Fermentation
A decision in Illinois today by the Illinois Liquor Control Commission delivered proof of what so many of us have come to understand as the truth: the Three tier system has evolved into the “Wholesaler Protection System” while the various alcohol beverage and liquor control commissions in the different states have become the enforcers of that corrupt system.
Today the Illinois Liquor Control Commission ruled against Anheuser-Busch’s bid to buy out its Chicago-area distributor so that it might distribute its beer on its own. The Commission cited the need to preserve the “Three Tier System” as the primary reason to deny A-B the ability to buy the remaining 70% of City Beverage-Illinois and self distribute its beer rather than use a wholesaler.
According to Gary Rutledge, A-B’s VP and General Counsel, “This challenge to our license was very last-minute — we made nearly 20
contacts with this agency and they never mentioned an issue until the
eve of the deal closing.”
Mr Rutledge knows what happened and so does everyone else: Southern Wine & Spirits and Wirtz Distributors, Illinois’ biggest wholesalers, called up their pals at the Illinois Liquor Control Commission and demanded the Commission protect their businesses from competition.
In order to protect their friends the wholesalers, the Illinois Liquor Control Commission made their ruling based on the thin ground that allowing A-B to distribute their own product would damage the Three Tier System, which, they claim, is the raison d’etre of Illinois’ entire set of alcohol laws.
According to news reports, A-B plans to sue the commission and the state on Commerce Clause grounds. I say more power to them.
The 70+ year old three tier system, whereby producers sell to wholesalers and wholesalers sell to retailers and restaurants, has become the wall of protection that wholesalers, who occupy a privileged and unearned and often unnecessary place within that system, hide behind whenever their cushy, government subsidized world is interrupted by the 21st century marketplace. Through this antiquated protection racket, wholesalers have near complete control over what products come into the market. And whenever it becomes clear that their services are not needed or that others can do their job without them or when consumers complain that the current system is broken, wholesalers go running to mommy-government crying that their wall of unfair protection is being threatened.
Luckily for the wholesalers, politicians (who take enormous amounts of cash from wholesalers) and alcohol regulators have both happily crawled up inside the wholesalers Honey Pot and will work their hardest to protect a small collection of HUGE business that looks more and more like the Mafia Commission every day.
Wine producers and retailers have known for decades that wholesalers are not their friends. Small Brewers have known this. Now it appears that Big Beer is learning just how out of control the complete control of the wholesalers has become.
• Consider that in Indiana there is a law about to be passed that will allow wine and beer wholesalers to get paid if one of their producers leaves and goes with another wholesaler. The bill says the new wholesaler must pay the former wholesaler “fair market value” of the right to distribute the brand in question
• In Michigan, after a federal court ruled that the state’s discrimination against out-of-state retailer who were not allowed to ship direct to consumers was unconstitutional, the head of the Michigan Liquor Control agency worked with the Wholesalers to write a law, get it introduced into a committee and have it passed out of committee without giving anyone warning. That regulator then quit and took a job as a lobbyist with the lobbying firm that represented the Michigan wholesalers.
• And of course it has been wholesalers across the country, a group of people who never deal with consumers and know little or nothing about selling wine to the public or the challenges it presents, have been in the forefront of stopping any all means of direct shipping to consumers by both wineries and retailers.
• Finally, consider that this “three tier system” of mandated use of wholesalers by producers who must sell to them and retailers that must buy from them, was set up in the 1930s when there was no wine industry, when their was no overnight shipping, when there was no way to distribute information instantly and when consumers had little or no interest in wine, yet it is supposed to be the framework by which alcohol sales are governed today.
My guess is that if an enterprising member of the journalistic community wanted to dig a little, they’d likely find very inappropriate pressure put on the Illinois Liquor Control Commission right before it stopped A-B from acquiring the Illinois distributorship and in advance of finally denying it from having controlling interest in the distributorship.
A-B is certainly going to have to sue. They’ll get no help from Illinois politicians who are so far in the pockets of Illinois wholesalers they could all get jobs as tailors.

