Beverage Industry logo
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
Beverage Industry logo
  • NEWS
    • R&D News
    • Supplier News
  • PRODUCTS
    • New Products
    • Reader's Choice Poll
  • CATEGORIES
    • Alternative Drinks
    • Beer
    • Bottled Water
    • Cannabis Beverages
    • Carbonated Soft Drinks
    • Energy Drinks & Shots
    • Juice & Juice Drinks
    • Plant-Based Beverages
    • Sports Drinks
    • Tea and Coffee
    • Wine & Spirits
  • R&D
    • Beverage R&D Features
    • Ingredient Spotlight
  • PACKAGING
    • New Packages
    • Packaging Equipment
    • Packaging Material
  • OPERATIONS
    • Distribution
    • Plant Focus
  • TOP LISTS
    • Beer Market Report
    • Executive of the Year
    • State of the Beverage Industry
    • Top 100 Beverage Companies
    • Truck Report
    • Wholesaler of the Year
  • MEDIA
    • eBook
    • Podcast
    • Polls
    • Videos
    • Webinars
  • DIRECTORIES
    • Annual Manual
    • Contract Packaging Guide
    • Take a Tour
  • MORE
    • Classifieds
    • Channel Strategies
    • eNewsletters
    • Events
      • Membrane Technology Forum
    • Interactive Product Spotlights
    • Market Insights
    • Sponsor Insights
    • Store
    • White Papers
  • EMAG
    • eMagazine
    • Archived Issues
    • Advertise
  • SIGN UP!

Industry Gets its day in Court

October 1, 2004

Industry Gets its day in Court

A battle has been brewing in the world of alcohol beverages and it will be fought in the nation’s highest court before the year is over. The U.S. Supreme Court is scheduled to hear arguments on Dec. 7 regarding direct shipping lawsuits in Michigan and New York — a fight that pits two aspects of the U.S. Constitution against each other, as well as two parts of the beverage industry.
Although the cases to be heard by the court involve wine sales, the issue of direct shipping affects beer and spirits as well. In question are laws in Michigan and New York that prevent out-of-state wineries from shipping products directly to consumers in those states. Both states allow local wineries to ship product to residents, and the organizations behind the lawsuits say that violates the Commerce Clause of the Constitution, which is meant to protect interstate commerce. But the Constitution has a competing interest in the form of the 21st Amendment, which gives each state the right to regulate the sale and distribution of alcohol beverages within its borders.
For history buffs, even those not directly involved with the issue, the case provides an interesting look at the way the industry has evolved. The repeal of Prohibition in 1933 recognized the range of attitudes toward alcohol by giving control to the states, which created a patchwork of local alcohol laws and sales methods. Most states use a three-tier distribution system in which alcohol manufacturers sell their products to wholesalers, who navigate local laws and make sure alcohol is sold only to retailers and other establishments that will legally sell it to consumers.
But technology often moves faster than the law, and during the ’90s, the Internet created new opportunities to expose consumers to niche products, and sell items that previously were only available in other states.
Naturally, wholesalers and manufacturers have different takes on the situation, and their respective livelihoods depend on the outcome. Wholesalers, represented in part by the National Beer Wholesalers Association and the Wine and Spirits Wholesalers of America, believe they play an important part in encouraging responsible consumption of alcohol and upholding local laws. Wholesalers also are responsible for collecting government excise taxes for the states.
Wineries involved in the case say their small volumes, combined with widespread wholesaler consolidation have shut them out of the market, and their businesses depend on being able to sell directly to consumers. WineAmerica, the Coalition for Free Trade, Family Winemakers of California, and other supporters of the wineries say state licensing agreements would provide for tax collection, and argue that a 2003 Federal Trade Commission study indicates direct shipping does not promote alcohol sales to minors.
While the beverage manufacturers involved in the current case are small boutique wineries, challenges to the system could have much bigger, farther-reaching effects. In theory, retailers also could bypass wholesalers and buy directly from manufacturers. Costco already has challenged the state of Washington, which prevents out-of-state suppliers from selling directly to the retailer, while in-state companies can do so.
Of course, the issue will not be decided by one  case — the question at hand deals with only part of the battle. But all sides of the debate will be watching closely for the decision, which is expected to be announced next year and could shape the future direction of the industry. BI

Share This Story

Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!

Recommended Content

JOIN TODAY
to unlock your recommendations.

