Translating the Wholesalers

Posted by | Posted in Wine Politics | Posted on 04-15-2011

Last week, I had an op-ed in the New York Times on the story behind HR 1161 — explaining why it’s so dangerous and will hurt consumers. It ruffled quite a few feathers.

This week, Rebecca Spicer and Jerry Brown — the vice presidents of public affairs and communications for, respectively, the National Beer Wholesalers Association and the Wine and Spirits Wholesalers of America – responded with a letter to the Times.

The response is chock-full of doublespeak, so I’ve helped translate it (in red text) below the fold… 

To the Editor:

Re “Wholesale Robbery in Liquor Sales,” by David White (Op-Ed, April 4): The Community Alcohol Regulatory Effectiveness (CARE) legislation reaffirms state alcohol laws, including laws in the nearly 40 states that allow direct shipping from a winery to a consumer.

Translation: The law cements an antiquated system which has its roots in prohibition. And we’ve convinced lawmakers, falsely, that alcohol is required to pass through an artificial middleman before making its way to consumers.

Notice, also, the focus on “producers.” The wholesalers don’t want consumers to access wines from out-of-state retailers, auction houses, or wine-of-the-month clubs.

The CARE act does not limit any state’s ability to allow wineries or other producers to ship directly to consumers.

Translation: While HR1161 doesn’t limit a state’s ability to “allow” wineries to ship, it does enable states to limit consumer choice. Consider two examples put forward by Wendell Lee of the Wine Institute last week: “State A passes a law that expressly taxes wine produced in State A at $.20 a gallon, but any wine that is not produced in State A at a rate of $3.00 per gallon…. Or State A passes a law that allows wine producers that produce up to 30,000 gallons of wine, regardless of the state they’re in, to ship direct to consumers in the state. All of the wine producers in State A are under 30,000 gallons.” This proposal is anti-consumer and anti-choice.

Notice, again, the writers’ focus on wineries and “other producers.” No mention of out-of-state retailers.

As for consumer choice, today’s system of state-based alcohol control drives entrepreneurial growth and generates vast consumer options. Within this regulated system, more than 1,700 breweries and 7,000 wineries have come into existence across the United States, and there are as many as 50,000 wine labels and 13,000 beer labels available. What other consumer product in America has so much variety?

This is an informal fallacy. There’s no way to prove (or disprove) that we have “more than 1,700 breweries and 7,000 wineries” because of our hyper-regulated system. I’d argue just the opposite. Basic economics dictates that the fewer the regulatory hurdles (and, consequently, the lower the costs as a result of less regulation), the easier it is to enter the market. The easier it is to enter the market, the more choices consumers would have.

The CARE act would maintain [today’s] effective system.

Translation: Everything will stay the same, until we lobby state legislatures to pass even more anti-consumer laws.

If HR 1161 simply helps us “maintain” today’s system, then why is the wholesale lobby pushing this bill, at all?

Ultimately, the CARE act is about who should make decisions regarding alcohol regulation (elected state legislators rather than unelected federal judges in distant courts), not what those decisions should be. National surveys show that the majority of Americans believe that alcohol decisions should be made at the state and local level. So do we.

By using political buzzwords — “unelected federal judges in distant courts” – the wholesale lobby hopes to hoodwink the right into supporting its measure, even though it flies in the face of the Constitution’s Commerce Clause and free-market commerce.

Comments (4)

  1. I believe Mr. White has an excellent perception of what’s going on. Using the FEC and Open Secret websites, I’ve been following the money flowing from WSWA, NBWA and SWAS to the elected politicians and which of them are co-sponsoring the bill.

    I am not as eloquent or politically correct as Mr. White. From what I see and read, particularly the “doublespeak” from WSWA & NBWA, I come to a simple conclusion:

    If Al Capone had been broader thinking, he would have hired “doublespeakers” and paid off politicians instead of cops and judges. Prohibition would have ended much sooner and all alcohol purchases would be through the “Organization” that his “family” controlled.

    Now, if HR 1161 passes, that “Organization” will be run by WSWA and NBWA families.

  2. I am a wine lover/consumer as well as third year law student in Chicago. I have been following this issue for some time now. Additionally, I am very familiar with the Commerce clause, state’s rights, and the 21st Amendment. I enjoy reading about and learning about any wine/law issues. I think you did a wonderful job of picking apart the proposed legislation in a way that everyone can fully understand. Well Done!

  3. I think your position is ridiculous. If anything the efficiency within which distibutors do offer brewery and winery products is staggering. To think direct shipment and open consumer choice would produce the same results is naive at best and seriously ignorant at worst. The problem with direct shipment or what would become an internet based business is that you would need to rebuild the basic structure that advertises, samples and introduces all of these wines, beers and spirits into the fold. To believe that a winery or brewery would have the means to reach each and every customer it does now under this ‘mafioso’ situation is flat out ignorant. Where as distibutors charge wineries and breweries to do what they do, the benefits far outreach a mailng list or the limited resources a winery can have alone. Once you factor in the cut throat nature of internet sales, the reality that 100′s of sales people make the wine, spirits and beer world go round and the fact that online shopping us still in its infancy, you see that the current system, although flawed, should not be subject to the WALMART policies of the internet. I’m liberal. I like mom and pop. I enjoy the market place and physical relationships. Direct shipment, wine of the month, and out if state retail will lead to less variety and severly hinders the value if a capitalist system. If a winery wanted to sell wines at drop dead prices they would. Then they’d go out if business.

  4. BobMaluka writes:

    “I think your position is ridiculous. If anything the efficiency within which distibutors do offer brewery and winery products is staggering. To think direct shipment and open consumer choice would produce the same results is naive at best and seriously ignorant at worst.”

    The problem with your post is that you assume there must be an either/or situation in place: that either wine is distributed by wholesalers and only wholesalers, or that wine is only distributed via direct shipment.

    There ought to be a system in place that allows both. There ought to be a system in place that allows producers to use wholesalers if they want and to ship direct if they want. Or they might choose only direct or only wholesalers.

    For consumers, they ought to be allowed to procure their wines from local retailers who are supplied by local wholesalers or they ought to be allowed to have wine shipped to them from producers or retailers.

    As for the following conclusion of yours, I’m not sure how you come to it: “Direct shipment, wine of the month, and out if state retail will lead to less variety and severly hinders the value if a capitalist system.”

    Wholesalers can’t and never could bring each and every American produced and foreign wine into a market. However, with direct shipment, consumers have the choice to buy what wholesalers DO bring in, as well as the choice to buy and have shipped what is not in the local market or that is sold out by buying from out-of-state retailers or producers. How does this hinder the capitalist system?