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Technology Giants Back Wine Industry on Direct Shipping


Dana Nigro
Posted: October 4, 1999

Wineries are getting support from an unlikely quarter as they fight for the ability to ship wine to consumers in different states. As Congress negotiates the details of a bill that would help states crack down on illegal Internet, phone or mail-order sales of alcoholic beverages, several technology giants have weighed in on the controversial issue of direct shipping.

In September, several prominent players in the computer and Internet industries wrote to Congress on the subject, including Intel, the Electronic Commerce Association, America Online, AT&T, MCI WorldCom and the Association of Online Professionals.

In letters addressed to the chairmen of the Senate and House Judiciary Committees -- Sen. Orrin Hatch, R-Utah, and Rep. Henry Hyde, R-Ill. -- those companies and trade groups exposed their opposition to broad restrictions on direct shipments of alcohol. Intel, echoing others' concerns, wrote that the bill under consideration "could provide a pretext for economic discrimination against Internet vendors of otherwise lawful products by state authorities who might use the authorities created by the statute for purposes unrelated" to preventing minors from buying alcohol online.

This year, Congress has become a major battleground in the economic war between alcoholic-beverage wholesalers and people who want to sell or buy wine, beer and spirits via the Internet, phone or mail-order. Wholesalers -- whose business may be threatened by such direct sales -- have also lobbied on the state level to enact new laws banning interstate direct shipments. Currently, regulations vary widely among states, from those that have made it a felony for out-of-state wineries or retailers to directly sell and ship wine to consumers to those that permit direct shipments under certain conditions.

In May, the Senate passed a juvenile-justice bill (S254) that contains provisions on direct shipping. The 21st Amendment Enforcement Act would put the power of the federal government behind state regulations on shipping alcoholic beverages, allowing state attorneys general to seek injunctions in federal court to stop out-of-state companies that violate those laws.

The House then approved a different version of the juvenile-justice bill, without any direct-shipping provisions. Instead, in August, representatives passed a separate bill (HR2031), also called the 21st Amendment Enforcement Act. Though similar to the Senate legislation, the bill includes key changes requested by wineries. The new provisions would make it more difficult for state attorneys general to seek federal injunctions. Also, the Cox-Goodlatte amendment stipulates that the bill cannot violate the Commerce Clause of the Constitution, meaning that states can't use federal injunctions to discriminate against out-of-state sellers solely to protect in-state businesses.

Although the House-Senate conference committee on the juvenile-justice bill has not yet met, winery trade organizations have been lobbying to ensure that if direct-shipping regulations remain part of the bill, it includes the language in the House's Cox-Goodlatte amendment.

For more details on the House direct-shipping bill:

  • Aug. 3, 1999
    House Overwhelmingly Passes Scarborough Bill

    For other past news reports and a complete explanation of the direct shipping issue, read our special feature package, The Wine Wars.

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