Tags: Fermentation Blog
It may come as a surprise to many of you, but if you come to the town of Sonoma there is no law against getting a cocktail instead of a glass of wine. In fact, lo and behold, there are actually a number of fine drinking establishments located on or around the famed Sonoma Plaza where you can belly up to the bar.
And yet I could find no reference on where one might go in Sonoma to get a Manhattan or Old Fashioned or French 75 or a Corpse Reviver or a good Dirty Martini or a Sazerac. So, being the font of wisdom and caretaker for thirsty Sonomans and their guests, I decided that just such a reference was called for.
Behold, the SONOMA COCKTAIL CRAWL—(brought to you by Tom Wark and GoogleMaps)
Now, far be it for me to suggest that one actually perform this Cocktail Crawl, hitting all 8 locations and drinking at each, in one sustained crawl (though I promise it can be done). However, for those inclined to sip a cocktail rather than wine, this little map with commentary might provide inspiration.
It should be noted that one can order food, and in some cases really great food, at six of the eight stops on the Sonoma Cocktail Craw. So if you do dare to do it all in one long, sustained crawl…get yourself something to eat.

Tags: Fermentation Blog
Many of us have watched opponents of direct shipping cynically use the clarion call of “KIDS, BUT THE KIDS!” for years in their attempt to prevent the shipment of wines across state lines and directly to the homes of consumers.
Distributors can’t be said to have no concern for the well being of children. They have children too, after all. But their faux concern for kids buying wine over the Internet then being on hand when the package arrives, being able to get the package with a fake ID without their parents finding out…well, we all know that its a faux concern. The worst part is that they know it’s a faux concern too. That’s what makes it unethical.
But those of use who have been involved in one way or another with the political battles surrounding direct shipping have been particularly upset and worried about this unethical tactic for one important and simple reason: It’s not that we care about the souls of distributors, rather it’s because we know that holding up kids as the raison d’etre for a public policy position often works.
A perfect example of how a people and politicians will quickly rally around a call to protect the children can be seen in the news that in just four years the amount of sugary drinks in schools has been reduced 95%. NINETY FIVE PERCENT in just four years.
This has resulted from parents and public policy advocates and health advocates working the system by holding up Children as the raison d’etre. And it worked.
In comparing the campaign to eliminate obesity by working to remove sugary drinks from schools with the campaign to save distributor profits from being reduced by exposing them to legitimate and necessary competition, I don’t mean to suggest that the anti-obesity campaign is anything like as unethical as the distributors campaign to hold up kids in front of the bullets. It’s not. It’s just to demonstrate that using kids as a reason for change is an effective tactic.
Last week in Maryland distributors once again put up their cynical faux “save the children” argument at a hearing in Annapolis on a direct shipping bill. Over and over they were challenged with testimony that explained no member of law enforcement or alcohol enforcement anywhere had ever said they saw a problem resulting from direct shipment of wine. They were confronted with surveys of minors demonstrating that the direct shipping channel is not used by minors to obtain wine.
Yet, when the anti-consumer distributors, who know less about retail sales than any other segment of the alcohol industry, expressed their “concern” that kids would use direct shipping to buy wine then kill people in cars, you could just see the politicians at the hearing retreat from any sympathy they had for consumer rights and notions of free trade. The very thought of being tagged with wanting to be the person that put alcohol in kids hands backed them up from doing the right thing.
The Clarion Call of Kids is a powerful thing. Shamefully, the alcohol distributors use it to cry wolf for the sake of their own profits, not for the sake of the kids.

Tags: Fermentation Blog
“CHEERS LADIES—A DRINK A DAY MAY KEEP THE WEIGHT AWAY”—ABC News
“MODERATE DRINKERS GAINED LESS WEIGHT THAN ABSTAINERS—Boston.com
“RED WINE LESSONS OBESITY RISK IN WOMEN—Oneindia
STUDY: WOMEN WHO DRINK MODERATELY TEND TO GAIN LESS WEIGHT IN MIDDLE AGE—LA Times
WOMEN WHO DRINK MORE GAIN LESS WEIGHT—Washington Post
A DRINK A DAY COULD HELP KEEP THE POUNDS AWAY—The Globe & Mail
MODERATE DRINKING MAY CURB POUNDS ON WOMEN—Boston Herald
Three hundred and fifty seven links showed up this morning when I did a News search on Google for “Women-Alcohol-Weight”. By the time the day is over, this post will likely be one of a couple thousand that all are commenting on a new study that shows women who drink moderate amounts of alcohol (red wine in particular) gain less weight in middle age.
