An Open Letter to Warren Buffett Regarding H.R. 5034

By John ~ May 21st, 2010.

Dear Mr. Buffett:

You are certainly one of the most astute investors in history. As such, I’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 wouldn’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 can’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 don’t want the government, under undue influence of the wholesalers lobby, to limit my buying choices. What about you?

Sincerely yours,

John Sosnowy

Filed under: American Wine, Miscellaneous

Reader's Comments

  1. Brian White | May 21st, 2010 at 7:11 am

    Very well put John! It’s amazing how so many of the wineries that many of us hold dear could not possible interest one of those 6 big wholesalers to even sample their wines, let along offer them for general distribution!

    Interesting to see Mr. Buffet buy into this industry. Time will tell what happens from here!

  2. rob newsom | May 21st, 2010 at 8:30 am

    Yeah, John!!! That just about sums up the whole terrible situation. Our WA State AG, Rob McKenna, has made it clear that he is not in support of this bill. Several of us from the board of the WA Wine Institute met with him 2 weeks ago concerning this. Hopefully we can block this bill. But, of course, the lobby with the most money wins……..
    Rob Newsom

  3. Robin Coolidge | May 21st, 2010 at 4:22 pm

    Well said! As a small winery owner I could not have said it better myself. Cheers!

  4. John | May 22nd, 2010 at 3:12 pm

    Brian, Rob, and Robin,
    Thanks for your complimentary comments on my post regarding this very important issue for all of us. Hopefully, fairness and sanity, and nervous imcumbency will prevail over money, because I don’t think we’ll win on money alone.

  5. Eric Stern | September 24th, 2010 at 8:43 pm

    Nicely said.