Keeping Corruption in Wine in Place: Campaign Contributions
Twenty twenty-one (2021) was a non-election year. It was also the first of the traditional two-year election cycle. This year is the second of the two-year election cycle, an important election year, and it is the year that campaign contributions really pour in.
I note this because what I’m about to show you is really a pittance; a drop in the bottle, so to speak.
American alcohol wholesalers have nearly completely captured the lawmaking process when it comes to alcohol. I have been involved in numerous efforts to change alcohol laws in various states and not in a single one of those campaigns to change laws has anything ever gotten done without the state’s wholesaler association being asked to weigh in. Oftentimes, if the state’s wine, beer or spirits wholesalers oppose the proposed law change there is simply no chance of it happening at all.
This is even the case when the proposed law concerns direct-to-consumer shipments, a topic that wholesalers have nothing to do with and that does not impact wholesalers’ business one iota. In fact, despite cawing to the contrary for the past two decades, not a single change in the direct shipping laws has ever negatively impacted wholesalers. Nor have these laws in any way impacted the functioning of the entire distribution system in a state. Yet, when such laws are proposed in a state, wholesalers are the first to be consulted.
The answer to why such deference is paid to the wholesale tier is money. Specifically, campaign contribution. Below is a graph (derived from followthemoney.org) that shows the total dollar amount different sectors of the alcohol industry donated to politicians and political campaigns during 2021:
The first thing to say about this is that the $4 million contributed by the wholesale tier only represents about 80% of total contributions as they have not all been reported for 2021 quite yet. The second thing to point out is that the $4 million in contributions is more than double the entire rest of the alcohol industry combined. The last thing to point out is that in 2022, this number will likely triple, if not quadruple. That is to say, in 2022 alcohol wholesalers will contribute between $12 million and $16 million to just state-based political campaigns. This is important because it’s at the state level where alcohol laws are made and changed. Many more millions will be contributed to campaigns for the House of Representatives and the Senate. But that’s another story.
If you are wondering who is so terribly concerned about who represents the people in the various states, here is a list of the top 20 donors among wholesalers, accounting for roughly 70% of the $4 million in contributions.
|VIRGINIA BEER WHOLESALERS ASSOCIATION||$410,199|
|ASSOCIATED BEER DISTRIBUTORS OF ILLINOIS||$328,223|
|NAU III, JOHN LISTON (Silver Eagle Bev – TX)||$284,153|
|PREMIUM DISTRIBUTORS OF VIRGINIA||$177,000|
|SOUTHERN WINE & SPIRITS||$171,281|
|WHOLESALE BEER & WINE ASSOCIATION OF OHIO||$165,992|
|VIRGINIA WINE WHOLESALERS ASSOCIATION||$139,731|
|MICHIGAN BEER & WINE WHOLESALERS ASSOCIATION||$135,975|
|ALABAMA WHOLESALE BEER ASSOCIATION||$132,000|
|VIRGINIA BEVERAGE ASSOCIATION||$114,702|
|WHOLESALE BEER DISTRIBUTORS OF TEXAS||$114,000|
|RETAIL SERVICES & SYSTEMS||$76,900|
|MANHATTAN BEER DISTRIBUTORS||$73,400|
|BEER ALLIANCE OF TEXAS||$70,204|
|OREGON BEER & WINE DISTRIBUTORS ASSOCIATION||$66,163|
|GULF DISTRIBUTING CO OF MOBILE||$61,200|
|DONALD LOFFBERM (Georgia Crown Dist. – GA, AL, TN)||$60,000|
|WISCONSIN BEER DISTRIBUTORS ASSOCIATION||$46,500|
I’ve said this before but it is well worth noting again. The reason wholesalers contribute far more than any other sector of the alcohol industry is that they have far more to lose and hence far more to protect. What they are protecting is the government-mandated use of wholesalers by both producers and retailers. In most states, producers are mandated by law to sell most of their beer, wines and spirits to wholesalers in the state. Meanwhile, retailers in the states are mandated by law to procure the majority of their inventory from those same in-state wholesalers. It is the only arrangement of its type in the country and you’d protect it too.
It is, of course, a corrupt arrangement. Everyone knows this. Everyone (besides the wholesalers) hates the system. But it should also be noted that the existence of this archaic, anti-competitive system is the reason that when wholesalers are required to make public statements about their opposition to consumer rights, wine shipping, or any other reform that might promote a modern marketplace for alcohol and allow producers and retailers to thrive, they do such a piss poor job of it. They simply don’t have to do a good job. They’ve got cash to burn. And burn it they do.
They are simply protecting their interests, as well as jobs for multi thousands of employees. Just another industry trying not to be diced up like many others.
No need to make it sound so “evil and devious”.
Bruce, that would make perfect sense if any of the reforms being sought would impact the health or job status of the wholesale tier.
Only these four, SGWS – 35% market share, Breakthru – 25%, RNDC and Young’s Market – 19% totaling 79% of wine and spirits distributed in U.S. meaning this number of wine and spirits is excluded from DtC. Indeed not so “evil and devious”.
Evil and devious might be strong words compared to many of the things happening in the world today, but ‘not nice’ and ‘golly’ might be a tad weak.
One way to look at the wonderful world of wine and spirits legislation is to ask yourself who gets the benefit?? Did Californians get the benefit when Artie Samish controlled the legislature and ‘fair trade’ laws (price fixing) laws were enacted?? Do New Yorkers benefit from wine being available only in wine and liquor stores?? In California wine is available almost everywhere. What about the laws designed to impede the free traffic of wine across state lines??
I could go on and on but one thing is clear: he who pays the piper calls the tune and the rest of us get to listen to it.
To flip the coin in NY. They are protecting their state revenue, and in a way helping the independent retailer to flourish. So bad? And as far as selection, I guarantee 95% of the customers ate getting what they want from their local business.
Total wine broke into the state, providing a wider selection in their areas.
New York is the rare example of store owners providing the lobbying force, not the wholesalers. In every state where there are wholesalers there are usually some whacky laws designed to protect them…not us.