesalers are in the top ten industries for campaign contributions. Between 2000 and 2006, America’s alcohol wholesalers delivered $60 million dollars in campaign donations to state political campaigns, dwarfing that contributed by either retailers or wineries.

What’s most clear is that wholesalers are using their power to maintain a system of alcohol distribution created to address a society, culture and market that existed three-quarters of a century ago. This United States no longer exists. Yet the system it created is still in place, to the detriment of wineries, retailers and particularly consumers.

26 Responses

  1. Mark Norman - June 24, 2009

    Tom…is there a solution? Is Free the Grapes doing any good? If SVB recommendations that smaller wineries develop the direct to consumer sales channel, the 5000+ case winery is SOL?

  2. Bob - June 24, 2009

    Great posting. Here in Maine, for many years there were a very small number of wine wholesalers, resulting in a pretty poor selection of wine. Over the last several years, a number of small distributors have sprung up, and have done wonders for the wine selection here.

  3. Westoakland - June 24, 2009

    Thank you for the clarity, insight and dedication to the truth.
    As an unfortunate citizen of Michigan, where the distributors spent (published estimate) over $2.5 million to lubricate our crooks (oops) politicians to oppose free-enterprise, I well know the problem.
    I work full time, pay wicked taxes, am otherwise a good citizen (not a drunk or a f’up), but am just a guy who would like access to the wines of my choice.
    But not in my state by the size of it.
    Bye-the-way, our governor, Ms Grandholm, a product of Canada & Berkley, and a beneficiary of some or a lot of that distributor money is so in the pocket of “special interest groups” that she reeks of special interest money, influence and graft. And, so much so that our dear state is headed to oblivion.
    You see, you takes the money, you be beholding, and you can never tell the truth after that.
    Your quip that “. . . this USA no longer exists” is a sad but true, at least here in my formerly august state.
    Does the distributor affect you so well articulate, herald further government/big business intrusion into our personal lives?
    Damn, Mr. Wark, I hope not.
    I’d just like the wine of my choice here for dinner or enjoyment after a day at work, after I pay my taxes, and after I tend to personal responsibility.
    What’s wrong with that in the USA?

  4. Tom Wark - June 24, 2009

    Is there a solution? Of course there is. In fact there is only one solution and everyone knows exactly what it is.
    Simply, anyone who feels as though they have a sufficiently vested interest in consumer access to wine, the health of the American wine market or their own businesses must give either time or money to the effort to correct the imbalance and inequity that currently defines this issue.
    Those with time to give must use it educate themselves on the issue then speak out in appropriate forums. Those with money must give it to those who have their vested interests at heart.
    The problem is that the investment being made can eventually outweigh the expected return and this must end the effort that is time or money. It’s for this reason that significant numbers of consumers, wineries, retailers adn restaurants have to be committed to investing in the issue so that the “troops”, as it were, can continually be replaced by new ones.
    The issue of consumer access to wine and equitable alcohol regulation is a straight forward public policy/legal issue. The forum for this issue with eventually be the halls of government. The halls of government only shake when people are walking them. Not enough folks have been willing to walk those halls. So, inequity, championed by those that DO walk the halls, prevails.

  5. Steve - June 24, 2009

    Great summary of a bad situation. Here’s one solution:
    Create a Federal (yes, I said Federal) interstate wine shipping permit which any party licensed by a state can obtain by showing proof of licensing and paying a modest annual fee. (This would cover wineries, retailers, and even wholesalers who want to compete across state lines).
    The interstate shipping permit would:
    1 Enable licensed parties to ship to other licensed parties in all 50 states.
    2. Enable licensed parties to ship to any adult consumer provided they perform an online or offline age verification, require adult signature on delivery, and pay sales taxes to the state of the buyer.
    3. Not specify any volume restrictions.
    4. Leave states with control of licensing and enforcement infrastructure on non-shipping related rules.
    5. Standardize any reporting requirements to states to minimize administrative overheads and simplify compliance by businesses.

