Don Quixote and the Wine Wholesalers’ Ride to the Rescue in the UK

DonquixoteIt really was quite quaint. Our own Wine & Spirit Wholesalers of America sent a little letter to the H.M. Revenue and Customs agency in the United Kingdom suggesting all their problems over across the pond with alcohol could be solved by implementing a U.S-style three-tier system in that Kingdom.

I’m hoping the folks at WSWA don’t hold their breath waiting for implementation of their magnanimous suggestion. They may as well have written to Her Majesty’s agents the following:

“If  you’d would like to turn over your alcohol distribution to a bunch of middle men who with their state-imposed monopoly will go about screwing the consumer, leave it us. We’ve got a plan!”

That’s not exactly what showed up the comment the WSWA’s president Craig Wolf put over his signature and sent over the pond. However there were some real nuggets in the press release they issued directly upon sending their comments to the Queen’s agents.

I haven’t had the chance to do it in a while so I thought I’d take this opportunity to set the good folks at WSWA straight on a few things. And if the Queen and her agents read this blog (turns out 2.6% of its readers ARE from the UK) then they to can find the following corrections to what was written in the wholesalers’ comments

“the three-tier system was designed to accomplish several objectives. The first was to ensure an orderly marketplace by preventing one tier, or one company or type of business within a single tier, from dominating the marketplace and exerting undue influence over other members of the industry or consumers, to the detriment of the public.”
That’s gonna be a hard sell, particularly when you consider that in state after state wholesalers completely control the wines that show up on store shelves and along the way use their state-granted power under the three-tier system to continually thwart needed reforms that consumers and producers and retailers regularly beg for. The Three Tier System is the very definition of a system that allows one tier to “dominate the marketplace and exert undue influence”.

“Second, the system facilitated distribution while discouraging over-consumption and encouraging responsible consumption.”
No one has ever figured out what this means or how the three-tier system accomplishes this, but the wholesalers keep saying it does much like the little boy with chocolate all over his lips continually claiming he didn’t eat the chocolate chip cookie.

“Today, the U.S. three-tier system delivers adults the widest variety of products available anywhere in the world.”
Actually that would be the system of direct to consumer shipments from producers and retailers that created access to the widest variety of products in the world. The three-tier system’s purpose and the role of the wholesalers over the past 20 years has been to disrupt access to as many products as they can.

Despite their erroneous claims, I wish the wholesalers luck helping the Queen and her Agents institute a three-tier system in the UK. I’ve got a copy of Don Quixote I can lend the wholesalers as they pursue that dream.

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6 Responses

  1. Robert Joseph - October 31, 2013

    Tom, this is going to be really, really hard for me to say, but… the WSWA may actually have a point. No, don’t worry, I’m not advocating that the UK or Australia actually rush to adopt a three-tier system. I hate the very idea of it, just as I hate the idea of the monopolies that control Canada and most of Scandinavia. But… our liberal system doesn’t actually work either. Talk to any Australian producer and he’ll weep at the duopoly power of Woolworths and Coles which between them control 77% of all wine sales, while in the UK a handful of supermarkets control >80%

    The US system does mean that several levels of sales people have a reason to promote a wine. In the UK and Oz, the relationship is between producer and retailer and it makes for a shrinking range, low margins and low prices.

    I speak from personal experience here, as someone who sells lots of (le Grand Noir) wine profitably in the US and Canada and – like many, many others – struggles to do so in the UK. Only 1.56% of retail wine sales are over $15 here. That’s far lower than in the US, and our wines carry a much higher tax. We buy lots of California wine, but 90% of it is cheap White Zin and similar. premium and super-premium US wine here is as rare as a civilian carrying a firearm or a country-music loving government minister.

    In the US, those nice people at the Tea Party have bombarded you with lies about the awfulness of the UK health service which actually runs pretty well on a budget that’s a fraction as high (per person) as the US model. But few people in the US talk about the genuinely dire state of the UK wine trade.

    All of which leaves me truly confused and conflicted. The notion of the UK adopting the three-tier system here is laughable, but we really wouldn’t mind someone coming in with a cure for our current ills.

  2. Tom Wark - October 31, 2013


    What was I thinking? Please, TAKE our wholesalers!!

    As you know, magic cure-alls are rarely what they say they are. I have no plan for how to cure the ills of the UK wine market. I only know that behind every white knight on a horse, there is likely a trail of shit. I was merely pointing out that the current white knight that has weighted in is followed by a very long and stinky trail.

    • Robert Joseph - November 3, 2013

      Tom, Brian… No, as I say, I really don’t want the three-tier-system here, and the arrival in the UK of some US wholesalers in particular would fill me with dread. The US system would, of course, be a nightmare for many UK specialist retailers. But… I still think it worth repeating that Manhattan residents have a far wider repertoire of wines to buy from than their London counterparts and the stores on the west of the Atlantic are actually financially more successful than most in the UK.

  3. Brian St. Pierre - November 1, 2013

    Most people here are still scratching their heads over this one. Robert has some good points, but generally speaking, we all know that the 3-tier system creates far more problems than it solves (if it solves any at all, really). The UK has had direct shipping to consumers for a few hundred years–as you know well, one of the things the WSWA and their paid-for politicians have always fought. Though supermarkets dominate here, many have on-line wine sales that are far better than what they show on their shelves (positioning on which is paid for by wineries, as a “promotional” fee, so lots of Gallo White Zinfandel at eye level). So, a little on-line browsing can get any wine-loving consumer some pretty good wines. Additionally, there’s the Wine Society, a sort of co-op, with really good stuff and free delivery. Further, anyone can order direct from an importer. Whatever the rationale (putting aside the sheer ridiculousness of WSWA claims to higher purposes), the last thing the U.K. needs is the 3-tier system.

  4. Donn Rutkoff - November 6, 2013

    The Brit health care system owes its’ lower cost to the Brit legal system. I believe it is still Loser Pays, and I also believe they don’t have huge legal awards and lawyering run amok that drives up “medical” and “health care” costs here.

    I opine that our 3 tier system worked well post Mafia of the 1930s, but now should be augmented by the direct-to-consumer option.

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