Media Updates

June 25th, 2010

HR 5034: Not going away soon

House of Representatives bill 5034, introduced by the National Beer Wholesalers Association (NBWA), is anticipated to be heard before the Judiciary Committee in June. A date has not yet been set.

With more than 100 co-signers in Congress, House Resolution 5034 is pitting wineries, brewers, distillers, retailers and consumers against the supporters of the bill: the National Beer Wholesalers Association and Wine & Spirits Association of America. A hearing before the U.S. Judiciary Committee is anticipated in July, and while many believed the bill would fade away, industry representatives caution against complacency.

What follows are some highlights on the HR 5034 issue in May and June:

•    First Ever Joint Producer Letter Issued to Congress: The primary associations representing wineries, brewers and distillers in the U.S. issued a joint statement June 23 condemningHR5034, the first time, to our knowledge, that these three industry segments have coordinated a joint communication to Congress. See http://www.freethegrapes.org/sites/default/files/JPL%206.23.10.pdf

•    Consumers Send 37,000 Letters to Congress: More consumers are engaged on direct shipping than even during the argument and ruling in Granholm v. Heald before the U.S. Supreme Court. Since April 20, consumers have personalized letters through www.freethegrapes.org, encouraged by fellow wine lovers, wineries and winery associations, among others. The Napa Valley Vintners and Oregon Wine Board distributed flyers to consumers at Auction Napa Valley and Oregon’s Memorial Day open house program.

•    Washington Attorney General Blasts WSWA: The WSWA’s May 12 ad in Politico stated: “40 State Attorneys General and the State Alcohol Regulators Agree – the Time to Act is Now. Congress: Support Your State Alcohol Laws. Co-Sponsor H.R. 5034 – the CARE Act – Today! ” But a May 17 letter from AG Rob McKenna to Wine Institute stated: “It has since come to my attention that some proponents of HR 5034 have suggested, both in direct meetings with Members of Congress and in advertising, that I support this legislation. Let me assure you that this is not correct.” “My support of this National Association of Attorneys General sign-on letter is now being construed by some as support for HR 5034. This is false.”

We will post updates to our Facebook page and News section on www.freethegrapes.org as they become available.

New Jersey: Favorable Bill Lives On
Senate Bill 766, based on the model direct shipping bill, passed the Senate 29-5 in March although the date for a hearing in the House is not finalized. By wine consumption, New Jersey is the largest state that continues to ban winery-to-consumer shipments.

Massachusetts: Still Considering HB 317
Industry representatives continue to work with legislators on House Bill 317 (Torrisi) that allows for winery shipments and removes the fleet licensing issue in the existing statute. The bill passed the Joint Committee on Consumer Protection and Professional Licensure on February 9 and is currently in the House Committee on Ways & Means Committee.
Delaware: Favorable Bill Killed in Committee
HB 180 was introduced by Representative Debbie Hudson last year and followed the "model" direct shipping bill used by most U.S. states. It was killed in committee in June.

OTHER NEWS
Wine Economists Peddle Junk Science (with WSWA Financial Support)
The American Association of Wine Economists – which holds its annual meeting this weekend at UC Davis in California – has issued a working paper with the cheeky title, “Direct Ship Blowout: How the Supreme Court’s Granholm Decision has led to a Flood of Non-taxed Wine Shipments.” But the paper’s sweeping and unfounded conclusions are all based on an inaccurate estimate of total direct wine shipments, provided by WSWA to one of the authors.

