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Recent headlines demand the attention of anyone invested in the future of the wine business in the US.
What does this consolidation mean to buyers and sellers? Quite simply, it means fewer choices in the marketplace and a real concern about monopolistic practices dialing the American alcohol industry all the way back to a century ago.
It’s important to understand the history. Prior to Prohibition, there was a de facto monopoly in the drinks business. The mob or mafia imported and produced alcohol, controlled the trucks or means of distribution, and they either owned or coerced retail establishments and bars to use their products and share revenue. The US government responded by breaking the structure that supported organized crime and installed a three-tier system that separated producers, distributors, and on-premise sales. This was a valiant attempt that somewhat succeeded. But, when you understand the inexorable march that distributors made to bend laws, and wherever possible to write favorable laws during the ensuing decades, you begin to see how we’ve arrived at the current state of limited choice. Distributors set up related importing companies. They passed franchise laws in many states, where they essentially “owned” the brands they represented forever. Big became bigger.
