Costco Seeks Total Disbanding of 3-Tier System
Posted October 6th, 2010 by sean@bevx.com
October 5, 2010
Costco Wholesale Corp., the Washington State retailer behind I-1100, is "seeking the total disbanding of the three tier system," Mitch Watkins, the outgoing chairman of the National Beer Wholesalers Association, told NBWA's 73d Annual Convention yesterday.
"The threat is real, it is immediate," he said. "We're fighting to defeat this. NBWA has contributed $2.4 million to a coalition opposing I-1100, and the Beer Institute has contributed a similar amount, and distributors in Washington State has assessed themselves $2 million.
NBWA's full-time president, Craig Purser, said the goal of retailer plaintiffs in a Texas case seeking to demolish Texas's requirement that only in-state retailers can ship to Texas consumers is to "expand Granholm.
And that's not the only threat. Others are seeking to overturn state regulations that treat smaller manufacturers differently, and Anheuser-Busch is challenging Illinois regulations that only in-state brewers can deliver directly to retailers. If A-B is successful, it will either gain control of Illinois' largest wholesaler, or start-up craft brewers won't be able to deliver to ale houses and private clubs.
The CARE Act is intended to support state-based alcohol regulation. Thus far, 150 members of Congress have signed onto the measure, H.R. 5034, as cosponsors. That's 68 congressmen short of the minimum needed to insure passage. "We're very clear that our legislative efforts are more of a marathon than a sprint." Purser said.
"As retailers and alcohol manufacturers consolidate, it's important that states be able to enforce their laws," Purser said.
But anti-regulation advocates are seeking to end regulation by the back-door approach of defunding state agencies. "We need to be smart and ensure state agencies can do their job," Purser added.
"Costco is smart and creative," Purser said. "They couldn't get all they wanted from the courts and the legislature, so they are going direct to voters. If I-1100 passes, Washington State would have more liquor stores than Starbucks outlets."
While NBWA has been joined in opposing I-1100 by the Beer Institute, state associations and public health advocates, Costco has been joined in its drive to destroy the three-tier system by Wal-Mart and Safeway, Purser said.
Another challenge: the privatization proposal of Virginia Gov. Bob McDonnell. If he is successful, the state will lose a $150 million a year profit that flows into the state's general fund. Purser said he fears that if McDonnell succeeds, the next step will be to raise alcohol taxes.
Despite the challenges, "We've made tremendous progress this year," he said.
. Members of Congress are aware of what we do."
. There's been increased involvement by owners, as shown by higher dues revenue, increased donations to the NBWA PAC.
. About 200 more distributor personnel attended this year's meeting than in the past.
. NBWA is taking action to meet its members' No. 1 concern - resisting alcohol deregulation. "We recognized that just filing amicus briefs wasn't enough. We need to advocate for state-based alcohol regulation. The CARE Act hasn't made the states bullet-proof in court. But the CARE Act recognizes that alcohol is different, and it reaffirms state-based alcohol regulation.
The other "elephant in the room is Costco and I-1100. They are seeking the total disbanding of the three-tier system," Purser said.
Beyond Costco's effort to "disband the three-tier system," Purser is also worried about Virginia Gov. Bob McDonnell's effort to privatize the state's ABC system. It would result in a $150 million a year deficit, and Purser fears that if the bill passes the next step will be to increase state excise taxes.
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Beverage News DailyCostco Wholesale Corp., the Washington State retailer behind I-1100, is "seeking the total disbanding of the three tier system," Mitch Watkins, the outgoing chairman of the National Beer Wholesalers Association, told NBWA's 73d Annual Convention yesterday.
"The threat is real, it is immediate," he said. "We're fighting to defeat this. NBWA has contributed $2.4 million to a coalition opposing I-1100, and the Beer Institute has contributed a similar amount, and distributors in Washington State has assessed themselves $2 million.
NBWA's full-time president, Craig Purser, said the goal of retailer plaintiffs in a Texas case seeking to demolish Texas's requirement that only in-state retailers can ship to Texas consumers is to "expand Granholm.
And that's not the only threat. Others are seeking to overturn state regulations that treat smaller manufacturers differently, and Anheuser-Busch is challenging Illinois regulations that only in-state brewers can deliver directly to retailers. If A-B is successful, it will either gain control of Illinois' largest wholesaler, or start-up craft brewers won't be able to deliver to ale houses and private clubs.
The CARE Act is intended to support state-based alcohol regulation. Thus far, 150 members of Congress have signed onto the measure, H.R. 5034, as cosponsors. That's 68 congressmen short of the minimum needed to insure passage. "We're very clear that our legislative efforts are more of a marathon than a sprint." Purser said.
"As retailers and alcohol manufacturers consolidate, it's important that states be able to enforce their laws," Purser said.
But anti-regulation advocates are seeking to end regulation by the back-door approach of defunding state agencies. "We need to be smart and ensure state agencies can do their job," Purser added.
"Costco is smart and creative," Purser said. "They couldn't get all they wanted from the courts and the legislature, so they are going direct to voters. If I-1100 passes, Washington State would have more liquor stores than Starbucks outlets."
While NBWA has been joined in opposing I-1100 by the Beer Institute, state associations and public health advocates, Costco has been joined in its drive to destroy the three-tier system by Wal-Mart and Safeway, Purser said.
Another challenge: the privatization proposal of Virginia Gov. Bob McDonnell. If he is successful, the state will lose a $150 million a year profit that flows into the state's general fund. Purser said he fears that if McDonnell succeeds, the next step will be to raise alcohol taxes.
Despite the challenges, "We've made tremendous progress this year," he said.
. Members of Congress are aware of what we do."
. There's been increased involvement by owners, as shown by higher dues revenue, increased donations to the NBWA PAC.
. About 200 more distributor personnel attended this year's meeting than in the past.
. NBWA is taking action to meet its members' No. 1 concern - resisting alcohol deregulation. "We recognized that just filing amicus briefs wasn't enough. We need to advocate for state-based alcohol regulation. The CARE Act hasn't made the states bullet-proof in court. But the CARE Act recognizes that alcohol is different, and it reaffirms state-based alcohol regulation.
The other "elephant in the room is Costco and I-1100. They are seeking the total disbanding of the three-tier system," Purser said.
Beyond Costco's effort to "disband the three-tier system," Purser is also worried about Virginia Gov. Bob McDonnell's effort to privatize the state's ABC system. It would result in a $150 million a year deficit, and Purser fears that if the bill passes the next step will be to increase state excise taxes.