HR 5034 (or HOW I LEARNED TO LOVE BREATHING SARIN GAS AFTER RUNNING A MARATHON)

The wine blogosphere has been blowing up over the proposed legislative bill HR 5034, which in essence, is collectively trying to squelch all the attempted lawsuits in the direct shipping fracas that is currently going on. The champions for direct-shipping are crying “the end of the world” though the bill is inherently doomed to fail.

I have been in this business for a long time, and have seen the rise of the big megawholesalers like Southern Wine & Spirits and Republic-National, and while standing in the shadows of monopoly-like distributors such as these and others, there are still “the little guys” that acquire great brands that would never get the time of day at the big boys’ house, and are surviving just fine. At issue are all the little wineries across the country that cannot afford to have a wholesaler represent them – it would eat up any profit they may incur, and subsequently bankrupt them before they ever got going.

So who is really standing in the way, not just of all the small, boutique wineries popping up in all 50 states, but of the consumers who visit these wineries and wish to purchase their wares, as well as any other wine enthusiast that may want to buy these wines in the less conventional means (via snail mail or the interwebs)?

I honestly think that this is another one of those “wedge” issues that when you get right down to it, doesn’t amount to a “hill a’ beans” in the grand scheme of things. When people are starving and in need of shelter (think Haiti, China, Afghanistan, Sudan, etc., etc.), it is hard to focus too much on this brouhaha. Yet maybe, I can offer some ridiculous notion that will more than likely be completely ignored or scoffed at for a nanosecond before all sides return to their various states of vitriol.

I don’t understand why the distributors cannot allow the tiny producers around the country to ship directly to consumers when it really doesn’t affect their businesses AT ALL. Yet it would ludicrous for someone like Gallo or Kendall-Jackson to ship direct due to logistics.

Let me explain.

You see, when it comes to the big guys, there are pretty much available in every state, so if these wineries were to sell their product on their own, they would need to employ thousands of people to get their products to the retailers and restaurateurs all over the country, which would mean multiplying their payroll exponentially. Obvious right? So with the wholesalers already in place, they have a built-in sales force in each state, ready to go, and they aren’t responsible for all that payroll, the wholesalers are. You following me? It is much more economical and more efficient logistically to utilize wholesalers if you are a large winery, i.e. Gallo, Kendall-Jackson, and the like.

On the other side of things, it makes far more sense for a winery with minimal production to self-distribute, and utilize any and all means necessary to get their wines to consumers as efficiently and as economically as possible. With not much financial means to pay a vast sales force, or hire a distributor to do the sales work for them, they need to be able to direct-ship in order to survive.

I’m not offering up anything new, am I?

So, why is there so much resistance to the idea of direct shipping of wines?

Well, the argument is constantly being made that direct shipping opens up the wine market to underage drinking. Anti-direct-shipping regulations have been enacted specifically to circumvent access to minors.

So the vitriol stirred up by the wholesalers and opponents of direct-shipping are doing it “for the children.”

They can and are methodologies in place to contend with underage drinking and the possibility of shipping to minors. It is no different than some “older-than-he/she-is” looking teenager strolling into a convenient store and buying a 6-pack of beer with a false ID. It is truthfully the politicians who (Politicians to me have always been soulless, moral-less, narcissistic lackeys for the corporate world, and lack the compulsion or backbone to do their job, which is do what is right for the people, not special interests.), because wholesalers are such enormous campaign contributors, step in and make this a bigger deal than it really is or needs to be.

Bureaucracy is a beautiful thing, eh?

What needs to be done with wine industry regulation is what needs to be done throughout government – eliminate bureaucracy and create a more modern, efficient way to do business, taxing fairly and justly, controlling the issues of bootlegging and underage drinking and other improprieties, and otherwise simplify a colossally ridiculous and antiquated system.

Being a retailer, I see both sides as viable arguments, yet having been a part of this industry for nearly two decades, I realize that the industry as a whole is wrought with stupidity that has been hindering real progress, allowing the big guys to get bigger and the little guys to sell out or just die.

I would hope that after all the wasted dollars spent fighting this fight, that both sides could take their heads out of their asses and resolve the conflict, working toward a better way, kind of like what I would hope would happen with anything going on in D.C. But that would be a Fool’s dream, right? I realize that it is really the wholesalers who are leading the charge against, and those for direct-shipping are merely doing what they feel they have to do to get things changed.

I hate to say it, but it isn’t going to happen.

The best to hope for is that the wholesalers realize that they don’t need to fight, they can let the small producers do what they need to do, and it won’t interfere with their bottom lines. Gallo isn’t going to do it themselves. Neither is any other multi-million case producer. It would be too much expense in the long run. If anything, it would affect retailers the most. And to resolve that issue, let retailers ship directly. Let them deliver product. A system would need to be in place to assure all parties that no kindergarten class is getting materials for white wine spritzers, certainly, but getting that done is the easy part.

Still, let your representatives in Congress know that HR5034 is a vapid idea, and that there are far more important things to be working on. Let your retailers and wholesalers in your area know how you feel, and be heard. Nothing can change without action from the consumer.

Maybe I am wrong. Maybe despite my experience in the business, I am missing the point. Maybe I should keep my warped opinions to myself. Maybe the three-tier system is the right way to go, and isn’t systemically flawed. Or maybe, we should all sit down and analyze the situations academically and analytically, and leave the “kids” out of it. Maybe then, we can get something constructive and concrete done without bureaucracy, special interest groups, or stupidity interferring. And maybe I have the winning lottery ticket in my underwear right now.