Help on Wine Shipping Laws

Several months ago, Congress passed (and Bush signed) a law that overrode certain state restrictions on the interstate shipment of wine. For those states that the law applies to, an ordinary individual can purchase wine AT A WINERY TASTING ROOM and have it shipped TO THEMSELVES in their home state. The quantity that can be shipped is still controlled by the states themselves and equals the amount that a resident (or, presumably, anyone else) can legally bring into the state for personal consumption. The catch is that some states prohibit ordinary individuals (i.e., not licensed distributors) from bringing ANY amount of wine (or any other alcoholic beverage) into that state. The aforementioned law does NOT apply to these states for reasons that should be obvious. Ohio is such a state.

Your posting indicates that there are certain dealers who say that they will ship wine into Ohio. My question (which I don't expect you to answer since you have not placed an order from any of these dealers) is whether or not such shipments are clearly labeled as wine and whether they require that a signature of of someone over 21 years old is required. My suspicion is that the answer to both of these questions is "no".

Comments from others more knowledgeable on this topic than me?

Vino

It is not illegal to ship wines into Ohio. There is a form on the Commerce Dept website that you fill out and send it in. They turn it around in about a week. It allows you to ship wine into the State that is not available in this State. You pay a very nominal .75per case and the going sales tax rate in your municipality. I'm not sure where you get your numbers but I don't think the mark-up is 135%. My recollection is 40% over winery release and 30% over wholesale. I travel extensivily and still don't find that the cost of wine here is out of line with most States. Yes, there are some States where the taxes are less (Ill, Ky, Delaware) but by and large the prices here are fairly reflective of what the market is. Buy your wine from Zachys or The WIne Club they ship anywhere. Bi!!

Boy, I can't see how you can dispute this price issue if you've ever shopped for wine in other states. Not to attack you, but are you a small retailer or wholesaler and have a vested interest in maintaining these margins? This is all about outdated laws protected by the political contributions of special interest parties. I should have posted some links (with text here also). Everyone will get a nice laugh from the wholesalers rationale as to why this markup makes sense.

Despite Wine Glut, No "Two Buck Chuck" for Ohio

By Jen Melby and Joshua C. Hall* [HOME]

Trader Joe's, a self-described "unique grocery store" that originated in California, has recently begun expanding into Ohio with stores in Dublin and Kettering. In addition to selling gourmet foods, Trader Joe's is known for offering a selection of unique, reasonably priced wines, some offered exclusively at Trader Joe's.

The most famous of the exclusive wines sold by Trader Joe's is from the Charles Shaw Winery. Called "Two Buck Chuck" by Californians because of its $1.99 retail price, Ohioans will have to find another nickname for these inexpensive table wines. According to the Columbus Dispatch, "Two Buck Chuck" sells for $3.89 in Ohio.[1]

Does Trader Joe's have something against Ohioans? Are they giving preferential treatment to Californians because that's where they started? Of course not.

The high price of "Two Buck Chuck" in Ohio is attributable to Ohio's antiquated liquor control laws. Ohio law imposes a 135 percent markup on each bottle of wine before it is sold in stores, resulting in customers paying 25 to 50 percent more for wine than customers pay in other states.

Wine sold in Ohio is significantly marked up at each level of the distribution system ¾ at the producer, the wholesaler, and the retailer. By the time it reaches the customer's hands, a bottle of wine that cost $6 to

produce will cost the consumer $14 before taxes.

To avoid some of these markups, Internet savvy Ohioans could buy their wine online if it were not illegal under state law. But those same antiquated liquor control laws forbid the interstate shipment of wine by common carrier.

A quick comparison between local "brick and mortar" sellers and online retailers illustrates how much the ban on interstate shipment, let alone the mandatory markup, is costing Ohioans. For the purpose of comparison, three random wines were chosen from a local grocer on High Street in Columbus and compared with the lowest priced wine available through the website winesearcher.com.

a.. 1999 Kenwood Jack London Cabernet Sauvignon Sonoma Valley

Local grocer: $36.19

a.. 1999 De Loach Chardonnay

Local grocer: $19.99

a.. 2000 Fetzer Barrel Selection Chardonnay

Local grocer: $14.19

In each case, the wine is significantly cheaper from the online retailer. The mandatory markup in Ohio is so large that Ohioans would only need to buy a couple of bottles each time to justify the shipping expense.[2] While customers will never abandon their local store due to the convenience of location and immediacy, legalizing the purchasing of wine through the Internet would allow Ohioans to have a larger selection of wines available to them at a lower cost. Right now Ohio's ban on the direct shipment of wine from the producer to the consumer denies citizens the right to purchase wine in a nationally competitive market.

Ostensibly, these restrictions are in place to protect minors and ensure state taxes are collected. The reality is that these restrictions exist only to serve the interests of those who benefit from the mandatory markups. As Nobel Prize winning economist Daniel McFadden explains, "The [state] restrictions on direct purchase of premium wines and their interstate shipment .[are] another example of abuse of the regulatory process to protect concentrated economic interests, going far beyond the minimum regulations needed to maintain the integrity of State taxation and to protect minor consumers."[3]

Consumers and wineries are taking steps to free customers from the binding laws in the wine market. One California winery, Ravenswood, states on their website that the trade barriers, "represent a serious infringement of free trade as well as individual rights," and have provided a sample letter to write to state representatives in opposition to the barriers. Free the Grapes! is a national grassroots coalition of consumers and wineries that is working to legalize direct to consumer shipments.[4]

Hopefully their efforts will come to fruition. Until then, if you go to Trader Joe's you'd better ask for "Four Buck Chuck."

• Jen Melby is a research intern with The Buckeye Institute. Joshua C. Hall is Director of Research at The Buckeye Institute and a lecturer in the School of Management at Capital University.

