A Look at HR 5034
HR 5034, a bill recently submitted to the U.S. House of Representatives, is the proposed legislation that will limit direct sale from a winery to the consumer, and in the minds of oenophiles, it’s a potential mess of our bureaucratic process. As many wine writers are reporting, the bill is arguably the biggest threat to wine and alcohol consumption since Prohibition, and it’s no surprise that this new legislation is being blamed on large distributors who may be bypassed in the process of consumers getting wine shipped directly from vineyard to their homes. Currently, individual states have the right to determine if they will allow alcohol products to be shipped into their borders, and this is what the bill proposes to change. At a minimum HR 5034 is very confusing. On a greater level, it speaks of the considerable greed that characterizes our industry.
Every twenty to thirty years, the distributor process cycles through a natural expansion that’s followed by a consolidation. Today, there is certainly a considerable consolidation happening around the United States. The primary force behind this consolidation is Southern Wine and Spirits, which is the largest distributor of alcoholic beverages in the US. While there are many of my colleagues who fear the giant, I have had delightful experiences with this very professional operation. The primary concern most people have is the company’s overt demand to have 80% of a retail outlets business. However, it has been and remains a family operation with excellent professionals at the senior levels. This bill, however, is being blamed on the large distributors like Southern Wine. This attribution is a canard. The bill is actually the responsibility of beer distributors.
At primary concern for the distributor is the possibility that a beer producer will be able to sell directly to a WalMart or Costco and skip the local distributor. Certainly, we are all willing to empathize with this considerable economic challenge. It might mean that the consumer is able to pay for the product at a more reasonable price. Imagine what would happen to a case of wine that was shipped from the winery directly to the consumer rather than through the normal three tier system. Beer distributors want to be able to control how wine, alcohol and beer get shipped on a federal level because it’s in their best economic interest to do so.
That desire, however understandable, is really awful for everyone who isn’t a beer distributor.
There is a point where our government works efficiently. However, there are too many instances where government grows needlessly complicated because of the special interests of large companies. Perhaps we could suggest that we use the end line consumer as the guiding force for our decisions. To me it all comes down to one question: is it better for American taxpayers to receive their wine at a lower price? Indeed it is.