  6. Ned - June 24, 2009

    The national federal permit, if ever legislated into existence by Congress, would certainly be challenged. The argument would be
    about meaning of the the 2nd article of the 21st amendment. Such a permit might be struck down.
    The power of money has always corrupted our political and legislative process. Somehow it seems that now it has grown and intensified. We are no longer able to do, enact or establish the right thing. Money interests always defeat public interests now, in the past at least sometimes big Money could be shamed into compromise.

  7. Samantha - June 24, 2009

    Steve’s solution sounds perfect.

  8. Thomas Pellechia - June 25, 2009

    Ned’s comment has the weight. To issue a federal permit, Congress would have to first repeal a constitutional article.
    Anyway, even if it were to happen, as soon as enough time were to go by, a movement to deregulate would get at it, and we’d be right back where we started.
    The answer, which I don’t expect to see in my life, is to repeal the section of the 21st Amendment that gives states the right to treat alcohol traffic differently than other commerce. And, as I’ve said a thousand times before, the majority of the present Supremes are on record that they will never do anything to interpret that article the way the states interpret it, with the exception of ‘fairness’ to everyone in the market, which essentially means that however a state regulates wine, it must cover out of state producers, too.
    What Tom didn’t say in his well done post is that the states opted for the 3-tier system as a means to consolidate the revenue funnel. They don’t have to keep tabs on too many entities, and the states love the consolidated distribution industry because it gives them even less revenue streams to have to track.
    The main thing the states learned form Prohibition was how to be legislative criminals, using coercion and corruption to bolster the state’s power to make laws.

  9. Paul Mabray - June 25, 2009

    Ironically one of the key solutions actually is not just legislative, it lives with the wineries and retailers to adopt new sales channels. This includes DTC and direct B2B for both wineries and wine retailers.

  10. Scott - June 25, 2009

    Bob from Maine has the correct and obvious answer, which has interestingly not been commented on since its posting. Where a void exists in serving an unserved need or demand, there is a business opportunity. And in states where the big boys are squeezing off supply of small wineries’ juice (still not clear on why they would do that), a dedicated and passionate small wine disributor will arise to fill the need. If it doesn’t, maybe that means the demand isn’t actually there.
    The news regarding the California ABC’s position on the third-party-fulfillment excuse for ignoring licensing requirements by those who market wine but don’t actually “sell” it should give de-reg tilters-at-windmills plenty of new fodder.

  11. Anneliese - June 25, 2009

    Informative post. As a California resident and wine consumer, I’m just completely unaware of how difficult it is to enjoy wines for those who live in other states. I take for granted, then, how easily I may order wine and have it shipped via UPS to my office, and simply drive it home.
    “The wholesalers determine which brands will be sold in wine stores and restaurants.” Which is why I have a difficult time selecting wine in restaurants and stores, seldom buy that route, and instead I have it shipped direct from the winery(s), thereby enjoying wine more at home, than ever in a restaurant.

  12. Tish - June 25, 2009

    Maybe the most complete yet easy-to-read summary of this complex topic I’ve read. THanks for staying on top of this issue, Tom.

  13. Richard Beaudin - June 25, 2009

    Great post…The current situation is detrimental to wineries, retailers and consumers as you point out. In Rhode Island you can have wine shipped from out of state ONLY if you order in person at a winery. Although a strong proponent of changing the current system and in FULL agreement that we need that change, I have to say that distributors do provide a benefit to larger wineries who likely couldn’t find sufficient channels to move say 100,000 cases without them. That said, the current system solves a problem that no longer exists, is self serving to a small number of insiders, and unjustly introduces restrictions to wine lovers across this nation as you rightly point out.

  14. Tom Wark - June 25, 2009

    Scott wrote:
    “And in states where the big boys are squeezing off supply of small wineries’ juice (still not clear on why they would do that), a dedicated and passionate small wine disributor will arise to fill the need. If it doesn’t, maybe that means the demand isn’t actually there.”
    The rise of a small passionate distributor does indeed suggest a demand for greater choice in the market. But the fact that such a business does not arise does not mean there is not demand for more choice.

