Wednesday, June 23, 2010

Internal Alcohol Industry Battle Heats Up.

"It's an inter-tier dogfight," says Frank Coleman, Senior Vice President of the Distilled Spirits Council (DISCUS).

Today the distilled spirits producers, beer brewers, and wine makers of America formed a united front through their respective trade groups to oppose HR 5034, which they characterize as the Wholesaler Monopoly Protection Act. HR 5034 is supported by the wine and beer wholesaler organizations.

Most Americans probably don't know how beverage alcohol regulation works in this country, but it's not like other types of nationally-distributed consumer products. A great deal of authority is retained by the states. The constitutional amendment that ended Prohibition in 1933 set it up this way, in part to ensure ratification. Although HR 5034 is one of those laws that is so broadly written it's hard to predict exactly what its effect would be, many believe it will be discriminatory and anti-competitive.

I oppose HR 5034 not because the producers do but because it's bad for consumers. If you can't get bourbons that are sold in the rest of the country that's usually not the producer's fault, it's the wholesaler or wholesalers that control your state, which in 18 cases is the state.

HR 5034 doesn't benefit anyone except the wholesalers, who have a sweet monopoly going and want to protect it. It will do nothing good for you, the consumer.

Here is the letter sent by the producer groups to every member of Congress:

We, the undersigned beer, wine and spirits associations representing virtually all alcohol beverages produced in the 50 states respectfully request you to preserve the effectiveness of the existing state-based alcohol regulatory system – and support the constitutional principles that protect the marketplace against discriminatory and anti-competitive state laws – by rejecting H.R. 5034.

The current system of alcohol beverage regulation in the U.S. provides a proven and effective balance between states and the federal government that allows for local flexibility while providing necessary consistency and fairness on a national basis. This allows producers, distributors and retailers to conduct business in an efficient and effective manner that best serves the interests of the American public.

The National Beer Wholesalers Association (NBWA) and the Wine & Spirits Wholesalers of America (WSWA) seek to dramatically alter the current system of alcohol regulation. With H.R. 5034, NBWA and WSWA want to put brewers, wineries, distillers and retailers at a competitive disadvantage; allow states to unfairly and arbitrarily enact protectionist laws against out-of-state beer, wine and spirits producers; and effectively eliminate federal oversight of alcohol. Specifically, H.R. 5034 would allow states to pass laws that violate the dormant Commerce Clause, federal antitrust laws and any other Act of Congress.

We fully support existing state alcohol regulatory systems and believe they provide an effective and efficient balance of control that serves the interests of consumers, producers and the marketplace as a whole. We strongly oppose H.R. 5034 and respectfully ask that you refrain from supporting this unnecessary legislation.

1 comment:

Paul said...

Chuck, you're absolutely right. The argument the wholesalers and the state regulators try to make is that the tiered system helps to protect against underage drinking. That's pretty far fetched. UPS and FedEx do a good job of ensuring adult signatures upon delivery. If enacted, this bill would severely curtail consumer choice and options when it comes to purchasing alcohol.