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Wine Trader Magazine


(a.k.a. Mead's Mad Mumblings)

dotTHE GOOD NEWS IS...dot

Our policy of beginning this column of mostly bitching and bellyaching with a good news or positive item, is as much to prove that The Wine Curmudgeon (TWC) can write such an item as for any other reason.

And the good news item this time is truly good...the "good guys," led by the Coalition for Free Trade in Licensed Beverages (CFT), have won yet another court case in the fight to grant wine and wine consumers their constitutional rights under the Commerce Clauses of the U.S. Constitution.

If you've been hiding under a rock somewhere, interstate wine sales in this country are controlled by 65-year-old, Prohibition era laws that created a monopolistic middle tier (wholesalers) through which all sales from the first tier (producers or importers) must go, to reach the final tier (retailers or restaurants), assuming you don't count consumers as a tier. Truth is, consumers do not, and never have, counted in these laws and regulations. They were written for the convenience of the monopoly and, to a lesser degree, for the government tax collectors.

Never mind that all of the above is a direct violation of the Commerce Clauses of the U.S. Constitution, as well as anti-trust legislation regarding monopolies.

In recent years with the advent of growing mail order and internet sales, and even specific new laws (reciprocal shipment laws in 13 states) permitting interstate shipments directly to consumers and bypassing the monopoly, the wholesalers began to get concerned. Not that they are especially concerned so much about the shipments of mostly "to small to be of interest to wholesalers" wineries (roughly 2000 of them) from 44 producing states direct to consumers, though their greed is notorious and the idea of any loss of their 100% monopoly seems an affront to them...the monopolists real fear is that the trend to direct shipments from producers to consumers might eventually lead to direct sales to large retailers and discount stores by wineries, which would cut them out of some serious bucks.

The fact remains, that with an average of only three to five serious wholesalers in each market, even major markets such as California and New York, that it is impossible for so few wholesalers to righteously represent 2000 American wineries, not to mention all the craft brewers, thousands of imported wines, and the scads of spirits brands that seem to dominate the sales efforts at so many wholesalers. And to not have a wholesaler in a particular state is to in effect be banned from making any sales there, a very obvious and un-American restraint of trade.

To protect this last major remaining American monopoly (even phone companies and utilities have lost their monopoly privileges), the wholesale monopolists are fighting dirty and making some very unholy alliances with neo-Prohibitionist organizations and even anti-smoking groups, anyone who can help them protect their monopoly, seemingly at any cost. And wholesalers are notorious for their outrageously large contributions to politicians of both political parties. It is through such political "bribery" that they have been able to pass individual state laws making wine shipments felonies, and the shippers subject to penalties more severe than some for violent crimes and drug possession.

Virtually every time these shipping bans end up in court, the Constitution prevails and the monopolists go down to defeat. Alas! The bad guys have more money than the good guys, and they just keep forcing the good guys to expend their limited funds on one expensive court case after another.

The latest win was in Massachusetts, where a Federal Court judge threw out a civil action brought by the monopolists against Virtual Vineyards (an internet wine sales company) and Federal Express, the overnight service making deliveries for VV.

The judge basically said the "black hats" could not use civil law to attempt to enforce apparently unenforceable criminal law, that being Massachusetts' laws against direct shipping.

Rack up one more for the good guys, but this issue will not be settled until it reaches the U.S. Supreme Court, and that takes big bucks which CFT is still trying to raise.?

TWC wishes to apologize to anyone (everyone?) who purchased this issue based on the headline about wine seeming like an aphrodisiac. And also to those subscribers who turned page after page looking for the sexy elixir item. There isn't one.

Every now and again when TWC needs one more headline for the front cover, he decides to play "tabloid editor" and write one of those salacious headlines that get your attention but really aren't about anything.

On rereading it however, it seems to be actually pretty accurate as a stand alone item. Pour a glass of wine and turn him or her on, and see what TWC means.

dotMAKE BEDFELLOWSdot

The folks at WSWA (Wine & Spirits Wholesalers of America), the trade association of America's middle tier distribution monopoly, have been keeping some really strange company of late.