  15. Tom Wark - June 25, 2009

    Richard writes:
    “I have to say that distributors do provide a benefit to larger wineries who likely couldn’t find sufficient channels to move say 100,000 cases without them.”
    There can’t be any argument that contradicts this statement. It is categorically true. However, this statement is beside the point. I’ve never met anyone who has suggested that distributors go away, be banned or that they won’t survive if direct shipment is allowed. The question is whether or not it is proper (from a public policy and ethical standpoint) to mandate only use of distributors for the distribution of wine.

  16. pinger12 - June 25, 2009

    Having been intimately involved in attempts to address the three tier “hourglass” over the past ten years and after digesting your excellent post and its associated comments the one statement that jumps out at me is Scott’s: “maybe that means the demand isn’t actually there.” I would like nothing more than to loudly reply “it IS there” but can’t. There is no empirical evidence that it is, in fact there. There are however, many of us who believe wholeheartedly that the demand exists.
    The American wine consumer outside of California simply hasn’t embraced receiving wine via home delivery. Also, retailers and restaurateurs haven’t embraced buying wines in quantity directly from wineries through Direct to Trade.
    Addressing both of these is necessary before we really know if the demand is REALLY there. Amazon, when it launches, may address the former, it may in fact make consumers comfortable with home delivery for wine and accordingly “raise the bar” for everyone selling consumer direct. The latter is a more difficult situation. As long as wholesalers hold sway over the other two tiers with threats of de-prioritization of sales for wineries and witholding allocations etc. for the retail trade (among other things) the Direct to Trade channel will contiinue to struggle to grow. There is no Amazon on the horizon to raise awareness of Direct to Trade. My gut tells me that if DTT ever really gains traction the major wholesale community will do more than simply try to block it…they’ll buy it.

  17. Thomas Pellechia - June 25, 2009

    “I’ve never met anyone who has suggested that distributors go away, be banned or that they won’t survive if direct shipment is allowed. The question is whether or not it is proper (from a public policy and ethical standpoint) to mandate only use of distributors for the distribution of wine.”
    Exactly. You have posted this before, Tom, but a lot of people clearly can’t seem to understand something so basic and also so seemingly “American.”

  18. Tim - June 25, 2009

    Great post – I could not agree more with your summary of the situation and the highlighting of the obvious greed motivation inherent in the efforts of distributors to block direct to consumer wine sales in many states.
    I do however have a comment regarding the importance of distributors in the sale of wine even for small wineries:
    In California it is completely legal for wineries to sell wine directly to retailers and restaurants without using a wholesaler. But with very few exceptions, CA wineries actually do use distributors or brokers to sell their wines in the wholesale market. I can’t help but believe that this is because wineries are typically pretty lousy at marketing, selling, and delivering their wines to retailers and restaurants.
    For the last number of years, I’ve been the wine buyer for a small retailer in an area where it would seem so much easier to buy many wines directly from the small wineries that surround the store. But in reality, I find that wineries are quite poor at gauging the market in regards to pricing, presenting wines and following up to finalize sales, making sure that their wine is stocked consistently, and delivering the wines in a predictable and timely manner. These are all things that distributors are particularly good at doing and consequently wineries need distributors much more than the direct shipping debate can account for.
    On the other hand, I agree wholeheartedly that it is bad policy and unethical for states to mandate that all alcohol be sold through a handful of distributors – it is monopolistic, protectionist, and creates a climate with all of the coersion and corruption that the three-tier system was supposed to guard against.

  19. Thomas Pellechia - June 25, 2009

    I don’t believe for a minute that the three-tier system was supposed to prevent corruption. It was set up from the start as it is, simply to ensure a known and controllable revenue stream. which is why it is so difficult to dismantle.

