-- A scathing report released by the Specialty Wine Retailers Association (SWRA) suggests that campaign contributions from wine and spirits wholesalers are suffocating free trade to keep the three-tier distribution system in place. The report, "Wholesale Protection," prepared by SWRA executive director Tom Wark, reveals that wholesalers and their associations donated almost $50 million to election campaigns in the 50 states between 2000 and 2006. The figure does not include an additional $19 million contributed to federal political campaigns, and lobbying costs expended by the wholesale industry. As noted in the report, alcohol sales are regulated by the individual states, perhaps accounting for the concentration on state races.
"It is impossible, except in the most blatant cases, to determine with certainty if this kind of remarkable political largess has purchased for alcohol wholesalers the unprecedented protection from competition that they enjoy in every state of the union," Wark stated in the report. "However, there is no question that it buys them access to the political process that wine retailers, wineries and consumers simply do not enjoy. As a result, legislators in the 50 states tend to be educated on issues of alcohol, direct shipment of wine, and the state of the American wine market by those who are whispering in their ears and helping out with financing their campaigns: wholesalers."
Wark, who assembled his data during three months of "Searching, sifting, sorting, adding," told
Wines & Vines that the donors do not appear to discriminate by party. "The percentage given to Democrat and Republican candidates is almost always split down the middle." Neither do they short candidates who support direct shipping, he said. Figures used in the report were sourced from the publicly accessible database of the National Institute on Money in State Politics'
followthemoney.org.
"The number of wholesalers has dropped from 5,000 nationwide in 1950 to 200 today," according to the report. Why is this dwindling number of ever-more-powerful distributors so generous with its cash? The report singles out two "vital interests" that the wholesalers must protect: maintenance of a strict, state-mandated three-tier system; and prohibition on direct-to-consumer sales.
Wark stated that legislation enacted during the period in numerous states directly benefited wholesalers by protecting those vital interests, and specified the largest distributor/contributors in each state.
"The language employed by wholesalers when they discuss the three-tier system…indicates their possessive sense that the laws and regulations are theirs and theirs alone," Wark wrote, quoting Phil Wayt, executive director of the Washington Beer and Wine Wholesalers Association on the infamous Costco case challenging the three-tier system in that state. "On the anti-trust side, these include our post and hold system; our ban on quantity discounts, our cash law, our tied house restrictions, our bans on central warehousing and our uniform pricing requirements. On the commercial clause side, these include our ban on interstate shipping direct to retailers."
What gives the wholesalers their continued power, despite opposition from some wineries, retailers and consumers, Wark concluded, "Is obscene amounts of campaign contributions that are only possible as a result of the wholesalers' privileged and monopolistic position in the middle of the three-tier system."
When asked to comment on the report, Chris Kennedy, manager, communications and public affairs for the Wine & Spirits Wholesalers of America, (WSWA) said that he'd been aware of it for more than a month. "Tom Wark's math is downright hilarious in places, but no, we're not wasting our time on a point-by-point refutation."
Kennedy did forward a statement issued by WSWA president and CEO Craig Wolf, which said in part, "America's wine and spirits wholesalers are proud to participate in the democratic process, as is our right and the right of those who disagree with us….It is a fact of life that it requires considerable resources to help defend prudent alcohol regulation against litigious attacks from special interests like SWRA, who seek nothing less than the total deregulation of alcohol distribution.
Declining to repudiate what he termed "SWRA's creative arithmetic," Wolf concluded, "Our time, resources and energy are better spent supporting policies--and policymakers--that preserve the safe and effective distribution of alcohol in this country." For more information, visit
wswa.org.
Wark quoted the statement in his blog, (
fermentation.typepad.com) and commented, "What they don't understand is that I and SWRA would never advocate (total deregulation). However, American consumers will not just advocate it eventually, but they'll demand it.
SWRA, founded in 2006, has adopted the motto: Wine Without Borders," and currently has a membership of 45 brick and mortar wine retailers, Internet-based wine retailers, wine cataloguers, wine auction houses and supporters from both within and outside the wine industry, Wark said. Download a PDF of "Wholesale Protection"
specialtywineretailers.org.
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