WASHINGTON, OCT. 30, 2003 - "E-commerce provides consumers with a broad array of goods and services to purchase from the convenience of their homes," said Rep. Cliff Stearns (R-FL), Chairman of the Commerce, Trade & Consumer Protection Subcommittee. "This hearing is a follow up to a previous hearing on state impediments to e-commerce, in this case the online sale of wine."
The Federal Trade Commission (FTC) issued a report concluding that states could significantly enhance consumer welfare by allowing the direct shipment of wine to consumers. Presently, more than half of the states restrict the direct shipment of wine. The FTC study finds that direct shipment offers consumer lower prices and greater selection, with online consumers saving 20% to 21% for wines priced over $40.
"Although the FTC report clearly shows significant consumer benefits with the direct shipment of wines, the states' public policy goals of precluding wine sales to underage drinkers and ensuring the collection of appropriate excise taxes are very important objectives," noted Stearns.
David Sloan, President of WineAmerica, testified that, "more than half of the states - including big states like New York, Texas and Florida - have effectively shut all but the top 100 wineries out of their markets by prohibiting direct sales to consumers from out-of-state wineries." He also noted that the number of wineries in the United States increased from 600 in 1975 to over 3,000 in 2002.
Juanita Duggan, President and CEO, Wine and Spirits Wholesalers of America, took issue with efforts to increase online wine distribution, "It's also about deregulating the alcohol industry. Because that's what we're talking about - deregulating alcohol, which includes loosening our restrictions on the control of alcohol products, including access to minors."
Added Stearns, "Clearly, wine is not like other consumer products bought over the Internet such as books and clothing. In reducing barriers to e-commerce, we must remain mindful of the proper role of the state in controlling the distribution and sale of alcohol. Still, if the FTC staff report analysis holds true for markets other than McLean (the site for the FTC study), I find it persuasive that states should pursue less restrictive forms of regulation of direct interstate wine sales than outright bans. For instance, the testimony shows that New Hampshire seems to have found the right balance between advancing its public policy goals without hindering interstate commerce."
I look forward to studying the results of this hearing as this panel continues its examination of possible barriers to e-commerce and their impact on consumers," concluded Stearns.
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