Tom Wark, the publicist who put retailer direct shipping on the map, is at it again. He's created a website, "Fermenting Changes," to promote an alternative to the three-tier system of alcohol regulation.
“The three-tier system was created in the early 1930s after repeal of Prohibition and with the goal of preventing the problems that preceded Prohibition more than 100 years ago,” notes Wark. What’s needed is a new alcohol regulatory approach that addresses the primary concerns and issues confronting society and the industry in the 21st century, not the 19th century.”
The website is a front attack on the distribution tier. Says Wark:
“The wholesale side of the alcohol industry has been gaslighting alcohol regulators, lawmakers, members of the alcohol trade, and consumers for decades with their false assertions that the three-tier system is necessary to prevent minors access to alcohol, promotes competition, keeps counterfeit products out the marketplace, and prevents monopolies,” says Wark. “But the biggest lie being told by wholesalers is their claim that the success of alcohol regulation in the U.S. depends on alcohol producers only selling to wholesalers and retailers only buying from wholesalers.”
Is the website a threat to wholesalers? Not right now. But it is likely to be. Americans are used to going on the internet and buying whatever they want from whomever they want, and you can expect Wark to pound on that fact. You can also expect him to ask why wine has broad direct shipping privileges, and spirits and beer do not.
The website itself describes his strategy: "Changing this archaic and harmful system begins through education . . . then action."
Here's what Wark is advocating under his proposed system:
1. Licencing Is Required
Any producer or importer seeking to sell alcohol through a state’s retailers would be required to obtain a license from the state.
2. Producers may Self Distribute or Use Wholesalers
Producers licensed to sell alcohol at retail in a state may choose to sell directly to retailers or engage a state-licensed wholesaler to sell their products to retailers in the state
3. Producers May Work with One or Many Wholesalers in a State
Producers may assign exclusive territories to a wholesaler in a state or assign their products to multiple different wholesalers who compete with one another to sell the producer’s products to the same retailers.
4. States May Enact Restrictions to Prevent Wholesaler Control over Retailers
States may restrict wholesaler discounting and regulate other sales, marketing, and pricing systems at the wholesale level so as to prevent wholesaler domination of retail accounts.
5. States Must Allow Direct Shipment to Consumers from In-State and Out-of-State Retailers, Importers, and Producers.
States would allow both in-state and out-of-state producers, importers, and retailers to sell products directly to consumers in their state and may regulate the means by which common carriers deliver those products to consumers.
6. Producers May Sell and Ship From Any Facility They Operate
States would allow producers to sell directly to consumers either from their production facilities’ “tasting rooms” or from remote retail outlets.
7. Tied Houses Would Be Allowed.
Retailers, bars, and restaurants would be allowed to exclusively sell one producer’s products if they choose.
8. States May Limit the Number of Retailer or Producer Sales Locations
A state may restrict the number of consumer-facing establishments a retailer or producer may operate in a state or geographic area.
Wark says that together with other obvious laws including those preventing sales to minors, these provisions would allow complete oversight of a state’s alcohol beverage industry, allow the collection of taxes on alcohol, encourage a competitive marketplace, provide consumers with access to all legal products available in the U.S. marketplace, and prevent the dominance of one part of the industry, including wholesalers, over the rest of the industry.