By Harry Wiles, Exec. Dir.
American Beverage Licensees Even by taking a cursory look through ABL Leader recently, you will notice that we have devoted a healthy amount of space to cover the recent court decision in Washington state involving big box giant Costco.
You may also have noticed that in recent months, we have been following developments of the case by talking with industry representatives and attempting to forecast what the future may hold pending the outcome of the case.
You might be wondering why we have devoted as much time and space to this issue as we have, considering the fight, as portrayed in the media, appears to be between Costco and the wholesale tier. After all, it was wholesalers who were targeted and who have been most vociferous in defending the three-tier system.
One might argue that retailers have other things to worry about that are more tangible and pressing.
Well, the future is now, and while this fight is not completely over, the first battle has concluded and it was not a favorable outcome for the wholesale tier of our industry. To take a disregardful attitude about this development at this time would be demonstrably irresponsible. Here is why.
As with most changes in the alcohol beverage industry, things rarely happen overnight. There is usually a slow process of the release of inflammatory studies and reports followed by public outcry, which is unfortunately often fueled by a media that takes claims by issue advocates as gospel.
Seizing upon the opportunity to look tough or champion convenience, politicians introduce and fight over regulations and/or legislation to reflect the skewed sentiment of their constituents.
Following such developments, unforeseen consequences can descend upon the industry and its consumers that might drive business owners or those who are affronted to take legal action. Court decisions are then rendered whereupon new laws are created and the entire process starts over again, though from a new--and this is the most important part--frequently weaker position.
The patience of those who would weaken the industry is seemingly infinite, as they realize that incremental successes eventually lead to sweeping changes. This is legislative creep and manipulation of public sentiment away from reasonability.
It is something we also see with the ongoing campaign to continue to move the BAC goalposts.
In this instance, however, the recent Costco case has the potential to have much more significant consequences. As Wine and Spirits Wholesalers of America (WSWA) President Juanita Duggan recently put it, deregulation is the greatest threat to the industry since prohibition.
I couldn't agree more and that is why retailers must pay attention.
The gradual erosion of the superstructure of the three-tier system should be of concern to all members of the alcohol beverage industry. The blurring of lines and laws in order to casually create more and looser access to alcohol beverages is not responsible and is counterintuitive to the current attention being given to stopping the social abuse of alcohol.
Wholesalers, so closely linked to the retail community given their personal interaction with retailers, promote an orderly and regulated system of distribution and sale of alcohol beverages in our country. Alcohol beverages continue to be restricted access products, as retailers are well aware, that deserve to be treated with the utmost care.
ABL members know that one part of the solution to fighting societal alcohol abuse problems is a system that is regulated with the best interest of the business community, health and safety community and the customer in mind. Those interests include efficient transactions, smart public policy and responsibility programs to address concerns associated with alcohol beverages. These are all found by design in the three-tier system.
Those who seek to tear down safeguards and checks and balances of a successful system by arguing that a free market includes the unfettered access to everything beverage alcohol don't understand the product and lack the foresight to recognize a potentially chaotic situation detrimental to their interests.
Just ask the many small wineries that were duped into supporting the cause to eliminate discrimination amongst in-state and out-of-state wineries in the Supreme Court case who are now clamoring for a return to protected status in their states. They are pawns in a game with much larger stakes.
Costco knows this and has been willing to fight an expensive and protracted legal battle to gain its foothold. It knows there will be more battles to come and is committed to fighting these because, should it succeed, it will be able to render traditional alcohol beverage retailers and wholesalers obsolete.
They will use the Wal-Mart model of squeezing suppliers/manufacturers to bring them to their knees in the name of lower prices.
This battle is seen by these behemoths as the precedent by which the entire landscape of the alcohol beverage industry can be changed to reflect its wishes.
The Costco effort is just the beginning of this dangerous trend. They are part of a larger movement that cares little for the plight of traditional retailers and focuses obsessively on dollar signs and the bottom line.
Retailers need to pay attention to this unfolding situation so that we can stay ahead of these irresponsible interests and vigorously defend our industry from those bent on destroying it.