Supreme Court Ruling A Cloudy Issue For Wine Connoisseurs

By nancy K. Crevier

Oenophiles across the state were popping their corks in celebration after hearing the ruling handed down by the Supreme Court on May 16. A 5-4 decision in the high court struck down laws in New York and Michigan that make it a crime to buy wine directly from vineyards in another state, stating that the laws were discriminatory because they allow in-state wineries to ship directly to customers, but forbid out-of-state wineries to do so.

Twenty-four states, including Connecticut, have laws that bar interstate shipments.

The initial elation has given way to uncertainty, though.

“We were so excited on Monday,” says Morgen McLaughlin, owner of McLaughlin Vineyards in Newtown. “But, we don’t know yet how it’s going to turn out.”

What appeared to be an immediate loosening of the highly regulated state liquor law is actually still at the mercy of the state legislature.

“Now,” says Ms McLaughlin, “each state’s legislature has to review the laws and vote. They could vote to allow all shipments [intra- and interstate] or they could vote to allow no shipments at all.”

Critics of the ruling, including Attorney General Richard Blumenthal, have voiced concerns that the ruling is a setback for states in the battle against underage drinking.

“The issue is a loss of taxation,” claims Ms McLaughlin, “not underage drinking.”

A signature with proper identity is presently required for shipment to a residential address, and it would be a simple matter, she believes, to find out what regulations other states have enacted to protect minors in states that have previously allowed interstate shipping of liquor. Nor does she think that the Internet will suddenly become a big point of sales.

“For one thing, the cost of shipping wine averages $40 a case,” she says.

Because Connecticut wineries are currently allowed to ship directly to consumers within the state, a negative vote on the issue could be detrimental to state vineyards. Ms McLaughlin estimates that ten per cent of her sales are within state borders, including those ordered online.

If the state votes to uphold the Supreme Court ruling in Connecticut, as this vintner hopes, the potential increase in sales could be significant for state wineries.

“Half the people who come through the vineyard are from out of state. The wine trail is the New England thing to do,” she says. As a matter of fact, she points out, the Connecticut Farm Wine Development Council sponsors a program called “Passport to Connecticut’s Wine Trail,” which encourages visitors to tour 16 of Connecticut’s vineyards.

Interstate shipping would be mainly a convenience for those out-of-state customers who are unable to carry home the quantity of product they would like to, for various reason. Out-of-state customers then become part of the customer base, with future sales potential. That adds up to more sales for a vineyard over the course of time.

The shift over recent years for distributors to carry more of the big brands from major producers also means that there are fewer avenues for small producers to get their product out to the public. More small wineries and fewer distributors means that it is the small wineries that are affected, says Ms McLaughlin, although McLaughlin Vineyards does not do a lot of wholesaling to liquor stores outside the local selling area.

Steve Small, manager of Yankee Discount Wines and Liquor on Queen Street in Newtown has a “wait and see” attitude about the high court decision.

“The business is so highly regulated it may not happen yet,” he cautions. “In such a highly regulated industry, we don’t want to jump the gun in how this is all going to shake out.”

Overall, Mr Small believes the Supreme Court decision will have very little impact on wholesale wine sales. The few people who want to buy directly from wineries will not affect store sales.

 “There’s already such a wide variety of wines. It’s a small percentage looking for esoteric wines,” he says.

Discriminating wine drinkers poised to buy may have to be put on hold, but Ms McLaughlin says with some satisfaction in her voice, “The ruling is a move in the right direction.”