[1] Jim Weiker, "Cheers for Wine Glut, Lower Prices," Columbus Dispatch, 15 May 2002.

Ohio Senator Tries to Eliminate Hefty Wine Markups Posted: Friday, October 17, 2003

By Nick Fauchald

Bob Eppich is riding a fence. The owner of Colonial Wine and Beverage in Chesterland, Ohio, can't decide if a proposed bill calling for the end of Ohio's minimum markup on wine will boost his business or destroy it.

"Right now, lots of people are driving to Chicago and loading their trunks up with wine," Eppich said. "This bill could keep prices down enough to keep these consumers in the state, or it could allow a lot of big box retailers to drive the little guys, like me, out of business." He fears that, without fixed pricing, the new Trader Joe's down the road could kill his business by offering huge discounts.

Ohio is among the 17 states that still impose mandatory markups on the sale of alcohol, but according to a 2002 study by the Cleveland Plain Dealer, its retail markup is 135 percent, making it the highest in the nation, with consumers paying 25 percent to 50 percent more per bottle than in other states. (The Ohio Liquor Commission's rules list the minimum markup at about

Legislation recently introduced in the state senate would eliminate the minimum markup, and also prohibit retailers from selling wine below cost. The latter provision is intended to prevent large retailers from predatory pricing -- selling wine at a loss in order to drive smaller retailers out of business.

But the author of SB 135, state Sen. Eric Fingerhut (D), knows it won't be easy to convince his colleagues to rescind the law, which was codified more than 50 years ago. Groups such as the Wholesale Beer and Wine Distributors of Ohio contribute to the legislators who control the state's liquor laws, Fingerhut said, which "keeps them more attentive to special interest than public interest." Last year, Fingerhut sponsored a similar bill that was quickly discarded by the Senate Agriculture Committee.

Even before Fingerhut reintroduced the bill last week, lobbyists from five r etail and beverage groups distributed a memo among legislators urging them to oppose the new measure, calling the existing laws an "effective tool" to "control the overconsumption of wine." The memo also stressed the importance of fair

ompetition between large and small retailers.

Fingerhut disagrees with both arguments. "We have laws against public drunkenness, we have laws against drunk driving," he said. "That's how we deal with overconsumption. The public doesn't expect us to fix prices in order to control consumption. If we wanted to control consumption, we should do it like we do with tobacco, through taxes."

As for unfair competition, Fingerhut said: "It's not our place to fix these prices. Do we protect small hardware stores from Home Depot by controlling the price of hammers?"

However, Phil Craig, executive director of the Ohio Licensed Beverage Association, said eliminating the minimum markup would have a devastating effect on smaller retailers. "Some of the bigger food chains have such a large volume that if we didn't impose minimum markup, they could sell wine below milk cost," he said.

Craig also stressed that smaller retailers create a more diverse wine market: "Big box retailers will never carry the length and breadth that some of our small shops carry, simply because they're not as interested in the experiential and educational aspects of wine. . As long as these smaller 'mom and pops' exist, the more people will be able to share wine and talk about it in a more thoughtful manner."

If wine becomes too cheap and more of it is sold, Craig added, it could be abused like its shelf mates, beer or liquor. But Eppich discounted that theory, based on what he sees among his customers. "Fine wine, by the very nature of who drinks it, is rarely abused," he said. "In my opinion, this is a nonissue."

Independent retailers, Eppich said, are more concerned with discount chains undercutting them out of business. But he said, "I'll survive, because I'm already a chameleon. I will conform and find a way to make money, one way or the other."

Monday, March 04, 2002 Ohio most expensive place in U.S. to buy wine

The Associated Press CLEVELAND - Ohioans are buying more wine, but they're also paying more per bottle than anyone else in the country because state laws don't let the marketplace set prices, The Plain Dealer reported Sunday.

The state requires a 135 percent increase in a bottle's price before it can be sold, even though Ohio gets none of the money from markups other than a tax of 7 cents a bottle.

Ohio consumers spent $300 million on wine last year, 50 percent more than a decade ago.

Consumers can pay from one fourth to one half more for a bottle of wine in Ohio than in other states, the newspaper said. Utah's lower required markup is the only one that comes close.

Ohio is one of 17 states that still regulate the sale of alcohol. None, though, is as generous to distributors and retailers as Ohio.

Dan Greathouse, president of Heidelberg Distributing in Cleveland, said that if "the minimum pricing went away, the big chains ... would come in here and have a heyday. If they take away the price controls, they will ruin a lot of Ohio's family businesses."

Some Ohioans are turning to Internet or out-of-state suppliers for better deals.

To make such purchases legal, buyers must fill out paperwork and pay state taxes on the wine. Many skip the tax, the newspaper said, hurting both the state and Ohio retailers who lost business.

The agency that oversees wine sales is the Beer and Wine Section of the state Department of Commerce's Division of Liquor Control. Its rules date to the late 1940s.

State Sen. Eric Fingerhut, a Shaker Heights Democrat, said the agency "long ago stopped focusing on safety and the public interest and has become a tool of special interests."

Lobbyists for wine distributors in Ohio, who have an interest in seeing the price controls continue, have contributed generously to state politicians.

The Plain Dealer calculated that the Wholesale Beer and Wine Distributors of Ohio has raised nearly $1 million in the last eight years for its Political Action Committee that annually gives money to both major parties, the governor and most legislators.

The amount donated by the distributors' PAC in election year 2000, about $170,000, was almost twice as much as was given during 1996, about $90,000.

The PAC contributed money to two of the three members of the state's Liquor Control Commission - Rocco Colonna and Janet Howard - when they were state legislators. Colonna and Howard did not return phone calls seeking comment.

