Queen of Smoke and Spirits

Today’s news blip in Waste News has the American wine industry throwing confetti in the street:

"Juanita Duggan will succeed W. Henson Moore as president of the American Forest & Paper Association."

You might think this announcement a strange reason to celebrate, but for the past seven years Duggan, as CEO of the Wine and Spirits Wholesalers Association, has resisted every effort to open direct shipping to any state, and has continually flogged, insulted, and reviled small producers.

Remarking on the development of direct shipping in Washington State in the Seattle Post-Intelligencer she said, "The fact is that the wine industry is putting soaring profits ahead of sound policy, with no concern for kids, communities or common sense."

And yet, as I pointed out in this post:

"According the Washington Post, there are 4,000 wineries in the U.S., ‘most typically producing 5,000 cases or less.’" And . . . "At a recent charity auction, Larry Ruvo, a senior managing director of Southern Wine & Spirits of Nevada spent $140,000 for a private tennis clinic with Andre Agassi and Stefanie Graf."

At a production level of just 5,000 cases, purchasing a forklift for $40,000 is a major family decision. While WSWA cronies are throwing money at celebrities, small wineries are struggling to survive in a monopolistic stranglehold.

The bulk of wine distributing in the U.S. is handled by huge distributorships that focus mainly on their more profitable liquor and beer brands. Wine is considered a sideline, basically, and these ‘ships really only want to deal with larger brands and the few wines that garner high scores from America’s handful of known wine reviewers. As the leader of WSWA, Duggan could have encouraged distributors and wholesalers to diversify and modernize. She could have encouraged them to improve their sales performance for small brands, and she could have encouraged the growth of small, focused distributorships that specialize in boutique offerings.

Duggan, who represented Philip Morris during their national tobacco settlement, instead chose to alienate the bulk of wine producers, who are small, family-owned businesses, and she chose to alienate individual consumers who, thanks to the internet, were becoming aware of everything they were not being offered by her precious three-tier system.

Instead, she proposed NAXON—a technological monopoly which would have contained and offered all independent wine products for sale. NAXON was her solution to small producers who want to "legitimize the growing black market in illegal alcohol sales, sell direct to consumers, pocket outrageous profits and avoid state taxes."

American wine producers are probably not the only ones happy to see her go. At a meeting with European producers looking for importers, Duggan began her remarks with, "The American experience with alcohol is very different from the European because of issues of morality."

From Wine Business Monthly, March 2005:

A wine producer asked Duggan about her position on wholesaler consolidation, "given a general feeling that it is creating a bottleneck and strangling access to the market for a lot of producers around the world that don't have the muscle to be heard from."

She replied, "Our system of distribution is not preventing those people from creating markets in the U.S. The fact that we have a wine glut is not helping, the fact that there's been more and more acreage planted, and obviously there was news from France this week about the destruction of surplus volumes of alcohol: that's a very serious problem and doesn't have anything to do with the distribution network."

A reporter asked a question concerning a program at WSWA's convention that was designed to encourage attendance by small wineries. None of those particular small wineries that participated in the program and attended the convention secured distribution.

Duggan said WSWA offered these small wineries free registration to be on the exhibit floor. "We weren't guaranteeing anyone any distribution. I had lots of follow-up conversations with any number of those people, and one of the problems I encountered was that in terms of my association's membership, they were looking for smaller, more niche-oriented distributors, which are not the ones with whom we have a lot of relationships."

Mind boggling.

And as always, Tom Wark at Fermentation has some entertaining and pithy comments on the situation.

Comments

[Mary B.]

I recently became aware of this colorful piece by Craig Camp about the WSWA, describing their sleazy annual convention:

http://winecamp.squarespace.com/journal/2006/7/20/wswa-and-the-pure-faith.html

What a sad state of affairs.