Already have an account? Sign In

  • Chocolate, Strawberry, Vanilla shakes

    Classic flavors provide reliable, consistent results for beverage-makers

    Classic flavors of chocolate, vanilla and strawberry...
    Ingredient Spotlight
    By: Chloe Alverson
  • Free Spirits Instant Bar Bundle

    Lifestyle trends drive growth for non-alcohol category

    As lifestyle trends continue to drive growth for the...
    Alternative Drinks
    By: Lauren Sabetta
  • Younger generation displays unique habits when it comes to beverage consumption

    Generation Z shakes things up in beverage

    Experts share that Gen Z is changing the standard on what...
    Beverage News
    By: Chloe Alverson
Subscribe For Free!
  • eNewsletters
  • Online Registration
  • Subscription Customer Service
  • eMagazine Subscription
  • Manage My Preferences

More Videos

Sponsored Content

Sponsored Content is a special paid section where industry companies provide high quality, objective, non-commercial content around topics of interest to the Beverage Industry audience. All Sponsored Content is supplied by the advertising company and any opinions expressed in this article are those of the author and not necessarily reflect the views of Beverage Industry or its parent company, BNP Media. Interested in participating in our Sponsored Content section? Contact your local rep!

close
  • Fourpeople toasting with cocktails made with low-sugar ingredients, celebrating healthier drink options.
    Sponsored byCargill

    What’s Hot in Sugar Reduction: Beverages

  • chocolate milk
    Sponsored byCargill

    Sweetening the Future for Dairy and Dairy-Alternative Beverages

  • woman pouring a drink
    Sponsored byFFP

    Building a Beverage System: Meeting Consumer Demand for Precision Wellness

Popular Stories

halfday sodas

Beverage-makers turn to fiber, prebiotics and more to support consumer needs

Anheuser-Busch Brewing Futures

Anheuser-Busch announces $300 million investment in US manufacturing

PepsiCo + poppi

PepsiCo completes acquisition of poppi

Vote for your favorite new product

Have your say in what makes it to the top this month!
Vote for your favorite new product and help us celebrate excellence.


VOTE NOW!

Events

April 16, 2025

2025 State of the Industry Series: Alcoholic Beverages

On Demand In Beverage Industry’s annual State of the Industry: The Alcohol Beverage Market, analysts at S&D Insights LLC delve into these trends and how they’re shaping the industry.

June 5, 2025

Heat-Resistant Molds 101: Fundamentals and Prevention Strategies for Better Beverage Quality

Learn about the spoilage challenges and operational bottlenecks that ascospores can pose to your quality program if detection is delayed, or worse – not detected at all. Subject matter experts will cover the basics of these bugs and real-world impacts of insufficient quality methods to help you beat the heat … resistant mold.

View All Submit An Event

Poll

Retail Coffee Segment

What retail coffee segments will fare well into the next year?
View Results Poll Archive

Products

Milk and Dairy Foods Nutrition, Processing and Healthy Aging

Milk and Dairy Foods Nutrition, Processing and Healthy Aging

See More Products

Related Articles

  • Scottish Spirits

    Scotch in a can gets resealable lid

    See More
  • TEAloe bottles

    TEAloe gets in sync

    See More
  • Beverage News graphic

    Beverage industry, manufacturers mark America Recycles Day

    See More

Related Products

See More Products
  • nanotech.jpg

    Nanotechnology in the Beverage Industry 1st Edition

  • small occ.jpg

    Occupational Health and Safety in the Food and Beverage Industry

  • quality control.jpg

    Quality Control in the Beverage Industry 1st Edition

See More Products
×

Elevate your expertise in the beverage marketplace with unparalleled insights and connections.

Join thousands of beverage professionals today. Shouldn’t you know what they know?

JOIN NOW!
  • RESOURCES
    • Advertise
    • Contact Us
    • Directories
    • Store
    • Want More
  • SIGN UP TODAY
    • Create Account
    • eMagazine
    • eNewsletter
    • Customer Service
    • Manage Preferences
  • SERVICES
    • Marketing Services
    • Reprints
    • Market Research
    • List Rental
    • Survey/Respondent Access
  • STAY CONNECTED
    • LinkedIn
    • Facebook
    • YouTube
    • X (Twitter)
  • PRIVACY
    • PRIVACY POLICY
    • TERMS & CONDITIONS
    • DO NOT SELL MY PERSONAL INFORMATION
    • PRIVACY REQUEST
    • ACCESSIBILITY

Copyright ©2025. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing