Today I want to share with you my picks of the winners and losers in the liquor space for 2019.
Winners of the Year
They exploded this year and are here to stay. They cannot even make them fast enough.
2. The American consumers
With DTC options increasing and laws opening up markets, the consumers have greater choice.
They are changing the face of what constitutes a wholesaler and Libdib is using technology to provide greater transparency and choice to retailers and suppliers. A small brand can put its product on LibDib’s platform and obtain access to retailers without an upfront financial commitment. A retailer can have access to a greater array of products on LibDib’s platform and select smaller brands that it would not recognize or have access to without LibDib.
The industry is taking notice and Republic National Distributing Co. joined an alliance with Libdib in 2018.
Libdib will continue to grow and enter more markets each year. They are transforming the market and setting the pace.
Losers of the Year
1. Michigan Liquor Control Commission and Republic National Distributing Co.
Can anyone top this fiasco! In Michigan, the Michigan Liquor Control Commission (MLCC) runs the distribution system for spirits. It picks three wholesalers to run the system. Michigan picked Republic National Distributing Co. (RNDC) to control around 2/3rds of the market.
Well RNDC builds a big distribution facility probably as a way to thank Michigan for their monopoly. Problematically, there are major glitches in the new facility. And problematically, the Michigan market does not receive the full allotment of many popular brands like Titos, Captain Morgans, and very worrisome for me, Jameson’s.
Not that small retailers depend on the holiday season for increased revenue or sales. These small retailers suffered at their most peak time, because they could not get the product to their stores in regular amounts and customers could not get their demands met by the market.
Michigan and RDNC combined this year for the biggest disaster in the liquor industry. http://irishliquorlawyer.com/has-michigan-lost-complete-control-of-its-liquor-system/
2. Bad law
Tennessee Wine stands for the proposition that the 21st Amendment can’t protect the state from bad law. Tennessee knew this when they decided not to defend their law at issue in this case.
Under previous Tennessee law, to obtain a retail license, someone had to reside in the state 2 years prior to applying and ten years after applying. The Supreme Court struck down this law as the state lacked a justification for the restrictions.
If a state is going to enforce a law in which they don’t have a plausible justification, expect courts to strike it down.
3. Laws with no evidence
Under Tennessee Wine and a series of lower court decisions, the courts now demand concrete evidence for why a state can impose a 21st Amendment restriction on Commerce. Gone are the days where a state can utilize the health and safety theory to justify a law.
Anyone that reads the Tennessee Wine decision understands that the Court takes a very adamant stand on this principle. Without evidence to justify a discriminatory law, a state’s 21st Amendment powers wilt.
Interesting enough, this principle not only resides strongly in writing, but also in how judges proceed in oral argument. In the oral arguments at the 8th Circuit for Missouri Broadcasters Association, the Attorney argued that the laws’ purpose was for public health reasons and to ensure that there was no financial entanglement between a retailer and distributor or manufacturer.
For the financial entanglement argument, the AG stated that having one retailer on a sign provided them great financial benefit, and that having more than one retailer decreased the benefit. The goal of the state was to make the benefit from advertising dollars flowing through to the retailer de minimis, and the more retailers you have on an advertisement the more de minimis the dollars become.
When a panel judge asked where the evidence was for this argument, the state came up with an intuitive analysis versus an empirical analysis. The Judge questioning the state did not seem impressed with the state’s position and pressed them to prove their legal theory.
Without hard evidence to back up a legal claim, judges will dismiss the credibility of a law.
Have a great New Year
Have a great New Year and New Decade. I look forward to the legal and marketplace developments that will come this year. Thank you for reading my blog, I am truly grateful for the time you spend reading! I know your time is valuable so I strive to provide you with the best!