wine

Alcohol Myths Persist Beyond Prohibition

by Michelle Minton on October 21, 2011 · 1 comment

in Features, Nanny State, Personal Liberty

Post image for Alcohol Myths Persist Beyond Prohibition

In a recent article for the Mackinac Center for Public Policy, I make the case that many elements of Prohibition did not fade away after the repeal of the 18th Amendment. In his October 13 opinion piece for The Detroit News, former police chief Jerry Oliver proves my point by digging up an old alcohol myth — one that was used to force Prohibition on the nation. In short, Mr. Oliver expresses the belief that producers of alcohol only seek to have customers consume as much alcohol as possible, thereby making it necessary for the government to intervene in the name of “moderation.”

Historically, it was unscrupulous alcohol producers selling directly to consumers or in cahoots with bars to sell only their products, sometimes at artificially low prices, that fostered an environment for abusive alcohol consumption. It was these excesses that helped trigger the Prohibition backlash.

…Today, most states require producers to sell to state-licensed distributors who in turn sell to local retailers. Exceptions abound where specific states allow direct-to-consumer shipments from wineries…

Critics of this time-tested approach argue the system is antiquated, citing its roots to the last days of Prohibition. That’s like arguing the Constitution is antiquated because it was written in the 1700s.

While Chief Jerry Oliver is correct that Prohibition was a backlash against Americans’ increasing alcohol use (or at least the perception of increasing use) there is no evidence that the system of direct sales or “unscrupulous” producers were the cause of increased consumption. His claim that “tied houses” (saloons owned or operated by alcohol producers) caused people to drink more is the same old myth used by the Temperance movement to push Prohibition on the country. However, we now have a large body of historical evidence that seems to debunk this presumption. Using cirrhosis of the liver as a proxy, historians have found that drinking sharply decreased in the decade preceding Prohibition — even though tied houses still abounded. While incidences of cirrhosis declined further at the start of Prohibition, they rose again toward its end.

This myth of “unscrupulous” producers has been used to maintain the mandatory three-tier system that forces alcohol producers, like brewers, to rely on a middlemen — wholesalers — to get their products into bars, restaurants, and stores. The only real reason not to shift to a voluntary system is to protect the profits of middlemen, who wield considerable political power. A voluntary distribution system would allow small producers to skip the middleman and cut costs, resulting in lower prices for consumers.

Alcohol Industry Infighting Leads to Wacky and Costly Regulation

by Angela Logomasini on November 22, 2010

in Nanny State, Personal Liberty

If the ban on alcohol-containing energy drinks tells us anything, it’s that American alcohol policy continues its tradition of being very wacky. If you need more examples see Enobytes: Top Ten Wackiest Wine Laws.  And not all of this dumb regulation is old. These days, it’s hard to find a public park with you can enjoy a glass of wine at a picnic, as many have recently banned this “egregious” activity.

Such anti-consumer regulations are advanced for a number of reasons. Blogger Tom Wark points out that the absence of a consumer advocacy organization has led lawmakers to simply serve special interests at the expense of consumers. Another key problem is that various parts of the alcohol industry work at odds. This situation eventually undermines the credibility of the whole industry.

For example, consider the infighting between wine, beer, and spirit producers regarding privatization of spirits and supermarket sales. As it now stands, 19 states do not allow spirit sales in supermarkets but allow supermarkets to sell beer and wine (some only allow beer in supermarkets). This simply makes life less convenient for consumers. Wine and beer lobbies don’t seem to mind discrimination against spirits probably because they think it makes them more competitive. For example, a comment to a recent post on Winepolicy.com noted one reason wine and beer industry players opposed Washington State ballot initiatives on spirits privatization (The Washington Wine Institute opposed privatization, for example): they fear losing supermarket-shelf space.

Ironically, wine and beer folks do not help themselves with such positions. They simply reinforce the idea that their very own products–which also contain alcohol–are somehow bad for consumers. That idea helps push regulation on the entire industry.  In fact, that was one factor that advanced the concept of prohibition. Richard Mendelson points out in his book From Demon to Darling: “Wine and Beer Interests proved themselves willing and eager to throw the liquor men to the drys,” he notes (pg. 46). Yet that strategy simply helped build the case for prohibition of all alcohol.

It was would wiser for wine, beer, and spirits industry players to understand the value that comes from working together to promote the image of the entire industry. Alcohol producers and retailers would benefit if they all promoted a positive image of the industry and supported market competition. The end result would be more rational and fairer regulatory policies for everyone rather than wacky and special-interest regulation.

