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Editor's Letter

 

Speak Out Against the CARE Act

June 2011
 
by Jim Gordon
 
 
The CARE Act is back in Congress this year, and Wines & Vines still doesn’t care for it. Wineries, brewers, distillers, retailers—even beverage importers—are speaking out against the cynically misnamed legislation that would give wholesalers much more influence over alcohol sales in individual states.

We think the bill now named House Resolution 1161 (known as HR 5034 in the last session of Congress) is bad for consumers, is inherently anti-free market and most of all is bad for our many, many readers that sell wine direct to consumers.

We encourage everyone involved in wine production to get informed about this bill, if they are not already, and to let their elected officials know that wineries and grapegrowers are against it. The bill failed to get past committee in the last Congressional session. Let’s make sure it fizzles again this time. Here is why it’s important that HR 1161 does not become law.

What the legislation intends

 
VIDEO: Jim Gordon discusses the CARE Act

The CARE Act supposedly stands for Community Alcohol Regulatory Effectiveness. The beer and wine wholesalers who back it are using their old tactic of posing as the protectors of underage youths and proponents of states’ rights. What the wholesalers are really doing is protecting their virtual monopoly as the distribution chain for beer and wine.

The bill would enable states to enact protectionist and anti-competitive laws that would limit consumer choice, harm vintners, brewers, distillers, importers and retailers. HR 1161 would strip away Commerce Clause protections that allow regulated interstate shipment of wine to consumers, upend decades of settled case law and undermine federal authority over alcohol.

The beer wholesalers are using the legislation to fight off big chain retailers who would like to buy beer direct from the breweries. For wine wholesalers the primary incentive is the same—money—but they are not so much fighting retailers as protecting their turf against wineries that ship direct to consumers in their states.

Peanuts for the wholesalers
Wholesalers already handle about 98% of the volume of all domestic wine sold. Direct-to-consumer wine shipments only account for about 1% of sales. That number is peanuts for the big wholesaler companies, but DtC sales can mean the difference between success or failure for thousands of small wineries.

U.S. Rep. Jason Chaffetz, a Republican from Utah, authored HR 1161. Its sponsors are almost evenly divided between Republicans and Democrats. It is difficult to say whether this year’s CARE Act stands a better chance than the previous version. It does have fewer sponsors, and with more Republicans in the House, more representatives may understand how anti-small business the bill is. Wineries and their partners, the grapegrowers, should make sure that HR 1161 dies on the vine again this year.

Heroics are not required. Speaking up is. All winery owners and supporters in the winemaking community who agree with the arguments against HR 1161 need to contact their representatives and ask them to oppose the bill.

Understand that the wholesalers have an inside track with members of Congress, having cultivated relationships for decades and spent millions of dollars on campaign contributions. Still, wineries have a lot of clout of their own. Wine Institute and WineAmerica are all over this issue, lobbying the key representatives who will decide if the bill will come to a vote, and presenting the many logical arguments against it.

Democracy in action
Individual winery owners, winery employees, grapegrowers, consumers, retailers—all of those who may have to pay more and jump through more bureaucratic hoops if the bill passes—should contact their representatives with personal messages against HR 1161. It’s democracy in action: letting the lawmakers know what the majority of people want, and not letting the few with the most money set government policy.

The Wall Street Journal said it well in an April 27 editorial: “It’s hard to imagine Congress giving states the authority to prohibit Amazon or any other online retailer from shipping its products directly to consumers. Yet that’s exactly what they’re trying to do with wine. Sounds to us like a case of sour grapes that deserves to be stomped.”

Keep in mind that even though the Congressional sponsors of HR 1161 presented it as a way to protect the public, it is really intended to put more money in the middlemen’s pockets by doing an end-run around the U.S. Supreme Court and pre-empting the Constitution. Let’s take care that the CARE Act doesn’t become law.

 
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LATEST READER COMMENTS
 
 
Posted on 06.08.2011 - 14:41:29 PST
 
Thanks for getting the word out about H.R. 1161. Apart from staying in touch with their lawmakers, wineries should be keeping in close contact with state and national trade associations, including WineAmerica, to ensure we have the strongest collective voice possible in the long fight ahead against H.R. 1161. To ensure continued growth, wineries need to mind not only their business models, but also their policy models, and the best way to do that is through membership in trade associations. These organizations exist solely to make the business environment for America's wineries better, and the deeper we make our grassroots, the better our chances of fending off harmful legislation like H.R. 1161.
 
Cary Greene, Chief Operating Officer, WineAmerica
 
Washington, DC USA
 
 
 
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