Not only do they totally fund ARAA (Americans for Responsible Alcohol Access) the group that fronts for the wholesalers by spreading propaganda declaring the imagined evils of interstate shipping (primarily the totally bogus claim that such sales are a major source of illegal purchases by minors). Through ARAA, WSWA has allied itself with an unbelievably long list of anti-alcohol groups including the likes of SADD and WCTU (Women's Temperance Union), the folks who helped bring about the original Prohibition 80-some years ago.

Now comes the latest strange association. With the retirement of long time WSWA C.E.O., Doug Metz, the wholesalers have hired a replacement from the tobacco industry, a woman named Juanita Duggan. Now, TWC doesn't know Ms. Duggan or one thing about her, but can't imagine a worse image for a wine and spirits trade association than perhaps hiring someone from a drug or narcotic agency.

Hiring someone from the tobacco industry is in effect a statement that WSWA sees itself as purveyors of a sin product that deserves to be regulated. That can only play into the hands of the neo-Prohibitionists. It will also be interesting to see if Duggan embraces the obviously bogus justifications for attempts to ban interstate shipping that she will inherit from Metz. Presumably, she will adopt the big lies to maintain her position.

dotWHOLESALERdot

TWC has received, of late, more than one pitch to buy wine via the Internet...direct from Europe, Australia and elsewhere.

It will be fun to watch the wholesale monopolists doing battle over "intercontinental" shipping, while they're still getting their collective butts whipped in court over "interstate" shipping.

No one said it was going to be easy, this being the last exception to the antitrust laws and the only business that thinks it's guaranteed and exception to the Commerce Clauses.

dotSPEAKS WITH TONGUEdot

TWC has only been frustrated with ATF's label regulations for about 31 years. That's how long ago he became aware of the agency's inconsistent, unrealistic regulations regarding what may and may not appear on a wine label.

What makes this all the worse is that the bureaucrats who actually make the decisions apparently don't know much about wine...or at least not enough. It is common wine industry practice to automatically resubmit any label that ATF turns down, because the next clerk who looks at it is just as likely to stamp "approved" on a submission that was denied a few days before by someone sitting two desks over.

TWC cannot tell you the number of times he has seen label denials for some verbiage that is present on the labels of dozens of competitor's wines.

The regs that have always bothered TWC the most are those that forbid wineries to place truthful information on the label.

For example, if a vintner in New York buys some California wine in bulk and bottles and labels it, that vintner cannot tell you the truthful information that the wine originated in California, made from California grapes, and worse yet the wine loses its right to a vintage date, even if it is 100% 1997 vintage. So how must our 100% 1997 California wine be labeled? It becomes non-vintage "American" wine under ATF regs. So the federal agency which is supposed to be looking out for consumers is pure and simple denying them truthful information which might help them make a more informed purchase decision.

Sitting down? Take the same scenario above, only with a vintner in Nevada or Oregon and the wine retains its righteous "California" appellation and its vintage date. What's the difference? Nevada and Oregon are contiguous to California. Got that? If the state's borders touch (that of producer and vintner doing the purchasing), consumers get truthful information. If the borders don't touch...no information at all.

TWC recently encountered a similar stupidity in ATF thinking. Upon tasting a particular Chardonnay with a vintner friend, I looked at the label and was dismayed to read the appellation line and find 85% Napa County - 15% Sonoma County. Now TWC knows this vintner pretty well and where his vineyards are located, all of which are entitled to highly regarded appellations. So TWC asked what Napa County meant. Was the vintner buying fruit from one of the few acres in the county of Napa not entitled to the Napa Valley appellation? The answer was that the Napa portion was 100 percent fruit in the Napa Carneros region.

And how about the Sonoma County portion? It was 100% from Alexander Valley.

Why, I wanted to know, was the winery using the almost meaningless place names when the wines in the blend come from such highly regarded and distinctive appellations?

The answer is ATF once again. The ruling being that if the wines come from more than one county they lose their right to anything but a county or state appellation. Dumb!

TWC is a consumer and he wants all the truthful information he can get at all times to help him make informed purchasing decisions.

Let's take this Chardonnay, for example. Napa County is meaningless as to telling me much of anything about the fruit. Did it come from relatively hot Calistoga or Pope Valley? Or mid-valley, the cooler American Canyon area, or perhaps the fruit was mountain grown and intense from Howell or Spring mountains?