Commission members, appointed to six-year terms by the governor, are responsible for establishing rules such as the mandatory markups on wine and for ruling on some liquor law violations. Their salaries are $45,000 to $49,000, depending on when they were appointed.

The commission's next public meeting is Thursday in Columbus.

"Until people see there is no reason for them to pay $18 for a bottle of wine here when they can get it for $10 in another state, things won't change," said Cleveland lawyer and wine collector Eric Baker. "The only people that benefit are the ones that sell it."

Dark Helmet

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FYI Here is the Ohio summary from the Wine Institute direct shipping information pages:

Ohio Summary: Direct shipment via common carrier prohibited.

Statute: Resident adult must obtain consent from Ohio Department of Liquor Control, 2323 W. Fifth Ave., Columbus 43204, and pay consent fee, to ship or bring in up to two cases of wine or brandy brought into the U.S. from a foreign country. Resident, with consent from the Department and payment of taxes and fees, may bring in up to 15 gallons of wine every 3 months. With consent of the Department, up to one gallon per month of foreign wine or brandy may be brought into state without payment of consent fees, if acquired abroad incident to a journey. (¶¶3054, 4325, 7166A)(O.R.C.§4301.20(K)).

Spence

Here's a link to the required form that can be downloaded and submitted.

The form states that: An Ohio resident may import beer, wine or mixed beverages for personal use if the alcoholic beverage is not available in the state. The maximum amount a household may import is 6 cases of wine, 6 cases of mixed beverage and 10 cases of beer in a three month period.

Ohio excise tax for dry red or white wine is .76 per case and any applicable county use or sales tax applies.

I have filled this form out many, many times and have never had a problem. The turn around is about a week. Bi!!

Boy, I can't see how you can dispute this price issue if you've ever shopped for wine in other states. Not to attack you, but are you a small retailer or wholesaler and have a vested interest in maintaining these margins? This is all about outdated laws protected by the political contributions of special interest parties. I should have posted some links (with text here also). Everyone will get a nice laugh from the wholesalers rationale as to why this markup makes sense.

Despite Wine Glut, No "Two Buck Chuck" for Ohio

By Jen Melby and Joshua C. Hall* [HOME]

Trader Joe's, a self-described "unique grocery store" that originated in California, has recently begun expanding into Ohio with stores in Dublin and Kettering. In addition to selling gourmet foods, Trader Joe's is known for offering a selection of unique, reasonably priced wines, some offered exclusively at Trader Joe's.

The most famous of the exclusive wines sold by Trader Joe's is from the Charles Shaw Winery. Called "Two Buck Chuck" by Californians because of its $1.99 retail price, Ohioans will have to find another nickname for these inexpensive table wines. According to the Columbus Dispatch, "Two Buck Chuck" sells for $3.89 in Ohio.[1]

Does Trader Joe's have something against Ohioans? Are they giving preferential treatment to Californians because that's where they started? Of course not.

The high price of "Two Buck Chuck" in Ohio is attributable to Ohio's antiquated liquor control laws. Ohio law imposes a 135 percent markup on each bottle of wine before it is sold in stores, resulting in customers paying 25 to 50 percent more for wine than customers pay in other states.

Wine sold in Ohio is significantly marked up at each level of the distribution system ¾ at the producer, the wholesaler, and the retailer. By the time it reaches the customer's hands, a bottle of wine that cost $6 to produce will cost the consumer $14 before taxes.

To avoid some of these markups, Internet savvy Ohioans could buy their wine online if it were not illegal under state law. But those same antiquated liquor control laws forbid the interstate shipment of wine by common carrier.

A quick comparison between local "brick and mortar" sellers and online retailers illustrates how much the ban on interstate shipment, let alone the mandatory markup, is costing Ohioans. For the purpose of comparison, three random wines were chosen from a local grocer on High Street in Columbus and compared with the lowest priced wine available through the website winesearcher.com.

a.. 1999 Kenwood Jack London Cabernet Sauvignon Sonoma Valley

Local grocer: $36.19

a.. 1999 De Loach Chardonnay

Local grocer: $19.99

a.. 2000 Fetzer Barrel Selection Chardonnay

Local grocer: $14.19

In each case, the wine is significantly cheaper from the online retailer. The mandatory markup in Ohio is so large that Ohioans would only need to buy a couple of bottles each time to justify the shipping expense.[2] While customers will never abandon their local store due to the convenience of location and immediacy, legalizing the purchasing of wine through the Internet would allow Ohioans to have a larger selection of wines available to them at a lower cost. Right now Ohio's ban on the direct shipment of wine from the producer to the consumer denies citizens the right to purchase wine in a nationally competitive market.

Ostensibly, these restrictions are in place to protect minors and ensure state taxes are collected. The reality is that these restrictions exist only to serve the interests of those who benefit from the mandatory markups. As Nobel Prize winning economist Daniel McFadden explains, "The [state] restrictions on direct purchase of premium wines and their interstate shipment .[are] another example of abuse of the regulatory process to protect concentrated economic interests, going far beyond the minimum regulations needed to maintain the integrity of State taxation and to protect minor consumers."[3]

Consumers and wineries are taking steps to free customers from the binding laws in the wine market. One California winery, Ravenswood, states on their website that the trade barriers, "represent a serious infringement of free trade as well as individual rights," and have provided a sample letter to write to state representatives in opposition to the barriers. Free the Grapes! is a national grassroots coalition of consumers and wineries that is working to legalize direct to consumer shipments.[4]

Hopefully their efforts will come to fruition. Until then, if you go to Trader Joe's you'd better ask for "Four Buck Chuck."

