HR 1161 introduced in Congress: Wholesalers continue to try to protect their monopoly at the expense of wineries and consumers

The intra-industry battle between producers of wine, beer and spirits and wholesalers that distribute many of those products was reignited yesterday with the introduction of HR 1161 in the US House of Representatives. The bill is once again dubbed the “CARE act.”

Similar to legislation put forth by the wholesalers last year (HR 5034), the new bill, sponsored by Rep. Jason Chaffetz (R- UT), addresses state-based alcohol regulation and strengthens states’ control of alcohol sales, almost certainly jeopardizing consumers’ rights to directly purchase and receive wine. HR 1161 would open the door for states to enact anti-competitive laws that may discriminate against wine consumers and their right to purchase wine products.

Congressman Mike Thompson strongly condemned the new bill today.

“The federal government has no business picking winners and losers in the wine, beer, and distilled spirits industry,” Thompson said. “Yet the Comprehensive Alcohol Regulatory Effectiveness Act would do just that by banning the direct shipment of wine and other forms of alcohol in the US. The impact of this bill would be devastating for brewers, vintners, distillers, importers, and consumers across our country.

“Specifically, this bill would allow states to replace federal standards with their own, making it harder for out-of-state producers in California and elsewhere to comply with other states’ laws. Wholesaler interest groups, the CARE Act’s biggest supporters, are lobbying aggressively to unravel the existing regulatory structure. If successful, they stand to monopolize the alcohol market at the expense of other industry members and American consumers.

“I will not allow this discriminatory bill to go unchallenged. Existing state and federal regulations have created a fair and competitive marketplace for wine and other alcoholic beverages. Nothing has changed. That’s why I am prepared to fight to protect our wineries, our businesses, our local economy, and our consumers’ right to purchase these beverages.”

In a collective statement released yesterday, associations representing wine, beer and spirits producers, including Wine Institute, concurred: “We urge Congress not to unravel a successful regulatory structure to the detriment of consumers, the industry and the federal interest in a fair, competitive and orderly marketplace for alcohol beverages."

The Napa Valley Vintners (NVV) believes that consumers in all 50 states should have the ability to directly purchase and receive fine wine. Many medium to small wineries have very limited distribution and garner little attention from the large distributors, especially now as distributor consolidation is severely impacting the three-tier system. These wineries survive by selling wine through mailing lists, wine clubs, and over the internet.

NVV agrees that the existing three-tier system should be augmented, not eliminated, and should provide controls and regulations necessary to respect local laws, avoid underage access and provide provisions to make tax payments.

What the NVV is doing:

The NVV has been deeply engaged in the Direct Shipping issue for more than a dozen years. After several years of championing the cause through its own programs, the NVV formed Free the Grapes! and spun it off as a separate organization in 1998. Free the Grapes! was created so that there would be a complementary consumer advocacy side to direct shipping legislative and legal efforts. Since the creation of Free the Grapes! the NVV has donated $400,000 in direct cash contributions to the organization.

Additionally, starting in 2008, NVV has been a main financial sponsor of the Direct to Consumer Symposium, the wine industry's premier summit on direct marketing and sales. Funds generated by the symposium benefit Free the Grapes! as well as the Coalition for Free Trade, the organization responsible for the legal aspects of Direct Shipping.

How you can help:

Contact Your Customers!

Congressman Thompson is already fighting on our behalf. However, it is important that Members of Congress from all across the country hear from your customers (their constituents) as to why HR 1161 is bad for them. Use your consumer e-mail database and Facebook page to encourage them to visit www.freethegrapes.org where they may personalize a letter to their congressional representatives.

Follow the Law

The NVV encourages all members to follow the letter of the law at all times. For a state by state update on direct shipping, visit www.wineinstitute.org. More information may also be obtained at www.freethegrapes.org.