Posted on 10/14/2002 1:19:53 PM PDT by snopercod
Edited on 04/12/2004 5:45:26 PM PDT by Jim Robinson. [history]
The provision would ease some restrictions on interstate shipments.
WASHINGTON -- California wineries and their out-of-state fans catch a break in new legislation that would permit more direct shipments to customers.
The legislation passed by Congress allows direct shipments to distant customers who buy wine while visiting wineries -- if the customer would have been allowed to carry the wine home personally. President Bush is expected to sign the bill into law soon.
(Excerpt) Read more at sacbee.com ...
Big time. But now we have a friend of freedom in the White House. The union-thug wine distributors can go put their corks where they will do the most good.
Mrs. Know refers to it as LPR!
Since the liquor distributors paid off the various state legislatures to protect their monopoly. The legislators went along to protect their monopoly (e.g. Sales Taxes).
Older thread posted by a friend of mine: Wine Wars
Mr. Chairman: I am John De Luca, President and Chief Executive Officer of the Wine Institute. Wine Institute is the association of over 450 California wineries which produce 80% of our nation’s wine.
California's wineries and winegrape growers, along with their counterparts in other states, comprise a significant agricultural industry that continues in the proud tradition of family-owned farms. Wine's rich heritage is an asset to our economy, culture and cuisine which should be supported.
Our traditions, which began centuries ago in Europe, define us as agriculture, cuisine and tourism. As winemakers, we take great pride in the growth of our industry and with the fine quality of the wines which we are growing. These successes have been underscored by the astonishing growth of the premium wine industry over the past two decades, a time when nearly 1,000 new wineries have been founded across the country. With this success has also come media and critical acclaim for our wines. Yet today, small winery owners are cast as potential lawbreakers and even felons for simply responding to the requests from consumers across the country who want our fine products.
I. Our Goal Is To Preserve The System While Providing Reform
Since the repeal of Prohibition, the wine industry has utilized the “three-tier” distribution system of producer to wholesaler to retailer mandated in many states to sell our wines. This is a system which served our industry well and we continue to value the partnerships we have developed with our colleagues over the years. When the number of wine producers was more limited, it was possible for wholesalers to handle the volume of brands and varietals offered for sale. However, the exponential growth in the number of wineries during the last two decades, coupled with the striking consolidation which has occurred within the wholesale tier, have created an environment which no longer allows for full service for all winegrowers and consumers.
In 1963 there were 10,900 distributors and 377 wineries. Today, there are less than 300 distributors and more than 1700 wineries. There are currently over 800 wineries in California alone, each of which produces approximately five different labels each year. That, in itself, is over 4,000 labels per year from California. There is simply no way that wholesalers and retailers in all cities and states can carry all of these wines.
Our attempts are directed at preserving the essentials of the system while providing necessary reforms. When reviewing wine industry statistics, it was found that the 50 largest wineries in the U.S. produce 90% of the wine. While the three-tier system is well suited to handle the wines made by these producers, it is not in a position to offer a similar distribution system for the more typical small, family-owned winery. Most wineries produce only a few thousand cases of wine each year (and some varietals in only a few hundred cases) and, therefore, simply do not have the quantities necessary to accommodate the needs of wholesalers.
The desire of consumers throughout the states for these specialty wines has only increased over the years. In the last 20 years, the attention of the media on the remarkable successes of the American wine industry has increased dramatically, with the proliferation of wine and food magazines, wine columns in local and national newspapers, and programs on television and radio. It is now commonplace for consumers in other states to learn about and want to purchase wines that are not available to them in their own states.
Our success has been further enhanced by the fact that the wine industry, in California and in many other states, has become a prime tourist attraction. Out-of-state visitors to our tasting rooms, as well as the tasting rooms in 46 other states, sample these small lots of wine, and want to purchase limited amounts to ship back to their homes, or else place phone orders for the wines upon their return home. Such basic transactions have now been elevated to the level of a felony in states such as Florida, Georgia, Indiana, Kentucky, North Carolina and Tennessee, primarily at the urging of the wholesalers in those states who fear losing possible market share. This year, 11 felony bills have been introduced in state capitals. Those who oppose direct shipments have a motto: “Ship the Wine, Do the Time”
II. Some States Have Found Ways To Accommodate Their Consumers
During the last ten years, 15 states have passed legislation which offer solutions allowing their citizens to have the wines they cannot readily find at home be shipped directly to them. These proposals were at first based on the concept of "reciprocity", which in effect created trade agreements between states allowing limited direct shipments between states enacting such legislation. Recently, Louisiana and New Hampshire enacted new, creative laws establishing a means of registering out-of-state shippers and collecting all tax revenues.
III. Underage Access Is Limited
The opponents of direct shipments continue to raise the issue of underage access. Underage drinking is a serious problem. The Department of Health and Human Services reports that more than one-half of 18-20 year olds consume alcohol every month. However, minors are not purchasing any significant amounts of wine or alcohol by the relatively expensive and slow path of direct shipments, which leaves a clear trail of delivery records and credit card information.
In California, where direct shipment has long been legal, virtually no complaints of underage/illegal deliveries have been made. Artificially created “stings” that garner media attention can illustrate that it is possible for underage persons to obtain alcohol by direct shipment, even in instances when the wholesaler has handled the product and it is subsequently shipped directly from the retailer to consumer. Thirty (30) states permit such intrastate shipments yet the wholesaler funded “Americans for Responsible Alcohol Access” does not emphasize the issue of underage access for this type of delivery.