• Jen Melby is a research intern with The Buckeye Institute. Joshua C. Hall is Director of Research at The Buckeye Institute and a lecturer in the School of Management at Capital University.

[1] Jim Weiker, "Cheers for Wine Glut, Lower Prices," Columbus Dispatch, 15 May 2002.

Ohio Senator Tries to Eliminate Hefty Wine Markups Posted: Friday, October 17, 2003

By Nick Fauchald

Bob Eppich is riding a fence. The owner of Colonial Wine and Beverage in Chesterland, Ohio, can't decide if a proposed bill calling for the end of Ohio's minimum markup on wine will boost his business or destroy it.

"Right now, lots of people are driving to Chicago and loading their trunks up with wine," Eppich said. "This bill could keep prices down enough to keep these consumers in the state, or it could allow a lot of big box retailers to drive the little guys, like me, out of business." He fears that, without fixed pricing, the new Trader Joe's down the road could kill his business by offering huge discounts.

Ohio is among the 17 states that still impose mandatory markups on the sale of alcohol, but according to a 2002 study by the Cleveland Plain Dealer, its retail markup is 135 percent, making it the highest in the nation, with consumers paying 25 percent to 50 percent more per bottle than in other states. (The Ohio Liquor Commission's rules list the minimum markup at about

Legislation recently introduced in the state senate would eliminate the minimum markup, and also prohibit retailers from selling wine below cost. The latter provision is intended to prevent large retailers from predatory pricing -- selling wine at a loss in order to drive smaller retailers out of business.

But the author of SB 135, state Sen. Eric Fingerhut (D), knows it won't be easy to convince his colleagues to rescind the law, which was codified more than 50 years ago. Groups such as the Wholesale Beer and Wine Distributors of Ohio contribute to the legislators who control the state's liquor laws, Fingerhut said, which "keeps them more attentive to special interest than public interest." Last year, Fingerhut sponsored a similar bill that was quickly discarded by the Senate Agriculture Committee.

Even before Fingerhut reintroduced the bill last week, lobbyists from five r etail and beverage groups distributed a memo among legislators urging them to oppose the new measure, calling the existing laws an "effective tool" to "control the overconsumption of wine." The memo also stressed the importance of fair competition between large and small retailers.

Fingerhut disagrees with both arguments. "We have laws against public drunkenness, we have laws against drunk driving," he said. "That's how we deal with overconsumption. The public doesn't expect us to fix prices in order to control consumption. If we wanted to control consumption, we should do it like we do with tobacco, through taxes."

As for unfair competition, Fingerhut said: "It's not our place to fix these prices. Do we protect small hardware stores from Home Depot by controlling the price of hammers?"

However, Phil Craig, executive director of the Ohio Licensed Beverage Association, said eliminating the minimum markup would have a devastating effect on smaller retailers. "Some of the bigger food chains have such a large volume that if we didn't impose minimum markup, they could sell wine below milk cost," he said.

Craig also stressed that smaller retailers create a more diverse wine market: "Big box retailers will never carry the length and breadth that some of our small shops carry, simply because they're not as interested in the experiential and educational aspects of wine. . As long as these smaller 'mom and pops' exist, the more people will be able to share wine and talk about it in a more thoughtful manner."

If wine becomes too cheap and more of it is sold, Craig added, it could be abused like its shelf mates, beer or liquor. But Eppich discounted that theory, based on what he sees among his customers. "Fine wine, by the very nature of who drinks it, is rarely abused," he said. "In my opinion, this is a nonissue."

Independent retailers, Eppich said, are more concerned with discount chains undercutting them out of business. But he said, "I'll survive, because I'm already a chameleon. I will conform and find a way to make money, one way or the other."

Monday, March 04, 2002 Ohio most expensive place in U.S. to buy wine

The Associated Press CLEVELAND - Ohioans are buying more wine, but they're also paying more per bottle than anyone else in the country because state laws don't let the marketplace set prices, The Plain Dealer reported Sunday.

The state requires a 135 percent increase in a bottle's price before it can be sold, even though Ohio gets none of the money from markups other than a tax of 7 cents a bottle.

Ohio consumers spent $300 million on wine last year, 50 percent more than a decade ago.

Consumers can pay from one fourth to one half more for a bottle of wine in Ohio than in other states, the newspaper said. Utah's lower required markup is the only one that comes close.

Ohio is one of 17 states that still regulate the sale of alcohol. None, though, is as generous to distributors and retailers as Ohio.

Dan Greathouse, president of Heidelberg Distributing in Cleveland, said that if "the minimum pricing went away, the big chains ... would come in here and have a heyday. If they take away the price controls, they will ruin a lot of Ohio's family businesses."

Some Ohioans are turning to Internet or out-of-state suppliers for better deals.

To make such purchases legal, buyers must fill out paperwork and pay state taxes on the wine. Many skip the tax, the newspaper said, hurting both the state and Ohio retailers who lost business.

The agency that oversees wine sales is the Beer and Wine Section of the state Department of Commerce's Division of Liquor Control. Its rules date to the late 1940s.

State Sen. Eric Fingerhut, a Shaker Heights Democrat, said the agency "long ago stopped focusing on safety and the public interest and has become a tool of special interests."

Lobbyists for wine distributors in Ohio, who have an interest in seeing the price controls continue, have contributed generously to state politicians.

The Plain Dealer calculated that the Wholesale Beer and Wine Distributors of Ohio has raised nearly $1 million in the last eight years for its Political Action Committee that annually gives money to both major parties, the governor and most legislators.

The amount donated by the distributors' PAC in election year 2000, about $170,000, was almost twice as much as was given during 1996, about $90,000.

The PAC contributed money to two of the three members of the state's Liquor Control Commission - Rocco Colonna and Janet Howard - when they were state legislators. Colonna and Howard did not return phone calls seeking comment.