Image credit: Joe Shlabotnik’s flickr photostream.

Using Government to Weed Out Competitors

by Michelle Minton on September 28, 2010

in Legal, Odds & Ends, Regulation

In states throughout the country, beverage distributors are stepping into the political ring and in every case the opponent is the same: competition. Since prohibition, distributors have had the U.S. government in their corner, forcing beverage producers to go through them in order to get their products onto shelves. It almost makes sense then that distributors’ response to the threat of new competitors entering the market is not to offer better services, but to lobby the government to try and keep them out.

Distributors Should Welcome New Products on the Market

In Virginia, both wine and beer distributors came out against Governor Bob McDonnell’s proposal to privatize liquor sales in the state (to read more about the proposal see my articles here and here and here). Though they don’t say it, their reasons are obvious: Beer and wine distributors don’t want any more products available on store shelves that would divert customers from their products.

In California, as reported last week by Huffington Post, the California Beer and Beverage Distributors Association (CBBA) came out against the idea of legalizing marijuana in that state. Again, though they don’t say it, it’s pretty obvious that the reason beer distributors fear legalization is because they believe the availability of marijuana will result in fewer beer drinkers.

But evidence may suggest that beer and wine distributors should support the increased availability of a multitude of refreshments. According to research from the Distilled Spirits Council of the United States (DISCUS), 70 percent of spirits drinkers also consume wine and evidence suggests they often purchase these items at the same time (anecdotal evidence indicates that about 50 percent make dual purchases).  It makes perfect sense if someone is planning a party or gathering that they would purchase at one time all the refreshments their guests might want.

Having liquor next to the wine in a store or pot on a shelf near the beer won’t stop beer and wine drinkers from picking up their favorite bottles. It just makes it more likely that liquor and/or marijuana consumers will purchase one of these other beverages when shopping for their favorite refreshment.

LibertyWeek 94: The Nanny State Diaries

by Richard Morrison on May 26, 2010

in CEI Projects, Features, Podcast, Zeitgeist

Richard Morrison and Jeremy Lott welcome guests Marc Scribner, William Yeatman, Lee Doren and Angela Logomasini to Episode 94 of the LibertyWeek podcast. We tackle politics in the Aloha state, freedom of information at the University of Virginia, Bureaucrash’s best and brightest and the attack of the nanny state.

Liquor Licensing Overhaul Brewing in NJ

by Michelle Minton on May 24, 2010

in Deregulate to Stimulate, Nanny State, Odds & Ends, Personal Liberty, Sanctimony

Democratic Senator James Beach introduced a set of bills earlier this month that, if passed by the New Jersey state senate, will make it easier and cheaper for restaurants and stores to obtain the necessary licenses to serve and sell liquor. Attempts like this to liberalize the sale of alcohol are certainly a step in the right direction. Though alcohol has been legally served in the US for 77 years, it should be a sobering revelation to every citizen that the impetus for restoring our right to free choice is money and not freedom. Yes, the reforms in New Jersey would be a step in the right direction, but we’ve still got a long way to go before we can really shake the hang-over regulatory policies from prohibition.

Because NJ’s licensing scheme works  much like taxi cab medallions, there is a limited number of licenses available in each municipality and no way for counties to sell their licenses to one another. Two of the bills introduced by Sen. Beach would increase the amount of liquor licenses by allowing their sale at “fair market value,” to other municipalities within the state. A third bill would create an entirely new type of license for restaurants. This new class of licenses allows for beverage sales along with food service at tables. These licenses are unlimited (unless a municipality chooses to limit the number) and the cost to purchase is capped

Wasted Time:

Getting a license to sell liquor in New Jersey is complicated, competitive, and time consuming. Because of their limited availability (each municipality is allowed to issue one tavern or bar license for every 3,000 residents, and one license for a packaged-goods store for every 7,500) they are rare and highly valued. For example, restaurant owner Ron Squillace had to wait 5 years and pay $300,000 before finally acquiring a license to distribute alcohol at his trattoria. That is five years that his BYOB had to compete with all the other restaurants in the area that could offer diners a glass of red wine with their eggplant parmesan.  Currently there are around 9,300 licenses-a decline since the 80′s as licenses have expired. Most small business owners can’t afford that kind of expense, and with a failure rate of about 50% over five years the inability to compete with well-established and chain restaurants that can afford the hundreds of thousands of dollars to buy liquor license, it makes success all that much more difficult.

