A new administration has been voted into office on an American First agenda. One can debate whether it is a positive vision or not. Especially concerning for some are the use of tariffs or other government actions to put American companies at an advantage against their foreign counterparts. In a split electorate, there is a great debate on whether or not this is sound economic policy.

My purpose today is not to wade into this great economic debate, but to discuss another issue that does not get discussed enough. Should we as Americans endorse a system that favors foreign companies at the expense of American ones? Especially when our political system purposefully writes laws that cut off opportunity and areas of growth for American companies.  This constitutes a bi-partisan problem across the states that should be addressed.

Our system that fails the American wineries

Liquor laws in the country are biasedly written in favor of liquor wholesalers, who control the political process and political contributions across the country.

The liquor wholesalers lost some control over the market when the U.S. Supreme Court ruled in favor of direct-to-consumer (DTC) shipping in the Granholm v. Heald case in 2005. The protectionist lockdown system of winery shipping laws was broken, and since that groundbreaking decision, the number of wineries in America has doubled. Opening up markets for American wineries has led to an explosion of growth in the America wine industry.

However, since Granholm the wholesaler lobby has made moves to make DTC shipping harder for American wineries and choke off their markets. As a side note, foreign wineries can’t take advantage of the DTC shipping network.

Laws in red states such as Tennessee and blue states like Massachusetts demonstrate how the states are attacking the U.S. wine industry. It also shows that bi-partisan destruction exists and we need to know the consequences. By limiting the definition of what constitutes production, states like Massachusetts and Tennessee do not allow for manufacturing innovation, impose their laws of production onto another state, punish a winery for residing in another state, and target small wineries that can’t afford massive production facilities. They hurt the U.S. wine industry, especially impacted are small wineries.

Additionally, fulfillment house licensing laws and other laws attacking not whether the winery legally complies with age verification, quantity limits, and taxes, but where a package is picked up from, make it harder and costlier for small wineries to get product into the marketplace.

Of course, all these laws detrimental to winery DTC shipping are endorsed and advocated for by the wholesale tier. The laws are essentially written to favor wholesalers holding a foreign dominated portfolio at the expense of the U.S. Wine Industry.

The Wholesalers foreign portfolio against the American Wine Industry

The U.S. wholesale tier products trend towards foreign producers. I was provided a look at Southern Glazer’s Wine and Spirits (Southern) wine portfolio in Illinois. Southern is the largest liquor distributor in America. The numbers were derived from Southern’s Proof website, which is an online shopping and account management software program.

Southern’s wine portfolio is skewed 52% towards international wine and 48% constitutes American brands.

For sparkling wines, the numbers are even worse, U.S. sparkling wine products only represent 17% of all products available, 83% are foreign products. According to a source, there are 58 American sparkling wine producers in Southern’s Proof website. As a frame of reference according to Google AI, 2,642 wineries in America produce sparkling wines. White sparkling wines represent the ninth most popular varietal in the American DTC market.[1] But good luck locating many of these American brands through the three-tier system.

When you look at the overall marketplace in Illinois, the numbers are even more skewed towards foreign producers. Binny’s, the most famous and largest liquor chain retailer in Illinois, lists its wines available by country.[2] According to its website, there are 3,947 U.S. wines available for sale, for foreign wines the number is 8,604. American wines constitute roughly 31.4% of the largest retailer’s portfolio.

What is the solution

Let’s look at this from a broader perspective, are we asking how we can help the U.S. wine industry? According to WSWA, wines sales decreased 8% for the year ending August 2024.[3] Vineyards across the country are being torn up with an estimated 30,000 to 40,000 acres being removed in California last year[4], and small wineries are suffering and barely surviving.[5]

But what has been the reaction of many state lawmakers and regulators, attack DTC shipping and make it harder for American small producers to enter the market. For many small American wineries DTC shipping is the only access to the market, as the wholesaler tier would rather take a wine from France or Italy versus a wine from Maine or Georgia. According to the Southern Proof numbers there are about an estimated 62 wineries that have a presence of 10 products or more available on Proof. There are an estimate 11,650 wineries in the U.S.[6], only a very small percentage make it onto Southern’s platform for selling.

And look I don’t begrudge the wholesalers for their choice of supplying French wine over wine from Maine. I am not advocating that we force Southern or any distributor to skew its wine choices, or have government enter the marketplace to force this issue.

What I am advocating for is freer markets for American small producers to access a greater customer base that is not available to them through the three system.

I am also advocating for state legislators and regulators to stop acting against the interest of the U.S. wine industry.

Lina Khan in her misguided antitrust crusade sought to bring down Southern through anti-trust laws stating that their pricing practices led to an anti-competitive market for large retailers versus small retailers.

Maybe the Biden administration would have been better advised to look at the disadvantages suffered by American wineries based on the current system.

In concluding, the numbers don’t lie. The American wine industry is suffering, sales and consumption are down, vineyards are being torn up in Napa, and small American wineries are barely surviving.

Adding to their problems are the American political class who are in a bi-partisan fashion hurting American wineries by siding with a distributor class geared towards foreign wineries, and legislatures that are writing laws on behest of the distributor class that will lead to the destructions of vineyards and American domestic wineries.

The wine industry is not facing great times ahead, but I am sure wine will weather the storm and get momentum again. My fear is that during the time of struggle, state laws will hurt American wineries and crush the spines for many of them.

I would love to see the American wine industry flourish again; I just hope state laws and regulatory actions don’t prevent this from happening!

 

 

[1] https://assets.vinoshipper.com/2025-vinoshipper-national-direct-sales-report.pdf

[2] https://www.binnys.com/wine/

[3] https://www.fooddive.com/news/wine-category-sales-decline-2024-chardonnay-wswa-alcohol/729853/#:~:text=Wine%20sales%20declined%208%25%20in,of%20America%20(WSWA)%20data.

[4] https://www.winespectator.com/articles/too-many-grapes-in-california

[5] https://daily.sevenfifty.com/the-story-behind-the-american-wine-crisis/

[6] https://cdn.bfldr.com/UG5EBX6L/at/sb25cq53ht98wkjcj4s2fbq/2024-DtC-Wine-Shipping-Report-0124.pdf