Commission members, appointed to six-year terms by the governor, are responsible for establishing rules such as the mandatory markups on wine and for ruling on some liquor law violations. Their salaries are $45,000 to $49,000, depending on when they were appointed.

The commission's next public meeting is Thursday in Columbus.

"Until people see there is no reason for them to pay $18 for a bottle of wine here when they can get it for $10 in another state, things won't change," said Cleveland lawyer and wine collector Eric Baker. "The only people that benefit are the ones that sell it."

Dark Helmet

Boy, I can't see how you can dispute this price issue if you've ever shopped for wine in other states. Not to attack you, but are you a small retailer or wholesaler and have a vested interest in maintaining these margins? This is all about outdated laws protected by the political contributions of special interest parties. I should have posted some links (with selected text here also). Everyone will get a nice laugh from the wholesalers rationale as to why this markup makes sense.

Despite Wine Glut, No "Two Buck Chuck" for Ohio

By Jen Melby and Joshua C. Hall*

The most famous of the exclusive wines sold by Trader Joe's is from the Charles Shaw Winery. Called "Two Buck Chuck" by Californians because of its $1.99 retail price, Ohioans will have to find another nickname for these inexpensive table wines. According to the Columbus Dispatch, "Two Buck Chuck" sells for $3.89 in Ohio.[1]

Does Trader Joe's have something against Ohioans? Are they giving preferential treatment to Californians because that's where they started? Of course not.

The high price of "Two Buck Chuck" in Ohio is attributable to Ohio's antiquated liquor control laws. Ohio law imposes a 135 percent markup on each bottle of wine before it is sold in stores, resulting in customers paying 25 to 50 percent more for wine than customers pay in other states.

Wine sold in Ohio is significantly marked up at each level of the distribution system ¾ at the producer, the wholesaler, and the retailer. By the time it reaches the customer's hands, a bottle of wine that cost $6 to produce will cost the consumer $14 before taxes.

A quick comparison between local "brick and mortar" sellers and online retailers illustrates how much the ban on interstate shipment, let alone the mandatory markup, is costing Ohioans. For the purpose of comparison, three random wines were chosen from a local grocer on High Street in Columbus and compared with the lowest priced wine available through the website winesearcher.com.

a.. 1999 Kenwood Jack London Cabernet Sauvignon Sonoma Valley

Local grocer: $36.19

a.. 1999 De Loach Chardonnay

Local grocer: $19.99

a.. 2000 Fetzer Barrel Selection Chardonnay

Local grocer: $14.19

In each case, the wine is significantly cheaper from the online retailer. The mandatory markup in Ohio is so large that Ohioans would only need to buy a couple of bottles each time to justify the shipping expense.[2] While customers will never abandon their local store due to the convenience of location and immediacy, legalizing the purchasing of wine through the Internet would allow Ohioans to have a larger selection of wines available to them at a lower cost. Right now Ohio's ban on the direct shipment of wine from the producer to the consumer denies citizens the right to purchase wine in a nationally competitive market.

Ostensibly, these restrictions are in place to protect minors and ensure state taxes are collected. The reality is that these restrictions exist only to serve the interests of those who benefit from the mandatory markups. As Nobel Prize winning economist Daniel McFadden explains, "The [state] restrictions on direct purchase of premium wines and their interstate shipment .[are] another example of abuse of the regulatory process to protect concentrated economic interests, going far beyond the minimum regulations needed to maintain the integrity of State taxation and to protect minor consumers."[3]

Hopefully their efforts will come to fruition. Until then, if you go to Trader Joe's you'd better ask for "Four Buck Chuck."

• Jen Melby is a research intern with The Buckeye Institute. Joshua C. Hall is Director of Research at The Buckeye Institute and a lecturer in the School of Management at Capital University.

Ohio Senator Tries to Eliminate Hefty Wine Markups Posted: Friday, October 17, 2003

By Nick Fauchald

Bob Eppich is riding a fence. The owner of Colonial Wine and Beverage in Chesterland, Ohio, can't decide if a proposed bill calling for the end of Ohio's minimum markup on wine will boost his business or destroy it.

"Right now, lots of people are driving to Chicago and loading their trunks up with wine," Eppich said. "This bill could keep prices down enough to keep these consumers in the state, or it could allow a lot of big box retailers to drive the little guys, like me, out of business." He fears that, without fixed pricing, the new Trader Joe's down the road could kill his business by offering huge discounts.

Ohio is among the 17 states that still impose mandatory markups on the sale of alcohol, but according to a 2002 study by the Cleveland Plain Dealer, its retail markup is 135 percent, making it the highest in the nation, with consumers paying 25 percent to 50 percent more per bottle than in other states. (The Ohio Liquor Commission's rules list the minimum markup at about

Even before Fingerhut reintroduced the bill last week, lobbyists from five r etail and beverage groups distributed a memo among legislators urging them to oppose the new measure, calling the existing laws an "effective tool" to "control the overconsumption of wine." The memo also stressed the importance of fair competition between large and small retailers.

Fingerhut disagrees with both arguments. "We have laws against public drunkenness, we have laws against drunk driving," he said. "That's how we deal with overconsumption. The public doesn't expect us to fix prices in order to control consumption. If we wanted to control consumption, we should do it like we do with tobacco, through taxes."

As for unfair competition, Fingerhut said: "It's not our place to fix these prices. Do we protect small hardware stores from Home Depot by controlling the price of hammers?"

However, Phil Craig, executive director of the Ohio Licensed Beverage Association, said eliminating the minimum markup would have a devastating effect on smaller retailers. "Some of the bigger food chains have such a large volume that if we didn't impose minimum markup, they could sell wine below milk cost," he said.

