Tuesday

Ruling might keep state wine sales bottled up

May 25, 2005

By: James Fuller Daily Herald Staff Writer

The fruit of Rudolph Valentino DiTommaso’s labor might never pass the lips of wine lovers as close to home as Indiana.

DiTommaso runs his own wine label, Valentino Vineyards in Long Grove, with grapes first planted 10 years ago.

Countless wine aficionados have never known DiTommaso’s vintage, nor those of more than 50 other small wineries in Illinois. Those wineries can’t ship wine directly to customers in roughly half the nation’s states, where wine import bans shut them out of the market.

Florida’s law would slap DiTommaso with a felony if he mailed a bottle to his father, who lives there.

But Florida and other states must rethink those bans in the wake of a U.S. Supreme Court decision - a 5-4 ruling last week declaring interstate shipping bans unconstitutional in Michigan and New York.

Illinois wineries already have petitioned the federal courts to strike down Indiana’s direct shipping ban.

Their dream is for an open market that intoxicates their bottom lines. But states could just as easily dash those hopes into sour grapes by ending all direct shipping, closing the market even more.

At least one key concern for states is a fear that direct shipping of alcohol is yet another catalyst for underage drinking.

‘Low-level trade war’

States must treat in-state and out-of-state businesses the same, the court ruled.

“The current patchwork of laws - with some states banning direct shipments altogether, others doing so only for out-of-state wines and still others requiring reciprocity - is essentially the product of an ongoing, low-level trade war,” Justice Anthony Kennedy wrote in the prevailing opinion.

Only four states consume more wine than Illinois, according to the Illinois Grape Growers & Vintners Association. For local consumers, the ruling may open up the wine market across the country to a war where only the strongest grapes survive. Better quality wine at lower prices with more labels to choose from could be the outcome.

As many as 50 decisions must happen before that, as states must rewrite laws to reflect the court’s ruling.

Wine is a big-money business. Direct shipments of wine to consumers doubled from 1994 to 1999, according to the Federal Trade Commission. Direct shipping accounts for only 3 percent of all wine sales, but is worth $500 million a year.

The growth is not from the Beringers and Gallos of the world. It’s the little guys. There are more than 3,000 local wineries in the country now, three times the number 30 years ago, according to the National Association of American Wineries.

But wine wholesalers and distributors have consolidated, making it tough for wineries that don’t produce massive quantities of well-known products to make it to store shelves.

Prohibition-era roots

Distributors, who some small vineyards blame for squeezing them out, became part of the mix when Prohibition ended. States still wanted to regulate alcohol, so a three-tier system was born.

It injects a distributor between alcohol producers and retailers. That helped calm the retail pressure of selling as much alcohol as possible to maximize profits.

Local wineries say the system works only for the Robert Mondavis of the world.

For instance, Galena Cellars, which operates a store in Geneva, can’t pay distributors to ship their wine without charging an elite price.

Scott Lawlor, whose family owns Galena Cellars, said distributors and retailers each want such a large chunk of the pie that a $30 price tag would be the only way to turn a profit.

“In other words, I don’t make money in that circle,” he said.

A $30 bottle of wine is too pricey for most consumers, especially the burgeoning twentysomething market, he added.

Movies like the Oscar-winning “Sideways” and local wine shops are defusing the hoity-toity stigma, attracting younger customers, wineries say.

The Glunz Family Winery in Grayslake is benefiting from the youth movement, but not enough for distributors to carry their relatively few bottles of wine, General Manager Suzzie Glunz Holtgrieve said. Direct shipping is the best way to turn a profit for them. The difficulty is achieving visibility without a distributor.

“There must be a happy medium,” she said.

Illinois wineries must wait at least a little longer for that because the initial impact of the court’s ruling will be modest locally, Illinois Solicitor General Gary Feinerman said.

Illinois has agreements with several other states allowing direct shipments of wine to consumers. The state is an open market, even for other states that don’t allow Illinois to ship in.

The Supreme Court revoked the choice to discriminate, but set in motion a host of other choices, said Jeff Modisett, a commercial litigation expert who worked to end the direct-shipping bans.

