Alcohol Reform for the 21st Century
New White Paper lays foundation for a new kind of alcohol industry
There have been only two times in the past 100 years when alcohol regulation in the United States saw systemic change.
The first followed the repeal of Prohibition in the early 1930s and gave us a new system of alcohol regulation that didn’t depend on crime lords, speakeasies, or a proliferation of local taverns to distribute alcohol.
The second came in 2005 when the U.S. Supreme Court fostered a direct-to-consumer/craft distribution revolution when it ruled states may not protect their own business through discriminatory alcohol distribution laws. The result was billions of dollars in alcohol being shipped directly to consumers’ homes.
In the case of each change, it was economic factors that spurred on the change. Repeal of Prohibition, and with it a new alcohol regulatory system, came about in large part because of the prospect of more jobs and more tax revenue and the positive impact they would have on the ongoing depression.
The direct-to-consumer shipping revolution was a direct result of the increase in craft beverage producers spurred on by a strong economy in the 1980s and 1990. Yet this increase in producers and the growing contingent of craft curious baby boomers could not be accommodated by a strict alcohol regulatory system designed in the wake of Repeal.
Now, a recently issued white paper by the National Association of Wine Retailers argues that systemic change to alcohol regulation is necessary not as a result of economic developments, but because the current system is unable to support new economic growth of the alcohol industry.
(Disclosure: I act as the executive director for the National Association of Wine Retailers)
“Modernizing Alcohol Regulation: A Proposal For New Guiding Principles” argues that the current alcohol regulatory system designed around the three-tier system cannot accommodate the most important requirements of 21st-century alcohol regulation. It claims that the current system was designed to prevent a return to the “Tied House” system of alcohol distribution that was prevalent in the two decades that led up to Prohibition over 100 years ago.
The White Paper goes on to note that the aims of the three-tier system that came into existence in 1933 have no relationship to the demands of a 21st-century alcohol industry, nor do these archaic aims address the primary concerns of the American public. The NAWR White paper argues that a modern alcohol regulatory system must advance four principles in order to address the needs of the industry and those of American society:
1. Encourage responsible alcohol consumption
2. Fund government through the efficient collection of alcohol excise taxes
3. Encourage a competitive and non-discriminatory marketplace for alcohol
sales
4. Provide consumers with equitable access to the marketplace for alcohol products.
The NAWR White Paper is the most comprehensive critique of the American alcohol regulatory system since the Granholm v Heald Supreme Court decision 30 years ago that led to the DtC distribution revolution.
So what?
Here’s the so what. Every member of the wine industry understands the difficulties that have crept into their sales and marketing efforts over the past few years. Every member of the industry knows that the current alcohol regulatory system, with its centering of the rapidly consolidating wholesale tier, inhibits your ability to innovate and reach your consumers and potential consumers.
Change to this system is a dire necessity but without a grounding in the fundamental nature of that system and without an alternative system to rally around nothing can change. “Modernizing Alcohol Regulation” is that grounding.
The only operators in the American wine industry that actually support the current three-tier system are those that most benefit from that system: wholesalers and the largest producers. Ask yourself, when was the last time the wholesale tier helped American wineries or American retailers or American importers improve their prospects? They have not and they will not.
Share this White Paper with your peers in the industry.
Post a link to the White Paper on your social media feeds.
Pass on this White Paper to the executives in charge of the trade associations you belong to and support.
Email it to any alcohol-related media you personally know.
The small step of gaining more education and passing on a solution-based document is a big first step to reform.
“Modernizing Alcohol Regulation: A Proposal For New Guiding Principles”
Issued by: The National Association of Wine Retailers