Locating the Moral High Ground in the Wine Industry

highgroundThere must be word or phrase for that rare occurrence when a business or organization’s financial interests are always located at the summit of the moral high ground. If there is no word or phrase for this phenomenon, there ought to be — how else to talk about and understand the role of the wine wholesaler.

This rare confluence of morals and financial interest were on display at the recently completed Annual Convention of the Wine & Spirit Wholesalers Association (WSWA) in Orlando, Florida. There WSWA President Craig Wolf stood on a large, well-lit stage and told the attending wholesalers from across the country that the WSWA would bravely “follow the better angels of our nature.”

Coincidentally, these angelic guides just happen to lead Mr. Wolf and WSWA directly to an ardent defense of the three-tier system, which has evolved over the past 80 years into not a rational and fair alcohol regulatory system but rather a system perfectly designed to protect wholesaler profits, margins and power.

While standing on stage in Orlando, Mr. Wolf explained that the greatest threat to the  Angelic System of Three came from retailers that are “applying their considerable resources in an effort to monopolize the retailer marketplace, replace or limit the role of the wholesaler and ultimately dictate the terms of trade to the supplier tier.”

How is this happening? No doubt as a result of retailers taking their lead from the worst angels of their nature who are located at the base of the moral high ground.

It turns out, according to Mr. Wolf, that retailers who want to be able to own more than one store in  state or be able to buy directly from producers rather than from wholesalers or who want to sell to consumers located in states other than their own are the devils that will upset “balance among and within the tiers.”

Coincidentally, it is in the financial interest of wholesalers that retailers not possess the buying power that comes with owning more than one store. Coincidentally, it is in the Financial interest of wholesalers that retailers not be able to purchase product directly from producers, but are rather forced to buy from wholesalers. Coincidentally, it is in the financial interests of wholesalers that retailers not be able to sell wine to consumers in states other than their own.

Again, there must be a word or phrase for this phenomenon of locating one’s financial interest at the top of the moral high ground.

This of course is not the first time WSWA has discovered that the interests of wholesalers happen to accompany the same space as moral righteousness. In the battle over winery-to-consumer shipping before and in the wake of the Granholm v. Heald decision, WSWA assured anyone who would listen that wineries shipping directly to consumers would lead directly to children dying from drunk driving accidents, states would fold under the weight of lost tax revenue and alcohol regulators would be unable to cast a net over the thousands of wineries shipping into their state. In opposing direct shipments, the WSWA was only following the better angels of their nature and looking out for the industry and society. It was only coincidental that the financial interests of wholesalers coincided with this desire to protect society.

What IS the word for this confluence of moral fortitude and financial interest??

In the end, Mr. Wolf promised those wholesalers in attendance that WSWA  would continue to “follow the better angels of our nature and continue to advocate for policies that encourage balance among and within the tiers.”

Wolf explained that while he wants all wine retailers to be successful, WSWA must oppose any actions on retailers’ part that are “designed to alter the balance of power between the tiers” and give any one of the three tiers too much power.

What does this “balance of power” look like?

-Requiring that wholesalers get a cut of every alcohol transaction
-Requiring that retailers not sell wine outside their state
-Requiring that producers only sell to wholesalers, not retailers
-Requiring that retailers only own a single store

What an astonishing coincidence it is that when a “balance of power” among producers, retailers and wholesalers is struck, it is the wholesalers that benefit financially while society, according to Wolf, is protected from a descent into moral and regulatory chaos.

There must be a word or phrase for this astonishing coincidence.


13 Responses

  1. Dwight Furrow - April 23, 2015

    “There must be a word or phrase for this astonishing coincidence.”

    Three immediately come to mind: “self-deception”, “lack of self-awareness”, and “chutzpah”

  2. Randy Agness - April 23, 2015

    I am working on an articles titled “Wine Politics” focused on the wine distribution issues in New York. You thoughts would be appreciated.

  3. fredric koeppel - April 23, 2015

    how about “greed”?

  4. Tom Heller - April 23, 2015

    The WSWA is a wholesaler paid for trade association and lobbying group. What do you expect them to say, put us out of business? I am not an apologist for them, but your ongoing screed against them is frankly tiresome, and no longer original. This is who they are, this is how they are, and this is how they are going to be. Any winery or potential winery should be aware of this fact, moral or otherwise. I see where some wineries, e.g Viader and Iron Horse have redirected their marketing efforts to direct to consumer, rather than putting all their eggs in the immoral basket

  5. Tom Wark - April 23, 2015


    My apologies for boring you. It was not my intent. However, it just occurred to me that the idea that the high ground could match up perfectly with financial interests seemed like such a rare thing, it ought to highlighted.