State legislatures must open the floodgates to direct shipping, or ban it for everyone, Modisett said.

Word is Michigan may be one of the states to kill all direct shipping, Modisett said.

“That to me is like throwing the baby out with the bath water,” he said. “It’s not clear to me what they are trying to protect by doing that.”

The answer is money and underage drinking.

Money and minors

States with bans argue it’s harder to ensure an out-of-state winery pays taxes on the wine it ships in.

The second concern is an outcry from substance abuse groups.

“When there is increased availability, there’s more of a chance youth will get alcohol,” said Sara Moscato, associate director of the Illinois Alcoholism and Drug Dependence Association. “The majority of people with alcohol dependence started before 21. This is definitely not going to help.”

The counter argument says 16-year-olds won’t wait a week for a bottle of wine to come in the mail when they can get their older brother to buy beer at the local 7-Eleven. Just put a label on the package and require an adult’s signature.

That doesn’t always happen, Moscato said. She’s aware of at least two tests where minors obtained alcohol by mail because the package wasn’t labeled or the delivery person didn’t ask for an ID.

“Do we want or expect to have FedEx and UPS start being bouncers and checking IDs when they drop off packages?” Moscato said. “Their job is not to prevent underage drinking.”

The Supreme Court said the evidence doesn’t support Moscato’s concerns. Local wineries don’t buy into the drunken-youths argument either. They fear a negative impact on their livelihoods.

“Huge,” “big” and “incredible” are all words used by local grape gurus to describe what a truly open wine market would mean for them. Word-of-mouth and Internet advertising will trickle into other states potentially causing more sales in new markets.

Potentially.

“I was excited about the ruling for one day, but then I sat back and thought that our state could now pass a law that could really hurt us,” said Galena Cellar’s Lawlor. “The ruling could help us, but it may put us back in the dark ages.”

Indeed, lawmakers say the wine trade across the country, is “up for grabs” now.

The Illinois Senate hosted hearings on the issue, under the leadership of Sen. Ira Silverstein, to forecast the impact of the Supreme Court’s ruling. None of the parties that testified swayed Silverstein into thinking anything was wrong with Illinois’ current setup.

But Silverstein didn’t expect the court to rule anything unconstitutional.

His immediate concern is the potential of a lawsuit claiming Illinois’ special shipping arrangements with several states are unconstitutional.

Local winemakers fear distributors will either try to limit the amount of wine local wineries can ship, or close off all direct shipping in Illinois.

Fred Koehler, who owns Lynfred Winery in Roselle, said a total direct shipping ban or severe limits would be poison in his glass.

“It’d put us out of business,” Koehler said. “That’s how serious it is. Why does the state want to put up more challenges for businesses when we’re an industry that’s trying to grow? But that’s what we have to watch out for because distributors are trying to monopolize the industry.”

It’s a fine line between monopoly and protecting your business. Distributors will continue to fight for the supremacy of face-to-face sales.

DiTommaso makes many face-to-face sales at his winery. He also doesn’t have a problem with shipping wine with a label requiring an adult signature.

Until new laws are written, it’ll be business as usual for DiTommaso. He has his local regular customers. And he’ll still have tourists come in, fall in love with his wine and return home with a few precious bottles because they can’t order any more by mail.

But one day, DiTommaso said he believes that will all change.

“As time goes on, and more wine customers and wineries put the pressure on, more states will open up. This isn’t a done deal yet.”

21 It's the law. But is it fair?

July 17, 2005

By: James Fuller Daily Herald Staff Writer

If the National Minimum Drinking Age Act was a person, it would likely be headed out to a local bar tonight to celebrate.

Today is the 21st birthday of the law enacted by President Ronald Reagan that tied the drinking age to federal transportation dollars. States that didn't set their minimum purchase age at 21 lost their federal road money.

The idea was to help put the brakes on drunken driving deaths among 18- to 20-year-olds - those most likely to be in alcohol-related accidents.

Twenty-one years later, government agencies and substance abuse groups say the law has played a key role in saving thousands of lives. But youth rights groups, armed with studies from sympathetic college professors, tell a different tale of self-destruction brought on by a discriminatory law.

