Alcohol wholesaling: Government control of the market and how it made the McCains wealthier.

Tuesday, October 21st, 2008 @ 12:31 pm | Booze & or Drugs, Politics

Via Sully, Reason’s article on anti-capitalist alcohol wholesalers:

For decades wholesalers have quietly added 18-25 percent to every bottle of beer, glass of wine, and shot of liquor you pour down your gullet. And there’s been little resistance to them, for a few reasons. First, wholesalers don’t interact with consumers. They take their markup between producer and retailer, out of the sight of the people whose money they’re ultimately taking. Second, they’re rather powerful. Alcohol wholesaling is a lucrative, concentrated industry that reaps enormous benefits from policies whose costs are spread out across the general public. Which brings up the third reason distribution laws aren’t frequently challenged: They haven’t had many obvious opponents. Until recently, the only people hurt by the three-tiered system were consumers, and again, the cost per consumer was too negligible, hidden, and entrenched for anyone to notice.

That’s changing. Bulk retailers like Costco and Wal-Mart have waged lawsuits against some of these laws, with mixed success. The popularity of microbrews, niche wineries, and the ability of both to reach consumers over the Internet has also put a dent in the distributors’ empire; wholesalers are among the leading advocates for banning alcohol sales over the web.

The article notes that Arizona features some of the most market-restrictive measures, and that the Anheuser-Busch empire (to which Cindy McCain belongs) owes millions upon millions to this.

The Hensley company provides a good example of how these laws can hurt consumers. Hensley is the fourth largest beer distributor in the country, one of the largest privately-held companies in Arizona, and holds a 60 percent market share in the parts of Arizona it serves. It also distributes Anheuser-Busch products exclusively. Beer-producing giant Busch began an incentive campaign in the late 1990s aimed at getting distributors to drop the products produced by its competitors. In those parts of the country where a given distributor has a huge, government-abetted market share, such arrangements put the squeeze on the variety of options available to consumers (Anheuser-Bush’s national market share rose five percent during the campaign, to 50 percent nationally).

Socialism!

But let’s get back to John McCain. What does the candidate lecturing Wall Street about greed think about the alcohol wholesaling industry? Is it fair? Should government be subsidizing (if not outright creating) an industry by forcing consumers to pay more for alcohol—for which they get little to no added value in return? And who’s greedier, the family who exploits that system to amass a small fortune, or the brokers and traders McCain derides for pursuing profits in a free market?

Oh, let the guy retire in Arizona in peace, wouldja?

-jb

4 Responses to “Alcohol wholesaling: Government control of the market and how it made the McCains wealthier.”

  1. Scott Says:

    Oh my God Mrs. McClain’s family got rich off of beer! I’m obviously on the wrong end of the supply chain. Who’d a thunk that the middle man made 25% on this here Boodvieser I’m drinkin here eh. That’s like 17cents a can fer gods sakes to drive this sucker all the way from St Louie. That’s less than the cost of a frickin stamp don’t ya know. Heres a shout out to all those beer deliverers out there.

  2. jeromy Says:

    “Oh my God Mrs. McClain’s family got rich off of beer!”

    That wasn’t even close to the point, genius.

  3. Scott Says:

    No that is the point. If not for the name McCain the story would not have even been written and you would not have the opportunity to feign indignation. The points pretty clear in the title “How your beer bought John McCain $500 loafers” Then half of the story is about…John McCain. Clear as a pale ale don’t ya think?

    The real travesty is knowing that your state makes more off this bottle of JD I’m sippin for breakfast than the retailer. In fact the STATE OF IOWA makes 40 million a year being an alcohol wholesaler which they claim is sooo much fairer for the little guy. I guess if you want fair you need socialism. Go Bama

  4. jeromy Says:

    One more time…the story is about how government regulation limits competition, which works in favor of companies like Anheuser-Busch.

    What’s funny is that you turn around and oppose alchohol wholesaling, but the only thing that irks you is GUBMINT getting money from the deal.

    Then you turn around and rant about “socialism” when my whole point was that this anti-capitalistic practice has benefitted McCain handsomely.

    Of course, not a one of you rightwingers has a clue what you’re talking about when you yell “socialism,” so that’s to be expected. Your VP candidate taxed oil companies and sent each Alaskan man woman and child a check. McCain initially opposed Bush’s tax cuts, and certainly isn’t proposing a flat tax now. You guys are a league of morons and that’s why you’re losing.