Soviet Style Economics Didn't Die: Just Look at American Wine

The state of Indiana has a new organization that is trying to draw attention to the remarkably anti-competitive and monopolistic laws that wine wholesalers there have bought to protect themselves from having to compete in a free market.

The new organization calls itself Vinsense and they are telling it exactly as it is. One of the most telling failures of Indiana's wholesaler-controlled monopoly on wine sales is spelled out in this simple comment on the Vinsense web page:

"The wholesalers in Indiana have decreed that of all the wines produced in the world, Hoosiers are allowed to buy from less than five percent of them."

Five percent. What they are referring to is that since nearly all the wine that Indiana residents may buy must first go through the wholesaler, and because direct shipping from an out-of-state retailer or winery into Indiana is nearly impossible, it is the wholesalers that decide what wines can be purchases in that state. They give residents access to less than 5% of the wines available in states where consumers may have wine shipped directly to them.

The Vinsense group is working hard. They were instrumental in helping get written a brilliant story on the state of wine sales in Indiana in the Tribune Star. But most important is the very existence of this organization. It appears that across the country folks are starting to challenge the assumptions and credibility of the remarkably inefficient tier of the wine distribution system   that has been granted control of sales for over 75 years.

You have to wonder how a group of wholesalers that are incapable of delivering to Hoosiers any more than 5% of the wines available can stay in business. The answer is two-fold. Wholesalers are nearly identical to many of the State-Directed industries that used to exist in the Soviet Union. Moscow would dictate to whom products would be sold. A very small group of state supported companies would have a monopoly on the sales of certain products in certain regions. Wholesalers in America represent the last vestiges of the old, corrupt Soviet system.

The other reason they survive as monopolists is money. When the state mandates that wines must go through you, regardless of whether or not there is benefit to the system, you are bound to get rich. How rich? In the past 10 years Indiana wine wholesalers have contributed over $1.2 million to Indiana politicians.

$1.2 Million!!

The folks over at Vinsense have a real battle on their hands. They least they deserve is to have folks go look at their efforts by visiting the website. You can find it HERE.

Comments

[Randy]

First porn, now Soviets. The depth of metaphor is dizzying.

--R

[markdas]

He says "him". There is no doubt. The vowel usage between "him" & "whom" is quite distinct.

[Dan Cochran]

I can relate to Indiana's plight - I live in Pennsylvania, one of the worst nanny-states where alcohol is concerned. The state holds a monopoly on retail sales of wine and spirits. And if you buy it out-of-state? Technically, that's illegal, though people in border areas do it as often as they can get away with.

[iangriff]

Vinsense wouldn't be exaggerating a little: "Naturally, the folks at HRAD conveniently fail to mention that 36 states, representing 85% of the nation's population, have abolished the three-tier system with nothing but positive economic effects". Did I miss something?

[Ty]

What if I became an indiana distributor. Consumers could come to me for out of state purchases. Could they buy from me or would I have to also have a retail space?

You would think if they could buy from me that I could charge say a 15% handling fee and maybe make some off the mark between wholesale and retail price?
Just a thought. If the license were easy to do I would do it now.