Why 21?

As the United States continues to send young people overseas to fight wars, some lawmakers are beginning to show signs of bending to the argument of "old enough to die for the country, old enough to drink."

Wisconsin is considering lowering the drinking age for military personnel. Vermont Gov. James Douglas has voiced support for lowering its drinking age to 18 if it passes the state legislature.
If either change happens, it'll be the first sign America is learning from a longstanding failure, Arlington Heights native Brad White believes.

A senior at the University of Missouri-Columbia, White is a former staff member of the National Youth Rights Association.

"I don't think our kids can learn responsibility by just giving them alcohol and saying 'OK, be responsible' when they hit 21," White said. "You don't hand a kid a car at 16 and tell them to go drive. You have to teach them."

Driving is a key component of the issue, with statistics cited on both sides to show the law has been both a success and a failure.

From 1993 to 2003, nearly 60,000 drivers under 21 in Illinois were arrested for driving with some amount of alcohol in their blood systems, according to the secretary of state's office. Drivers under 21 are still the single largest group involved in alcohol-related deaths.

That only counts the number of people who were caught.

"It does point to a problem with underage drinking," said Brad Fralick, adviser to Illinois Secretary of State Jesse White on DUI issues. "No one is disputing that underage drinking is going on. But no matter which end you're looking at, the law has certainly been a success."

The proof of success is in the 1,000 lives the drinking age has saved every year, said Susan McKinney, executive director of Mothers Against Drunk Driving in Illinois, where the drinking age was made 21 in 1980.

MADD and other like-minded groups also cite numbers that show fewer young people are drinking now than in the mid-1980s. And while drunken driving deaths for the under-21 set still occur, they are happening less frequently than when 18-year-olds could buy alcohol.

Susan Wishnetsky is the secretary of Chicago-based Americans for a Society Free of Age Restrictions and believes those numbers are a product of selective memory.

"They single out particular age groups and particular periods of time that make their case and ignore others," she said. "What they don't mention is that the decrease in drunk driving has covered all age groups and accidents."

Seat belts, air bags, safe-driver courses and alcohol education programs are all factors contributing to lower numbers over the years. So spotlighting the age increase as the sole reason simply isn't fair, she said.

The argument comes down to civil rights versus human health.

The main support for why the drinking age is 21 versus 18 or any other age is medical research. The human brain doesn't stop developing until the early 20s. Drinking regularly before then can kill brain cells that never come back, said Sara Moscato, associate director of the Illinois Alcoholism and Drug Dependence Association.

"It wasn't an arbitrary number by any stretch of the imagination," she said.

Alex Koroknay-Palicz, executive director of the National Youth Rights Association, refutes that notion.

"Almost every other society and country around the planet has a lower drinking age than the U.S.," he said. "If the entire rest of the world is drinking before 21, and realistically, most Americans are as well, then all of us are brain-damaged."

Forbidden fruit

The 21 law has also created another problem seen more broadly during the age of Prohibition, said Ruth Engs, a professor of applied sciences at Indiana University.

"The bottom line is the 21-year-old purchase law has caused more problems related to alcohol abuse than it has prevented," she said.

Engs points to the forbidden fruit syndrome, which, she said, "has caused young adults to rebel against something they feel they are entitled to. If they can die for their country, vote, get married, sign contracts, why shouldn't they be allowed to drink?"

In Illinois, 18-year-olds can also buy cigarettes, get a hunting license and own an assault weapon. The criminalization of drinking under 21 compared to those other rights is exactly why people under 21 end up in the hospital for trying to down 21 shots on their 21st birthdays, Wishnetsky said. It's also why some youths binge-drink in secret before they turn 21.

"If you're going to commit crimes, you're not going to do it moderately," she said. "They figure they're already criminals, so they might as well behave like them. It's also a matter of opportunity. If it's more difficult to obtain alcohol, then once you get some, you have to take advantage of it to the fullest."

Brewing change

Few groups, if any, seem to advocate raising the voting or driving age to 21. The only solution to make the drinking law fair, youth rights groups say, is to lower or eliminate the age restrictions - and then trust parents and teens to make responsible choices in controlled situations.

