Rethinking Demon Rum

Lee Pender | June 1, 2006

Several observers have noted the generational nature of Granholm�s 5-4 split in the Supreme Court. Roughly, the judges divide between those do not remember the advents of Prohibition and Repeal, but have witnessed the growing acceptance of table wines, particularly relatively costly wines from the burgeoning small producer sector; the dissenters recall vividly the lawlessness and social cost associated with unrestrained access to cheap liquor.

Similar differences in frames of reference are surfacing in public statements by industry members, as post-Granholm legislative strategy develops. One change that may have long-term significance is an apparent fault line in the longstanding alliance between major brewers and wholesalers on legislative matters. It is increasingly difficult to defend as sound public policy a system that purports to promote temperance and tax collection by allowing private actors to evade competition and pocket the resulting abnormal margins. Recently, the major brewers have expressed irritation at the “alcohol is dangerous” tack wholesaler organizations are taking in attempts to preserve mandated middle tiers. Miller’s government affairs VP Nehl Horton is quoted in the press as asking wholesalers to see some advantages in reduced governmental involvement and to knock off using arguments ordinarily advanced by “our worst critics” to defend trade restrictions. A-B reportedly threatened to withdraw support of the NBWA if it insists on emphasizing the “socially sensitive” nature of the product as a rationale for restricted channels of distribution.

Larger implications arise from increased acceptance of wine and craft beers as legitimate articles of commerce, subject to the same national economic policy that applies to other consumer items, a direction indicated by Costco. We are beginning to recognize that beverage alcohol can be withheld from the immature and the small minority who abuse it by laws aimed directly at the undesirable conduct, without sacrificing the right of the vast majority of consumers to obtain products at prices and in selections that are not afflicted by unreasonable restraints of trade. At the Costco trial, the Washington Liquor Control Board was shown to have prided itself on providing a wide selection of wines to the public in its state-run stores at remarkably low prices. I think we are poised to let the private sector do the same.