US lifts ban on out-of-state wine

Wineries like Sanford - shown in the film Sideways - will benefit

US states cannot prevent their citizens from buying wine directly from vineyards in other states, the US Supreme Court ruled on Monday.

The ruling overturns a 70-year old law, in place since the 21st Amendment ended Prohibition.

Under these laws, states could regulate alcohol from out-of-state and only allowed it to be sold through wholesalers, which added a mark-up.

The ruling will enable consumers to buy from wineries via the internet.

Growing market

If a state chooses to allow direct shipments of wine, it must do so on even-handed terms Justice Anthony Kennedy

It could also lower prices by cutting out the middleman in the US wine market that was worth $21.6bn (£11.7bn) in 2003, according to the San Francisco-based Wine Institute.

Large retailers like Costco Wholesale and Wal-Mart have also wanted to be able to deal with wine growers direct to get better prices.

The court ruled five to four that the previous ban on direct sales to consumers in New York and Michigan discriminated against inter-state commerce and was unconstitutional.

Twenty-six US states already allow direct sales to consumers.

The twenty-four states upholding the ban tend to argue that direct sales to consumers could lead to underage drinking.

Some, such as Michigan, sell direct to consumers from their own in-state wineries, which critics said undermined their argument.

Family affair

The ban penalised small wineries wanting to sell direct

"If a state chooses to allow direct shipments of wine, it must do so on even-handed terms," Justice Anthony Kennedy said.

The ruling may damage the business of wholesalers.

In contrast, the lifting of the ban is likely to benefit states with large wine-producing areas, such as California.

Small wineries are expected to benefit in particular as they will have access to consumers in more states via the internet.

At present, they are effectively barred from certain states because wholesales often don't want to deal with small firms.

Previously, wineries such as Californian firm Lucas Winery - which was among those to challenge the law - could not sell direct to out-of-state consumers from 24 states.

Even if a New Yorker visited the winery in person, New York law banned it from shipping a case of wine back to the customer's New York apartment.

Lucas Winery got together with three New York consumers and the Swedenburg Winery in Middleburg, Virginia to challenge the ban.

Sales of other beverages like beer, where there are existing restrictions, could now come under pressure to be sold more freely.