Forgive me for generalizing about the sexes, but in my experience when you start to suggest to women that a specific thing will help keep the weight off, they are likely to respond—and a hell of a lot quicker than men respond. Add to this to a specific action that is as easy to do and enjoyable as drinking wine and women will REALLY respond.
That’s why this new study on alcohol and weight consumption is going to have a measurable effect on wine sales over the long term.
What’s interesting and VERY IMPORTANT to note about these studies is that the “How” and “Why” is no where to be found. WHY do women who consume moderate amounts of alcohol gain less weight in middle age than those that don’t consume alcohol or consume more than moderate amounts? HOW does this conversion of wine drinking to keeping the pounds off actually work?
The answers to these questions, while important, are not important to the commercial impact of the announcement of this study on correlations.
As you might imagine, as a public relations professional, I’m pretty interested in how news stimulates action. Does there have to be an explanation of HOW drinking red wine will reduce the amount of weight gain in women in order for women to take action upon hearing this? No. There does not. In this case I’m pretty sure that all that needs to be done is note the correlation between the two in order to see women alter their alcohol consumption habits.
But what if drinking red wine has NO direct connection between keeping weight off in women? What if women who happen to drink wine moderately in middle age also tend, as a group, to do a number of other things—like exercise, eating healthy, have less stress—that more directly affect weight gain? Would this information make the reaction to this bit of news more muted. You bet it would.
So in this case, where the wine industry is concerned, less information is better I suspect.

Tags: Fermentation Blog
Testifying in front of a government body is frustrating, for a number of reasons. The primary source of frustration, however, is the inability to stand up in the midst of of a hearing and shout, “Bullshit!”
It’s not so much an inability as it is a matter of decorum and one’s desire to see how the hearing ends. I stayed until the end of a hearing last Friday on HB 716, a bill that if made into law would provide Marylanders the opportunity to purchase and have shipped to them wine from wineries and retailers inside or outside of Maryland. In other words, I suppressed my desire to stand and shout, “Bullshit”, as opponents of direct shipping—both wine industry members and legislators—went about defiling logic and fact in their rush to keep consumers from accessing the wines they want.
I was in Annapolis, Maryland to testify in favor of HB 716 on behalf of the Specialty Wine Retailers Association. I was joined by local winery owners, farmers, retailers, sommeliers, consumers (Lots of consumers) and members of Marylanders for Better Beer and Wine Laws.
Testifying in front of a legislative committee is pretty much the same in Annapolis, Maryland as it is in Sacramento, California and Springfield, Illinois and Salem, Oregon and Nashville, Tennessee and Olympia Washington. It is a stilted affair. One signs up to speak on a particular bill being heard that session. One waits for their name to be called. One then advances to a simple, rectangular table with microphones that faces a semicircle of legislators. When it’s apparent they are ready for your testimony by staring at you with nearly dead eyes you commence with, “Mr./Madame Chairman and Committee members, thank you for…”
When I reached the rectangular desk with the microphone in Annapolis, however, I noticed that the committee members’ eyes were deader than usual. I also noticed one particularly well-aged yet pretty female member of the committee to the left trying, but failing, to disguise her tendency to nod off. I started with a joke involving my mother, Boone’s Farm Strawberry wine and a particular member of the committee. I got a laugh and the older committee member to my left woke up.
In nearly every legislative hearing I’ve ever been to or testified at, the minds of the committee members, who will eventually vote to pass or not pass the bill on to the full House or Senate, have already been made up on the matter. There is the possibility to change minds. And there is the occasional legislator who hasn’t yet made up their mind either due to laziness, disinterest or genuine respect. We testify nonetheless because we know it’s important that the various constituencies and stakeholders have their views aired. In the case of the Maryland bill to allow direct to consumer shipping, I was there because it is important for the nation’s progressive wine retailers to have their view heard.
