To Save Craft Distillers, Legalize DtC for Spirits: Irish Liquor Lawyer

The latest post in Sean O'Leary's Irish Liquor Lawyer makes a cogent argument for quickly legalizing direct-to-consumer shipments by craft distillers.

Why didn't the Justice Department impose stiff penalties on Southern Glazer's Wine & Spirits for it brazen bribery scheme in California? And I'll ask, if SGWS employees are bribing retailers in California, is there a good chance they're doing the same in, say, Illinois or New Jersey? You bet. So why didn't Alcohol & Tobacco Tax & Trade Bureau immediately launch an investigation to see if they were bribing else where?

The answer, as O'Leary puts it, is SGWS is "too big to fail." The system, some thought, couldn't stand the shock of both RNDC and SGWS collapsing.

The Problem with Big Companies

This is precisely the problem with monopolies, duopolies, etc. When they are "too big to fail," there's a problem. In the case of public utilities, they are regulated. The solution for the others is to break them up. The failure of any one company does run the risk of triggering a panic in others.

But what's wrong with large companies? After all, you need giant companies to make steel or build ships for instance. True.

But you don't need giant companies to produce a newspaper or run a broadcasting operation, provide banking serivces to business and people – or to distribute beer, wine or liquor.

There is no real reason why any distributorship needs to cross state lines. Nor do newspapers or broadcast outlets. Or banks. Or drug stores.

The argument can be made that large national chains bring superior resources, which reduces expenses and stirs innovation which the rubes at the local level simply can't do.

But do the large chains really do that? The largest (by number of properties) newspaper company is USAToday Co. It's most recent income statement shows a profit margin of -0.28%, return on equity of -3.32, and a 7.71% drop in quarterly revenue growth.

Stifling Innovation

Any major decision has to be approved by top, national maangement. With financials like those, any local publisher who does generate cash is going to have to forward it to the central headquarters, not reinvest it in his local profit.

So innovation is squashed. A nationwide company has exactly one CEO, which mean the innovative potential of 49 others is left by the roadside.

Which brings us back to the Irish Liquor Lawyer's argument. He doesn't call for breaking up SGWS, or Reyes, or Breakthru or any other distributor.

Let Craft Distillers Ship DtC Just Like Wine

But he does say craft distillers are in a bad way, and the solution to save them is to allow them to ship directly to consumers under exactly the same terms that wineries can ship to consumers in other states. Some of those distilleries might grow, spurring innovation in business processes, perhaps in distilling or warehousing or any one of a number of things involved in making distilled spirits.

That's something we should all be able to drink to.