Supporters of laws that ban wineries from shipping directly to consumers in many states -- especially wholesalers who now act as middlemen and would like to have all wine sales continue to go through them -- invoke all manner of justification for their position. They say they're trying to abide by the United States Constitution and to ensure that appropriate sales taxes are collected and, above all, to help states "protect their communities ... [and] safeguard their children ... " as Juanita Duggan, president and CEO of the Wine & Spirits Wholesalers of America, said when the U.S. Supreme Court agreed last month to hear two cases that involve direct shipping.
Right. When all else fails, invoke those poor, helpless kids. If the Supreme Court rules against Duggan and her allies, I can just see all those impatient 14-year-olds e-mailing their orders to Napa and waiting three weeks for their Screaming Eagle to arrive.
When the Supreme Court takes up this case later this year, justices will be reviewing just two states' laws, but their ruling could affect all 24 states that now forbid direct sales to consumers. These states essentially rely on the 21st Amendment, which repealed Prohibition but threw a legislative bone to the temperance movement by giving states broad authority to regulate the sale of alcoholic beverages within their borders.
I hope the court throws all those states' laws out the window. I hope the justices rule that wineries in California and elsewhere can ship their wines directly to consumers in every one of the 50 states.
A Federal Trade Commission study last year said consumers could save "as much as 21% on some wines" if they were able to buy them directly from the wineries. That's why wholesalers oppose the change; they'd lose money if wineries could bypass them and ship directly to individual consumers.
Although consumers in California probably wouldn't be greatly affected by such a decision -- at least not directly -- it's still a huge issue here. California is by far the biggest wine-producing state in the country, accounting for two-thirds of the nation's wine sales. All the other states combined produce only about 7% of the wine consumed in the United States.
West Coast arrangement
California residents can buy directly from California's more than 850 wineries -- just as residents in other states can buy directly from wineries in their states -- and California also has reciprocal agreements with Oregon and Washington that permit wineries in each of these states to sell to customers in the other two.
I don't want to be chauvinistic, but I have to say that with all those fine California, Oregon and Washington wines already available, I really don't see a significant number of Californians suddenly spending a lot of money to buy the wines of, say, New York, Ohio and Texas.
But a favorable Supreme Court ruling would allow residents of California -- or any other state -- to call a California winery and order wine as a gift to be sent to a friend or relative or business acquaintance in another state.
Would opening new domestic markets for California wines mean that consumers in California might have more trouble finding the California wines they want -- or have to pay more for them?
"No," says Rich Cartiere, editor and publisher of the Calistoga-based Wine Market Report. "There's plenty of California wine available, and there's too much competition among too many brands, California and foreign imports, many of them being offered at discount prices, for California wineries to get away with raising prices."
Direct shipping throughout the country could be an enormous windfall for California wineries, though, simply because they could sell more wine to more customers. This should make the wineries healthier, and since the wine industry contributes $33 billion to the state's economy, the state's economy should get healthier too.
But that's not why I favor eliminating the ban on direct shipping. The ban just seems discriminatory to me. Over the years, the Supreme Court has generally interpreted the Commerce Clause in the U.S. Constitution in ways that limit such state-by-state discrimination -- "economic Balkanization," the court called it in another case -- and I hope the justices will do likewise now.
If I lived in New York (or Michigan) -- the two states whose bans are the basis of the pending Supreme Court case -- why should I only be able to direct-order wines made in New York (or Michigan)? Why shouldn't I be able to buy by phone, online or through the mail any wine from California and Oregon and Virginia and any other state that makes wine that appeals to me? And why shouldn't wineries be able to sell to anyone, anywhere, who wants to drink their wines and is willing to pay for them?
Even a favorable Supreme Court ruling wouldn't allow foreign wineries to ship directly to customers in the U.S. because federal import and customs regulations, not state laws, prevent that.
But if, like me, you tend to root for the underdog -- the little guy -- in most situations, there's another reason to hope the Supreme Court overturns the direct shipping ban within the United States.
Big fish, little fish
The big wineries, in California and elsewhere, can survive under the current system. They may not like it. They may be able to make even more money if the system is changed. But at least they're in the game.
The biggest 25% of the country's almost 3,000 wineries sell more than 80% of the wines consumed nationwide, and wholesalers are happy to work with them. Most wineries are small, family-owned operations, though, with volume so slight that wholesalers don't find their business worth taking.
These wineries get shut out of interstate sales altogether under the current system; they can't ship directly to consumers, and they can't ship indirectly, through wholesalers. Collectors and casual drinkers alike should have direct access to these wines.
Direct sales from wineries to consumers are a relatively small piece of the wine pie at present, accounting for only $200 million of last year's $18 billion in total wine sales. But that number would increase significantly if wineries could sell directly to consumers everywhere.
The Supreme Court should make that possible.
David Shaw can be reached at firstname.lastname@example.org. To read previous "Matters of Taste" columns, please go to latimes.com/shaw-taste.