Open Letter To The American Wine Trade: “Who Among You…”

An Open Letter To the Wine Trade

If you think American alcohol distributors and wholesalers are your friends then you are begging for disappointment. All you have to do to understand the nefarious intent of wine and spirit distributors is take a look at their most recent statement by one of their most important leaders.

According to reports coming out of the recently ended Wine & Spirit Wholesales Association Annual Convention in Las Vegas, Craig Wolf, the Association's CEO, declared the following:

"WSWA supports the efforts of Congress to ensure that states retain their constitutional power to regulate the distribution of beverage alcohol and are able to fend off litigation which serves to destabilize or destroy that authority."

That litigation that "serves to destabilize or destroy" state authority is the very litigation that has opened up the most profitable sales channel for small to medium sized wineries since the end of Prohibition and that has kept small and medium sized wineries from failing during this recession. Without the litigation that "serves to destabilize or destroy", the small and medium sized American winery would not have the Direct Shipping Channel to move their wines through. Instead, they would be at the mercy of a very small group of wholesalers that don't market, don't care, and don't want small and medium sized wineries in their portfolios.

The Wine & Spirit Wholesalers Association and the National Beer Wholesalers Association are working very hard and literally spending millions of dollars to to put direct shipping back in the bottle. The legislation they are seeking from congress in Washington would exempt state laws from the very litigation that led to the Granholm v. Heald Supreme Court decision that put an end to discriminatory laws on wine shipping that prevented wineries from selling wine directly to consumers. It would close down the direct shipping sales channel that Craig Wolf describes as "Counterproductive" and "Destructive".

Who among you believe that the direct shipping of wine to consumers has either been "counterproductive" or "destructive"? You wineries that sell cases of wine to wholesalers only to see it sit in their warehouses while they focus on $8 California Red and who only move your wine when you go to the market to do work-withs? You small and medium sized wineries who can't get wholesaler representation even when you beg for it and promise to sell it to them at 50% or more off your retail price? You wineries who have been able to support your families by working hard to cultivate your wine club and 3000 person mailing list?

In discussing the WSWA's support for legislation that would EXEMPT states from having to defend their discriminatory laws in court, Wolf said:

"Our goal in any federal legislation that may come out of that hearing is not to overturn existing state laws. Rather, we want to stop the litigation that has paralyzed the industry and those who regulate it for over a dozen years now – and return power to the state legislatures – which provide the proper forum for resolving legitimate differences over these issues – not the courts."

Who among you believes this? Who among you believes that wholesalers, who rank among the most influential and biggest campaign contributors in nearly every state, would not systematically trump up minors-related shipping stings then run to their surrogates in the state legislatures and demand that the direct shipping laws be repealed lest minors be corrupted by the temptation of having wine so easily shipped into their hands? Who among you believe that wholesalers, with their millions upon millions of dollars in campaign contributions and easy access to lawmakers and regulators, would not succeed in getting these law rescinded and replaced with felony laws that prohibit direct shipment of wine?

Anyone? Anyone?

If you want to assure your future profitability as wineries, as wine clubs, as artisan retailers, as auction houses and on-line wine retailers who can effectively and safely serve the growing numbers of wine lovers in America, then you better start thinking about and becoming vigilant in your defense of your sales channels.

If you want to secure your future and assure that the direct to consumer sales channel is not taken away from you, then you better actively support The California Wine Institute, Free The Grapes, Family Winemakers of California, Specialty Wine Retailers Association, other progressive state groups like Family Wineries of Washington State, and Consumer organizations like Marylanders for Better Beer & Wine Laws—the organizations that are doing what they can to assure that consumers and wine sellers have access to each other despite the ongoing attempt by wholesalers to keep you at their mercy.

If you really want to assure that small and medium sized wineries have a chance at creating a vibrant American wine marketplace and if you want consumers to be able to access wine via entrepreneurial wine retailers who appreciate the power of the Internet and Social Media to inform, educate and give access to America's wine consumers, then you better be willing to speak up when you see this kind of challenge to the future of the American wine market.

If the wine trade does not provide a loud and compelling response to the kind of real and vital threats levied by wholesalers at this week's Sarah Palin-headlined convention in Las Vegas, I promise you will wake up one day, pick up your daily paper and read that wholesalers are on the verge of successfully rescinding your ability to make a living in the wine industry.

6 Responses

  1. cornfish98 - April 11, 2010

    You need to Jon Stewart to get on this one, its a situation so ridiculous and anti-free market you need a few liberals to help out. Lord knows that in this Distopian land of the un-free and can’t-be-brave-for-the-power-of vested-interest-political-lobby-groups, the Republicans who populate and control the distribution companies and pro five tier market structure lobbies are yet again, not for free markets at all.. or am I being deceived…

  2. Charmion - April 12, 2010

    cornfish98 or comfish98, you are not being deceived. the wholesalers are trying to protect their business. they don’t care about the general public, they care only about the public that shops in traditional channels of distribution. limit the types of outlets to ones that you control, and don’t allow other outlets or channels of distribution.
    but wineries need either a good distributor or a good sales office in-house. can’t make money if all you do is make wine. got to have someone to move it from the warehouse into the public’s house or restaurant.

  3. Wilf G. Krutzmann - April 12, 2010

    Tom, you are a prophet and sad to say, prophets are often ignored till it is too late.

  4. Barney Treadway - April 15, 2010

    Its similarily unconstitutional with regard to the three tier system many states have. As the owner of a wine bar/restaurant I only have one distributor by law that can supply me with any particular product. I cannot buy direct nor can I buy any product not carried by the distributor. I sell boatloads of sparkling and dessert wines but many quality products aren’t stocked by wholesalers, they instead carry only the generic dry and hot (high alcohol) products THEY think customers want. Its crap and monopolistic.

  5. [email protected] - April 16, 2010

    Small Farm Wineries must pay to fight this battle! Way too many state officials across the USA think that small farm wineries are all about a few local tourist dollars. There is an old saying in business, as old as the wine trade itself, if you can’t win in the market place then pass a law that prevents competition!
    Washington, DC

  6. trade plumbing supplies - May 24, 2010

    The law of comparative advantage refers to the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party. It is the ability to produce a product with the highest relative efficiency given all the other products that could be produced.

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