November 07, 2024
Column

Direct wine shipping provides consumer choices

A national wine war is pitting consumers, who want the option of having wineries ship directly to them, against wine wholesalers, who feel threatened by consumers’ growing demand for more diverse choices in wine and wineries. That war is now being waged in Maine.

A decade ago, just four states allowed direct wine shipments across state lines. That number has now increased to 33 states. But 17 states still prohibit interstate shipments. Maine is among that ever-shrinking minority of states that restrict choice. In the interest of fairness to consumers, it is time we changed that.

Consumers expect to be able to purchase the wines they want, in the manner of their choosing – from retailers, at the winery, and remotely by telephone, fax and the Internet. Oddly enough, Maine law even prohibits Maine wineries from shipping their product within the state.

A consumer in Portland must travel to Lincolnville, near Camden, to buy wine from the Cellardoor Winery.

This bizarre situation cuts off the state’s largest market from a farm winery that commands a spectacular view of the Camden Hills. If the winery cannot thrive, its land might be chopped up into pricey house lots that would replace a family farm.

LD 1900, An Act to Allow the Im-portation of Wine, is an outstanding piece of legislation with bipartisan support. It satisfies consumer demand for choice in wines and means of delivery. It also satisfies regulatory requirements and creates a new source for state sales tax

revenues. This model bill has been successfully implemented in New Hampshire, Louisiana and Wyoming. Massachusetts and Florida have just opened their states to direct shipping, and Vermont seems ready to do so as well.

Millions of wine enthusiasts, regulators and tax collectors in states that have passed favorable legislation, as well as America’s 3,500 mostly family-owned wineries located in all 50 states, support limited, regulated, direct-to-consumer shipments.

Citizens and winery plaintiffs have worked together to sue in numerous states and even took the case successfully to the U.S. Supreme Court. On May 16, 2005, the court ruled that it is unconstitutional for states to allow their wineries to ship to their consumers but deny that same privilege to out-of-state wineries. This ruling apparently did not affect Maine because Maine wineries are even prohibited from shipping within the state to Maine consumers!

Wine wholesalers bitterly oppose direct shipping, as you might expect – arguing that it cuts into their business. It does, but only minimally. Interstate direct shipments are estimated to be less than 1 percent of total wine purchases in this country. Nonetheless, they have used scare tactics to ward off the competition, while hiding their real objection with high-sounding rhetoric.

The first myth perpetuated by the wholesalers is that direct shipping will increase underage access and Internet abuse. In fact, government officials have gone on record that underage access is not and has not been a problem in legal shipping states. Wineries know they have a responsibility to avoid underage access and always support adult signature at delivery. The Federal Trade Commission debunked this myth in a July 2003 report.

Another myth is that wineries want to avoid paying state taxes. In fact, wineries support provisions allowing for state tax payments. LD 1900 includes these provisions. (The bill is currently under consideration by the Legal and Veterans Affairs Committee.)

The biggest myth is that direct shipping will destroy Maine’s three-tier liquor regulatory system. Remember that interstate direct shipments are estimated to account for less than 1 percent of total wine purchases. Direct shipping costs about $3 a bottle or $36 for a case of wine. Wholesalers, who enjoy a very advanced and efficient system of distributing beer and wine in Maine, can ship their product for about $3 a case.

Thus, even in a free market, wholesalers would have a huge competitive advantage. Even the large producers would be foolish to set up competing distribution systems to circumvent them. Wine wholesalers operate very profitably in every state of the union, except for those few where the state controls the wine distribution system.

Even Moxie is distributed exclusively by a large wholesaler that is independent of the manufacturer. There is no law in Maine mandating a three-tier system for fizzy soft drinks – not even the official state drink.

So let us set aside the hysteria and hyperbole. Rather than succumbing to the cries of “the sky is falling,” which Maine is hearing from wholesalers, let’s enact LD 1900 and allow limited and regulated wine importation directly to Maine consumers.

Rep. Ken Lindell, R-Frankfort, serves on the Insurance and Financial Services Committee.


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