REPORT—Wine Retailer Shipping Will Kill Americans

Posted by Tom Wark on Mar 5, 2020

This is why I’m absolutely positive that large swaths of consumers across the country will eventually have access to wines via retailer-to-consumer shipment: “FAKE ALCOHOL AND INTERSTATE E-COMMERCE“.

This is a new “white paper” from the “Center For Alcohol Policy”, which is a front group for the National Beer Wholesalers Association that attempts to look like a neutral party simply wanting to get to the bottom of alcohol policy.

While ostensibly focused on the dangers of “fake alcohol”, this paper is actually a throw-in-the-kitchen-sink attempt by middlemen wholesalers to discredit interstate retailer shipments of wine just in advance of them getting shellacked in court and in the statehouses on this issue. This just-issued “report” really has very little to do with the question of fake, tainted or counterfeit alcohol. If that’s what it was really about, you’d read somewhere in the paper that interstate shipment of wine has never been an important or significant source of fake or tainted alcohol in the United States. It doesn’t say that.”

Here’s the bottom line of the Beer Wholesaler Association’s report:

“The expansion of online orders of alcohol beverages shipped to consumers by out-of-state retailers has a greater potential to expose consumers to fake alcohol products which, in turn, poses health and safety risks to the public.”

What’s always interested me about lies and liars is their motivation. Do people lie without knowing what they are saying is a lie, in which case what you have is simple ignorance? Or do most people knowingly lie, in which case they are simply unethical and immoral?

In any case, the author of the Beer Wholesalers’ paper knows this statement is a lie and if he doesn’t know it is a lie then he should have his license to carry sharp objects taken away.

An in-state wine retailer not shipping wine (the kind of retailer wholesalers like) is equally likely to have access to fake alcohol products as an out-of-state retailer that ships wine because, well, every retailer is an in-state retailer and every retailer is an out-of-state retailer.

A retailer that delivers wine to a consumer over a counter is every bit as likely to be selling fake alcohol products as a retailer shipping the wine to a consumer out of state. All are retailers that obtain their inventory from the same federally and state-licensed wholesalers. If a retailer somewhere is going to purchase alcohol from an unlicensed source or decide to sell counterfeit alcohol, how they deliver that alcohol to the consumer isn’t really the problem. This obvious point isn’t mentioned in the wholesalers’ “report”.

I’ve spent a LOT of time reading and listening to arguments against wine retailer shipping. Some arguments are better than others. The ones presented in this paper are not better than others. It is, in fact, the worst argued screed against wine retailer shipping I’ve ever read. And this is what leads me to believe that wine retailer shipping is coming to wine consumers across the country sometime soon.

The reason this paper is such a poor excuse for an argument is that the arguments against retailer shipping have been so summarily dismantled and dismissed by courts, legislatures, experience and judges that there is just very little to argue with, as is evident from this paper.

I want to highlight some of the shoddy, and frankly embarrassing, arguments made in this new paper issued by the Beer Wholesalers, just so you can get a taste of how the case against consumers having wine shipped to them from out-of-state retailers is being made today:

“It is simple to assume that an increased presence in e-commerce will result in a similar presence of fakes or counterfeits as is the experience with the myriad of other consumer goods.“ Yes, it is “simple to assume” isn’t it. It’s a much different thing to offer proof. And nothing in the way of proof that retailers shipping interstate has ever increased the amount of fake alcohol in the marketplace has been offered here. 

“States may, as some have, decide to adopt laws allowing these types DTC shipments of some products by out-of-state retailers and thereby assume the risks from the high propensity of fake products marketed online.” PROPENSITY….this is one of those words you use when the last vestiges of your conscience won’t let you use the word “likelihood” or “Probability”, which are both more specific and less accurate. There is no higher “propensity” for online wine shipments to contain fake alcohol than deliveries that take place over a counter at a store. If for no other reason we know this is the case because the writer of this paper would have said so if it were true. After all, we know from this part of the report that this is what they want to insinuate—as opposed to prove or demonstrate.

