In the Doghouse: 'Tis the Season for Deregulation: 2014 Alcohol Legislative Snapshot

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 February 20, 2014

Big Alcohol spends millions each year on political contributions and lobbying to dismantle alcohol regulation.

Just 6 weeks into the new year, legislative proposals to decrease or eliminate alcohol regulation abound:

Multiple bills in 5 states (Connecticut, Hawaii, Michigan, New Jersey, Washington) would reduce current excise tax rates

Ohio Rep. Dan Ramos is sponsoring a bill to increase the allowable ABV in beer from 12% to 21%, and keep the associated minimal tax rate

The New Hampshire State Senate gave preliminary approval for the Finance Committee to review a bill that would strike down a ban on alcohol billboard advertising

Bills that would expand access to alcohol have been proposed in 3 states (Kansas, Tennessee, Missouri)

In Oregon, the Northwest Grocers Association (read Costco, Walmart and Safeway) is the sponsor of a voter initiative that will be on the November ballot to allow sales of spirits and wine in grocery stores, undermining the state monopoly on sales.

Each of these proposals dismantles effective, evidence-based policies to reduce alcohol-related harm: decreased access to alcohol; state control over wholesale, distribution, and/or retail sales; and increased prices through taxation. Who wouldn't want evidence-based alcohol policy? Who would influence legislators to support proposals that will contribute to alcohol-related harms?

Big Alcohol, that's who. Alcohol producers have an inefficiency problem, according to economists. Having exhausted corporate reach into production by buying one another out of market share, the easiest way producers can expand their ever-increasing profits is to make alcohol cheaper and more easily accessible. How can they do that? By controlling as much of the distribution and retail sales as possible. Big Alcohol fights tirelessly to chip away the 3-tier system that was designed to check its political power. Big Grocery, knowing that the cheaper the alcohol, the more customers in the stores, has joined the alcohol deregulation fray.

Big Alcohol and its industry trade groups exerts hefty influence on legislators, adept at flying under the public radar. Alcohol lobbyists haunt the halls of both Congress and state legislatures, spending big bucks on lobbying and political contributions. A quick look at its Congressional lobby spending in 2013 provides some telling examples:

Anheuser-Busch InBev, the world's largest beer producer, is known by the Center for Responsive Politics as a heavy hitter, one of the top 140 biggest overall donors to federal elections since 1990. A-B InBev's pet bill in the 113th Congress was the Brewers Excise and Economic Relief Act of 2013, a giant beer tax cut for beer producers.

Diageo, the #1 distilled spirits producer, ranks in the top 5% of all political contributions and 7% of all lobbying money spent.

The Distilled Spirits Council of the United States (DISCUS) spent over $5 million on lobbying and almost $77,000 on political contributions last year.

The influence bought by these lobbying activities has effectively thwarted billions in potential government revenue in tax increases, undermined state trade regulations provided by the 21st Amendment, and dismantled laws intended to protect public health by limiting access and availability to alcohol. Big Alcohol's legislative battles are not only about privatizing state control; the constant chipping away at regulations endangers public health and safety as well.

In the Doghouse: Pernod Ricard Partners with Alcohol Delivery App

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January 30, 2014

Alcohol delivered to America's doorstep, all with a credit card number and a tap of an iPhone. That's what Drizly, a start-up alcohol-delivery app service with ambitions to be the "Amazon.com for alcohol," promises. Drizly just entered into a marketing deal with Pernod Ricard, to promote its service along with Pernod products (Absolut, Jameson, and Kahlua brands, to name a few). What could possibly go wrong?



Let's start with the intent of the venture capitalist investors, who had this to say about their recent $2.25 million cash infusion into the company: "We believe Drizly is poised to fundamentally change the behavior of 225 million Americans who can legally buy alcohol, as well as the three-tier system that services them.” This investor statement is prescient, alluding to the lines between retail service and producer within the three-tier regulatory system that could get blurry without much notice under this arrangement. Drizly has already cleverly circumvented the New York State Liquor Authority’s (NYSLA) regulatory system by getting NYSLA approval despite not having a retail liquor license because of the way it set up the service payment (technically the store processes the credit card, not Drizly). This isn't the first foray into alcohol delivery apps, but it's a troubling example of a special kind of deregulatory activity, without the bother of a legislative process, or public participation in the matter. 



Another troubling aspect is the potential for Pernod's marketing deal with Drizly to slide into an influential, or even controlling, interest. How much has Pernod Ricard sunk into the deal with Drizly? So far, the details are under wraps. The press release vaguely describes a new association between the liquor giant and Drizly, centered around promotion, education and brand awareness. And who is in charge when a young, new startup welcomes Big Alcohol into its circle? The multibillion global alcohol conglomerate infusing the little startup with cash, or the startup?

That newly cemented relationship with Big Alcohol makes it hard to believe the app's press release statements about only focusing its online promotion and actual sales on adults who are 21 and older. In a recent study, 45% of home deliveries to underage youth were successful, many to those with fake IDs. Drizly scrambles to reassure that their delivery method is “responsible,” but, industry calling itself "responsible" is a tired marketing spin with the ironic intent of absolving the industry of any actual accountability. And despite Drizly's repeated assurances that its ID scanning technology will prevent sales to underage customers, the app can be downloaded by any 17-year-old.



It's a slippery slope from a couple of college guys who seal a marketing deal for their wannabe Amazon alcohol app, to that app (and its owners) being influenced, controlled, or even owned by Big Alcohol.