Craig also stressed that smaller retailers create a more diverse wine market: "Big box retailers will never carry the length and breadth that some of our small shops carry, simply because they're not as interested in the experiential and educational aspects of wine. . As long as these smaller 'mom and pops' exist, the more people will be able to share wine and talk about it in a more thoughtful manner."

If wine becomes too cheap and more of it is sold, Craig added, it could be abused like its shelf mates, beer or liquor. But Eppich discounted that theory, based on what he sees among his customers. "Fine wine, by the very nature of who drinks it, is rarely abused," he said. "In my opinion, this is a nonissue."

Independent retailers, Eppich said, are more concerned with discount chains undercutting them out of business. But he said, "I'll survive, because I'm already a chameleon. I will conform and find a way to make money, one way or the other."

Monday, March 04, 2002 Ohio most expensive place in U.S. to buy wine

The Associated Press CLEVELAND - Ohioans are buying more wine, but they're also paying more per bottle than anyone else in the country because state laws don't let the marketplace set prices, The Plain Dealer reported Sunday.

The state requires a 135 percent increase in a bottle's price before it can be sold, even though Ohio gets none of the money from markups other than a tax of 7 cents a bottle.

Ohio consumers spent $300 million on wine last year, 50 percent more than a decade ago.

Consumers can pay from one fourth to one half more for a bottle of wine in Ohio than in other states, the newspaper said. Utah's lower required markup is the only one that comes close.

Ohio is one of 17 states that still regulate the sale of alcohol. None, though, is as generous to distributors and retailers as Ohio.

Dan Greathouse, president of Heidelberg Distributing in Cleveland, said that if "the minimum pricing went away, the big chains ... would come in here and have a heyday. If they take away the price controls, they will ruin a lot of Ohio's family businesses."

Some Ohioans are turning to Internet or out-of-state suppliers for better deals.

To make such purchases legal, buyers must fill out paperwork and pay state taxes on the wine. Many skip the tax, the newspaper said, hurting both the state and Ohio retailers who lost business.

The agency that oversees wine sales is the Beer and Wine Section of the state Department of Commerce's Division of Liquor Control. Its rules date to the late 1940s.

State Sen. Eric Fingerhut, a Shaker Heights Democrat, said the agency "long ago stopped focusing on safety and the public interest and has become a tool of special interests."

Lobbyists for wine distributors in Ohio, who have an interest in seeing the price controls continue, have contributed generously to state politicians.

The Plain Dealer calculated that the Wholesale Beer and Wine Distributors of Ohio has raised nearly $1 million in the last eight years for its Political Action Committee that annually gives money to both major parties, the governor and most legislators.

The amount donated by the distributors' PAC in election year 2000, about $170,000, was almost twice as much as was given during 1996, about $90,000.

The PAC contributed money to two of the three members of the state's Liquor Control Commission - Rocco Colonna and Janet Howard - when they were state legislators. Colonna and Howard did not return phone calls seeking comment.

Commission members, appointed to six-year terms by the governor, are responsible for establishing rules such as the mandatory markups on wine and for ruling on some liquor law violations. Their salaries are $45,000 to $49,000, depending on when they were appointed.

The commission's next public meeting is Thursday in Columbus.

"Until people see there is no reason for them to pay $18 for a bottle of wine here when they can get it for $10 in another state, things won't change," said Cleveland lawyer and wine collector Eric Baker. "The only people that benefit are the ones that sell it."

Dark Helmet

I've tried responding to this about a billion times, but I must be trying to post too large of a file and getting it kicked out. I apologize if my responses are making it to the server, but my own newsreader is not picking them up. So, I've decided to break up my reply into segments. If anyone is interested, read on, if not, happy holidays!

Boy, I can't see how you can dispute this price issue if you've ever shopped for wine in other states. Not to attack you, but are you a small retailer or wholesaler and have a vested interest in maintaining these margins? This is all about outdated laws protected by the political contributions of special interest parties. I should have posted some links (with text here also). Everyone will get a nice laugh from the wholesalers rationale as to why this markup makes sense.

Dark Helmet

Despite Wine Glut, No "Two Buck Chuck" for Ohio

By Jen Melby and Joshua C. Hall* [HOME]

Trader Joe's, a self-described "unique grocery store" that originated in California, has recently begun expanding into Ohio with stores in Dublin and Kettering. In addition to selling gourmet foods, Trader Joe's is known for offering a selection of unique, reasonably priced wines, some offered exclusively at Trader Joe's.

The most famous of the exclusive wines sold by Trader Joe's is from the Charles Shaw Winery. Called "Two Buck Chuck" by Californians because of its $1.99 retail price, Ohioans will have to find another nickname for these inexpensive table wines. According to the Columbus Dispatch, "Two Buck Chuck" sells for $3.89 in Ohio.[1]

Does Trader Joe's have something against Ohioans? Are they giving preferential treatment to Californians because that's where they started? Of course not.

The high price of "Two Buck Chuck" in Ohio is attributable to Ohio's antiquated liquor control laws. Ohio law imposes a 135 percent markup on each bottle of wine before it is sold in stores, resulting in customers paying 25 to 50 percent more for wine than customers pay in other states.

Wine sold in Ohio is significantly marked up at each level of the distribution system ¾ at the producer, the wholesaler, and the retailer. By the time it reaches the customer's hands, a bottle of wine that cost $6 to produce will cost the consumer $14 before taxes.

To avoid some of these markups, Internet savvy Ohioans could buy their wine online if it were not illegal under state law. But those same antiquated liquor control laws forbid the interstate shipment of wine by common carrier.