“The recent U.S. Supreme Court decision in Tennessee Wine and Spirits Retailers Association v. Thomas is cited by proponents of DTC retail sales as a green light to allow for the opening of e-commerce and online ordering world to alcohol beverages. The Supreme Court’s holding that a two-year durational residence requirement and other onerous requirements for Tennessee retailers violate the dormant commerce clause because the state failed to prove public health and safety grounds has little to no bearing on whether the state may protect its citizens from the risks of fake or counterfeit alcohol beverages.” Man…What a sentence and what a collection of non-sequiturs. However, this quote from the same Tennessee Wine Supreme Court decision has bearing on retailer shipping: “Granholm never said that its reading of history or its Commerce Clause analysis was limited to discrimination against products or producers. On the contrary, the Court stated that the Clause prohibits state discrimination against all “‘out-of-state economic interests”

“But how does a state alcohol regulatory agency monitor every website accessible to consumers in the state in order to determine whether it is an alcohol beverage seller or a retailer that has complied with the state law? It cannot. And a state is powerless to regulate in another state. However, a state can regulate within its borders where it has access to product inventory, sales records and inspections of wholesale businesses.” This is the intellectual conceit inherent in nearly every screed (or “White Paper”) denouncing retailer wine shipping. States don’t attempt to monitor every winery in America when they legalize winery shipping, just those that have received permits from the state to ship wine to its consumers. Likewise, a state regulatory agency would only concern itself with those out-of-state retailers that would obtain a permit to ship into the state under a legal wine retailer shipping law. And here’s what goes unsaid: In states where both wineries and retailers may ship wine, it’s the wineries that obtain 65% of the shipping permits issued. Regulating out-of-state retailers is easier than regulating out-of-state wineries. The totality of the ignorance and self-deception exhibited in this claim is so great as to be really hard to measure.

“One group has suggested that interstate DTC wine shipments are a simple matter. According to them, all that is needed to protect consumers in the receiving state, is the filing of a copy of an out-of-state retail license and minimal procedures on the delivery and shipment of the wine to the consumer. Nothing in their proposal addresses the source of supply by the out-of-state retailer or the use of third-party merchandisers to fill the order.” Source of Supply? It’s almost as though the writer of this report, a former state alcohol regulator, doesn’t know that all retailers in every state obtain their “supply” of wine from state and federally licensed wholesalers? This is problematic and speaks to the credibility of the report and its author.

“Once you move away from e-commerce by the actual producer or manufacturer of the commodity, the likelihood of fake and counterfeit products increases and, as other consumer goods in ecommerce show, are prevalent. The economic incentives and brand protection concerns for a small winery selling a fake version of its own wine are completely different than a retailer’s concerns.” This is an attempt to suggest that fake wine sold by retailers is prevalent. But what you’ll notice is that the author of this paper has spent thousands of words warning about retailer selling fake and compromised wine, yet can’t and does not point to a single instance of it happening. That’s just shameful. Also, notice the display of ignorance that is the author’s suggestion that providing authentic goods to their customers is less important to retailers than to wineries. That’s not just a shameful attack on wine retailers, it displays a complete misunderstanding of consumer expectations.

There are a number of important lessons to be learned from the release of this White Paper by the Beer Wholesalers of America. The first one, of course, is that the shoddy quality of a work product won’t go unnoticed. The second lesson is that wholesalers appear to think that the audience for their anti-consumer, pro-discriminatory, anti-free trade, self-serving position on direct shipping doesn’t care about logic.

The last lesson to be gleaned from this unfortunate effort is that the best argument against allowing consumers to receive interstate wine shipments from retailers now boils down to one single argument: Wine retailer shipping is going to kill you with tainted products being loaded on to UPS and FedEx trucks. It’s hard to argue with this kind of cry for intellectual help.