Knowing that 85% of the fruit came from cool climate Carneros would tell an informed consumer that this wine probably has a lean, crisp acidity and a structure with some spine.

Knowing also that the other 15% comes from Alexander Valley would be a tip off that there's probably a very forward tropical fruit component as well. TWC could really pretty accurately imagine what a Carneros-Alexander Valley blend Chardonnay would taste like and how it would feel in the mouth. Alas! ATF denies us all that kind of information.

Why won't ATF permit the truth on wine labels? The only thing TWC can come up with is that the agency is so used to hiding truth (Ruby Ridge, Waco, congressional hearings) that they no longer recognize its importance.

dotSHOULD REMEMBERdot

Election time is coming and we're told that Barbara Boxer (D) is trying to get reelected the U.S. Senate.

Wine lovers (and lovers of freedom) should not forget that Boxer has neo-Prohibitionist tendencies and stood side by side with the MADD mothers at committee hearings favoring not only federally mandated blackmail to force states to adopt .08 blood alcohol (a level not shown to be a serious problem in DUI statistics) as the new lower standard for determining drunk driving, making unimpaired drivers into "legal" drunks, but this reincarnation of Carrie Nation, went on to endorse "zero tolerance," the term used by anti-alcohol fanatics as a euphemism for the new Prohibition.

We're told that California's other senator, Diane Feinstein (sp?) (D) also voted for the federal blackmail. Sounds to me like Californians need to communicate to their politicians that they don't approve of this kind of voting. Phone calls and letters are good...communicating by voting for opponents is even more effective.

dotIN DEFENSE OF TWCdot

TWC has been accused by some loyal wholesaler subscribers of unfairly picking on this one segment of the trade. Some even support free trade and yet feel painted as villains by the same broad brush as we use on the wholesale trade in general. TWC has said it before and will say it again. We need wholesalers. The wineries need wholesalers. The retailers need wholesalers. Consumers need wholesalers. And TWC has many friends who are wholesalers. TWC is not anti-wholesaler. But TWC is anti-monopoly, pro-free trade, and wants as few restrictions as possible on his favorite beverage.

So long as the majority of wholesalers support the trade organization Wine & Spirits Wholesalers of America (WSWA) and its misguided efforts, then all wholesalers will be tainted with the same greedy monopolist image.

And good guy wholesalers, how wise is it to allow your trade association to call your suppliers names like "bootlegger" and try to get them arrested as felons? How smart to raise the specter of rampant sales to juveniles via mail order and Internet (totally untrue of course), all the while playing into the hands of those who picture all adult beverages as evil? And how wise to allow WSWA, in your name, to associate itself with the likes of ARAA, MADD, SADD, WCTU and dozens of other anti-alcohol fanatic organizations. All to try to protect an unprotectable monopoly? TWC is here to tell you loud and clear that those associations with neo-Prohibitionist groups is going to come back and bite you all on the butt.

So, Mr. Good-Guy wholesaler, speak up a little louder for moderation, for free trade and against your associates getting in bed with the Women's Christian Temperance Union. And trust TWC..."temperance" in the language of the ladies does not mean "moderation." Let TWC say it again. Most wine will continue to be sold through wholesalers, and it should. The wholesaler provides a service that the vast majority of wineries could not afford to provide for themselves. The wholesaler allows retailer and restaurateur alike to order and stock numerous brands, ordering only a few bottles at a time, all because of the wholesalers' willingness to invest in a huge inventory. Consumers obviously benefit from selection and availability in the same way as the retailers.

But! For the winery too small to supply a wholesaler. For the winery too insignificant to capture a wholesaler's interest. For the winery making only offbeat wines, say gooseberry or those made from Vitus Rotundifolia (Southeastern Muscadines), which has a willing buyer but no way to reach them without a wholesaler, then that vintner should have means of selling his wine direct to the consumer...just like the producers of every other agricultural product in America.

