Supreme Court Permits Direct Wine Sales

By JULIETTE ROSSANT Yesterday, the Supreme Court voted 5-4 to overturn trade-barring Prohibition laws that prohibited direct interstate wine sales. This frees out-of-state vinyards to sell directly to states all across the nation. Previously, a number of states barred out-of-state direct sales from vinyards, ostensibly to protect in-state vinyards but de facto to protect state-licenses wholesalers. Now, buyers in any state can purchase directly from vinyards of any size, not those who were able to penetrate powerful wholesale distributors. Three cases were combined for the ruling: Granholm v. Heald, No. 03-1116; Michigan Beer & Wine Wholesalers Association v. Heald, No. 03-1120; and Swedenburg v. Kelly, No. 03-1274, which were then combined (see Supreme Court summary of questions and Duke University's summary). "An important principle was defended—states are part of a national economic union where discrimination is not tolerated," said Kenneth W. Starr, former independent counsel in the Whitewater Affair and now counsel to the Coalition for Free Trade as well as dean of Pepperdine Law School. Starr and Kathleen Sullivan of Stanford University's law school represented Michigan plaintiffs last December. Other states with similar laws are: Vermont, Massachusetts, Connecticut, Florida, Indiana, and Ohio. The states already permitting direct shipment number 27. However, another 15 states ban direct shipments equally from out-of-state and in-state sources and thus unaffected by the Supreme Court ruling. It is a major victory for wine producers: as The Washington Post explained this morning: While the number of small wineries is growing rapidly -- there are 4,000 in the United States, each typically producing less than 5,000 cases a year -- the number of distributors has decreased through a series of mergers. Small wineries complain that the national distributors are too expensive to work with and ignore small companies in favor of a few big brands... As a result, 80 percent of wine sales come from just 100 brands such as E&J Gallo Winery, Robert Mondavi Corp. and Beringer Blass Wine Estates Ltd., according to WineAmerica, an industry trade group. "In this David versus Goliath battle, the ruling is a triumph for America’s family wine farmers,” said W. Reed Foster, president of the Coalition for Free Trade and chairman emeritus of Ravenswood Winery said in a press statement. "It is an historic day for the U.S. wine industry," said Paul Kronenberg, president of Family Winemakers of California. "The only way that most small wineries can survive economically is to open up new markets and that means shipping directly to consumers," he added. The hero of the hour is Juanita Swedenburg -- click here to read her story in The Washington Post. What will the effects of this ruling be? There should be an increase in the total amount of wine sold, since it will be sold more freely. Will wine prices really go down? And what will lower wine prices lead to? The gallicization of American eating, with more meals served with wine and thus better and better wines grown -- or higher incidences of drunk driving and alcoholism? And with increased direct sales, will we see more chef branding of wines? Daniel Boulud offers a Cuvee Daniel: will newly "liberated" vinyards now freely court chefs to put their faces on wine labels, like pasta sauces? Previous articles: Foie Gras War 2: Ban All Poultry? "G" is for Wine: Guler Sabanci Xmas Spirits: "Club Rocco" Brand? Foie Gras War Chef Branding: B&G Foods Exposes Emeril? Super Chef vs. Governator: Todd English Fights For Foie Gras Rights Tags: wine --> back to superchefblog