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Mark Squires' E-Zine on Wine

September/October, 1997

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The Wine Lover's Public Enemy #1: Douglas Metz
Wine and Spirits Wholesalers of America

Meet Wine Lover Enemy #1......Douglas W. Metz, Managing Director of the Wine and Spirits Wholesalers of America ("WSWA"). Across the country these days, draconian laws have been passed to end the practice of interstate shipment of wines direct from winery to consumer. This small improvement in the horrible choices faced by many wine lovers in most states is apparently too much of a good thing for Douglas W. Metz and his wholesalers' trade organization. They mean to stop you.

As noted in a recent editorial in USA Today, "Entrenched alcohol wholesalers are applying their clout with legislatures and their alliance with state tax collectors to stop mail order sales of boutique wines and beers....they're pushing to make such competition a felony--a form of economic protectionism that clothiers, electronics stores and nurseries can only dream of. So far they've succeeded in Kentucky, Georgia and Florida.....felony laws are being pushed in 14 states."

Addendum added Oct. 17, 1997: As I predicted over a year ago, these felony cases have not gotten very far. Recently, the State of Florida's Circuit Court correctly held that Florida could not constitutionally assert criminal jurisdiction over people who had committed no crimes in Florida. Predictably, our public enemy #1, the WSWA, announced that it was considering an appeal. Make no mistake about it: they are the enemy.

Most rational people would think it odd that a winery, say, like Marcassin, wishing to ship half a case of wine to a resident of Kentucky could be accused of a felony. In a country with one of the western world's highest rates of violence, surely there are better things for our police and prosecutors to do. And there are better things for our legislators to do than be lackeys for the WSWA.

The reason why wine shipments are made the subject of such asinine laws has less to do with logic than it has to do with economic interests, whether that of the WSWA or of local tax collectors. The reason why they get away with it is that the 21st Amendment to the Constitution of the United States gave extraordinary powers to the states to regulate alcohol as the price of repealing prohibition. Otherwise, many of these restrictions would be void at the outset under the Commerce Clause. Instead, we get a crazy quilt of regulations from state to state, which varies from creating completely "dry" areas, to regulating sales on Sundays, to insisting that all sales be by the State only. Of course, this power was granted to the States in order to regulate, not in order to rape consumers. It was not supposed to be a vehicle for gouging, just for regulation of dangers, real or imagined.

There is no good reason why a consumer should not be allowed to shop for wine in the national marketplace. Metz's arguments to the contrary are patently self-serving and transparent.

First, he raises the specter of the need to control alcohol. He cites the famous example of UPS delivering wine to minors. As noted by others, including the editorial writer in USA Today, "anecdotes of teen buyers have been exposed as state or industry engineered stings." More to the point, this "problem" is simply cured merely by requiring all alcohol shippers to obtain an adult signature....or not deliver. The current system, by the way, is hardly perfect. The Commonwealth of Pennsylvania has recently adopted a program--run in other states, too---called "Cops in Shops" to "sting" adults who accept small payments from minors in return for buying them booze. It uses $500,000 in federal money---but I guess there's no problem under the current system. None of this stops Metz from writing that with direct sales, shipments to minors cannot be controlled. This is so obviously wrong that one wonders why he bothers to raise the issue, other than as a bogeyman. It seems to me that if the WSWA persists in taking such a hard and ludicrous line, the only fair response is to work to the abolition of the distribution networks they represent. Why, really, do we need the WSWA and its members?

Second, Metz bewails the loss of tax revenues and complains that even systems designed to allow wineries to obtain a license and report sales and pay taxes will be imperfect. Many violations will occur. No doubt, Mr. Metz is just being an upstanding citizen here, concerned about maximizing state revenues. Yeah, right. His most effective ally, of course, is the tax collector. His has been an effective tactic; talk about tax revenue gains, and get the tax collectors and legislators on your side that way. This was an issue in some of the toughest states, like Florida, and Metz is happy to exploit that feeling. It is revealing, however, of the WSWA's blindness and arrogance that Metz would actually write in a piece designed for public viewing about his great concern for tax evasion. His "concern" is such a transparent cloak for his self interest that one begins to laugh on reading the article.

As with the "shipment to minors" issue, moreover, he is patently wrong. Mail order wine would seem to pose no greater risk in this area--except maybe to the pocketbooks of Metz's members---than mail order stereos, furniture, or computers. In fact, wine should be far less likely to fall through the cracks and far easier to regulate given the unusual powers over alcohol distribution possessed by the states. But in any event, the "problem" is no worse than with any other product. As noted by the USA Today editorial writer, other businesses can only dream of economic protection like this.

And that is, precisely, what we are talking about, of course. Economic protectionism. Anti-consumer, anti-competitive activities undertaken by States, egged on by the WSWA, solely to protect its members' pocketbooks. The States may have the Constitutional right to control alcohol distribution, but the WSWA isn't mentioned anywhere in the Constitution, a fact that seems to escape Metz.

It seems to me that if it were proven in a court of law that, as the WSWA almost seems to admit, the WSWA is engaged in anti-competitive activities designed to inhibit sales of a product by others in order to allow WSWA members to maintain their distribution control, there might be some antitrust or other legal consequences. In other words, I am not so sure that the WSWA can hide behind its state tax collectors forever. Perhaps some enterprising winery will test the waters in this regard one day.

Third, Metz assures us that there are plenty of legal ways to accomplish increased consumer choice. However, those nasty wineries, he says, "reject sincere distribution offers from licensed wholesalers." Translation: Do it our way, so that when you come onto our turf, we make money, or we're going to make sure you don't do it at all.

This is so transparently self-serving that it is almost shocking that Metz would actually write something that tips his hand so obviously. His contempt for our intelligence is palpable. His willingness to publish such a comment in a USA Today editorial supposedly written to convince the general public of the justice of his cause tips his hand both as to his arrogance and his true motives.

Bottom line: The laws in the various states regulating wine shipments are ludicrous. They are motivated by economic protectionism, and are anti-consumer. Some legislators, blinded by the possibility of new tax revenues (hmmm...I wonder how much in new taxes will appear, say, in Pennsylvania where people routinely just cross the border over to New Jersey?) or antipathy to alcohol, may have been happy to ignore the assault on consumers. Other legislators may have been more interested in keeping well funded constituents happy. I.e., money talks, we lose.

Everyone who cares needs to speak up loudly all the time now and let the legislators know that we are on to this game. We expect our legislators to work for us, not the WSWA. The Wall Street Journal, on September 26, wrote that "[t]here's nothing like protectionism to energize the bureaucratic brain in the service of special interests and political gain." And the wineries, those who are organized and well funded, need to fight back. The boycott of Florida events is a good start, but only symbolic, and not nearly enough. Finally, we need to knock on the door of the WSWA and embarrass them at every possible turn. WE are their customers. They are spitting in our faces. And you know what happens when people spit? Sometimes it winds up into the wind.

Douglas Metz and his Wine and Spirits Wholesalers of America. Wine Lover Public Enemy #1. Don't forget them.

Copyright 1997, all rights reserved, Mark Squires.