Posts Filed Under wine shipping
I know what you’re thinking, after reading the title of this post.
“Is the Dude about to go on yet another tirade about the PLCB? Okay, okay, they suck – we get it already…”
Well… the answer is “Yes.” Sort of. I’m about to go on a bit of a tirade about the wine shipping laws not just of Pennsylvania, but also of WA, ID, AZ, CO, KS, MN, IA, WI, MI, IN, KY, GA, FL, SC, NC, NY, VT, CT, RI, and IL (pending review of currently proposed legislation).
The state of affairs of wine shipping laws in those states is almost hopelessly broken. Notice I say “almost hopelessly.” That’s because I’ve thought of a way to fix it. Let’s break it down…
I say broken because those states have laws on the books that restrict the free trade of inter-state wine sales – a practice deemed unconstitutional at the federal (and for some also at the state) level. For the most part, these states are trying to protect state-run monopoly businesses that would be handed their own jock straps in the free market if, say, a big buyer like Costco were permitted to sell and ship wines directly to consumers in those states. The state run operations add extra cost while limiting value and selection – because they are monopolies, they don’t need to compete on the basis of price or service. If individual consumer rights, or the best interests of local state wineries get in the way of their monopoly profits, those citizens are simply disregarded – even if the states’ supreme courts have ruled against those practices. So, they make billions, pay big bucks to lobbyists to protect their position, and the state governments (for the most part) turn a blind eye to it all (probably because of the huge windfall).
How to fix this mess? Simple. Here’s a 2-step process of playing politics that could turn the tide. The thing to keep in mind is that politics is almost always a numbers game. And it almost always involves you (the people getting screwed) getting off your keesters and getting active.
- Stop buying wine from the state. I mean it. Don’t buy wine from your state-run liquor store. What will this do? It will reduce the windfall (remember the part about this being a numbers game?). No profits, no windfall. No windfall, no paying lobbyists to turn the tide of free trade legislation. No lobbyists, no deceit-filled battles to block the spread of capitalism to the wine shipping business.
Disclaimer: I’m not advocating you breaking the law – and to be honest, your state’s liquor laws are so convoluted you probably violated them already if you took any cough medicine this year. Anyway, I don’t care where you get your wine, as long as it’s not from a state-run monopoly. If you are lucky enough to live near a bordering state that does sell wine through the free market economy… well, I’m just saying that you might have alternatives.
- Write your state legislators. This is still a numbers game, because far fewer people actually do this than you’d think. So, if you flood your state legislators with correspondence, eventually they will question whether the tide needs to turn against the monopolies. Especially if you followed step 1 (politicians likely won’t stand by a sinking ship that is losing money) and indicate in your correspondence that you’re a voter in good standing and any re-election bid support on your part will hinge on their demonstrated support of free trade.Fortunately, writing your state legislators is very easy. Head on over to FreeTheGrapes.org – they will find your legislators e-mail addresses for you, and give you a handy form-letter to send them (don’t forget to add the re-election support part – politicians usually don’t like losing their jobs).
Maybe this sounds unreasonable, overly-simplistic and ridiculous to you.
But ask yourself this:
Is it any more ridiculous than a business with cripplingly poor business models, that can’t compete on the basis of service, selection, and price, making in excess of $1.5 billion dollars a year by hiding behind antiquated laws and charging you artificially high prices?
What if your state controlled your cell phone service that way? Or forced you to buy milk only from the state, even though it was stored improperly and cost 35% more than what your cousin, who lives in the next state over, pays for his family’s milk (which he can buy from wherever he feels offers the best milk at the lowest price)? Or limited your selection of underwear to a handful of brands and sizes?
Or treated women’s designer shoes the same way? (scary… that one might have the potential to drive some women I know to kill)…
Sure, there’s a big difference between “essential” goods like bread and luxury goods like designer fashions. But before you write off wine as an item that is fair play for regulation by the “pleasure police” (Robert Parker‘s term for the alcohol regulators in his home state of MD), don’t forget that two of our founding fathers (the two widely regarded to have had the most raw intellectual horsepower, by the way) – Jefferson and Franklin – viewed wine as an essential life good, equal to water and bread in terms of necessity.
So… who’s being unreasonable?
(images: blog.whathappensnow.com, wine.appellationamerica.com, ronalfy.com)
UPDATE (1PM ET): I’d like to send out a special welcome to all of the PA State government folks who, according to my site stats, have been reading this post. The wine world wants to know your viewpoints on these topics, so please shout ’em out in the comments section of this post if you’re inclined.
I suppose by now it’s no secret that I can’t stand the archaic, and probably unconstitutional three-tier monopoly wine distribution system still in effect in some states, including my hometown in the “Communistwealth” of Pennsylvania. The lucky numbers of you out there in blogosphere-land that are allowed to purchase the wine of your choosing, for a fair price, and have it shipped directly to your doorstep don’t really know the suffering that we unlucky hordes in PA have to deal with when shopping for wine.
Most readers will remember the board game Monopoly, in which players compete to take control of the highest amount of properties and services that they can, resulting in fees so high that the other players go bankrupt trying to pay them. States that operate under a monopoly of wine sales and distribution (like PA) are kind of doing the same thing, but in real life.
These stats should be abiding by the decisions of the Supreme Court and open up their borders to competition from wineries and direct shippers. The trouble is, the State monopolies have a crap business model, and they’d get handed their own jock straps in a fair capitalist marketplace. So instead, they are willing to go to extremes to protect their monopoly position.
Let the Dude enlighten you by way of an example…
- Let’s say that I badly wanted a wine that was not available for purchase through the Pennsylvania Liquor Control Board (PLCB). This isn’t difficult, since their selection, in the Dude’s opinion, is poor.
