New Jersey and the State of Direct Shipping

Posted by Tom Wark on Jan 10, 2012

With New Jersey passing direct shipping legislation on Monday and the governor only needing to sign it, really one more significant state exists where the wineries and significant numbers of wine consumers need to get direct shipping: Pennsylvania. Yet the New Jersey experience demonstrates all the various dynamics that are currently in place in the world of direct shipping politics.

1. The Minors Issue Is Played Out
Although opponents to direct shipping will sometimes argue that Direct Shipping will lead to minors getting their hands on alcohol, this argument is rarely taken seriously anymore. In the NJ hearing on the direct shipping bill, legislators asked for proof that minors' purchases of wine or instances of drunk driving increased after direct shipping started. There was no evidence.

2. Wine Industries Are Seen As Assets By States
One reason that wineries have in six years gotten direct shipping legislation passed in so many states, besides the Granholm Supreme Court decision, is the view by lawmakers that wineries are important to the state. And they are. Not only do they see it as a very high value-added industry, but state wine industries in places like New Jersey, Michigan, Tennessee and other states are perceived as prestigious. They also promote tourism—another source of tax revenue. Finally, they preserve Ag land. It's hard to ignore these things even when powerful opponents of direct shipping with loads of campaign contributions are asking lawmakers to ignore them. This view of wineries was the overriding factor driving NJ lawmakers to support direct shipping legislation.

3. Imported Wines Are Left Out
Only 14 states allow their consumers to have imported wines shipped to them. Only these 14 states allow French, Italian, German, Austrian and wines from all other non-American terroir to find their way to consumers via direct shipping. This is due to the fact that only retailers sell these wines and only 14 states allow out-of-state retailers to ship in. I've gotten a close up look at this situation as a result of being Executive Director of the Specialty Wine Retailers Association. Two factors have led to this appalling situation to be in place: 1) Courts have been split on whether the Granholm Supreme Court decision applies to retailers as well as wineries. 2) The overwhelming majority of wine retailers don't ship wine and would prefer to lobby to see that out-of-state retailers don't ship wine into their state. One result of this is huge state losses of tax revenue. Retailers were left out of the NJ legislation.

4. Consumer Interest is Not Considered
Despite the outstanding efforts of UncorkNJ and their fantastic testimony in hearings leading up to the passage of the NJ direct shipping law, consumer interests was not an issue in the move to get legislation passed in that state nor in most other states where direct shipping legislation. This is primarily due to the fact that wine consumers simply don't have a powerful voice working on their behalf in the media and in the halls of government. During the NJ hearings and debates, only once were the interests of consumers actually mentioned by lawmakers. As a result, what consumers get is half a loaf: no shipments of imported wines, 12 case annual maximums, etc.

There is a great deal to do across the country to make consumer interests paramount in the alcohol regulatory world. And the industry too still has a great deal to do in order to level the playing field and make their marketing deliver real ROI.