  20. Grant - June 26, 2009

    That is a cracking article. For a foreigner trying to properly understand why it is so difficult to crack the U.S. market, well, that just about answers all the questions.

  21. Sandy - July 8, 2009

    You’ve hit on what seems like an important issue and a usually unstated point, i.e., that the “power that exists in the hands of a very few (no more than 10) alcohol wholesalers operating in markets across the country cannot be underestimated” and that in some state markets, like TX, only 2 wholesalers dominate. This seems like a compelling issue in other large states, too. It seems like CA and NY are similarly dominated by only 2 wholesalers (Youngs & Southern and Charmer & Southern) and that Southern seems to be just about everywhere nationwide. Are there really less than 10 other players in the country and who are they?
    Also, if the market is so dominated by so few, as you argue, why is there no discussion of the antitrust laws? This does not appear to be a federally regulated industry, like a public utility. If there are so few in charge of the system, it would seem that the antitrust laws would be a likely avenue of challenge to the system. Perhaps, I’m missing something though.

  22. Noel Kaplan - July 9, 2009

    Very good and informative post. I would beg to differ about a couple of your points: In Texas, I wouldn’t say that we have “a small number of wholesalers” at over 25 distributors in the state. I would doubt that Glazer’s and Republic actually control as much as 99%. The figure is certainly high, yes, but that high? What it comes down to is the retailer and restaurateur turning the tables and forcing good service (and products) out of the wholesaler. This is done by not giving in to the mentality of letting the consumer follow the advertising dollar, and actually thinking about the products they sell. By guiding the consumer through education and enlightenment the end-seller can create a demand for something other than cookie cutter wines – but that requires hiring trained and knowledgeable professionals at more than minimum wage – never mind, it’s easier to just sell KJ. My point? The problem lies as much with the end-seller as with the wholesaler – and of course with the consumer who refuses to see the difference between KJ and Le Montrachet.

  23. Janet Texas - July 9, 2009

    I am only very familiar with distribution in NY and NJ and I assure you that all distributors are not “enormously powerful & wealthy.” There are small wine-only distributors in both of those states struggling to supply the market with high quality wines from small producers. It would be very helpful to them if retailers and restaurants gave them the support they deserve by buying wine from them (if in fact they truly are interested in small high-quality wine producers.) Unfortunately most of these smaller distributors are unable to offer the “rips” that they can get from the large wine/liquor distributors. Consumers need to tell their retailers and restaurateurs what they want to buy – and when the store or restaurant tells them “oh I can’t get that wine” the consumer needs to say – “well I’ll do my shopping/dining at an establishment that can.”

  24. ian - July 10, 2009

    Steve’s solution would be great and a win-win except it likely could never happen because of a pesky thing called “states’ rights.”
    I’m no constitutional expert, but the 21st amendment specifically gives states, not the federal gov’t, the right to regulate alcohol. Aside from a constitutional amendment changing the 21st amendment, I don’t see how wine distribution could be legislated on a federal level.

  25. Julian - August 5, 2009

    You mentioned that Glaziers and Republic distributes 99% of all wine in Texas. I was wondering if the beer distribution industry, like the wine distribution industry, was mostly (99-80%) controlled by two or three major distributors. It is very difficult to find any good information concerning beer distributors and the Texas market.

  26. Nathan Redshield - January 2, 2011

    All I wnat to do is buy some Delaware wine, made from the Delaware grape. I was accomplishing this years ago by annual trips to western New York. This article explains why Delaware isn’t sold in Mass.; the Wholesalers’ stranglehold explains some of the same asinine wine advertising (particularly for German wines) seen in so many stores: the wholesalers mandate it. The situation is similar to my cigar situation. I bought hand-rolled thin Brazilian cigars; they disappeared. I learned years later the Brazilian state tobacco monopoly had decided to export only thick cigars; my brand was still made but not exported. Well–I gave up cigars. Maybe this 3-tiered system is why alcohol sales overall are declining; the wholesalers are marketing getting drunk rather than taste. In such case one might as well give up wine.

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