Wine Lovers Getting Bent Over in Delaware

New direct shipping bill in Delaware would continue to appease the middlemen

I wonder if wineries are the only business that states are inclined to inform, “You may sell your product, but you may not sell TOO MUCH of your product. Oh, and if you do start to bump up against our definition of ‘too much,’ we're gonna fine you.”

Take Delaware as an example.

This little state wedgd between Maryland, the Atlantic Ocean and New Jersey to the north has finally gotten around to writiing a winery direct shipping bill that, if passed, would allow Delawareans (is that right, or is it “Delawarans”? I don’t really care) to receive shipments of wine from both Delaware and out-of-state wineries.

Hooray!

Turns out that Delaware is one of only three states that bar its residents from receiving shipments of wine. And, it is one of 37 states that ban its residents from receiving wine shipments from retailers, in or out of state.

Today, I want to draw your attention to the most recent attempt to bring wine shipping to Delaware: House Bill 187, introduced yesterday by Republican state representatives Mike Brown and Jeff Spiegelman. First, don’t worry. This new bill would NOT allow Delawareans to receive wine shipments of any imported wines since those are only sold and shipped by retailers, who, if this bill passes, would still be barred from shipping to residents in the state. Oh, hooray, hooray!! But there’s more.

HB 187 would allow wineries to ship no more than three cases annually to a single household. And, the bill bars any winery from shipping more than 1,800 cases of wine into the state in a single year and if they exceed this figure the winery must no longr ship direct, but instead use a Delaware wholesaler. Moreover, if the winery already has a wholesler in Delaware, they may not ship direct to consumers in the state.

But here’s the provision of the bill that really tells the story: The biennial fee for a winery shipping license is $400 if the winery ships up to 200 cases total to residents of the state annually and $3,600 annually if the winery ships more than 200 cases annually to residents.

Put another way, the cost to ship that 201st case into the state of Delaware will cost a winery an extra $3,200 or a touch over $280 per bottle. It’s almost as though the state of Delaware doesn’t actually want wineries to ship very much to consumers.

Now, keep in mind, a Delaware winery has no limit on how much it can shove over its tasting room counter to an individual, nor is there a limit on how much wine a Delaware winery may sell from its tasting room in a year.

There is obviously no practical, philosophical, or safety reason for the limit on how much a winery may ship into the state, let alone the absurdly higher cost for the shipping license for wineries that ship more than 200 cases into the state. The only explanation for these provisions is the cowardliness of the bill’s sponsors, Brown and Spiegelman, who are unwilling to look Southern Glazers Wine & Spirits and Breakthru Beverage—two of the largest wholesalers in the state who oppose the bill—as well as other state wholesalers, and tell them to shove off with their protectionist and anti-consumer objections to wine shipping.

It’s worth noting that since 2020, state wholesalers have dropped over $140,000 in campaign contributions in that little state.

When I communicated with Representative Spiegelman last year to alert him that his previous shipping bill (which failed) would result in Delawareans being barred from receiving wine shipments of any imported wines, as well as any wines from retailers, wine-of-the-month clubs, or wine auction houses, I was informed by him of the following:

“We are working to get the best compromise bill we can passed through the General Assembly. The changes you are suggesting [allowing shipments from retailers] will surely kill the bill as they have the last roughly 20 years of this issues existence in Delaware. Maybe at some point we can go back into the law and make these changes. But it is much more important not to lose votes on a bill that will be very close.”

Not to be too pedantic, but it’s not the inclusion of retailer shipping in the bill that would kill it. It’s the cowardliness of elected officials who would have to stand up to opponents of real wine shipping and tell them to sit down and shut up.

Well, they didn’t include my suggestion to allow Delaware wine lovers to receive wine shipments from out-of-state retailers, and the bill still died. Opposition came from wholesalers who claimed it would upend the three-tier system. The Teamsters, who represent the wholesalers’ drivers, opposed the bill because those drivers get paid for every case they deliver, and it was presumed this bill would reduce the number of cases those drivers unload from the trucks. Finally, the Division of Alcohol Tobacco Enforcement opposed the bill, stating that too many challenges would arise from shifting from a three-tier system to e-commerce.

Just to be clear, nothing in that bill would have overturned the requirement in Delaware that any wine ending up on retailer shelves or on wine lists first go through wholesaler hands—the very definition of a “three-tier system”.

To accommodate these complaints, in this new bill Spiegelman has reduced the amount of wine a winery may ship into the state to 1,800 cases per year and made sure no winery would ship any more than 200 cases into the state by increasing the direct shipping licensing fee to $3,600 if more than 200 cases are shipped per year.

Not to put too fine a point on it, but this year’s version of the Delaware wine shipping bill is a terrible piece of legislation that is designed by cowards to appease campaign contributors.

Wholesalers have had nearly 100 years of market domination with their three-tier system that requires wineries to sell only to them if they want to see their wines on retail shelves or restaurant wine lists. They have had 20 years since the Granholm Supreme Court decision, during which no direct shipping of wine was allowed. And NOW it’s time to compromise with wholesalers? Hasn’t allowing Delaware consumers to be bent over and violated for all those years been enough of a compromise?

Apparently not.