For years, the Associated Beer Distributors
of Illinois has been one of the most successful lobbies at the
Statehouse. The victory that comes immediately to mind
was when ABDI teamed up with Mothers Against Drunk Driving to
prevent direct sales of out-of-state wine to consumers. The
argument then was that underage kids could buy their booze using
that ever-so-scary Internet. The odd coalition was one of the most
ingenious legislative plays I’d ever seen. But if you’ve read the papers lately or
watched TV news, you’ve seen that the beer guys are getting
hammered for picking on the state’s nascent wine-growing and
wine hospitality industry. The wine industry, it turns out, has
finally started to turn the table on the beer distributors. What it all comes down to is that the U.S.
Supreme Court ruled last year that states may not “ban, or
severely limit, the direct shipment of out-of-state wine while
simultaneously authorizing direct shipments by in-state
producers.” Illinois law allowed Illinois wineries to bypass
distributors by shipping some wine directly to consumers and
retailers but banned the practice by out-of-state wineries —
which happens to be the law passed by the beer distributors and
MADD several years back. In response, the beer distributors introduced
legislation that would slap a limit of two cases per month on
out-of-state wineries — the same limit in place for Illinois
wineries before the Supreme Court ruling. Then, as all lobbies do,
they went further overboard in their initial legislation by
requiring that the first wine purchase be face to face. You
couldn’t just surf the Internet and buy a couple of cases of
wine from Gallo unless you’d previously been to the Gallo
winery and bought a bottle. The Illinois wine industry howled that the beer
distributors were trying to put them out of business. The media has
been eating it up ever since, particularly in southern Illinois, where
the winery boom began. The region’s newspapers have been full of
articles and editorials about the “David and Goliath”
battle. Most editorial boards don’t have a lot of sympathy for
what they believe to be parasitical middlemen who make large campaign
contributions, and they’re in love with the idea of little
wineries dotting the state’s landscape. The once hugely effective
“minors will buy wine on the Internet” argument has also
fallen completely flat. But there’s more to this than the news
media are telling you. The wine industry went overboard with its
own initial bill. The wineries’ proposal greatly
increases the amount of wine that Illinois wineries could ship
directly to retailers. Although the amount of wine they were
allowed to produce was doubled, the amount of wine they could ship
directly to retailers was quintupled. The beer, wine, and spirits distributors
aren’t happy with anything that bypasses them, of course, but
they claim that last year’s Supreme Court ruling would mean
that the big out-of-state wineries could take full advantage of
that proposed direct-shipping language to send thousands of gallons
of wine to Wal-Mart and other big retailers, and they say that beer
and hard-liquor makers could use the loophole to bypass them as
well. Because few Illinois wineries are even large enough to ship
that proposed increased amount of wine, the opponents claim the
language was probably intended to apply to the big out-of-state
wineries, brewers, and distilleries in the first place. Also ignored in every media report so far is
the fact that many small Illinois wineries that use Illinois grapes
wouldn’t have been able to ship wine directly to consumers if
the wine industry’s own bill had passed as written. Oops. A
wine-industry spokesman said recently that the bill would be
amended, but the beer distributors point to the rather large
omission as “proof” that this legislation is all about
a power play by the big wineries out west and has nothing to do
with Illinois’ winemaking industry. That’s also an overstatement, however.
The wineries’ legislation would allow many Illinois wineries
to open up 10 “tasting facilities” each, up from the
current limit of two. Those facilities could be a real profit
center for Illinois winemakers, but the distributors are opposing
this idea. There is plenty of room for compromise on
both sides, but the massive favorable publicity they’re
getting means that the wineries definitely have the upper hand
here.
This article appears in Feb 9-15, 2006.
