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NAWR Responds to U.S. Treasury Report on Competitiveness in Alcohol Industry

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Wine Retailer Association Identifies “Severe Levels of Anti-Competitiveness” at State Level

NAWRFebruary 11- (Washington, DC)—The National Association of Wine Retailers (NAWR) today issued this statement about the U.S. Treasury Department’s Report responding to the Biden Administration’s Executive Order on promoting competition in the American alcohol industry:

“Like most members of the American alcohol industry, NAWR was pleasantly surprised when the Biden Administration directed the Treasury Department to include the alcohol industry in its review of competitiveness in the American economy. NAWR and its many independent wine retailer members appreciate the many suggestions and ideas promoted in the recently released report, particularly those about vigorous antitrust efforts that can be taken by the Department of Justice and the Federal Trade Commission to reign in the distributor level consolidation that harms the industry and consumers.

“However, NAWR notes, as the report demonstrates, that little can be done at the federal level to address the severe levels of anti-competitiveness that result from the discriminatory and protectionist state laws that are lingering vestiges of a time and of circumstances that no longer exist in the U.S. economy and that include more modern attempts at creating protectionist laws and legal schemes that lead to gatekeeping, rent-seeking and anti-consumer structures in the alcohol industry.

“The report correctly suggests that ‘state legislatures might consider if the benefits of the three-tier system outweigh its costs to competition and study markets without a three-tier system’ for it is that very ‘three-tier system’ of alcohol distribution with its state mandate that alcohol flow through wholesalers that leads to thousands upon thousands of products being restricted from state markets. The required use of wholesalers causes independent retailers to race to the bottom on price since all are selling the same wholesaler-provided products, rather than competing on unique inventory offerings that would better serve the customer and the health and safety needs of communities.

“The NAWR also appreciates the emphasis the report on competitiveness placed on Direct-to-Consumer sales and shipments, which has led to the huge increase in domestic wine, beer, and spirit producers by giving them a profitable path to market, rather than having to rely on wholesalers that too often ignore the needs of small, artisan producers. It was disappointing, however, but not wholly surprising, to see no mention in the report of many states’ protectionist and anti-competitive laws barring direct to consumer interstate shipments by retailers. These often-unconstitutional bans on retailer direct shipping are the single greatest deterrent for consumers accessing the wines they want. However, we recognize that barring federal legislation, this obstacle to a fair and competitive marketplace must be addressed at the state level.

“In the end, NAWR commends the Treasury Department on its thorough report and on its diligent efforts to carry out the Biden administration’s efforts to enhance competition in the American marketplace. NAWR looks forward to working with any Biden Administration and any federal agencies, as well as states, in the effort to make the American alcohol industry truly competitive and fair for consumers and the trade.”

NAWR is an association of independent fine wine retailers and associated businesses located across the United States. It seeks to bring a level playing field to the alcohol industry through education, lobbying, litigation and industry outreach. For more information about NAWR see www.nawr.org.

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