Tag Archives: three-tier system

Winebits 550: Dennis Horton, legal weed, and controversy in Champagne

Dennis HortonThis week’s wine news: Remembering Virginia wine pioneer Dennis Horton, plus three-tier for legal weed and another Champagne controversy

Dennis Horton’s legacy: Virginia’s Dennis Horton, who died in June, was one of the most important winemakers and winery owners in the U.S. That most people have never heard of him speaks to the way the wine world works. Dennis was one of the two or three people, along with New York’s Konstantin Frank, who never gave up on the idea of Drink Local, and is one of the people who helped us get to where we have wine in every state. To quote Virginia wine writer Frank Morgan: “I had the pleasure of sharing a few glasses of wine with Dennis in the early days of my wine journey. I remember him for his unique personality, wit, humor and the viticulture insights he shared.” Dennis was also famous for his dislike of the three-tier system; once, when I asked him about direct shipping, he told me he would ship wine to anyone anywhere, and he dared the states’ various liquor cops to try and stop him.

Bring on the weed: The WSWA, the trade group that represents the wholesalers and distributors who make up the second tier of the three-tier system, will support marijuana legalization. The catch? That its members distribute legal weed, reports Shanken News Daily, and the “states agree to regulate cannabis as they do alcohol.” One has to admire the group’s consistency and its chutzpah, if nothing else. Much of the wine world is trying to get rid of three-tier for its antiquated inefficiencies, but that doesn’t bother the wholesalers in the least.

A tussle in Champagne: The Wine Curmudgeon has long enjoyed watching the Champagne business run around in circles, and this bit fits that description perfectly. It’s not easy to decipher what’s going on, but it involves sparkling wine sold in the U.S. that is labeled as “Champagne,” an important French producer, Big Wine, and a variety of Gallic name calling (including one side accusing the other of “mad arroigance” and the other responding that it did not like being called an imbecile).

Winebits 546: Crummy wine, rose’s popularity, and three-tier restrictions

This week’s wine news: A top winemaker goes off on poorly made and crummy wine, while rose continues to grow and we learn about even more silly three-tier laws

Poor, poor sauvignon blanc: The Wine Curmudgeon is not the only person lamenting the state of wine quality and the abundance of crummy wine. Says Matt Day of South Africa’s Klein Constantia: ““If we’re not careful sauvignon blanc will go down the same route as chardonnay and no one will want to drink it.” His point? That winemakers and producers are “cheating” – ignoring terroir and varietal character – to make all sauvignon blanc taste the same, no matter where it’s from. The result, he told drinksbusiness.com, is boring wine that doesn’t taste like sauvignon blanc.

Rose is here to stay: No kidding – though I have to admit, I liked the tone of the piece, which positions rose as something wine snobs don’t respect. Or want us to drink. And there’s a great picture of a rose picnic, with everyone dressed in pink. On the other hand, some of the other was hard to swallow, like roses’ pink color has much to do with its popularity. How its popularity is because it’s usually cheap, well-made, and offers value where so much other wine doesn’t these days?

No, no, no: Liza B. Zimmerman, writing for wine-searcher.com, relates some of the especially silly laws tied to the three-tier system in the era of social media – because, of course, we can never get enough of that. How about not being able to list the price of a wine on social media? Or that posts can only made in a “media where at least 71.6 percent of the audience is of drinking age [based on reliable audience data].” Or, my favorite, that wineries can’t list just one retailer that carries their product, but at least two. Says an attorney quoted in the story: “[T]hese laws are not rational in today’s market.” Would that more people felt that way.

Photo by Kaboompics.com from Pexels, using a Creative Commons license

O, Canada: How did your Supreme Court screw up the Free the Beer case?

free the beer case

“Honest, officer. I’m not transporting beer from Alberta to British Columbia.”

Canadians get a taste of U.S. three-tier laws in the Free the Beer case decision

The Canadians have always seemed so much more sensible than those of us south of the border. In fact, many of my Canadian readers delight in pointing that out – our politics, our devotion to four-down football, and our liquor laws. So how to explain the decidedly U.S.-style legal decision last week in Canada’s infamous Free the Beer case, where the dominion’s top court said laws similar to the U.S. three-tier system are OK in their country?

Or, as the blog’s unofficial Canadian correspondent wrote: “And the court’s decision was unanimous, no less. It’s ridiculous. I have a cabin in British Columbia and I always bring my Alberta-bought beer and wine with me since prices in BC tend to be much higher. I guess I’m officially a bootlegger now.”

To which the Wine Curmudgeon can only smile and say, “Welcome to the club.”

The Free the Beer case revolved around a New Brunswick law that limits the amount of alcohol that can carried across its provincial borders. In 2012, Gerald Comeau was stopped and fined for bringing more than the 12-pint limit of beer from neighboring Quebec, where beer was less expensive.