The wholesaler should not be able to restrain trade that it is not willing or able to handle, nor for that matter to prevent the wildly independent who just wants to do it all themselves.

dotWARNINGdot

Residents of Wyoming should be alerted to the fact that an anti-interstate shipping law is being considered...a law making wine shipments to residents of that state a felony. And, yes, it's being promoted by the wholesale monopoly and WSWA. There is time for residents to let their legislators know that they find laws criminalizing free trade to be repugnant. Previous examples of this kind of legislation have been pretty much limited to the "bible belt" South. TWC finds it hard to believe that free-thinking, independent Westerners would support this kind of monopoly-serving legislation that restrict the freedom of consumers to buy what they want, where they want to.

dotIN THEdot

Arizona continues to threaten wineries for mailing their newsletters to Arizona citizens, citing an obviously unconstitutional regulation banning offers to make illegal purchases of wine, that being any transactions involving out of state merchants.

The way TWC sees it, even if Arizona is able make the out-of-state purchase ban stand up (questionable), the state still cannot ignore the First Amendment rights of the wineries. After all, most of the newsletters have lots of other information, like vintage quality, new release dates, recipes, visitor information and so on. Much of this is information that the consumer can use as the foundation for making local, in-Arizona purchases. Or maybe the recipient has a friend or relative in the state where the winery is based and wants to make a purchase as a gift.

The point is, even if the winery were publishing information about an illegal activity, the First Amendment guarantees them that right. The law/regulation wouldn't be broken/violated until the Arizona consumer makes a purchase. And no one has yet explained to me why the state of Arizona thinks it can ban winery newsletters because they offer wine for sale, yet haven't applied the same regulation to The Wine Trader, The Wine Spectator, The Wine Enthusiast and a half dozen (at least) other periodicals that contain ads offering wine for sale. The law is being unequally applied.

As an occasional visitor to that hotter-than-hades-in-the-summertime state, TWC even volunteered to surrender himself to arrest or citation for violating this publication ban.

Knowing the outcome of such an event, the bureaucrat we talked to replied: "Not in this lifetime!" And TWC doubts they would arrest or cite anyone. The threatening letters being sent out are a bluff and are being done at the behest of (you guessed it) Arizona wholesalers.

dotdotdot

Speaking of Arizona, it's the state where the local restaurant association (spearheaded by the big resorts and hotels) sponsored legislation to ban corkage (consumers being able to bring their own wines and pay a small consideration for having them opened and served).

Never mind that the restaurants behind this law were always able to refuse to provide corkage, they wanted a law so they could lie through their teeth and say: "We'd love to let you bring your own wine, but it's against the law and we could lose our license." When what they really meant was: "We passed this law that says you have to buy all wine from us at our 300% to 400% markups, and we didn't have the nerve to just say it so we passed a law to hide behind."

Corkage is permitted under certain circumstances in Arizona...at unlicensed premises with 40 or fewer seats.

We still can't figure out why the wholesaler and retailer lobbyists supported the corkage ban. Wholesalers would get a cut wherever consumers buy their wine and retailers would actually make sales they wouldn't otherwise get. Oh! The wholesalers didn't want to piss off their big ticket customers at the hotels? You're probably right...but why the retailers?

dotdotdot

For what it's worth, TWC actually met and conversed with a major Arizona retailer who supports consumers rights to make out-of-state purchases direct from wineries or wine of the month type clubs. Says he, "I'll still get most of the sales, and the wine clubs often send stuff people wouldn't ordinarily try, which eventually makes a new customer for me. And besides, I'm not only a retailer, I'm a wine collector too, and I want to be able to order the rare stuff for my home collection that never gets to the wholesalers or into my store."

dotdotdot

TWC also visited Oklahoma recently for the first time in probably 20 years. Things are much better than they used to be, though not perfect.

Lawton, OK was our destination (home of the Army's Fort Sills), where we discovered a retail store that would make any state in the union proud, and with a selection that most California or New York retailers would have difficulty equaling. I saw allocated wines floor stacked or openly displayed on shelves...the kind of wines that if a California retailer had some of they'd be dealt out of the back room to favored clients.

My first thought was, "My God, man, you could do one heck of a mail order business considering all the desirable merchandise you have."

Alas! Oklahoma is the only state I ever heard of that bans shipping OUT of state. Most states don't care what goes out, only about what comes in. The store does do bigtime business with neighboring Texans, New Mexicans and other southwest residents who drive in and carry there own home. Oh! TWC didn't mention the name of the store? It's Cache Road Wines & Liquors in Lawton. Check 'em out if you're anywhere near. A final note on Oklahoma, 've still got blue laws...no sales.

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