By John ~ May 21st, 2010.
Dear Mr. Buffett:
You are certainly one of the most astute investors in history. As such, Iâ€™ve noticed with interest that one of your companies has recently purchased several beer, wine and spirits distributors. Obviously, this means that you believe that the future is bright in the wholesaling business.
What I want to know is whether this also means that you are a supporter of H.R. 5034? I cannot believe that someone like yourself, such an advocate of and poster boy for the American free enterprise system, would support such an anti-American, anti-consumer, and anti-free and fair trade bill such as H.R. 5034.
The Warren Buffett that I have admired for the 40+ years I have been in the investment management business wouldnâ€™t have supported this self-serving legislation for a minute. But to date, you have been silent on this issue. Please speak out against this legislation so I will know that my admiration for you has not been misplaced. Wholesalers can still make good money without destroying small wineries.
Today, I understand that there are more than 6,000 wineries in the U.S., most of them making very small amounts of wine. Yet while the number of wineries has grown tremendously, I read that just six wine and spirits distributors now control over 50 percent of the market. To me, this means that wholesalers cannot possibly handle more than a fraction of the wineries that want to expand their sales out of their home state. So as any smart entrepreneur like you, Mr. Buffett, would do, these small and mid-sized wineries started marketing direct to the consumer.
Wholesalers, used to having a monopoly under our Depression-era three-tier system, fought back by pushing legislation at the state level to stop direct shipments. The direct marketing advocates countered with a number of lawsuits challenging the legality of the special interest legislation. Several lawsuits even reached the Supreme Court. When it became obvious that wholesalers were slowly but surely losing more and more of their old state mandated legal protection for their monopoly, they have now resorted to special interest legislation of the worst kind, H.R. 5034, which looks to me like a blatant attempt to buy in Congress what they have been losing in the courts.
Mr. Buffett, I buy wine from many sources, including direct from wineries, when I canâ€™t find what I want at an independent wine shop or at a big-box store or even through an online retailer. I want to continue to have this freedom to buy wine from a variety of vendors, whichever best fits what I am looking for today. I certainly donâ€™t want the government, under undue influence of the wholesalers lobby, to limit my buying choices. What about you?
Filed under: American Wine, Miscellaneous