Winebits 589: The world revolves around the three-tier system edition

three-tierThis week’s wine news: It’s all about three-tier — a merger called off because it would have raised pricers, the “unique” U.S. distribution system, and tussling in New Jersey

No deal: Breakthru Beverage Group and Republic National Distributing Company, which had announced a $12 billion merger in 2017, have called it off. The reason? The Federal Trade Commission, which oversees these deals, said it would have caused “likely anticompetitive harm.” An FTC official said the agency found that “this transaction likely would have resulted in higher prices and diminished service in the distribution of wine and spirits in several states.” The Wine Curmudgeon, who is not an attorney and doesn’t pretend to know anything about anti-trust law, has just one question. If this deal was anticompetitive, why did the FTC allow the 2016 Southern-Glazer’s merger, worth $16.5 billion, to go through? The new company controls one-quarter of the wholesale spirits and wine market, and is bigger than the next three companies combined.

Just a happy family: Who knew that alcohol distribution was just another family business? That’s the latest from the industry’s trade group, the Wine and Spirits Wholesalers Association, which wants the world to know the “story of wholesalers and the three-tier system while highlighting the value and uniqueness of America’s beverage alcohol system.” The Wine Curmudgeon, who does know how to read a news release, got a giggle out of this one. Unique indeed – so unique that almost no one but liquor law attorneys and wholesalers understand how the damned thing works. And yes, value, especially when the FTC doesn’t object.

Not in Jersey: New Jersey’s legislators are trying to decide if they should loosen the state’s direct shipping law, one of the most restrictive in the country. The article is exceptionally well written by Bloomberg.com reporter Stacie Sherman – easy to understand, direct, and almost devoid of winespeak and legalese. In other words, it’s everything almost all other mainstream media booze stories aren’t. My favorite part? Her description of three-tier: A “patchwork of laws that, as with those governing so many other industries, were ill-suited for the advent of e-commerce.”

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