Direct-to-Consumer Wine Sales Could Prove to Be Disastrous

North Carolina's Josephus Daniels was secretary of the Navy from 1912 to 1921. During his tenure, Daniels banned alcoholic beverages aboard naval ships. Because sailors started drinking more coffee, the term "cup of Joe" was born.

Attitudes toward beverage alcohol have significantly changed from the days of Josephus Daniels, who banned its use, to modern times, when men like former Whitewater Independent Counsel Kenneth Starr argues before the U.S. Supreme Court that wine sales ought to be allowed over the Internet.

Last month, Starr and the Institute for Justice's Clint Bolick clashed before the nation's highest court with former White House Counsel Boyden Gray and U.S. Supreme Court nominee Robert Bork, about whether the 21st Amendment of the U.S. Constitution, which gives states the right to regulate alcohol sales, trumps a federal "Commerce Clause" that prohibits states from discriminating against out-of-state business. It was a case that went largely unnoticed by most of the Christian community, but its decision could radically change the way our nation allows for alcohol sales.

The case was precipitated by a new phenomenon in today's alcohol marketing -- wine via the mail. Over the last few years there has been a boon in Internet wine sales, which makes that market most appealing for wineries who want to circumvent the limitations of the three-tier alcohol system that sets specific parameters for producers, distributors, and retailers. The wineries want to be able to ship their products directly to consumers, bypassing the three-tier system, but laws in a number of states won't allow for it. Starr and Bolick represent the wineries, while Gray and Bork represent the Wine and Spirits Wholesalers and 33 state attorneys general who are concerned interstate wine sales via the mail would undermine the current system of safeguards provided by the three-tier system.

What brought the case before the U.S. Supreme Court were two different decisions by federal courts on the matter. The Second U.S. Circuit Court of Appeals upheld New York's sovereignty over alcohol sales. But just a few months before that decision, the Sixth Circuit justices sided with winemakers against the state of Michigan.

The current three-tier system has been in place for seven decades and is a critical means of alcohol control. It works in this fashion: tier-one is made up of beverage alcohol producers who sell their products to tier-two, which consists of licensed alcohol wholesalers and distributors who sell to tier-three, properly licensed retailers who sell only to persons age 21 and in areas where alcohol sales are legal. The Texas Safety Network correctly contends the "three-tier system ensures alcohol is not sold or delivered through unlawful channels -- and is delivered responsibly to the people who are licensed to sell it and subsequently sold to those who are of legal age to buy it." The process may seem a bit cumbersome, but it provides necessary checks and balances for a product with the social sensitivity of alcohol.

To allow interstate wine sales for wineries that want to directly ship their products would likely produce a host of problems. But the worst of them would certainly be to exacerbate the current dilemma of underage drinking. According to a 2004 National Academy of Sciences report, 10 percent of underage drinkers already buy alcohol online. The report also adds "increasing use of the Internet may increase the percentage."

Commenting on the problem of Internet alcohol sales, Wine and Spirits Wholesalers (WSWA) CEO Juanita Duggan said: "Parents are especially worried that their children can go online and easily buy alcohol through these faceless transactions. How can anyone argue that we should dismantle the existing system of safeguards in favor of a shadow alcohol trade that is unchecked and unaccountable? Proponents of so-called 'direct shipping' favor the freewheeling Internet over effective, local alcohol controls where retailers check IDs in face-to-face transactions -- impossible to do through anonymous online sales."

In 2003, I lobbied the General Assembly of North Carolina to reject a bill that allowed out-of-state and in-state wineries to ship directly to a consumer's home. In an editorial that ran in the Raleigh News and Observer, I argued: "To grant companies like UPS or FedEx the authority to deliver alcohol opens the potential for underage purchases .... What do delivery people know about checking the well-forged driver's licenses and fake IDs available to teens today? These IDs may be purchased from sites online. Or they can be made with high-resolution graphics on a home computer .... The Internet provides an open invitation for minors to log on, find hundreds of wine-by-mail sites, and make an immediate purchase of alcohol to be delivered to their homes, college dormitories, fraternities or sorority houses .... Supporters of direct shipping contend that teens aren't going to be ordering a $60 bottle of Chardonnay. That's true, but they will order cheap wines, which have also been made available by direct shipment .... According to a study by the Center for Media Education, 10 percent of wine sites studied online had features that strongly appealed to youth. Moreover, brands of wine like Mad Dog 20, Night Train Express, and certain Boone's Farm wine products, as well as many others, are quite popular with underage drinkers. So whether a $60 bottle or $4 bottle, its all ordered the same way -- right to the doorstep, often during school hours when parents are working."

Unfortunately, the Christian Action League wasn't successful in stopping that particular piece of direct shipment legislation. Nevertheless, since the legislation's approval, a number of different local television stations have done investigative news reports, demonstrating online wine sales to minors is a growing problem in North Carolina.

I agree with Juanita Duggan, who also said direct shipping gives the entire alcohol industry "a black eye." "What we need today," she added, "is more accountability, not less. Those who say it is safe to switch to an alcohol delivery system that is unchecked and unaccountable and has truck drivers as the last line of defense are simply wrong."

Lastly, it should be noted that if the three-tier system of alcohol control is by-passed in allowing for the direct shipment of interstate wine sales, then not long thereafter certain beer and liquor manufacturers will likely push for the same provision. Considering that fairness would dictate such a provision, and that beer is the beverage of choice for underage drinkers, and that studies reveal whenever there is an increase in alcohol outlets there is also a corresponding rise in alcohol consumption, which in turn results in an escalation of alcohol-related problems, then the situation would unquestionably result in what vice president of the WSWA, Karen Gravois, referred to as "virtual alcohol anarchy."

It's ironic to me that at approximately the same time the Supreme Court was considering arguments in favor of wine sales over the Internet, Israeli archaeologists and their American counterparts were announcing they had found the city of Cana, the place where Jesus performed the miracle of turning water into wine. But before one is quick to argue that what happened in Cana is proof of Jesus' approval of wine drinking, it should be noted that the alcoholic content of the wine of Jesus' day was considerably less than the fortified wines of today -- equating the two is like comparing apples and oranges. Moreover, Jesus would have never approved the actions of a bunch of greedy Internet wine retailers who were determined to distribute "strong drink" at the expense of the nation's children.

The High Court is expected to rule in this case by the spring of 2005.