Wine-shipping barriers under attack
With the usual apologies to our international readers who find it hard to understand how or why a country as modern as the United States can make it so difficult for its citizens to purchase something as simple as a bottle of wine, it's time for another look at this wacky issue.
For those who haven't been paying attention, a quick refresher: As a remnant of the Repeal of Prohibition in 1933, every state in the U.S. retains authority to administer the transportation of alcoholic beverages within its borders.
This has created a Balkanized situation in which a majority of states forbid their citizens to purchase wine, beer or liquor except from licensed retailers who must buy their stock from in-state wholesalers. It's no surprise, then, that the national wine and spirits wholesale industry fights very hard - and spends a great deal of money - to keep this so-called "three-tier" system intact. Each "tier" takes its share of profits as wine passes through, and the system forbids consumers to bypass the system by purchasing direct from wineries or distributors.
While some states do permit direct consumer purchases from "reciprocal" states that have passed similar laws, more states don't - and a few, under modern legislation sponsored by the Wine and Spirits Wholesale Association, actually declare it a felony to sell wine to their citizens outside the "three-tier" system.
This system has been under attack via litigation and legislation, and restrictive laws in a few states, including Virginia, North Carolina and Texas, have been overturned by court action. The issue may eventually reach the Supreme Court. Legislative efforts to change state laws have largely been unsuccessful, not least because they pit individual, mostly unorganized consumers against a national industry lobby with deep pockets.
Last week, however, a rational argument for change came from an unexpected quarter: The U.S. Federal Trade Commission issued a thorough, seemingly objective and surprisingly non-political report that sharply criticizes the current system as antagonistic to business and consumers.
In a July 3 news release titled "E-commerce Lowers Prices, Increases Choices in Wine Market," the FTC summarized its report in strong terms: "E-commerce offers consumers lower prices and more choices in the wine market, and ... states could expand e-commerce by permitting direct shipping of wine to consumers," it read. "The empirical study finds that state bans on direct shipping prevent consumers from saving as much as 21 percent on some wines and from conveniently purchasing many popular wines from suppliers around the country."
The news release quoted FTC Chairman Timothy J. Muris as saying, "E-commerce can offer consumers lower prices, greater choices, and increased convenience. In wine and other markets, however, anticompetitive barriers to e-commerce are depriving consumers of those benefits."
The FTC said its investigation revealed that online and mail-order shopping offers consumers greater choice and lower costs. "State bans on interstate direct shipping represent the single largest regulatory barrier to expanded e-commerce in wine," the report concluded, adding that if states merely wish to restrict sales to minors or to ensure payment of taxes (the arguments most often mounted against change), there are simpler, less restrictive ways to accomplish those ends.
It will probably come as no surprise to readers to learn that the wholesale industry has been quick to discount the importance of this report. In comments to reporters, liquor-lobby spokesmen have sought to "spin" the issue as one of "rich versus poor," dismissing critics as selfish, well-to-do connoisseurs who aren't satisfied with the wines available from local shops.
I don't think so ... How about you?
The FTC news release summarizing the report is online at
The complete report, a sizable (3.2 megabyte) Adobe Acrobat file, will be found at
For information about each state's specific laws regarding wine shipment, see "Direct Shipment Laws by State for Wineries" on the "WineLaw" pages of Wine Institute, a trade association of the California wine industry:
And finally, if you would like to get involved in a citizen effort to change these laws, visit our friends at Free The Grapes,
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Wednesday, July 9, 2003