Good Grape Wine Company

May 15 2007

The Incredible Game of Wine “Survivor”

I’m reminded that the reality TV show Survivor has the tagline of “Outwit, Outlast, Outplay” it kind of typifies the state of the regulated wine industry today.

Tom from Fermentation has a post on his site today citing the two year anniversary of the Granholm vs. Heald decision and based on current state of affairs some outlasting is probably in the offing, for both sides. 

Two years ago, on May 16th, when Granholm came down, I remember where I was, as if it was Princess Diana, or the Space Shuttle crash, or, well, the day Jerry Garcia died.

Then, I had no idea I would be here a mere two years later as that was pre-blog, pre-wine industry days.  At that point, I was t-minus 32 days to my wedding date and I was fighting with the caterer because they gave me a crap selection of wine and they wanted to charge me 2.5X mark-up plus what equated to a corkage fee for selecting the wine.  For the record, I whittled ‘em down on price, but the Beverage Manager at the catering facility was, shall we say, a remnant of another time, similar to the antiquated laws we’re discussing.  He probably had adult kids when Kennedy was assassinated, but I digress.

That May day, I was in the cafeteria at my previous employer making my way to the line to order some lunch and I stopped off, serendipitously, to read the headlines in the newspaper.  I had been following the proceedings from a distance and I was relieved that the Supreme Court ruled for consumers.  I even dashed off a note to a small, local distributor who was procuring one of the wines for my wedding to see if he had any thoughts.

Flash forward two years later and I would argue that while the laws have changed, they really haven’t changed enough, and a lot of the law changes are what I politely call, “plant hiding.”  That is, they change a couple of things, but at the end of the day you still have a crack in the wall and the proverbial plant there to cover up the crack in corner. 

Case in point:  I talked with a high-ranking person in the Alcohol Tobacco Commission in the Indiana government today!  Today!  My question was centered on the micro-wholesale permit capability that was enacted in mid-2006 as an accommodation to Granholm that allows an Indiana winery to self-distribute up to 12,000 gallons (5000 cases) annually.  After three weeks of trying to pin this person down about the ability for an out-of-state winery to use this same permit because under Granholm you can’t discriminate against out-of-state wineries privileges that are afforded in-state wineries, I get my answer.  Suffice to say it’s not what I was hoping for, but I got the “Well, the laws are changing all the time, who knows what will happen in the future.”  In the future, I ask?  What about the present?  I thought the law was changed to be in compliance with Granholm? 

Pregnant pause …

Um, yeah.  Not really.  Indiana, despite changing the laws in the wake of Granholm isn’t Granholm-compliant.  An out-of-state winery in order to get the micro-wholesale permit must have a physical premise in the state of Indiana.  That is hardly a balancing of the playing field and is about as asinine as the fact that if an Indiana consumer wants wine shipped directly to them they have to fill out a state-administered form in person in the tasting room for subsequent shipment.

We have a long way to go.  And, unfortunately, I fear it’s not going to get any easier.  To wit, the following quote from Craig Wolf, President and CEO of the Wine & Spirits Wholesalers Association in response to the Supreme Court refusing to review a Virginia case limiting out-of-state wine sales (and taking a swipe at at the Specialty Retail Wine Retailers Association—Executive Director Tom Wark—) in the process—the SWRA is engaged in battling retail wine shipping laws in many states, including the ones Wolf cites.

Wolf says (quoted from Wine & Spirits Daily):

“This should send a powerful message to those seeking to dismantle smart state-based alcohol regulations-states retain virtually complete control over how to structure their alcohol sales and distribution systems, which are based largely on the wholesaler-centric model.”

“Today’s Supreme Court action ends years of litigation in Virginia, but it is perhaps even more relevant to regulators facing retail direct litigation in Texas, Michigan, New York- and potentially Illinois. The Supreme Court’s decision reaffirms the 4th Circuit’s ruling that nothing in Granholm supports the notion that states have an obligation under the Constitution to ensure that out-of-state retailers, no matter how geographically distant, have equal access to in-state retail markets.”

I’m not an apologist for either side, but any rational human being should see the facts that are clear—if you want to buy wine from a winery, at the least, you should be able to and have it shipped to your door.  The three-tier system, while valuable as a means of providing logistics support for large wine companies, is an industry woefully under-skilled to serve the entire wine industry effectively.  All of this is colliding—two years ago and today, like bumper cars at the Carnival. 

What will happen in the future?  Who knows, but I do know it’ll come down to who can “Outwit, Outlast, Outplay.” 
For additional reading, see Tom’s original post, Wine & Spirits Daily and an article on Granholm at Appellation America. 

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