Alcohol deregulation, the wine industry

I have been asked many times now by customers and readers about my feelings on proposition 1183 in Washington state and its effect on the wine industry and the prospects of a similar law here in Idaho.

Also, since we share the same distributors with Washington, we have had many conversations with these distributors about the consequences of 1183 both intended and unintended. While my general view of the law and its effects is to wait and see what really comes of it, there are some clear trends that are developing.

First off my views on the Washington law and on any future change in Idaho are driven by how it impacts the wine industry. We have no interest in selling liquor; our passion is now and always has been providing the best selection of the "coolest" and most delicious wines from around the world, backed up with the best customer service and most knowledge. While we recognize the limitless choices in great beer and liquor our expertise in wine is driven by focus and passion and will remain so.

Deregulation as it is embodied in 1183 and would likely be included in an Idaho law governs all alcohol including wine, so being aware of the ramifications is vital. In the short term so far in Washington the impact on the wine industry and availability of more sought after smaller production wines has been negative. Distributors and large retailers are clearing space both in inventory capital and on the shelf for hard liquor and its larger profit margins. This results in smaller production wineries being dropped from larger stores, and from distributor books that will carry alcohol.

The tough news for North Idaho wine consumers is that choices in the short term will likely be limited too, again because we share distributors with Eastern Washington. For those wine consumers who focus their buying more on larger wine brands that are carried in grocery stores and other big box outlets it will create some increased competition and ultimately price reductions.

The law has also increased the shuffle of wine brands and distributors as wineries endeavor to work with the proper size distributor given the new reality of the law, but also find ones that want to continue carrying their product. All of these consequences are clearly unintended and hopefully will be short lived.

One trend that will likely help with this dislocation is the recent and ongoing start up of small distributors which focus on smaller wineries. While our existing local distributors do a good job for us one of the natural inefficiencies of the distributor system is for small wineries and as mentioned above is exacerbated by the passage of 1183. The new start ups will ultimately fill this void as will the remaining distributors that carry only wine, but it will take time and in between then and now you are likely to have trouble finding some of your old favorites that are produced and imported on a smaller scale. Also as small wine shops develop their contacts to purchase wine directly from wineries access will improve.

This brings me to my wish list for any Idaho law that would similarly strike down state control of the alcoholic beverage industry. At the top of that list would be the freedom to buy wine directly from wineries outside Idaho and to negotiate pricing directly with the winery.

My other wish for any Idaho law would be to avoid the increased taxes that are imbedded in the Washington law. The income previously generated by the state dispensaries has been replaced by a tax structure that adds upward of 25 percent in taxes passed directly to consumers resulting in prices in Washington actually increasing until the competitive pressure begins to bring them back down. While the revenue the state of Idaho earns from liquor sales will have to be replaced, my hope is a better way will be found than a broad based high percentage tax across all categories of alcoholic beverages.

At the end of the day, my feeling for Idaho is a wait, see and learn from our neighbors' approach which will likely be the best for wine consumers. All changes of this magnitude have unintended consequences, and my feeling as a wine professional is that the passage of 1183 in Washington provides all of us here in Idaho a perfect laboratory from which to study the implications and ultimately craft the best law possible to create the most efficient market for wine from vineyard to bottle, and ultimately for beer and hard alcohol as well.

If there is a topic you would like to read about or questions on wine you can email George@thedinnerpartyshop.com or make suggestions by contacting the Healthy Community section at the Coeur d'Alene Press.

George Balling is co-owner with his wife Mary Lancaster of the dinner party - a wine and table top decor shop in Coeur d'Alene by Costco. George is also the managing judge of The North Idaho Wine Rodeo and writes frequently for the online version of Coeur d'Alene Magazine at www.cdamagazine.com. You can learn more about the dinner party at www.thedinnerpartyshop.com.