AnuvaBlog

Tom Wark’s blog “Fermentation” pointed out in today’s post that the 3-tier system that governs the vast majority of the alcohol trade in the US severely limits “innovation” and thus consumption.

I’m not sure if innovation is the right word to describe the possibility of progress in the wine world. But the 3 tier system must change especially if small producers are going to be able to get to market easily, and if quality is going to continue to improve in general, across all sectors.

Innovation I think would amount to something like a “softening” ingredient for tannic wines, a substitute for oak barrels or aging, or using milk carton containers instead of bottles. But wine production is thousands of years old and tradition is rich. In another blog today, Steve Heimhoff was talking about 10 things that “gatekeepers” could do to better educate the public on wine. At the top of his list was to not poo-poo screw tops. It seems to me that a rift exists within the wine world.

On the one hand, we have true innovators: people who invent synthetic corks, screw tops, micro-oxygenation, direct to consumer shipping and the like. And on the other hand, the doubters. Not that the tride and true should not be honored and that new innovations should not be questioned rigorously.

Here I find as is so often the case, that wine mimics life: those who push for change will be ridiculed and resisted by those who have something invested in the current way of doing things or simply have drawn an arbitrary line of what they “value” on this side of what’s new or different. Once some critical mass is reached, however, the tables will turn and the iconoclast will become what’s in.

In the particular case of the 3-tier system, a whole lot of legal entanglement, lobbyists, and money stand in the way of freeing the grapes (visit freethegrapes.org). The entrepreneur in me can hardly blame those who have worked hard to set up successful wholesale businesses that simply move wine from one place to another and claim a percentage. Actually, when I think about it, that’s all that any of us do who do not actually produce wine. We just move it around or talk about it.

An article released today by the Boston Herald states that the battle for the ability to ship wine direct to consumer in the state of Massachusettes will potentially continue for some time.

Why are the conusmers punished? This is no rhetorical question. As Jeremy Benson (Go J.B.!) asserts at the end of the article, the consumers are punished because those who control current distribution channels fear losing their stranglehold on business within the state.

I totally agree with this but what is to be done about the situation? The only way that this can change is for the consumers themselves to become more vocal and more active. Join www.freethegrapes.org and help to get the word out.

It floors me the extent to which rule enforcers do not know the rules that they are supposed to be enforcing. A recent article in the Seattle Times talks about how visitors to wine country wanted to bring back wines with them to enjoy in their home, a very common thing to desire.

I will not bore you with a summary of the article itself, but I will offer the following commentary: the fact that both the agent for the TSA and the superior figure/manager for the TSA were totally unaware of the regulations that they were supposed to be enforcing not only causes real monetary losses for the consumer but the wine industry and the airlines themselves. If people hear horror stories about not being able to bring wine back from a visit to wine coutry 2 things happen:

1. Less people will be likely to go to wine country because they will assume that they cannot bring with them the souvenir and product that they are going to explore. This results in less people traveling which means that they airlines lose money.

2. Less people going to wine country represents an indirect loss of business for the wine industry in addition to the fact that people will assume they can only take 6 bottles with them (in reality there is no limit for wine (or spirited beverages under 24% alcohol content) but there is a weight limit that is determined by the AIRLINE not the TSA. This can be gotten around by simply paying more) and will thus only buy 6, and not 12 or 24. Another loss for the industry.

We must get away from our post-prohibition ways of protecting distributors and preventing free trade. It does nothing but hurt the consumer and the producer. I would also argue that it hurts the distributor as they lose the brand awareness generated through online sales and direct shipping. Free the Grapes!

I will admit that this is a bit of a sore subject for me, as I am in the business of shipping wine, but I have not yet met a single American who has attended one of my wine tastings who doesn’t cringe when they realize that they live in a state that does not permit direct to consumer shipping of wine.

They stand and look at me flabbergasted, as if I had something to do with the fact that they can’t simply go on the internet and buy the wine they prefer. An article here in the Citizen’s Voice gives great insight into why these direct shipping bans exist (someone thinks that they will not be getting their money), and the ridiculousness of that:

“There is nothing complicated about allowing consumers to buy the wine they prefer over the Internet and having it shipped, while still ensuring compliance with state tax and underage drinking laws. Most other states have figured it out, but the Politburo that runs Pennsylvania’s booze monopoly prefers to treat it as indecipherable rocket science.

According to the Wine Institute, 81 percent of all adult Americans have access to their preferred brands over the Internet. Pennsylvanians are a large chunk of the other 19 percent.

And make no mistake, this truly is a matter of choice. The Wine Institute says that 40,000 to 50,000 domestic labels, and another 40,000 to 50,000 imported labels, are available for sale in the United States each year. Well, the United States excluding Pennsylvania, where the state monopoly has 3,024 listed varieties and about 22,000 others that can be ordered through the state system — about 25 percent of the variety available to other Americans, often at better prices.

Several courts have found that states cannot simply forbid shipments of out-of-state wines, if they allow shipments of wines produced in-state — a little matter known as interstate commerce.

Here’s how a pending bill in Pennsylvania would purport to have the state comply. Consumers could order from a winery, but the shipment would have to go to the state Liquor Control Board, which would then deliver it for a fee. Orders could be made only to wineries that produce 80,000 gallons a year or less, which fits the description of most wineries inside Pennsylvania.

That, of course, is ridiculous. Of 19 “control” states, those where the state government controls varying degrees of the business, 12 allow direct shipments to consumers. None of those states is as “controlled” as Pennsylvania. But New Hampshire, with state-controlled sales, allows direct shipments. It requires shippers to use licensed interstate carriers, for the shipments to be clearly labeled, and for adults to sign the receipts. Consumers get the products they want. The state gets its cut. Cheers.

Rather than forever guarding its own interests, the PLCB should find a way to accommodate consumers who aren’t satisfied with its selection and service. And the Legislature should do far better than trying to convert the PLCB into a delivery service, an enterprise that requires a far greater degree of urgency than the agency is likely to muster.”This article was published Thursday, August 28th, 2008.

It is too bad that ultimately, the consumer is always the one who gets hurt in situations where massive, rich distributors, or other entities that hold onto monopolies are unwilling to change, adapt and overcome new circumstances that will make everyone better off.