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Last Updated: Wednesday, 8 December, 2004, 00:00 GMT
Prohibition still hurts America's wine makers
Stephen Evans
By Stephen Evans
BBC North America business correspondent

There is a strong view that America is the land of the bonfire of red tape. It's a place where bureaucracy and regulation never arrived with the Pilgrim Fathers. The free market rules.

Juanita Swedenburg, who runs a small family winery, is challenging US wine trade rules
Some of the great secrets of America - fine wines made by small producers - never gets a big market in the big cities

Try telling that to the wine-makers of 24 states whose wineries are forbidden from selling directly to customers outside the borders.

If wine drinkers in New York or Florida, say, fancy a zinfandel from a small winery out of state, they are forbidden by law from buying it directly by mail order or over the internet. The out-of-state "import" has to be sold through shops licensed by the authorities.

Buyers may know sellers of a legitimate product but the authorities get in their way.

Market entry

It's a hangover from Prohibition.

When the ban on sales of alcohol was lifted with the approval of the 21st Amendment to the Constitution in 1933, regulations were enacted to control the flow of the threatening substance.

And control the flow it does. Still.

The regulations mean that small wineries find it difficult to get into out-of-state markets. In other countries, they might advertise on the internet and ship directly. In the relevant states of the US, they can't do so.

Under-age drinking

If they want to sell, they have to use an officially approved network of distribution ending in a liquor store which, they say, is expensive and prices them out of the market.

Juanita Swedenburg, who runs a small family winery, is challenging US wine trade rules
Small wineries find it difficult to get into markets in other states

It means that some of the great secrets of America - fine wines made by small producers - never get a big market in the big cities.

The matter goes to the Supreme Court this week where the owners of small wineries will oppose state regulators. No doubt, the word "liberty" will be pronounced by those who say a freedom to trade is at stake.

Lawyers for the authorities (and for the big wine sellers which understandably like the current arrangement) say that regulation prevents under-age drinking.

To which the wineries say that FedEx or UPS demand adult signatures when they deliver to homes and, anyway, teenagers have easier sources of alcohol than a fine pinot gris from upstate New York.

Freedom

It is hard to know what the court will decide.

The case has gone through a string of lower courts, each swerving different ways.

Three of the Supreme Court justices have in the past indicated that the 21st Amendment over-rode the right to trade freely. Two others have suggested the opposite.

It is part of the paradox of America. This country is devoted to the free market but with a strong nannyish tendency, especially where matters of drink (and sex) are concerned.

The people should be free - as long, that is, as they don't buy a delicate chardonnay directly from its maker.


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