Californian wine buyers under threat

publication date: Apr 23, 2002

One of our beloved multinationals, Diageo, based here in London but with tentacles across the globe (not least in the remains of the old Seagram wine empire in the US - most significantly the fine wine importer Chateau and Estates), is trying to put the squeeze on the Californian wine market. At the moment, individual wine lovers there are free to order bottles from anywhere they like (including outside the US).

Diageo, via Marco Firebaugh, an Assemblyman representing East LA, is lobbying hard to impose a law restricting the distribution of all wines, no matter what the vintage, strictly to the authorised California distributor of the current vintages. This would mean that Diageo and the other two giant distributors Southern Wines and Spirits and Young's Market who already control about 70 per cent of the California wine market would tighten their vice-like grip to control even closer to 100 per cent. You would not be able to buy mature vintages on the open market and could acquire them only via one of these giant distribution companies who are, methinks, unlikely to offer them at particularly keen prices if and when they are allowed this cosy monopoly.

Of course the beauty of this for the big companies would be that it would stamp out the flourishing business of 'parallel' or 'grey market' imports whereby smaller distributors other than the officially authorised ones often undercut the official price. The big boys argue that that the little ones are less likely to offer suitable storage and transport conditions, but the jury is currently out on that one.

There is an interesting divergence in official political views on the health or otherwise of these exclusive agency agreements between Europe and the US. Brussels, in theory at least, is gung-ho on market freedom. Washington considerably less so.

The proposed bill can apparently be found at www.leginfo.ca.gov but frankly I think your time would be better spent protesting against this worrying prospect of protectionism.

Californian wine merchant Mannie Berk of the Rare Wine Company is one of those instrumental in setting up earlier this month the California Fine Wine Alliance (the official Wine Institute having come down firmly on Diageo's side). It will represent small importers, retailers and consumers who are most likely to be affected by the bill. They are hard at work lobbying in the state capital Sacramento and are launching a national fundraising and information campaign.

'It will be an uphill fight,' he acknowledges, 'a real David-versus-Goliath struggle, but we're confident that if there is enough public scrutiny of the issue, we can win.

I am in an unusual position to see this issue from both sides. In addition to selling rare and hard-to-find wines to our collector customers, more than half of my business is as an authorized importer for 31 high-quality, small-production European producers. We are exclusive US agents for 2/3 of these. Because many of the wines I represent are highly sought-after, I, too, have competition from non-authorized importers. But I believe that the competition is healthy. It creates visibility, interest and demand for my wines and often actually supports prices. Laws like AB1922 [the code assigned to this bill] are not only unnecessary, they are likely to increase wine prices, while greatly limiting availability of the scarcest wines.'