Bloggy Round-Up: The Three-Tiered Distribution System
A blog posting on Louisville Juice about what people are saying about direct wine shipping:
It occurs to me, given all the chatter here and elsewhere about
direct shipment of wine to retailers and consumers, that we ought to
look around and see what people are saying.
By the way, the comment discussion on this over at Tom Wark’s place is really good.
From Vinotrip: A Maryland Wine Blog:
It is important to note this: proponents
of direct wine shipping to Maryland are not trying to dismantle the
three tier system and run distributors out of business. If direct
shipping to Maryland becomes legal, distributors will still thrive
doing what they do. They provide a service and fill a need to the
retailers and restaurants and this need will continue to exist.
Millions of Marylanders are still going to buy from their local shop.
Very little will change.
Since I’ve become active in the online
wine community, I have always been supportive and empathetic towards
those poor misfortunate souls who have the bad luck to live in
backwards states that won’t allow them to receive wine shipments from
out of state. This morning, I woke up as one of those people, living in
one of those states…The ruling yesterday (sent) Texas consumers back to
navigating the byzantine 3-Tier system…Texas has several large
metropolitan areas who will probably not feel the sting of this
decision as much as some of the smaller areas.
I live in Lubbock, a city in West Texas
that really does not have a true wine shop. We go to the liquor store
to buy wine. Some stores have better wine selections than others, but
there are some varietals and types of wines, especially imports, that
are simply not available here. I try to shop locally as much as
possible, but if I wanted a bottle of Brunello, I had to order it from
an online retailer. Now I just have to live with the fact that I won’t
be able to purchase these wines without driving several hours to one of
the metropolitan areas. Lubbock has 200,000 people, so I can only
imaging how bad the selection is in some of the even smaller areas.
From On the Wine Trail in Italy:
For the record, I am not against
wineries that cannot get their wine going through the regular channels
to try to find ways for their wines to reach the public. At the very
least, those folks will get an education in the blunt realities of
getting your wine to the final consumer. It is already not easy through
the established channels, so if someone finds a way to the New World,
good on them. Spend two weeks on the road knocking on doors and it is
very clear. Very few people “in the industry” have time to read blogs,
wine or otherwise. They just want their wine delivered at the right
time and with the right discount.
From Schiller Wine:
There are little incentives for those in
the wine business and the legislators to change the system as it works
fine for them, with the latter often getting generous campaign
contributions from the former. In other words, the system serves the
interests of a group of insiders at the expense of consumers…
From A Year in Wine:
The Wine & Spirits Wholesalers of
America Inc. is an outgrowth of the 21st amendment to the Constitution
of the United States. That’s the amendment that repealed Prohibition.
It also laid the foundation for the three-tier system of wine and
spirits distribution in the U.S. This scheme requires a third party –
the wholesaler – to handle distribution of alcoholic beverages between
producers and retailers. The government, in effect, gave wholesalers
the key to the cellar door, and they’ve been reluctant to share it with
others ever since, especially in recent years, as wineries turned to
direct shipping of their releases to consumers as a way to build
audience, remain solvent and embrace freedom. That would seem to be the
American way, emphasizing competitiveness and liberty, but the
wholesalers don’t look upon the three-tier system as an irrelevant
relic of Prohibition, but as their justification to continue to make
big bucks under the pretense of preserving state rights.
From The Secret Fork:
In South Dakota, our “three tier”
alcohol distribution system esentially means that certain distributors
have dibs on certain wines. Accordingly, one would expect that the
veritable monopoly this creates means that prices of a certain wine
from the distributor to the retailer remain identical across the board.
Not necessarily. Some retailers get deals- maybe based on volume, maybe
based on relationships- there is not always rhyme or reason to this.
Needless to say, though, retail prices can vary. The only way to get a
feel for those prices is to get out and check them out.
From Family Winemakers of California et al. vs. The Massachusetts Beverage Control Commission:
We hold that § 19F violates the Commerce
Clause because the effect of its particular gallonage cap is to change
the competitive balance between in-state and out-of-state wineries in a
way that benefits Massachusetts’s wineries and significantly burdens
out-of-state competitors. Massachusetts has used its 30,000 gallon
grape wine cap to expand the distribution options available to “small”
wineries, including all Massachusetts wineries, but not to similarly
situated “large” wineries, all of which are outside Massachusetts. The
advantages afforded to “small” wineries by these expanded distribution
options bear little relation to the market challenges caused by the
relative sizes of the wineries. Section 19F’s statutory context,
legislative history, and other factors also yield the unavoidable
conclusion that this discrimination was purposeful. Nor does § 19F
serve any legitimate local purpose that cannot be furthered by a
We further hold that the Twenty-first
Amendment cannot save § 19F from invalidation under the Commerce
Clause. Section 2 of the Twenty-first Amendment does not exempt or
otherwise immunize facially neutral but discriminatory state alcohol
laws like § 19F from scrutiny under the Commerce Clause. We affirm the
grant of injunctive relief.