    • Tom Heller - April 23, 2015

      Brother Wolf needs to justify his existence to his employers….I think that conversations around lets call them alternative forms of distribution are more interesting than trying to gore an Ox that will not go down ever. Certainly without a fight. I am curious if outfits like Amazon, actually sell any wine? Is this a legitimate outlet. There are I suspect, literally hundreds of wineries out there, that never spent a dime trying to figure out how they were going to sell their wine. Then get scared and blame wholesalers for not doing the job that they wrongly think the wholesaler should do. These people who make themselves victims have only themselves to blame

  6. Tom - April 24, 2015

    With all those contortions he must be a yoga instructor in his spare time.

  7. Tone Kelly - April 25, 2015

    The astonishing coincidence of moral High Ground and their financial interests is …. (drum roll please…. “Brazen aggrandizement”

  8. 1WineDude - April 29, 2015

    So many hands in the skein of how screwed up the U.S. wine marketplace is at the moment… at some point, it will be untangled. At some point, the sun will also expand to envelop the inner planets of our solar system…

  9. James Rego - April 29, 2015

    This Moral Highground sounds a lot like our Banking System whereby the wealthy few control the system and reap the financial harvest; I agree with the comment above that it is no more than GREED!

  10. Ed Donegan - April 29, 2015

    I do not even like Tom Heller BUT he is spot-on. Too many wineries believe that wholesalers are going to build your brand. Let’s see did Steve Jobs rely on 1 of his distributors to create the brands values, purpose & vision? Did he need a wholesale to provide proper brand-voice? Brand owners must hold themselves accountable. In a 2013 survey conducted by the London School of Business & Brand Future of 13,000 US & Europeans indicated on average 85% of brands are MEANINGLESS.
    The root cause of the problem winery owners and managers believe their product is their brand, which is false. They lack any true understanding of how the consumer’s brain receives, stores, processes and interprets information. Every winery shares an identical brand voice, so you can not tell who is “speaking” without revealing the trademark, how much brand equity do they actually possess? What has been created is a Sea-of-substitutes, that wholesalers must deal with.. Because the dimensions of differentiation from a consumer prospective are appellation, varietals & price.
    Do not blame the wholesaler’s they buy, finance, store, transport and sell products.
    If you think your getting screw by the wine wholesalers I wonder how you feel about, lawyers, doctors, universities, banks, religions, hospitals, government, credit cards, etc.
    Where would the wine industry be without wholesalers?

  11. Tom Wark - April 29, 2015

    You wrote:

    “Where would the wine industry be without wholesalers?”

    Well, for one, we’d be without Franchise laws.

    Sure, brand owners must hold themsevles accountable. But wouldn’t it be nice if wholesalers were not protected by the state from being held accountable.

    • Ed Donegan - April 30, 2015

      Some state franchise laws need amending, Ma.,Ct, Ga, Tn & Va. Having sat on both sides of this fence I do not like wholesalers holding brands hostage. I terminate SW&S more often then a Greek banking official changing their pay back program ( which will never take place). But on the other hand as a wholesaler I never held them hostage either, the new wholesaler would pay us 1 times sales, or trade brands. What normally happen the winery found out we were performing to market potential. Of course they listen to this smaller distributor about all the attention they would provide the brand going forth. That is pure BS. What must be factor in is the time restaurants & retailers have allocated to purchasing. How many wholesalers do you need to purchase from to satisfy your customers needs? From my experience 7 or 8. The new wholesaler should be asking what has changed and how will it increase sales? Nothing changes because the brands dimensions of differentiation remain the same, varietal, appellation & price, (a large mutual fund)
      What if scenario, no franchise laws, resulting in numerous wholesalers representing the brand in 1 state, a race to the bottom with the brand being hurt the most. Most states have annual sales minimum to maintain the franchise, if sales are under that number you can go tomorrow. With internet sales and fair franchise laws it’s not a bad system, except for the states noted above.
      The base root problem for the winery is lack of brand equity. Except for the 1% they are selling a substitute because the dimensions of differentiation are too alike. Wholesalers, retailer alike would love a brand that was meaningful differentiated, provided a unique brand experience and support consumer’s inner & social self-identities. Within the consumer’s minds value is much more than the function of quality/ $, much more.
      Take care,

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