- Let’s also say that I spied a nice little beauty of a wine for sale on the Internet from someone else in another state. For this example, we’ll go to the way-cool folks at Domaine547, who sell all manner of tasty vinos. On their website, I spy the 2006 Scholium Project Gemella, Lost Slough Vineyard, and decide that I want a bottle for myself. (I checked – the PLCB doesn’t have it).
- Let’s assume that Domaine547 is a licensed direct shipper with the State of PA. That would mean that a) the PLCB doesn’t carry the wine so b) I’m allowed to order it from Domaine547 so long as they’re a licensed direct shipper with the state, provided that the following mandatory charges are added:
“The Direct Wine Shipper will have a shipping charge, and must add a $4.50 handling fee, Pennsylvania’s 18% liquor tax, 6% sales tax (and 1% sales tax in Philadelphia & Allegheny counties).”
Following is a rough estimate of what this would cost me, before shipping charges are added:
Wine Sale Price: $34.99
PLCB Handling Fee: $ 4.50
PA Liqour Tax (18%): $ 6.30
PA Sales Tax (6%): $ 2.10
PA County Tax (1%): $ 0.35
That’s an extra $13.25 out of my pocket. The additional charges constitute nearly a 40% premium above the sales price. At that level of markup, I might as well buy the wine in a restaurant instead of trying to have it shipped to me home. Imagine trying to buy something really pricey to being with, such as a case of Ch. Petrus (at upwards of $700 per bottle) with that kind of markup. Most PA state residents simply wouldn’t bother. And neither would the on-line wine sellers – it’s just not worth their time, because the state customers are unlikely to view it as a reasonable expenditure. That’s a “Lose – Lose” situation. Except for the state of PA, who are winning. At my expense.
The bottom line is that this system does not support real competition or competitive pricing – it amounts to a token gesture to appear to be opening the borders of the state to direct shipping (in this case, “direct” means shipped to a PLCB store, where you then have to go to retrieve it). In reality, all this system does is bolster the existing state monopoly on wine sales and distribution.
And finally, consider also that many high quality wine producers are shunning the State of PA because of state regulations that require them to add PA labels and bar coding to their wines. Why? Well, according to sources quoted by the Pittsburgh Post-Gazette, PA wine labels actually reduce the value of high-end wines because of the state’s reputation for poor wine storage, bad customer service, and overall expense of doing business.
In the words of Public Enemy, we’ve got to Fight the Power!
Here’s a little quiz for all of you out there in wine-land. What do you call a government that:
- Limits the choices of products available to its citizens by offering them only via government-run monopoly that has no incentive to provide competitive prices, good customer service, or expanded selection;
- Charges its citizens a premium for the “privilege” of the products limited choices & poor service, including taxation on goods already controlled by the government;
- Refuses to change archaic legislation that was enacted over 50 years ago, in order to protect its monopoly position & profits;
- Does nothing to alter its stance or comply with changing federal law, nearly three years after its current legislation has been deemed unconstitutional at both the federal and regional levels?
In most circles, the first two points could be considered Communism.
Technically, the later two points aren’t Communism, but I’d like to think that most people would at least consider them reprehensible…
Unfortunately, what I’ve described above is more-or-less what the state of Pennsylvania is doing in its wine trade, which is controlled by the Pennsylvania Liquor Control Board, right here in the good ol’ U.S. of A.
Bucking the Law Means Big $$$ for States
Actually, now that I consider it, I haven’t been entirely honest with you so far. Since the Federal government ruled that PA’s liquor laws banning interstate trade were unconstitutional in 2005, the PLCB has done something. It’s made money. Approximately $3 billion dollars in sales (that’s Billion, with a “B“), in fact. That is roughly twice the GDP of the country of Liberia.
That’s big, big money. In the case of the PLCB, it’s record-setting sales money, all achieved while operating what has been determined an unconstitutional system.
This is not just impacting PA wine lovers (& wineries) – similar situations are playing out in other states. The ones who benefit are the middle-men (distributors and state governments). The ones who get the short end of the stick? That’s you & me, baby (and the people making our favorite beverages!).
Distributors are – not surprisingly – paying big money to protect this windfall. What is surprising is that those same groups are claiming that money is not the motivator in their efforts to protect the “three tier system” of wine shipping. $3 billion in 2 years, seemingly operating unconstitutionally, and it’s not about the money?!?? I don’t know how they can even say that with a straight face…
Whether You Know it or Not, You’re Being Taken for a Ride
If you live in one of the States that prohibits (or seriously discourages) direct shipping of wine, and you buy wine, then you’re getting screwed. Your wine choices are probably limited. You might have little (if any) recourse to purchase the wines that you want. And likely, you’re paying too much for the wines that you are able to get.
What You Can Do About It
Big money issues like this one will not go away on their own. They require that wine consumers who want a fair deal – people like you (and me) – fight back:
- Visit the Shipment Compliant blog to find out where your state stands, and to catch the latest news in the fight for fair wine shipping for your state.
- If you have a blog or website, read Tom Wark’s posts on fighting back and link to support Wine Without Borders.
- Visit (and support) FreeTheGrapes.org.
- Write to your state legislators and let ’em know how you feel! I have (many times) – and trust me, some of them will respond!
Found a great article on Newsday.com today detailing how the current archaic U.S. state wine shipping laws are negatively impacting the budding wine production business in New Jersey.
And if you think NJ is not state with fine wine potential, then you’ve probably not yet tasted the premium reds from Tomasello Winery, which was one of the top favorite picks of Andrea Immer on her TV show Simply Wine. For the record, Tomasello has stopped shipping wine to consumers within their own state.
This same scenario is playing out with similar negative effects all over the continental U.S. You can do something about it – starting with writing to your state legislators to let them know how you feel.