With the fight to pass HR 5034 heating up again in the wake of this month’s dramatic election results, it’s a good idea to examine the positions of both sides more closely. We’ve devoted quite a bit of space to discussing the chief concerns of wineries and other retailers interested in relieving restrictions on direct shipping, but it’s important to also understand why wholesalers are fighting just as hard to see the new legislation passed.
At the heart of the wholesalers’ argument is the idea that the current three-tier system of the alcohol market, which has been in place since the end of Prohibition, is still relevant and beneficial to all parties involved. Although wineries and wine collectors have protested that the current paradigm has made it difficult to fully explore the vast array of wines available for consumption in the United States, wholesalers point out that part of their function is to help small and mid-size wineries onto retail shelves where they might not otherwise have the resources to market themselves.
Wineries do concede this point but counter that HR 5034 goes too far in protecting wholesaler interests. Since the law would, in effect, make it harder to challenge state laws against direct shipping, it has the potential to establish the current system as permanent. Wholesalers believe, however, that the challenges—such as a ballot initiative in Washington state that was defeated on November 3rd—only serve to dismantle the three-tier system entirely, with the ultimate goal of removing wholesalers from the equation. In that sense, then, the wholesalers are fighting for their very survival. Direct shipping does not pose nearly the threat to their business, they claim, as nationwide deregulation of alcohol sales could. Individual states, after all, will still be responsible for writing their own alcohol laws after HR 5034 passes. Wholesalers are trying to make sure that these laws, once written, can stay on the books.
While HR 5034 opponents say that it may indeed be time for the three-tier system to be revised or done away with, wholesalers argue that the superiority of the three-tier system is in fact why it has survived for so long. In a series of recent interviews with Wine Spectator magazine, wholesalers acknowledge that there is some consumer frustration due to volume cap laws and others, but maintain that these are necessary difficulties that accompany what is possibly the most safe and effective system for alcohol sales the world over.
One thing is for sure: the debate is far from over, and in fact may finally be about to truly begin. If you have a strong feeling one way or another, now is the time to make your voice heard.