Consumers Win in 2003, a Banner Year for Direct-to-Consumer Wine Shipping; Free the Grapes! Reviews The Good, The Bad and The Ugly.

Business Editors/Wine Writers

NAPA, Calif.--(BUSINESS WIRE)--Dec. 3, 2003

Consumers are the winners in 2003, according to an annual review of the wine direct shipping issue by Free the Grapes!, the consumer grassroots coalition seeking to ensure consumer choice in wine (www.freethegrapes.org)

"We freed a lot of grapes in 2003," said Jeremy Benson, executive director of Free the Grapes! "Wine lovers, wineries, and state regulators all won in the courts, state capitols, and the court of public opinion in 2003. Although there are more grapes to be freed, it was a year unlike any other," he added. The group compiled a list of the year's milestones.

The Good

-- The Majority of States Now Allow Direct Shipping. Four

states -- Texas, North Carolina, South Carolina and

Virginia -- were added to the list of states that now allow

interstate, direct-to-consumer wine shipments. This brings the

total number of legal states to 26, representing 53% of U.S.

wine consumption (source: 2001 figures from Adams Wine

Handbook 2002). Eighteen years ago, no states had enabling

legislation; this year, more states turned than any year.

-- Two Complete Court Victories for Consumers, Wineries. The U.S.

Circuit Court of Appeals in the 5th Circuit and 6th Circuit

handed consumers and wineries the first complete legal

victories on the issue, ruling that shipping bans in Texas and

Michigan, respectively, were unconstitutional. The state of

Texas did not pursue an appeal, and the 6th Circuit ruled

against a request for re-hearing en banc.

-- Litigation Team Expands. The Coalition for Free Trade retained

Judge Kenneth Starr, former Solicitor General of the U.S., to

advance the issue. Additional suits were filed in AZ, NJ, OH,

and RI. See www.coalitionforfreetrade.org.

-- FTC Endorsed Direct Shipping. The Federal Trade Commission's

July report, "Possible Anticompetitive Barriers to E-commerce:

Wine," dealt a blow to the wholesaler's red herring issues:

tax collection and underage access. The thorough study

included a survey of alcohol regulators in 11 states that

allow direct shipping, and concluded, "E-commerce can offer

consumers lower prices, greater choices, and increased

convenience," and found "no evidence suggesting direct

shipping increases underage access." See

http://www.ftc.gov/opa/2003/07/wine.htm

-- FedEx and UPS Expanded Service. FedEx added new states and the

carrier began offering ground service to those state

previously served via air express. In June, UPS and FedEx

began opening more states to direct shipment in accordance

with the FAA Homeland Security Act signed in November 2002 by

President Bush. For a state-by-state summary, visit

www.wineinstitute.org.

-- Direct Shipping is Now a National Issue. On average, the media

ran one story per day in 2003, with national coverage in The

Washington Post, Wall Street Journal, LA Times, New York 

Times, CNBC-TV and even People magazine.

The Bad

-- Utah Passes Felony Legislation. As expected, Utah passed an

omnibus bill establishing a felony penalty for a

direct-to-consumer shipment to an adult 21 years or older.

-- Florida Wholesalers Try to Crush Florida Wineries. Florida

wholesalers instigated an unsuccessful campaign to prohibit

Florida's 14 wineries from shipping directly to Florida's

consumers. The Florida legislature killed the bill.

The Ugly

-- Wholesalers Fund Bogus Survey, Waffle on Online Sales. The

Wine & Spirit Wholesalers of America's survey of 918

respondents over two days in 2003 concluded that "the

overwhelming majority of Americans oppose allowing beer,

liquor and wine to be sold directly to consumers over the

Internet or through the mail." (source: wswa.org). As a

comparison, Free the Grapes! has over 300,000 consumer

supporters. Contrary to their apparent opposition to Internet

sales, the WSWA publicly endorsed the e-commerce website,

WineShopper.com in 1999, which attempted to complete sales

transactions through wholesalers. The company is now defunct.

-- WSWA Position Increasingly Out of Sync with State Regulator's.

The FTC report included surveys of regulators from states with

delivery safeguards, and they concluded that these states

report "few or no problems" with underage access. But the

WSWA's October testimony before the Congressional Subcommittee

on Commerce, Trade and Consumer Protection, attempted to paint

direct shipping as "uncontrolled" and "unregulated." But those

responsible for its control and regulation, state regulators,

reporting the opposite conclusions to the FTC.

-- WSWA Twists National Academy of Science Conclusions. The

WSWA's testimony before the previously mentioned Congressional

hearing attempted to use the NAS report as a blanket

condemnation of wine direct shipping. But the NAS report,

"Reducing Underage Drinking," included three recommendations

for online purchases that are already in use in every state

where direct shipments are legal: clearly marking wine

packages as such, requiring the delivery personnel to verify

the recipient's age, and requiring an adult signature at the

point of delivery.