WineAmerica Opposes Missouri Bill Modifying the Definition of a Franchise: Bill Would Artificially Protect Wine Wholesalers

The following letter was sent to the Governor of Missouri on Friday, June 8, 2012.

Re: S. 837 – Modifying the definition of franchise under Missouri franchise law

Dear Governor Nixon:

WineAmerica, the National Association of American Wineries, on behalf of our
member wineries in Missouri and across the nation, encourage you to veto S. 837, a
bill that artificially protects wine wholesalers against competition at the expense of
Missouri’s 116 wineries.

As passed by the Missouri legislature, S. 837 would deny wineries an essential free
market right—to negotiate contracts affecting the sale of their products. Under this
draconian bill, Missouri wineries would be able to terminate their distributors under
only the narrowest of circumstances, with potentially crippling termination costs, and
under the threat of long, expensive litigation.

Over the five years between 2005 and 2010, the Missouri wine industry has doubled in
size, with an economic impact that has nearly tripled. See Stonebridge Research, The
Economic Impact of Wine and Grapes in Missouri 2010 (Oct. 2010). The unnecessary
and anticompetitive S. 837 would harm a shining example of dynamic, rural economic
development in Missouri, and the thousands of well-paying, rural jobs this rapidly
growing industry has created.

Missouri wines are a truly American gem. There’s nothing else in the world like them.
As local wineries continue to grow and flourish—improving their reputation
throughout the country and around the world—it is incumbent upon the Missouri
legislature to find ways to improve the state’s distribution laws. Tightening so-called
“franchise” protections would be a significant step backward, creating a barrier to
market entry for wineries with no commensurate benefit to the state.

Missouri is a leader of the Midwestern wine industry. Its distribution laws should
further encourage the development of local wineries and promote the interstate sale of
locally produced wine. The state should not impose new obstacles, such as those
proposed by S. 837, that would derail the efficient sale and distribution of wine.

We urge you to veto this harmful proposal.