Why are the most ardent defenders of a free market so dead-set against DTC?


Republicans and Democrats alike take campaign contributions from liquor wholesalers, as you can see from this data compiled by The Center for Responsive Politics, but perhaps the poster child for alcohol distribution companies is the Republican Senator from Texas, John Cornyn, who heads CRP’s list.

Our system of wholesalers and distributors is, of course, an anachronistic relic of the Repeal of Prohibition. As Tom Wark cogently pointed out last week in his blog, the original reasons for creating this “third leg” between producers and buyers might have seemed logical in the 1930s, but today, the system has become a “self-serving…monopoly” that “provide[s] the means for wholesaler coercion of producers and retailers.” The effect of this, as we all know, is that smaller wineries too often find themselves shut out of distribution channels, forcing them to try to sell their products directly to stores, restaurants and individuals. DTC is in fact the Holy Grail for wineries for the simple fact that the three-tiered system so ignobly makes fair distribution impossible. Wineries, especially small family ones, find themselves thwarted at every turn by a wholesaler industry that desperately wants to keep its monopoly intact.

Now, Cornyn is the senior senator from a state, Texas, which is one of a handful of American States, all of them in the so-called Bible Belt, that still has “dry” counties—those in which the sale of alcoholic beverages is illegal. This is a dreary leftover of the “temperance” movement in America, a religious-based crusade that began quite early in our country’s history, picked up steam throughout the nineteenth century, and finally resulted in the calamity of Prohibition, which, for fourteen years (1920-1033) made the sale and distribution of alcoholic beverages, including wine, illegal, except in the rarest of circumstances.

What people should understand about Cornyn, who also is against almost any form of gun control including background checks, is that politicians like him are the reason why liquor wholesalers continue to hold so much power over what the American people can and cannot drink. When Tom Wark says today’s lawmakers tend to support this wholesaler manipulation and control of the alcohol beverage marketplace,” he must have had John Cornyn in mind.

Politicians often claim that their votes can’t be bought even if somebody contributes a lot of money to their campaigns. (I know, I know, Hillary says the same thing about her Wall Street donations.) But an analysis of where Cornyn gets his money shows an outsized presence of liquor distributors, almost all of them based in Texas. When Dallas-based Andrews Distributing, one of Texas’s biggest beer wholesalers, contributed to Cornyn, what did they get for it? How about Texas City-based Del Papa Distributing, or Corpus Christi-based L&f Distributing, or Amarillo-based Budweiser Distributing? The list goes on and on.

Why would any reasonable person be against direct sales from small family wineries to whomever wants to buy their wines (as long as they’re of legal drinking age)? Tom Wark points out the many reasons why the three-tiered system is antiquated. But it’s more than that: it’s also anti-democratic (with a small “d”) and thus anti-American. It’s ironic that people who argue with such passionate conviction about the virtues of a free market should side with one of the nation’s most monopolistic trusts, the liquor wholesalers. “Let the free market work,” Cornyn endlessly yammers—and yet, when it comes to putting his money (or rather, the distributors’ money) where his mouth is, Cornyn is conspicuously silent, a lacuna that helps to crush the very free market he praises.

The ironies pile up. A fund-raising company called the Aristeia Group held a “wine tasting reception” for Cornyn that asked for a minimum contribution of $1,000 for PACs and $250 for individuals. What is Aristeia Group? Well, in a single year, 2014, they gave more than $281,000 to “Texans for Senator John Cornyn,” but they also gave large amounts of money to the Rand Paul Victory Committee and the Alamo PAC, whose Federal Election Commission statement lists only a single individual “Leadership PAC Sponsor,” John Cornyn. And where does Alamo PAC get all this money to donate to its favorite politician? From the interests and lobbyists who attend the many BBQs, breakfasts and “dove hunts” they sponsor, every one of which lists as its sole beneficiary “John Cornyn.” Your cost of admission: at least $1,000 per event. A sweetheart deal, and we can only guess at the things Cornyn is forced to do for his benefactors.

Well, the tight little circle of PACs, campaign contributions and lobbying isn’t limited to any one political party, like I said, but a peek behind the murky scenes into the Cornyn-Aristeia-Alamo PAC-beer distributors cabal should be enough to make even die-hard free marketeers bewail the extent to which the true “free market” has been demolished, in the alcohol distribution industry and no doubt in others. Returning to a truly free market of wine distribution should be a non-partisan no-brainer, but for some reason, we’re not seeing it, and I wonder if we ever will, as long as some of these politicians are drinking off the teat of distributors.