I spent three minutes explaining to the members of the Economic Matters Committee of the House of Delegates exactly what out-of-state wine retailers would do if HB 716 became law: pay for a permit, faithfully remit taxes, report to the Comptroller on a monthly basis, submit themselves to the legal jurisdiction of the State of Maryland, and assure that common carriers checked IDs before any wine is delivered.
In those three minutes I made a point of looking each committee member in the eye. However, I don’t think the older lady to my left saw me looking at her. My testimony was followed by questions from committee members, the part of the process I like most, but almost never changes minds.
Marylanders for Better Beer and Wine Laws have been driving forward this issue of direct shipping in Maryland. Adam Borden, it’s executive director, has been relentless and built the organization into a 25,000 person-strong collection of wine and free-trade lovers. The result was a significant turnout at the hearing. Upwards of 40 individuals signed up to testify with proponents outnumbering opponents of direct shipping by at least 2-1. Everyone eventually went to the podium and did their three minutes. Not everyone got questions, but the committee members did muster the occasional question for a speaker.
The one legislator who decided to try to counter my testimony was a good looking gentleman in his late 30’s who, like most legislators, asks questions in order to make a point, not to illicit more information upon which to make a decision. What this tall, young politicians wanted to know of me was how I could claim that there would be enough shipping into the state to generate significant tax revenue, but that these shipments would not take food off the table of local retailers who would be hurt by the competition?
What I’m sure he heard me explain, but didn’t care about, was my belief that Marylanders were probably just as smart as wine consumers in other states where they are unlikely to pay substantial shipping charges on wine they could otherwise obtain locally.
In response to his query, I repeated my contention about the intellect and reason of the average wine lover Marylander. He was not satisfied with my response: “I don’t’ drink wine but I can’t believe they’ll be buying wine both on-line and at local stores.”
This forced me to explain my own proclivity for Austrian Riesling, how I can’t find much of it in Sonoma, how I buy it on-line, yet how I often patronize local grocery stores as well as wine stores to procure other wines.
“Well, I think you must like wine more than most people,” he replied.
I didn’t have a chance to tell him about my recent exploration of spirits and cocktail mixing. It wouldn’t have mattered anyway. He successfully communicated his disinterest in understanding the issue and was also successful in communicating to his patrons in the audience who opposed direct shipping that he had done his duty to take their side.
The Annapolis hearing lasted four hours. I sat through it all even though I’d heard it all before.
I learned that allowing direct shipment of wine would be “catastrophic” for the youth of Maryland who would use the sales channel to obtain alcohol then likely go kill themselves or others in a car accident. “BULLSHIT,” I didn’t yell.
I learned that out-of-state retailers can not be trusted to pay Maryland sales taxes. “BULLSHIT,” I didn’t yell.
I learned that 1000s of Marylanders would lose their jobs if direct shipping was allowed. “BULLSHIT,” I didn’t yell, again.
When all the yelling was done not getting started, the hearing ended, the committee chair thanked everyone for their input and announced the bill was unlikely to pass this year. There was no straw vote among committee members. There was no real vote of committee members. There was merely an announcement that the SUB-committee of the Economic Matters Committee of the Maryland House of Delegates would review the bill next.
When that happens there will also be no yelling of “BULLSHIT” at all. Rather, the Alcohol Subcommittee will announce they don’t’ support the bill and it will die there.
The process by which political influence is purchased and wielded includes campaign contributions, using contributions to gain access to politicians, communicating during that access what you want the recipient of campaign contributions to do, and giving them talking points for doing it without making a complete fool of themselves. The committee hearing is where it really all pays off. This is where wine shipping is killed and where distributors see their return on investment.
The more I attend and testify at these hearings and the more I see the same thing happen the more I start to believe that standing up and yelling “Bullshit” early on may not be a bad idea. It would have the benefit of getting me kicked out of a 4 hour long hearing with a predictable ending and have the benefit of actually being the truth.

Tags: Fermentation Blog