A front page story in the Wall Street Journal this morning explored how Prohibition-era state and local regulations-- originally constructed to keep single brokers from controlling the booze trade much as mobsters did during Prohibition—are crumbing under the force of court challenges on constitutional grounds. These regulations kept consumers from buying boutique wines over the phone or Internet because laws forced producers to funnel hooch through state-licensed wholesalers and retailers, prohibiting consumers from dealing with wineries directly.
But in the late 1990s, wine connoisseurs and wineries began mounting legal challenges to such bans when wholesaler consolidation made it all but impossible for wine geeks to acquire boutique wines from the growing litter of small wine producers spawning nationwide. The froth culminated last year with the Supreme Court handing d down a ruling that said states must permit both in-state and out-of state wine shipments to consumers, or ban consumer shipments all together. As a result, the number of states allowing dircect shipments jumped from 26 to 34, and wine sales nationwide are booming--outpacing both beer and liquor—as retailers hawk wines via such avenues as Internet video.
"What will happen as this unfolds is that more people will be buying more wine cheaper," says Sterling Steves, a Fort Worth attorney and wine writer who filed one of the first successful challenges to these state laws in U.S. District Court in Houston in the late 1990s. "Because consumers don't have to go through the distributor or the retailer and they can probably buy it for less...it's going to be more of a consumers' market."
Steves is making sure this happens. In May of this year, Steves filed suit against Texas Alcoholic Beverage Commission Administrator Allen Steen on behalf of Wine Country Gift Baskets.Com and others challenging Texas' prohibition of wine sales to Texas consumers from out-of-state retailers over the Internet. Glazer's Wholesale, Texas largest liquor distributor, has joined the lawsuit challenging Steves complaint. Meanwhile, beer is going flat, which means cult cab chugging may soon emerge as a popular college parlor game. --Mark Stuertz