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Thursday, March 22, 2007

My annual rant

Every year, the Indiana General Assembly convenes. And every year, the old saying, "No man's life, liberty, or property are safe while the legislature is in session"* comes to mind.

Now, I studied political science and journalism in college and worked as a lobbyist for eight years, so I may be a tad more cynical about the process than the average citizen. But here's the way I see it: With some exceptions, it's all about money, and whoever has the most effective lobbyists generally wins. (The general public doesn't employ lobbyists, so guess who loses a lot of the time? But more about that shortly.)

For wine enthusiasts, the two most significant issues that keep coming back are about direct shipments of wine and what a "grocery store" is.

Last year, the United States Supreme Court ruled that the states' laws regarding the shipment of wine had to be reciprocal -- that is, if the wineries within a state were allowed to ship out, wineries outside the state had to be allowed to ship in. Or, similarly, if out-of-state wineries were forbidden to ship in, then in-state wineries couldn't ship out.

In state legislatures, this had the effect of pitting local wineries -- who very much want to be able to ship their products out of state -- against the wine distributing companies, who don't want to lose any money to direct shipments. Of course, the distributors and their lobbyists claim that they're only concerned about the children who would surely order wine over the Internet.

Well, that's utterly transparent bullshit -- it's all about the grickles, period. (Hell, I ordered a T-shirt from Elyse Winery, and UPS wouldn't leave that without an adult signature!) Generally speaking, when it comes to alcoholic beverages the under-21 set is interested in whatever is cheap, easily available and effective -- not exactly the profile of a consumer of fine wine. And is Junior really going to be able to go online and order wine with a charge card, arrange to be home when UPS or FedEx comes, and convince the driver that he's of legal drinking age -- AND not get caught by Mom or Dad? Not too bloody likely, I'd say.

No, the real issue is money. The distributors are afraid that they'll lose money if wineries can ship to their customers directly. But how much would they lose, really? Right now, to distribute their wines to all of the United States, wineries only have to deal with no more than 50 entities -- distributors, who buy in bulk. Could Columbia Crest distribute 90,000 cases of their best selling Merlot without distributors? Absolutely not. And shipping a bottle or two -- even a case or two -- is expensive. A distributor might pay up to a dollar a bottle for shipping, while an individual is more likely to pay $20 for UPS Ground. Believe me, direct shipping wouldn't put any distributors out of business.

In Indiana, the wineries prevailed, although the resulting law is so convoluted that most out-of-state wineries still won't ship in. Here's the way it works (or doesn't):

Wineries can obtain a $100 permit to direct ship into Indiana if they sell less than 500,000 gallons (or 210,300 cases) in Indiana and the Indiana consumer makes an initial onsite visit to the winery and provides the following:

(A) Name, telephone number, Indiana address, or consumer’s Indiana business address;

(B) Proof of age by a state-issued driver’s license or state-issued identification card showing the consumer to be at least twenty-one (21) years of age;

(C) A verified statement, made under penalties for perjury, that the consumer is at least 21 years of age, has an Indiana address and intends to use the wine for personal use and not for resale. 

Then, if the winery does not have a wholesaler in the state of Indiana, and the winery qualifies with the Secretary of State to do business in Indiana, and pays excise, sales, and use taxes monthly directly to Indiana, then they can ship you some wine.

But wait! There's more! An Indiana resident may not receive more that 24 cases a year by direct shipment -- and if a winery ships even one bottle to a Hoosier who has already hit his 24-case limit, then the winery can be charged with a felony.

Obviously, this law wasn't written to benefit the consumer -- but hey, the general public doesn't have a lobbyist, remember? The good news is that the camel's nose is under the tent, and this law is so ridiculous that it will fall to a legal challenge sooner or later. Let's hope sooner.

Next up: What is the definition of a grocery store, and who cares anyway?

It could be that you care, and don't even know it. Some of the best wine shops in Indiana, including Grapevine Cottage in Zionsville, Cork & Cracker and the Cork Marketplace in Indianapolis, Cost Plus in Carmel, Jane's Gourmet in Lafayette, the Old World Market in Valparaiso and the now-defunct C’est Cheese in Evansville, operate (or did operate) with grocery licenses. So do those businesses that are more obviously grocery stores -- Marsh, Kroger, et al -- as well as Costco, Target, Wal-mart, Sam's Club and Village Pantry.

Stores that have grocery licenses operate under a different set of laws than liquor stores do. Grocery stores can just sell beer and wine; liquor stores can sell spirits as well. (So can pharmacies, go groceries that have pharmacies can sell spirits too.) Liquor stores can hold in-house tastings; groceries and pharmacies cannot. People under the age of 21 can enter grocery stores and pharmacies legally, but not liquor stores. Groceries can't sell cold beer; liquor stores can't sell cold sodas (unless they're in vending machines outside, which they frequently are). Liquor stores can't sell food, other than snacks. And liquor store permits cost more and are harder to get that grocery permits.

Not surprisingly, the liquor store people want to make it illegal for the grocery store people to sell beer and wine -- particularly at convenience stores like Village Pantry, where people can pick up a (warm) six-pack along with their gasoline, cup of coffee, can of spaghetti sauce and lottery ticket.

For a while, the liquor stores argued that anyplace that sold gasoline wasn't a grocery store but a filling station, and filling stations aren't allowed to sell beer or wine. But Marsh owns Village Pantry, and Kroger, Costco and Sam's Club sell gas. The lines are blurry.

There's a lot more to the issue, and I'm not sure I own enough electrons to cover all the nuances on this blog. What it boils down to is this: The liquor stores are trying to make it tough for grocery stores to sell beer and wine, and that potentially has an impact on you, the wine consumer.

The liquor stores are claiming that they're only thinking of the children (does this sound familiar?) and the local neighborhoods who may not want a convenience store that peddles beer and wine in their midst. So, can't that be taken care of at the local level, through zoning hearings? Is it really necessary to create state laws to address neighborhood issues? And what is it that makes it OK for the Cork & Cracker to sell wine and groceries in their location (and the Marsh next door to them, for that matter), but not OK for the Village Pantry a block away to sell beer and groceries?

Well, guess what: The liquor stores aren't concerned about the neighborhoods, or that the chilluns might be exposed to seeing beer and wine on store shelves. They're concerned about their bottom lines. Period. They're paying their lobbyists to protect and expand their turf, while you consumers -- oh, you don't have a lobbyist, do you? Pity.

Beyond that, grocery licenses make it more affordable for budding entrepreneurs to go into business as wine merchants. And wine shops / gourmet groceries are pleasant, wholesome places for the whole family to go. The kids don't have to stay out in the car while Mom or Dad shops, and if they do go in there aren't any girlie mags to shock their sensibilities.

What may happen is that the existing wine shops / gourmet groceries will be grandfathered, and protected by new legislation that will curtail the establishment of new, similar shops. The owners of the grandfathered shops won't care, because their licenses will suddenly be worth lots more. Who will lose? Potential entrepreneurs and consumers. But you don't have a lobbyist, do you? Pity.

The Indiana General Assembly will likely be deciding the grocery store issue next week. If you care about it, call your legislators.

*Attributed to Mark Twain or Gideon J. Tucker.
M. Zane Grey, 10:11 PM