AWCC Testimony on Massachusetts Direct Shipping

TESTIMONY PROVIDED BY AWCC TO THE
JOINT COMMITTEE ON CONSUMER PROTECTION
ON DIRECT WINE SHIPPING IN MASSACHUSETTS AND H294

November 12, 2013 • Boston, Massachusetts

Mr. Chairman, Committee Members.

My name is Tom Wark. I’m the executive director of the American Wine Consumer Coalition. The AWCC is a member supported advocacy organization that works to advance the interests of wine consumers across the country, particularly in settings like this where issues of consumer access to wine are generally discussed only among lawmakers, regulators and members of the trade, without much formal input from consumers, and usually to the detriment of consumers.

I want to thank you very much for scheduling and having this hearing. Massachusetts’s consumers have been waiting a very long time for the opportunity to legally take part in the vibrant and expanding American wine marketplace. This hearing is a long awaited first step toward that.

Let me briefly explain where wine consumers stand on this issue of direct shipping and particularly on Representative Ted Speliotis’ H294.

The AWCC and consumers wholeheartedly support H294 and believe that with some amending it can be outstanding example of a consumer friendly direct wine shipping bill.

As currently written, 294 would give MA consumers the right to have wine shipped to them from out of state wineries. This is a huge improvement over the current situation that currently allows Massachusetts consumers to have no wine shipped to them. We applaud Representative Speliotis and the supporters of this bill for advancing it.

However, the bill does require some amending for it to make sense to consumers and to make it a consumer friendly bill.

As it is currently drafted, 294 would ban MA consumers from having any French, Italian, German, Spanish, Austrian, Greek, Australian, New Zealand, Argentine, Chilean or any other imported wine shipped to them at their home. The reason for this is that 294 bans MA consumers from receiving shipments from out of state wine stores and retailers. And it is only wine stores and wine retailers, not wineries, that sell imported wines in the U.S.

Additionally, 294 would ban MA consumers from joining the popular Wine of the Month Clubs, which are licensed as wine retailers, not wineries.

H.294 would ban MA consumers from having gift baskets with wine sent to them because gift basket providers are also licensed as retailers, not wineries.

H.294 would ban MA consumers from having collectible and investment grade wines shipped to them from auction houses, which are also licensed as retailers, not wineries.

Finally, MA consumers would also be banned from having nearly all kosher wines shipped to them since nearly all kosher wines are imported and sold by retailers, not wineries. As I mentioned, under H294 Massachusetts consumers are banned from having wines shipped to them from wine retailers.

Mr. Chairman, from a consumers perspective it doesn’t matter why these kind of arbitrary restrictions on consumers found their way into H294 and the other three bills addressing direct shipping. What matters is that they represent severe restrictions on the consumer’s access to wine, particularly the ban on MA consumers being able to receive any and all imported wines through direct shipping channels.

Mr. Chairman, I understand there is a concern that allowing MA consumers to purchase wines from out-of-state retailers may harm local package stores. But allow me to explain how this just isn’t true based on how the wine consumer experience works.

When a wine consumers wants to buy a particular wine, the first thing they do is attempt to acquire it locally. By doing so they obtain the bottle more immediately and at a lower cost than if they had it shipped to them. Wine is heavy and very costly to ship. If the consumer wants to buy a bottle of 2005 Chateau Latour, a particular Canadian Ice Wine or a Napa Valley Cabernet Sauvignon, they go to their local package stores and look for it. If they have it they buy it.

What consumers are asking you for is the option to procure these wines elsewhere when they can’t find them locally. Purchasing a wine elsewhere that isn’t available locally is not a loss to local package stores.

I’d also like to draw your attention to another piece of information. In Maryland a recent study by the state’s Comptroller looked at the impact of direct shipping on that state one year after legislation passed. What the Comptrollers report determined was that there was no negative impact on local businesses as a result of direct wine shipment. In fact, during the 12 months of direct shipping examined by the Comptroller, it found that wholesaler to retailer shipments actually increased 3.6%. Furthermore, the amount of wine shipped direct during that time amounted to 0.3% of total wine sold in the state. Just as important the Comptroller determined the following: “There was a measurable positive impact on Product availability and consumer choice.”

Mr. Chairman, I would suggest that if comprehensive direct wine shipping legislation passes in Massachusetts, you will see the same impact: no harm to local package stores and increased selection for consumers.

To finish, the AWCC strongly urges the members of this committee to support a comprehensive direct wine shipping bill that will give this state’s consumers access to wines sold by wineries, and perhaps to wines sold by retailers.

Again, we strongly support H294 as written. And we would support an amended bill as well.

Thank you again for holding these hearings. They represent an important opportunity for the states consumers.