A quick comparison between local "brick and mortar" sellers and online retailers illustrates how much the ban on interstate shipment, let alone the mandatory markup, is costing Ohioans. For the purpose of comparison, three random wines were chosen from a local grocer on High Street in Columbus and compared with the lowest priced wine available through the website winesearcher.com.

a.. 1999 Kenwood Jack London Cabernet Sauvignon Sonoma Valley

Local grocer: $36.19

a.. 1999 De Loach Chardonnay

Local grocer: $19.99

a.. 2000 Fetzer Barrel Selection Chardonnay

Local grocer: $14.19

In each case, the wine is significantly cheaper from the online retailer. The mandatory markup in Ohio is so large that Ohioans would only need to buy a couple of bottles each time to justify the shipping expense.[2] While customers will never abandon their local store due to the convenience of location and immediacy, legalizing the purchasing of wine through the Internet would allow Ohioans to have a larger selection of wines available to them at a lower cost. Right now Ohio's ban on the direct shipment of wine from the producer to the consumer denies citizens the right to purchase wine in a nationally competitive market.

Ostensibly, these restrictions are in place to protect minors and ensure state taxes are collected. The reality is that these restrictions exist only to serve the interests of those who benefit from the mandatory markups. As Nobel Prize winning economist Daniel McFadden explains, "The [state] restrictions on direct purchase of premium wines and their interstate shipment .[are] another example of abuse of the regulatory process to protect concentrated economic interests, going far beyond the minimum regulations needed to maintain the integrity of State taxation and to protect minor consumers."[3]

Consumers and wineries are taking steps to free customers from the binding laws in the wine market. One California winery, Ravenswood, states on their website that the trade barriers, "represent a serious infringement of free trade as well as individual rights," and have provided a sample letter to write to state representatives in opposition to the barriers. Free the Grapes! is a national grassroots coalition of consumers and wineries that is working to legalize direct to consumer shipments.[4]

Hopefully their efforts will come to fruition. Until then, if you go to Trader Joe's you'd better ask for "Four Buck Chuck."

• Jen Melby is a research intern with The Buckeye Institute. Joshua C. Hall is Director of Research at The Buckeye Institute and a lecturer in the School of Management at Capital University.

[1] Jim Weiker, "Cheers for Wine Glut, Lower Prices," Columbus Dispatch, 15 May 2002.

Ohio Senator Tries to Eliminate Hefty Wine Markups Posted: Friday, October 17, 2003

By Nick Fauchald

Bob Eppich is riding a fence. The owner of Colonial Wine and Beverage in Chesterland, Ohio, can't decide if a proposed bill calling for the end of Ohio's minimum markup on wine will boost his business or destroy it.

"Right now, lots of people are driving to Chicago and loading their trunks up with wine," Eppich said. "This bill could keep prices down enough to keep these consumers in the state, or it could allow a lot of big box retailers to drive the little guys, like me, out of business." He fears that, without fixed pricing, the new Trader Joe's down the road could kill his business by offering huge discounts.

Ohio is among the 17 states that still impose mandatory markups on the sale of alcohol, but according to a 2002 study by the Cleveland Plain Dealer, its retail markup is 135 percent, making it the highest in the nation, with consumers paying 25 percent to 50 percent more per bottle than in other states. (The Ohio Liquor Commission's rules list the minimum markup at about

Legislation recently introduced in the state senate would eliminate the minimum markup, and also prohibit retailers from selling wine below cost. The latter provision is intended to prevent large retailers from predatory pricing -- selling wine at a loss in order to drive smaller retailers out of business.

But the author of SB 135, state Sen. Eric Fingerhut (D), knows it won't be easy to convince his colleagues to rescind the law, which was codified more than 50 years ago. Groups such as the Wholesale Beer and Wine Distributors of Ohio contribute to the legislators who control the state's liquor laws, Fingerhut said, which "keeps them more attentive to special interest than public interest." Last year, Fingerhut sponsored a similar bill that was quickly discarded by the Senate Agriculture Committee.

Even before Fingerhut reintroduced the bill last week, lobbyists from five r etail and beverage groups distributed a memo among legislators urging them to oppose the new measure, calling the existing laws an "effective tool" to "control the overconsumption of wine." The memo also stressed the importance of fair competition between large and small retailers.

Fingerhut disagrees with both arguments. "We have laws against public drunkenness, we have laws against drunk driving," he said. "That's how we deal with overconsumption. The public doesn't expect us to fix prices in order to control consumption. If we wanted to control consumption, we should do it like we do with tobacco, through taxes."

As for unfair competition, Fingerhut said: "It's not our place to fix these prices. Do we protect small hardware stores from Home Depot by controlling the price of hammers?"

However, Phil Craig, executive director of the Ohio Licensed Beverage Association, said eliminating the minimum markup would have a devastating effect on smaller retailers. "Some of the bigger food chains have such a large volume that if we didn't impose minimum markup, they could sell wine below milk cost," he said.

Craig also stressed that smaller retailers create a more diverse wine market: "Big box retailers will never carry the length and breadth that some of our small shops carry, simply because they're not as interested in the experiential and educational aspects of wine. . As long as these smaller 'mom and pops' exist, the more people will be able to share wine and talk about it in a more thoughtful manner."

If wine becomes too cheap and more of it is sold, Craig added, it could be abused like its shelf mates, beer or liquor. But Eppich discounted that theory, based on what he sees among his customers. "Fine wine, by the very nature of who drinks it, is rarely abused," he said. "In my opinion, this is a nonissue."

Independent retailers, Eppich said, are more concerned with discount chains undercutting them out of business. But he said, "I'll survive, because I'm already a chameleon. I will conform and find a way to make money, one way or the other."