Buzz-kill: Opposition to Reform:

Predictably, the major opponents to the proposed overhaul-especially reforms that make it easier for grocery stores to sell alcoholic beverages, are liquor store owners. They complain that since grocery stores can sell a greater variety of liquor, are more convenient, and cheaper, that “Mom and Pop” liquor stores will be unable to compete. They may be right. However, their business model is built on a niche created by a regulatory injustice. Nobody would have listened to mobsters or speak-easy owners had they complained that ending prohibition would put them out of business. If small liquor stores can find no other way to compete in the wake of reforms it will be sad, but it will be a small price to pay for economic liberty.

Addicted to the money: It’s only a problem if politicians admit it.

The fact of the matter is that a lot of old alcohol regulation remains in place because of the money and power they generate. Restricting the number of licenses makes them very valuable and because restaurants able to obtain them have a competitive leg up on other establishments owners are willing to spend just about whatever it takes to get them. Take for example, the fact Squillace was willing to wait 5 years and pay $300k in order to compete with other restaurants already able to serve alcohol with meals  waited 5 years and spent at least $300k to obtain the license that would allow him to compete with other restaurants already able to serve alcohol with meals. And who knows how many officials he had to bribe or incentivize to move the process along.

Drunk with Power: Abolish liquor licensing.

The bills introduced by Sen. Beach represent a significant step toward increasing the available licenses in the state and reducing the cost of purchasing a license for businesses. However, it still does no correct the real injustice, which is the government overstepping its authority. It isn’t there to take money from business owners or tell them what they can sell to their customers.

After 77 years of milking the beverage regulation cow, it is understandable that NJ lawmakers are having a tough time walking away from all that power and money.  While increasing the number of available licenses make it easier and cheaper for restaurants and less likely that they’ll fail, thereby increasing tax revenue generated in the state, the need for reform is not about money; it is about the proper role of government and correcting the sins of the past (aka prohibition).

If New Jersey politicians want a vibrant economy and a just government actually of, by, and for the people [all the people not just the politically connected and rich] it should consider abolishing licensing all together; allow all restaurant owners the ability to serve alcohol without the necessity of first paying tribute to the state in order to make a living.

In Letter and Spirit: Equal Treatment Under the Law

by Angela Logomasini on May 24, 2010

in Nanny State, Personal Liberty

A Washington Post blog pointed out last week that the State of Virginia is looking into privatizing its liquor stores. My recent pieces comparing New York and Virginia show that Virginia has done a pretty good job allowing competition to flourish within the wine and beer industries, and that serves consumers very well. Why not allow competition for spirits sales?

The so-called temperance lobby says that spirits are fundamentally different than wine and beer because they usually contain more alcohol per unit. They ignore the fact that spirits are often diluted with other liquid, which means mixed drinks don’t necessarily contain more alcohol than other drinks.

Ironically, alcohol abusers seem to know something better than government bureaucrats: you don’t need whiskey or “hard liquor” to abuse alcohol. Of interest, I recently discovered an article with data showing that people who abuse alcohol are mostly beer drinkers!

That is not to suggest that beer is somehow a bigger villain. It simply shows that alcohol is alcohol. Demonizing one over the others is plain dumb. The article suggests equal regulations for all alcohols, which makes sense. It foolishly advocates more stringent regulations for all alcohol. Let’s face reality. Binge drinkers will simply find ways around such laws. They did during prohibition, and it was a disaster! And it’s wrong to penalize responsible drinkers because kids in college drink too much.

Ultimately, everyone should be responsible for themselves; if you have too much, that’s your fault. And if you harm someone else, you should pay a big price. As for “the children,” supermarkets and other retailers can police that as well as or better than government bureaucrats.

Those of us who enjoy wine and spirits responsibly should have the convenience of picking up our spirits, wine, and beer along with our groceries. Why should I have to hunt down a government store so I can offer Margaritas at my next barbecue?

This move toward liberating spirits in Virginia seems to be part of a progressive trend in the state to liberalize liquor laws. Just recently, they lifted silly restrictions against liquor tastings.

Cheers to Virginia’s new governor for recognizing these common-sense realities and for calling for equal treatment of spirits. After all, equal treatment under the law is a basic constitutional principle. Picking and choosing one industry over the other is unfair and frankly, un-American!

