WSWA Responds to Irresponsible Reason Article on DTC Alcohol Shipping
Wine & Spirits Wholesalers of America
Jul 29, 2022
WASHINGTON, D.C.
In a recent article by Jarrett Dieterle for Reason, readers are misled about the current state of the U.S. alcohol marketplace and are asked to accept a disingenuous narrative about America’s independent wholesalers to justify the author’s advocacy for the direct-to-consumer (DTC) shipping of alcohol.
The U.S. marketplace is the safest, most diverse and transparent beverage alcohol supply chain in the world — and, at times, a victim of its own success.
Thanks in large part to the strong, state-based regulatory models that helped the three-tier system to evolve, American consumers have little exposure to the limited and dangerous markets that exist in other countries. Interestingly, advocates for deregulation, like Dieterle, never seem to address this with their audiences. Just this week, for example, 36 individuals died and nearly 50 more people were hospitalized in western India after consuming illicit alcohol.
Throughout his piece, Dieterle seems to find it strange that alcohol is treated as a special case among product categories. The truth is, beverage alcohol is a socially sensitive product that 82% of surveyed Americans think should be regulated differently than other products and that has two U.S. constitutional amendments dedicated to its control.Dieterle suggests regulations like those that limit DTC shipping are “red tape” and should be nullified because the industry is “sidelined” from the convenience of a “mail-order economy.” Dieterle asserts this without addressing the dangerous impacts to public health and safety, supply chain transparency, competition, effective enforcement and efficient tax collection that would accompany the changes he advocates.
To justify his push for deregulation, Dieterle completely mischaracterizes America’s independent wine and spirits wholesalers, labeling them as “recalcitrant,” “exclusionary,” and “only interested in selling alcohol from big-ticket producers.” Similarly, he misrepresents distributors as a barrier to market entry, limiting consumer choice and craft brand growth. Ironically, he celebrates the exponential growth of craft breweries, noting how the “industry has gone from less than 100 breweries nationwide several decades ago to over 6,000 today,” while failing to acknowledge the role wholesalers and distributors played in that market expansion.
The craft industry boom of the past few decades is evident in the plethora of products seen on the aisles and backbars of every alcohol retailer in the country — nearly all delivered there by independent distributors. Unlike other beverage industries (think soda) craft, startup and small production beer, wine and spirit brands are readily available to American consumers, and distributors across the country have invested heavily in specialized craft divisions to keep up with both supply and demand.
The only “pay-to-play scheme” that would flourish in Dieterle’s “deregulated utopia” is a DTC alcohol shipping marketplace that would enable the biggest producers to edge out craft, startup and small production beer, wine and spirits brands with deep marketing budgets, outsized promotional teams, and paid celebrity endorsers. Deregulation like that suggested by Dieterle would tip the careful balance regulators have worked to achieve that maintains a level playing field for producers and retailers of all sizes. The loss in innovation, as well as opportunities for veteran- and minority-owned startups, would turn back the clocks and harken back to an industry makeup many are working to change for the better.
The real story of America’s craft beverage explosion over the past few decades is a collaborative partnership among craft producers, independent distributors, and local retailers — small and large — that has increased consumer demand, secured consumer confidence in legitimate product and value, and driven brand growth. If we want craft brands to flourish even more, the right recipe is enforced regulation that maintains a level playing field, not less.