Monday, March 04, 2002 Ohio most expensive place in U.S. to buy wine

The Associated Press CLEVELAND - Ohioans are buying more wine, but they're also paying more per bottle than anyone else in the country because state laws don't let the marketplace set prices, The Plain Dealer reported Sunday.

The state requires a 135 percent increase in a bottle's price before it can be sold, even though Ohio gets none of the money from markups other than a tax of 7 cents a bottle.

Ohio consumers spent $300 million on wine last year, 50 percent more than a decade ago.

Consumers can pay from one fourth to one half more for a bottle of wine in Ohio than in other states, the newspaper said. Utah's lower required markup is the only one that comes close.

Ohio is one of 17 states that still regulate the sale of alcohol. None, though, is as generous to distributors and retailers as Ohio.

Dan Greathouse, president of Heidelberg Distributing in Cleveland, said that if "the minimum pricing went away, the big chains ... would come in here and have a heyday. If they take away the price controls, they will ruin a lot of Ohio's family businesses."

Some Ohioans are turning to Internet or out-of-state suppliers for better deals.

To make such purchases legal, buyers must fill out paperwork and pay state taxes on the wine. Many skip the tax, the newspaper said, hurting both the state and Ohio retailers who lost business.

The agency that oversees wine sales is the Beer and Wine Section of the state Department of Commerce's Division of Liquor Control. Its rules date to the late 1940s.

State Sen. Eric Fingerhut, a Shaker Heights Democrat, said the agency "long ago stopped focusing on safety and the public interest and has become a tool of special interests."

Lobbyists for wine distributors in Ohio, who have an interest in seeing the price controls continue, have contributed generously to state politicians.

The Plain Dealer calculated that the Wholesale Beer and Wine Distributors of Ohio has raised nearly $1 million in the last eight years for its Political Action Committee that annually gives money to both major parties, the governor and most legislators.

The amount donated by the distributors' PAC in election year 2000, about $170,000, was almost twice as much as was given during 1996, about $90,000.

The PAC contributed money to two of the three members of the state's Liquor Control Commission - Rocco Colonna and Janet Howard - when they were state legislators. Colonna and Howard did not return phone calls seeking comment.

Commission members, appointed to six-year terms by the governor, are responsible for establishing rules such as the mandatory markups on wine and for ruling on some liquor law violations. Their salaries are $45,000 to $49,000, depending on when they were appointed.

The commission's next public meeting is Thursday in Columbus.

"Until people see there is no reason for them to pay $18 for a bottle of wine here when they can get it for $10 in another state, things won't change," said Cleveland lawyer and wine collector Eric Baker. "The only people that benefit are the ones that sell it."

Dark Helmet

I didn''t say that it made sense it is what it is but I'm not sure that it nets to 135%. I'm not a retailer, I just have a very, very large cellar and have been deeply interested in wine for about 30 years. I travel extensivly and I purchase wine whereever I can get it. I don't find a huge swing in the prices in types of wine that I drink or buy, from state to state, except in the states where there are little or no taxes on alcohol. Much of it depends on where you're located and where you shop. A great relationship with a local wine merchant can save you plenty. Bi!!

I too have shopped in various states and I still cannot fathom how you can possibly think that prices in other states are anywhere in the ballpark of Ohio prices. Please read the links I posted and you'll see why, including specific examples of actual wine prices. You will also see how the markup comes to a minimum of 135%. If you doubt these sources, do a search on "mandatory wine markup ohio" and you'll get a boatload of other articles. I personally am doing whatever I can to fight this ridiculous law. I look forward to the day that I don't have to buy my wine from out of state sources. I also look forward to the day I can actually browse a decent local wine shop. There is currently no reason to have any if no one buys fine wine there.

Dark Helmet

"Dark Helmet" wrote in news:1z6Eb.79$ snipped-for-privacy@news1.news.adelphia.net:

Hee hee, you never mentioned how you found wine shopping in PA...seriously, though, sorry not to have been of more assistance, but I had an exam that week, I had to study... Oh, and the 2 Buck Chuck, I think Trader Joes in states other than CA do sell it for more that $2...$3-4+ last I heard... d.

I appreciate the thought :-) I ended up not being able to make the trip to PA. Eventually I ended up in Chicago over Thanksgiving weekend and managed to buy a some cases. Between Chicago, PA (hopefully) and on-line merchants, I should be able to at least create a supply of wine to my cellar. It won't be as much fun as the constant trips to a local shop, but it will do until we get out of the stone-age here in Ohio.

Also, in the case of 2 Buck Chuck, the shipping costs are such a significnt portion of the total cost to the consumer that it tends to get more expensive the further east you go. I don't think it's anything less than 3 Buck Chuck anywhere west of the Rockies.

Dark Helmet

Forget Pa. It makes the prices and selection in Ohio look downright stellar. I don't know where you live in Ohio but there are a number of wine shops in Columbus with large selection at prices that are comparable to prices found online. I will reiterate that it really pays to make friends at your local wine store. I can't really say much more but perhaps you'll figure it out. Please note that there is no emoticon for a wink and a nod. Bi!!

I hear what you're saying about a wink and a nod, but it would still be very difficult for a retailer to achieve comparable pricing to other states, given the mandatory markup is not just at the retail level, but also at the wholesaler and producer level. That's a lot of winking and nodding! I would also add that if you are comparing to on-line merchant pricing, then please realize that only a few out of the many offer anything close to a good price, especially when shipping charges are tacked on.

Still, I'm in the Cleveland area, so Columbus is only a short hop away. I would be more than willing to make trips there for some good priced wine and a decent selection. Can you please provide me with two things:

1. What wine merchants in Columbus offer good prices and large selections?
2. Examples of a few bottle's prices there so I can compare to other prices

Mucho appreciated,

Dark Helmet