Image credit: wickenden’s photostream on flickr.

LibertyWeek 93: Tea Party Euro Trip

by Richard Morrison on May 17, 2010

in CEI Projects, Features, Podcast, Zeitgeist

Richard Morrison and Jeremy Lott welcome Reason magazine Senior Editor Michael Moynihan to Episode 93 of the LibertyWeek podcast. We take on the high-profile congressional primaries, Chuck Schumer’s hypocritical stance on privacy, the fight for wine liberation in New York, passing the buck on debit card fees and we embark on a Tea Party Euro Trip.

Regulation of the Day 111: Buying Wine in New York

by Ryan Young on February 6, 2010

in Nanny State, Personal Liberty, Regulation, Regulation of the Day

It is illegal for grocery stores to sell wine in the state of New York. Only liquor stores are allowed to sell the stuff.

This regulation, a relic of Prohibition, lives on because of one of the central concepts in public choice theory: diffused costs and concentrated benefits.

The benefits are concentrated in one constituency: liquor stores. Regulations give them get millions of dollars in free business. That means they have millions of reasons to lobby to keep the status quo.

Consumers, on the other hand, are hurt by the ban by the exact amount that liquor stores benefit. But that hurt is spread far and wide. No one consumer feels enough pain to hire a high-priced lobbyist to open up the market.

That means New York’s misguided restrictions on competition are likely to continue for some time. It’s hard to imagine an aggrieved shopper suing New York’s wine cartel because she has to make an extra trip to get the wine on her grocery list. Or because she pays a bit more than if she lived in a different state.

(Hat tip: Jonathan Moore)

A French Kiwi wine? New Zealand and Australia say “non”

by Fran Smith on January 13, 2010

in Intellectual Property, International, Regulation, Trade

Nice article in the Wall Street Journal today by Anne Jolis on a trademark brouhaha between France and Australia that highlights some of the absurdities of the French (and other countries’) protection of geographic designations. Usually France is the country protecting its local food, wine and even chickens by ensuring that other countries’ imports can’t use a French geographical or place name description, such as Roquefort cheese or Champagne.

But this time the Australians and New Zealanders have decided that turnabout is fair play.  Acting on a New Zealand complaint, Australia’s trademark office has refused to okay the import of a French wine called “Kiwi Cuvee 2007 Sauvignon Blanc” because using the name could deceive or confuse consumers into thinking it was produced in Kiwi Country, i.e., New Zealand.

France is not alone in its protection of its local and regional products; the UK, Germany, Italy, Poland, and many other countries have their own registries.  The European Union also has its own system of registration and protection of geographic specialties, such as for the Polish Truskawka kaszubska lub Kaszëbskô malëna. Even the World Trade Organization has limited protection for certain geographic designations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights. The U.S. has a few such geographic protections in place, for instance, for Vidalia onions, Florida orange juice, and Idaho potatoes.

Jolis provides some of the arguments proponents use to defend the practice but also suggests a private standards-setting alternative to bureaucratic procedures and protectionism:

So the justification for what is effectively a trademark is that a product’s origin partly defines the product itself.

Perhaps there is truth to that. But then, nothing stops producers from these prized regions from simply applying for and defending regular trademarks. This would eliminate the temptation for every local producer in the world to seek privileged status for otherwise ordinary place-names. Producers of Parma ham or feta cheese could very easily certify their products as meeting privately developed standards of quality and brand them accordingly, without the global bureaucracy that has grown up around “geographical indications.”

Regulation of the Day 95: Buying Wine in Ohio

by Ryan Young on January 5, 2010

in Nanny State, Personal Liberty, Regulation, Regulation of the Day

It is illegal to buy more than 288 bottles of wine per year in Ohio.

If you drink that much wine by yourself, then you have more important problems to worry about than regulatory compliance. But if you host of lot of parties or are building up a wine collection, you run a real risk of hitting the limit.

“The level was set to establish what would seem to be a reasonable amount for personal use,” according to the Ohio Wine Producers Association’s executive director, Donniella Winchell.

Since the law is somewhat difficult to enforce, no violators have yet been found. But when there are, the Ohio Department of Public Safety Investigative Unit will come knocking. Because while buying 288 bottles of wine is perfectly fine, buying 289 poses a threat to public safety.

(Hat tip to CEI colleague Megan McLaughlin)

← Previous Entries