•  Basis for Study: About 1000% Wrong. The paper’s abstract states that the “interstate sale of wine in the United States rose from 6.2 percent of the market to about 10.4 percent.” There is no explanation of how the “interstate demand model” was created or developed, other than an admission that it was “developed by the New York City based consulting firm, John Dunham and Associates, for the Wine and Spirits Wholesalers of America, a Washington DC based trade group.” That’s it? Every credible estimate of the amount of wine sold by wineries directly to consumers in the tasting room as well as through wine clubs, email and Internet places the total at or under 3% of total US wine production. In fact, a 12-month study presented June 10 by Wines & Vines magazine, in conjunction with ShipCompliant, projected total direct sales at about 2%. (Click here for a pdf of the study) And of that 2%, one-half are tasting room carryout sales (tax paid), so the total sold via Internet, club and telephone is just 1% of production, making the AAWE conclusion about 1000% off. (see www.winebusiness.com). Since the paper’s conclusions are all based on this tainted estimate, the remaining conclusions are meaningless.
• Extrapolation at its Best: Nevertheless, it’s worth pointing out that the authors twist themselves into knots trying to explain that state-specific taxes, consumption, cruise ship sales, duty free and other variables affect what it calls “cross-border trade.” They define this as an amalgam including not just direct-to-consumer sales, but also purchases by consumers living in one state buying wine at a retailer in a different state because of better prices and taxes. Based on the WSWA estimate of direct sales, the paper claims that the amount of wine volume shipped in “cross-border trade” increased from 6.2 percent in 2005 (before Granholm v. Heald) to 11.5 percent of US production in 2008, “with nearly 84 percent of this not being taxed at the state level.” The authors then make the sweeping conclusion that “it is likely that much of this is due to increased direct shipments of wine from producers to consumers.”
  
• Where is Analysis of Tax Collection Increases? We’re not economists here, but shouldn’t a paper making claims about tax collections also consider increases in state tax revenues, as opposed to only making guesses about decreases? The model direct shipping bill, introduced in 1997, forms the basis for statutes in most of the 37 legal states for winery shipments, and includes provisions for winery collection and remittance of excise and sales taxes. In fact, the wine industry was the first industry, to our knowledge, that voluntarily offered to pay sales taxes on Internet sales. The real story is that direct shipments are creating new tax revenues for states, which is another reason this bit of junk science comes out of left field.
  

Of course, this isn’t the first time we’ve seen “research” in the name of anti-consumer and anti-business shipping prohibitions. Unfortunately it won’t be the last.  

May 13, 2010

LEGISLATIVE UPDATES

Update on HR 5034

House of Representatives bill 5034, introduced by the National Beer Wholesalers Association (NBWA), is anticipated to be heard before the Judiciary Committee in June. A date has not yet been set.

The NBWA and the WSWA are lobbying aggressively on Capitol Hill. In fact, the WSWA took out a print ad on May 12 in Politico – a newspaper read by legislators and their staffs in Washington D.C. – encouraging legislators to co-sponsor HR 5034. As you know, the bill would exempt anti-competitive and discriminatory state alcohol beverage laws from most federal review, including capacity cap laws. It would turn back the clock on direct shipment laws. 

What is Free the Grapes! doing about it?

30,000 Consumer Letters to Congress: Since we posted information on April 20, consumers have personalized and sent 30,000 letters through www.freethegrapes.org to members of the House and Senate. That’s nearly a letter every minute. This is an unprecedented showing of support for wine direct shipping at either the state or federal level.

Major Market News Coverage: While numerous media outlets reported that the bill did not have a future, we have been successfully encouraging coverage of HR 5034 in outlets stretching from the Washington Post to the Santa Rosa Press Democrat. The bill is an anti-consumer attack on choice in wine, and an anti-business attack on retailers and wineries.

Grape Liberation Month: Free the Grapes! is coordinating a national, consumer toast this Sunday, May 16 in opposition of HR 5034, and to toast the fifth anniversary of Granholm v. Heald. Back in 2004, only 27 states allowed wineries to ship; now 37 do. But more grapes must be freed, and we are all challenged by monopolistic power grabs like HR 5034.

Facebook: Nearly 9,000 fans are having an online dialogue on the bill, and we post and share information there with wineries and consumers.

Background Information: See the Free the Grapes! Background Piece on the US Supreme Court Ruling as well as wine industry association statements on HR 5034.

How can you support the cause?

Winery Website Information: Include a short summary and link to www.freethegrapes.org on your homepage.

Facebook: Become a “fan,” or “like” www.facebook.com/FreeTheGrapes

Emails: Hundreds of you have included summaries of HR 5034 in consumer email newsletters. Send another email this month with a link to the letter-writing page on our website, which allows consumers to personalize and automatically send a letter to Congress: http://capwiz.com/freegrapes/issues/alert/?alertid=14948676