In other words, just like a host of U.S. laws. It’s not unusual for state troopers at the Texas-Oklahoma line, for example, to stop cars for beer checks – to see if motorists are bringing beer from one state into the other in violation of the same sort of law in the Free the Beer case.

The same argument

Comeau’s argument will sound familiar to any U.S. wine drinker frustrated at the inability to buy wine in another state because of three-tier. His lawyers argued the New Brunswick law violated their client’s constitutional rights because it conflicted with a section of the constitution that says Canadian goods shall “be admitted free into each of the other provinces.”

In other words, the same argument used in the U.S. to challenge similarly restrictive laws, citing the commerce clause of our constitution. And which usually fail.

Which is the same thing that happened here. Canada’s Supreme Court ruled that the country’s provinces can regulate liquor any way they want, regardless of federal law, given the provinces’ autonomy under the Canadian constitution. I laughed when I read it: It’s practically a word for word reading of many U.S. three-tier decisions.

So listen up, Canada. Here’s what you have to look forward to: No Amazon wine. No Internet wine at all, in fact. Probably increased restrictions on direct shipping from Canadian wineries. Plus higher prices and less competition.

Wrote the blog’s unofficial correspondent: “For years, the Mounties would have a check stop on the May long weekend in BC and pull over any car or van full of young people from Alberta. They would take all their Alberta bought booze and pour it out on the side of the road. I can still remember the looks of dejection on their faces. I thought those days were over.”

Ain’t three-tier grand?

Three-tier system failure: A tale of three wines

three-tier system failure

Three-tier system failure has turned U.S. wine regulation upside down, and the wine drinker can’t buy even the most ordinary wines.

Three quality cheap wines readers aren’t able to buy, thanks to three-tier system failure

Sometimes, even I’m surprised at the screwed up three-tier system, which regulates booze sales in the U.S. And we know how screwed up I think it is. But three things happened over the past couple of weeks that demonstrate, with even more finality, three-tier system failure: That in the 21st century, three-tier has nothing to do with safety or law enforcement, but instead mostly prevents wine drinkers from buying even the most ordinary bottle.

• A reader in Sacramento – the capital of California, with one-half million people – couldn’t find a $10 Italian wine that I bought in Dallas. Know that the importer is one of the largest in Europe, and the distributor is the fourth-largest in the country, with $3 billion in sales. Finally, after back-and-forth emails with the importer’s brand manager (who is a certified sommelier), he found it at one store for one-third more than it cost here.

• I bought an $8 Italian red in Dallas, and it was $10 Hall of Fame quality. But, because I know about three-tier system failure, I checked on availability. The red is imported by a winery in Sonoma, and apparently mostly sold through its tasting room; it shouldn’t be in Dallas at all. So the Sacramento reader couldn’t buy a wine from a huge importer and an even bigger distributor, but I was able to buy this?

• Southern Glazers is the biggest distributor in the world, with $17 billion in sales, and it controls one-third of the U.S. market. So why does it distribute a $10 French sauvignon blanc in Texas but not in Illinois? I know this because my mom wanted to buy the wine, and I assured her it would be no problem. Because, of course, Southern Glazers. But as the sales guy at her local retailer told her in disgust, that sort of thing happens all the time.

And, of course, because it’s illegal in most states under three-tier to buy wine from an out-of-state retailer, you can’t use the Internet to buy any of these wines.

The three-tier system, as it exists today, benefits no one but Big Wine, retailers like Kroger and Walmart, and the biggest distributors. Or, as any number of small and medium-sized retailers have told me over the past couple of years: Three-tier failure in the 21st century means higher prices and less selection for wine drinkers, and we pay that price so the supply chain will be more efficient for multi-billion dollar companies. What the consumer wants is irrelevant.

Is it any wonder I worry about the future of the wine business?

Winebits 535: Direct shipping, three-tier strikes back, and baseball and wine

direct shippingThis week’s wine news: Dave McIntyre of the Washington Post takes on efforts to halt direct shipping, plus saving the kids from getting drunk and a baseball wine item

Direct shipping clampdown: Dave McIntyre of the Washington Post takes on efforts to stop consumers from ordering wine out of state retailers, describing it as “The three-tier system that favors big producers and big wholesalers is fighting back. …Over time, the way we shop has changed, and wine lovers demand more freedom to buy wines that don’t reach local shelves through the traditional system.” The piece is worth reading – well thought, concise, and sensisible, and even discuss possible solutions.

Striking back: The Texas Package Stores Association, which just had a federal judge call one of its favorite state laws arbitrary and irrational, is taking another tack to keep Walmart out of the state. From a post on its Facebook page: “Since the United Kingdom has deregulated its three-tier system, alcohol-related crime, bar intoxication, and alcohol-related deaths have increased.” Which, of course, has noting to do with the court decision invalidating the law that gave the association’s members a virtual monopoly on spirit sales in Texas. But when in doubt, always bring up public drunkenness and teenagers.

