Towards the end of spring WSWA took time to trash those that want to dismantle the three-tier system, as people opposed to safety and competition in the alcohol space.

Much of their piece was based on the benefits the three-tier system provides and that dismantling the three-tier system would take us back to a time 90 years ago where only the biggest players dominated.

I want to provide some of their quotes and address their assertions.

“WSWA steadfastly defends the robust federal and state regulatory environment that created the safest, most competitive, and most successful alcohol marketplace in the world. Federal alcohol regulations coexist with the Twenty-First Amendment, giving every state the right to regulate alcohol as they see fit.”

The liquor wholesalers are not the reason why alcohol is safe in America. The robust federal regulatory system under the TTB is largely responsible for this. The wholesalers never provide evidence that they test product for safety and in fact, if a retailer orders a case of wine, more often than not the box is not even opened. So, I fail to see how the three-tier system has been the vanguard for safety. Further, since winery DTC shipping opened up because of Granholm, there is no evidence presented that product bypassing the three-tier system has led to safety issues and that the absence of the three-tier system in these transactions has compromised the consumer’s safety.

“Keeping the alcohol marketplace competitive is paramount. Weakening the current system of regulation would take the industry back in time 90 years with only the largest and most lucrative brands dominating the marketplace, limiting consumer choice and value. This means that the investments of time, money, and sweat made creating the craft wine and spirits brand renaissance of today would all be in vain.”

“Over the past decade, craft, startup, and small production wine and spirits have become one of the largest growth segments in the industry because of the three-tier system. Who would want to undo this?”

The growth in crafts has arisen not because of the three-tier system but in spite of it! The number of wineries has doubled since DTC interstate winery shipping was legalized in Granholm. Supporters of the three-tier system fought against the opening up of markets and intervened in many lawsuits on behalf of maintaining the regulatory status quo. Essentially, history demonstrates that liquor wholesalers fought the major change that has led to the greatest growth of craft wines in history.

The growth of craft spirits and wines is also due to the ability to vertically integrate, without the ability of a craft distiller or winery to sell at its tasting rooms, these businesses could not survive, and greater access to markets and the ability to sell more on site is integral for their robust growth and sometimes even survival.

Wholesalers fight against vertical integration and greater privileges to vertically integrated companies. They may have not been successful in stopping the former, but there is not doubt that any privileges to further vertical integration leads to heavy opposition from the wholesaler tier.

Further, WSWA is on record (Wholesalers Letter) supporting a policy that would eliminate small wineries from the U.S. marketplace. In a letter to the Uniform Law Commission in 2020, the WSWA took the position that wineries shouldn’t exist if they produce below a 1,000 gallons. “Establishing a minimum production level to be a winery, for instance, 1000 gallons annually. Having a minimum production ensures that the winery is in fact producing wine on a commercial scale.”

Clearly, the goal of WSWA has been to fight policies that open up markets and encourage smaller producers to enter the marketplace.

WSWA takes on what they term the dismantlers as being against growth and a diverse marketplace. That would make sense if diverse product offerings were caused by the policies and business practices of wholesalers.

However, history and their own deeds prove WSWA has fought this trend and competition has flourished in spite of their efforts.

Although WSWA makes it seem like they created the open and free market in the liquor space, history and their actions demonstrate they are not the vanguard for free markets!