The fact is, there is no evidence direct shipment to minors, whether from producer to consumer or retailer to consumer, is a serious problem. State enforcement authorities that have experience with direct shipments do not consider this to be a significant part of the underage drinking problem. Common Carriers like Federal Express, DHL Worldwide, and United Parcel Service play a pivotal role in the delivery of wine to consumers via direct shipments with special handling taking place.
The wine industry has worked with these common carriers to develop programs that ensure such compliance, and the success rate of these programs has been excellent. In crafting legislation to permit direct shipments, we include language to require that all packages be marked: “Contains Alcohol, Adult Signature (Over 21) Required for Delivery.”
In these states, drivers have been trained as to how to handle packages that have these special delivery requirements. A good example of this is provided in the enclosed correspondence from Jon Olin, Senior Legal Counsel for DHL Airways, Inc. (See attachment #1) This letter was sent in response to a complaint by wine trade journalist Jerry Mead, who was upset that his 55 year old associate was made to show identification before she could sign and take possession of a wine delivery. (See attachment #2)
To further ensure our own Wine Institute members compliance with the shipping laws, we have agreed with Federal Express that any member identified by Federal Express as making an illegal shipment, or who is not marking packages as containing alcohol as outlined above, will be removed from our discount program and prohibited from shipping via Federal Express in the future.
Stings have almost exclusively been done in states where direct interstate shipment is not legal, and where drivers have not been trained on how to handle packages containing alcohol, as they have been in the legal shipping states. In addition, the packages involved in these deliveries have rarely borne the required warnings about special handling.
Common carriers have created a good system of checks upon their systems in the legal shipping states. If direct shipping opponents are truly concerned about deliveries to minors, they should in fact encourage the adoption of the direct shipping model we have passed in the 15 legal shipping states, and thereby ensure that all packages will be marked in such a way - and drivers trained in such a way - as to achieve a much greater system of protections than simply further criminalizing such shipments.
IV. Most Direct Shipments Are Legal
Opponents of direct shipments cite it as a billion dollar business - an exaggerated figure that cannot be substantiated. The entire market of direct shipments is estimated at less than $600 million. Contrary to the impression fostered by wholesalers, virtually all of these sales are fully legal, made within the 30 states which permit intrastate shipments and 15 states which additionally permit limited quantities of wine to be shipped directly to their citizens. No direct shipment of wine is sold without full payment of both federal excise tax and state excise tax in the state where legally sold.
As an outgrowth of the Internet Tax Freedom Act, Congress created a commission to examine the means to ensure the fair imposition of consumption, sales and use taxes on business including those using the Internet in remote sales. A group of 35-plus Members from both the House and Senate has requested the Commission include an investigation of unreasonable state barriers which do not allow consumers access to out-of-state wine and remedies for states to collect excise and use taxes. This is where any legitimate revenue concerns should be addressed.
V. Using The Federal Court System To Regulate Wineries Is Not Necessary
The members of Wine Institute respect the need for states to be able to administer the laws which they have on the books, even as we work to create legislation that is responsive to consumer needs across the country. There already exists a federal remedy for states to enforce their alcohol laws. The Bureau of Alcohol, Tobacco and Firearms (ATF) has informed the states, in Industry Circular 96-3 dated February 11, 1997, that it has jurisdiction over any holder of a Federal Basic Permit (FBP) - a winery, distillery, wholesaler or importer - found to be in violation of a state’s laws. ATF, once notified by a state, will take action. ATF will administer punitive action up to and including suspension or revocation of a license if a FBP-holder is in violation of a state’s law. During the last two years, there has been one complaint to ATF which led to the loss of the violator’s FBP - and the violator was a wholesaler.
States have other remedies available if they so choose, including pursuing citizens for illegal importation and criminalizing underage solicitation and purchase. And just last week, the Utah Court of Appeals ruled that Utah may prosecute companies that ship alcohol across state lines in violation of state law.
Passage of federal legislation in this area would harm efforts to craft creative state-by-state reforms. It would lock in the status quo and eliminate the incentive of the middle tier to work to find solutions.
VI. Conclusion
Our member wineries and I will continue to work with the various states to craft laws so that consumers in all states can have reasonable access to limited amounts of the wines which currently are not readily available to them. In the meantime, we recognize that in order to continue to do business, wineries must comply with the laws of the various states in order to retain their Federal Basic Permits.
There is no need for states to be granted access to the over-burdened federal court system as a second federal venue in which to pursue citizens and small wineries. American consumers want convenience, access and freedom to make their own purchases. America’s winegrowers want to fulfill those desires. Local state-sanctioned distributors should not attempt to criminalize practices which in any other industry would be considered free enterprise.
Interstate commerce and burgeoning E-commerce should not be hindered by one segment of the industry, which raises false concerns in order to hamper competition and create barriers to trade. The three-tier system should be augmented on a state-by-state basis in order for consumers to have access to hard-to-find wines. Any federal legislation in this area should be balanced to allow this to happen.
On behalf of the members of Wine Institute, I thank the Committee for this opportunity to express our views.
If you like cabs, try Wild Horse out of Paso Robles, CA.
Actually, he already is. The price of California agricultural products is easily 50% higher this year than last, according to my own informal supermarket survey.
It's also a given that the price of California wines (and everything else Californian) will increase.
But there are always alternatives. My neighbor brought me a bottle of Chateau Grand Traverse Late Harvest Riesling from Michigan, which was better than any California Reisling I have ever tasted.
The invisible hand is going to slap Davis upside the head.
BTW, the "LPR" I referred to earlier is Liquid Pantie Remover
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.