It’s baseball season: So that means it’s time for a baseball and wine post. Chicago Cubs outfielder Ian Happ is my new favorite player – he’s learning about French wine. Plus, he has discussed wine styles with Cubs manager Joe Maddon, who much prefers the kind of wine we don’t like to talk about on the blog. That’s the good news. The bad news? Happ is off to a .125 start, with 10 strikeouts in his first 16 at-bats. Not even first growth Bordeaux can fix that.

Walmart liquor stores could be coming to Texas

walmart liquor storeFederal court ruling in Walmart liquor stores case: Two key Texas three-tier laws are arbitrary and irrational

Walmart is one step closer to opening liquor stores in Texas – a development that could help loosen the three-tier system’s stranglehold on wine sales in the U.S.

A federal court judge in Austin ruled this week that two state laws that forbid publicly-held companies from getting a liquor license are unconstitutional. The ruling will be appealed by the trade group for the state’s liquor stores; the state isn’t sure yet what it’s going to do. If the judge’s ruling is upheld, we could have a Walmart-owned liquor store built next to a Walmart, a Kroger liquor store next to a Kroger, and so forth.

The two laws are crucial to how the three-tier system works in Texas, restricting what we can buy, where we can buy it, and when we can buy it. Three-tier, of course, is the framework that regulates alcohol sales in the U.S., adapted by each state for its own use.

One of the overturned Texas laws is the legendary “just us kinfolks exception,” which allows privately-owned companies to own as many package stores as they want – as long as the licenses for the stores are held by different members of the same family. For everytoine else, the limit was five stores total. Nifty, huh? It directly benefits the state’s biggest — and family-owned — chains – Houston’s Spec’s, with more than 160 stores; Austin’s Twin Liquors, with some 70 stores; and Dallas’ Goody Goody, with about 20 stores.

Since the laws are unique to Texas, striking them down doesn’t establish a precedent elsewhere. What does matter to the rest of the country is the tone of U.S. District Judge Robert Pitman’s 50-page decision. Pittman invoked every argument that those who want to liberalize three-tier have used for more than a decade: that laws like these violate the commerce clause of the Constitution, that the laws discriminate against one group in favor of another for no good reason, and that they don’t promote the public good.

“In sum, the [kinfolk] exception creates an unusual and entirely arbitrary classification,” wrote Pittman. “There is no reason to believe that the exception bears any relation to the promotion of family business or small business or serves any other legitimate state interest. It thus fails rational basis review.”

Which, of course, is what those with a vested interest in keeping three-tier claim. The package store trade group, in announcing it would appeal, said just that: “We will appeal the trial court’s decision and continue to fight for family-owned liquor store owners against the world’s largest corporate entities that seek to inflate their profits by upending sensible state laws that protect both consumers and small businesses.”

We’re still a long way from shopping at a Walmart liquor store. But that the decision emphasized the irrationality of specific laws that make up the three-tier system in Texas speaks well for others trying – and succeeding – to overturn similarly restrictive legislation in their states.

Winebits 526: Three-tier and direct shipping news

direct shippingThis week’s wines: Distributors lavish campaign contributions, plus direct shipping and Mississippi stays true to form

Big, big money: Distributors – the second tier in the three-tier system – contributed $107 million to state political campaigns over the past five election cycles, according to a report from the National Association of Wine Retailers. Two things to know about this study: First, the group that did it is the sworn enemy of the wholesalers, and second, that doesn’t affect the results. Anyone can find the same numbers, using sites from the The National Institute on Money in State Politics (which this report used), the Federal Election Commission, or Open Secrets. The distributors spend heavily to protect constitutionally guaranteed monopoly, which prevents us from buying wine over the Internet from places like Amazon, in grocery stores in New York, and on sale in Michigan. The distributors’ $107 million “dwarfed the combined contributions of all other sectors of the alcohol industry.” Said association executive director Tom Wark: “It should be no surprise that this ‘middle tier’ of the alcohol beverage industry pays huge sums to lawmakers to keep their competitive advantage in place.”

Direct shipping update: Five states still don’t allow their residents to buy wine directly from out of state wineries – but that’s the good news, reports the Napa Valley Register. Just 20 years ago, 44 states didn’t allow the practice. But “There’s been a lot of progress made over a long period of time,” says Jeremy Benson, who heads the Free the Grapes! Lobbying group. “But I think the No. 1 reason why this works is that [the industry groups] got together and they realized they needed a lobbying plus litigation plus PR strategy and that’s been really what has made this entire campaign.”

Only in Mississippi: Mississippi officials are suing four mail-order wine sellers, saying they illegally shipped wine and liquor into the state. It’s one of a handful of states that don’t allow wine to be shipped to someone’s house for any reason. All wine and liquor is supposed to go through the Madison County warehouse operated by the Revenue Department’s Alcoholic Beverage Control division. Because, Mississippi. And, of course, the three-tier system.