In other words, don't allow 12-year-olds to buy a six-pack on the way home from middle school, but do allow a beer at home with Mom and Dad. At the college level, allow drinking in local bars and university-sponsored events, but no kegs in dorm rooms.

Achieving a lower drinking age, whatever the parameters, is not without a price tag.
Lowering the purchase age in Illinois, or any other state, means forfeiting federal transportation dollars. For Illinois, that would have cut a nearly $64 million hole in the state's purse in 2004.
That chunk of cash represents an abuse of federal power in the eyes of Bill Olson, executive vice president of the Associated Beer Distributors of Illinois.

"The biggest thing here from our standpoint is that this is the law of the land, and the federal government passed legislation that blackmailed the states into doing this," he said. "It's a controversy that's really beyond us as an alcohol beverage industry. It's for policy makers to decide."

Policy makers will continue to be pushed from both sides. Youth rights groups will watch Wisconsin and Vermont to begin a chain reaction of change.

"If alcohol is bad, and I believe that it is, then alcohol is bad for all people," Koroknay-Palicz said. "We believe alcohol is a problem and a vice, but the reason that we're in on this issue is equality. You can't single out young people. It's not fair."

Meanwhile, MADD and substance abuse groups will continue to chip away at the ways youths circumvent the age law.

Bars are the next frontier, said Moscato, of the Illinois Alcoholism and Drug Dependence Association. Far too many college town bars allow admission at 18, all but guaranteeing such customers will drink illegally once inside, she said. Keeping 21 the minimum purchase age is key to attacking addiction problems and giving parents a basis to push responsibility with their children and show them alcohol isn't necessary to have a good time.

"Maybe the 21 law isn't fair, but I don't know that I'm in the business of being fair when it comes to saving lives," Moscato said. "I'm not the fair queen. So I'm sorry if it's not fair, but it's right."

GRAPHIC: Key dates in drinking age laws
Jan. 1, 1980: Illinois establishes 21 as the minimum drinking age.

July 17, 1984: President Reagan signs National Minimum Drinking Age Act, which cuts off highway funds for states that don't set 21 as minimum drinking age.

Sept. 12, 1986: New state law revokes all driving privileges for a year or until driver turns 21, whichever is longer, for any person under 21 convicted of a second DUI.

Jan. 1, 1994: New state law suspends driving privileges for one year for drivers under age 21 caught illegally transporting alcohol. Driving privileges are revoked on the second offense.

Jan. 1, 1995: Illinois institutes "Use It & Lose It" law. Drivers under 21 caught with even a trace of alcohol in their systems lose their driving privileges.

Jan. 1, 2003: Local liquor commissioners ordered to report to the Secretary of State any conviction of a person under age 21 who buys, accepts, possesses or consumes alcohol. A violation results in a one-year suspension or revocation of driving privileges.

Source: Illinois Secretary of State

GRAPHIC: Other alcohol-related offenses
- Providing alcohol to a person under 21
- Parents or guardians allowing underage consumption of alcohol
- Hotel/motel employees renting rooms to someone under 21 and knowing alcoholic beverages will be consumed there
- A person 21 or older paying for a hotel room or facility knowing alcoholic beverages will be consumed there by underage individuals
Penalties: All of above are considered Class A misdemeanors with possible imprisonment for up to 1 year and fines of $500-$2,500. In addition, people over 21 paying for the hotel/motel room are liable for injuries or property damage caused by underage drinkers.
Source: Illinois Secretary of State

GRAPHIC: Underage drinking
- Alcohol is the No. 1 drug of choice for youths.
- Alcohol kills more young people than all other illicit drugs combined.
- In 2003, 2,283 people ages 15-20 were killed in alcohol-related traffic crashes, accounting for 36 percent of all traffic fatalities.
- All states prohibit possession and purchase of alcohol by those under 21, but 14 states allow consumption.
- Nearly 10 million drinkers in the United States are between the ages of 12 and 20.
Sources: Mothers Against Drunk Driving, U.S. Dept. of Health and Human Services