Alabama Wine Pushes Back Against Inertia

Posted by Tom Wark on May 26, 2011

SYNONYM OF THE DAY

In·er·tia [in-ur-shuh]
1. inertness, especially with regard to effort, motion, action, and like; inactivity; sluggishness.

Three [three]  -  Tier [teer]  -  Sys·tem [sis-tuhm]
1. inertness, especially with regard to effort, motion, action, and like; inactivity; sluggishness.

Never has such a pure set of synonyms existed. Dramatic proof that the three tier system is really just an example of systematic inertia comes to us from Alabama, where local wineries that can't get distributors to sell their wine and hence can't find their way on to retail shelves want to change the law to allow them to sell their own wine to retailers. However, opponents to this sensible kind of change explain that the reason it is a bad idea is because it would change the way things are.

Let me repeat that. The reason it is a bad idea to change the system is because it's a change to the system. I swear:

"It is in conflict with the nationally recognized three-tier system of alcohol beverage distribution and Alabama law. The bill makes various other changes in the law… such as allowing the retail sale of liquor and beer, as well as wine at a winery and changes in the licensing system."
Statement by the Alabama Alcoholic Beverage Control Board on why HB 418 is a bad idea.

“We want to say that we are not against small wineries, but in our state everything dealing with alcoholic beverage sale and distribution is in the three-tier system."
William Thigpen, Assistant Administrator, Alabama Alcohol Beverage Control Board

Of course, the three tier system has evolved from a once useful format for regulating the sale and distribution of alcoholic beverage into a wholesaler protection unit of the various state governments that is jealously guarded by wholesalers and by regulators who have jobs that appear to them to depend on little or no change to the system—no matter who it harm or how it stifles safe and legitimate forms of commerce.

Consider that in places like Alabama a winery owner must use a wholesaler to see its wines sold at retail outlets. However, Alabama wholesalers are not required to sell Alabama wines. If wholesalers don't want to sell a winery's product, those products will never appear on Alabama retail shelves.

As you consider this remarkably unfair situation, take into account this statement:

"Steve Windom, who represents Gulf Distributors, said passage of the bill will jeopardize the three-tier system and harm major distributors. 'We don’t want to be put out of business,' Windom, a former lieutenant governor, said."

In addition to supporting inertia, Mr. Windom apparently believes that if Alabama wineries are allowed to do the job of selling their wines to retailers themselves, without the help of his company, Gulf Distributors will go out of business. This despite the fact Alabama wineries represent less than 1% of all wines sold by Alabama wholesalers.

The essence of HB 418 is this. Alabama wineries making 41,500 cases of wine or less per year would be authorized to sell up to 10,000 cases directly to retailers, without the use of wholesales. Happily, the bill passed out of the House Economic Development and Tourism Committee and will now go to the floor of the Alabama House of Representatives.

However there is still time for inertia to do its business and see this commonsense reform stopped in its tracks. Alabama wholesalers are working as hard as they can to convince legislators that any change is bad…because its change: "We can't change the three tier system because…well..because we have a three tier system." That argument has worked before, and it's not unlikely it will work again.

The only problem with this bill is that it doesn't go far enough. A truly commonsense reform bill would allow Alabama wineries of any size to sell as much wine as they choose to retailers and restaurants. In addition, true consumer-friendly, business-friendly and small business appropriate legislation would allow wineries in every state in the Union to sell as much wine as they want directly to Alabama retailers and restaurants without relying on a wholesaler they may not need.

But stopping the profound motion of inertia is a hard thing to do. The simple change under consideration is a fitting push back against Inertia/three tier system.