Today, I write in response to a letter from Trevor Cooke, a Teamster that works for Republic National Distributing Company (a major liquor distributor), who wrote against California’s attempts to legalize DTC shipping for spirits.

I am sure Mr. Cooke was well intentioned, but I respectfully disagree with his reasoning.

He indicates that the attempts to expand DTC shipping is a move by out-of-state corporations and Amazon to increase profits and crush the little man. First, since Amazon is a retailer and not a distillery, I am not sure how Amazon would factor in.

Second, the bill if passed would help the little man. Small distilleries and wineries don’t have national distribution in general, and rely on tasting rooms, very local markets, or a DTC base. Distilleries unlike wineries cannot generally direct ship product, so they don’t have access to the DTC markets.

During COVID, many small wineries and distilleries across the country were forced to close tasting rooms, their main source of income. Wineries were able to survive and earn extra income from DTC shipping when tasting rooms were closed. Distilleries did not have this same luxury. Allowing DTC shipping would help small Distilleries during difficult times. Laws should encourage this and not work against it!

Mr. Cooke indicates that allowing out-of-state DTC shipping would be harmful to the California distilled spirits market. My question is why are California Distilleries supporting SB 620? [1] Does Mr. Cooke know something the California Distilleries don’t?

Fourth, Mr. Cooke claims that allowing DTC shipping, places his job and many other retailer jobs in jeopardy. Let’s look at history to determine whether he is right.

History shows Mr. Cooke’s claims are erroneous.

After the Supreme Court’s Granholm decision, which allowed out-of-state wineries to ship into state and made state discriminatory wine shipping laws illegal, the number of wineries across America exploded. Did this explosion of out-of-state winery shipping, lead to wholesalers bleeding jobs, if it did, there is no evidence to support it!

So, I question based on the empirical past, whether Mr. Cooke’s claims are true?

What did result from Granholm increasing DTC shipping access?

A winery explosion which not only led to more wineries, but businesses that support the agriculture, logistics, and hospitality industry among many. From the growth of the little man winery, led to benefits to many different and related businesses.

I would also argue that increasing DTC shipping across the country would help the Teamsters.

24% of the Teamsters 1.4 million members are employed by UPS. The largest employer of Teamsters in the country. UPS handles a large amount of wine shipping, increasing and expanding DTC markets to spirits would lead to increased hiring for the biggest employer of Teamsters in the United States. [2]

The reality of the markets is different than what Mr. Cooke portrays, he indicates that the current distribution market in California makes DTC sale unnecessary. I respectfully disagree. It is difficult if not impossible for a small distiller or winery to obtain distribution in California. It would make no sense for a California distributor to sell product from a small Iowa distillery, when maybe its audience in California is 50 people versus a national brand where its audience is millions of people. (I invite him to read my post on Fed Biletnikoff!) The only way it makes sense for the small distiller to enter the market is through the DTC shipping channels

Without the DTC market many small wine producers would never have started, shouldn’t we provide small distilleries the same opportunity? Wouldn’t doing so would help the little man!

It seems Mr. Cooke and I share something in common, we both want to help the little guy and create more Teamster jobs.

But the actual effect of Mr. Cooke’s policy is to hurt the little guy and hinder job growth.

Under his way, the billion-dollar company would control the market and be able to control access to markets and consumer choice. Under my way, we could experience growth for small entrepreneurs and reduce barriers to entry in the country’s largest consumer market.

I believe Mr. Cooke is a well-intentioned and hardworking man, but I think if he wants to help the little guy, he needs to change his position.

 

 

 

[1] https://craftspiritsmag.com/2021/03/24/california-Distilleries-urge-legislature-to-make-dtc-shipping-permanent/

[2] https://landline.media/will-the-teamsters-get-tough-with-ups/