Free Trade - Boom or Bust for Small Oklahoma Wineries?

Web logs (blogs) all over the internet are posting their opinions of the current U.S. Supreme Court case on shipping wine across state lines.
Regular Oklahoma Wine News readers know that this is a subject I am very interested in.

However, searching the blogosphere provides few references to folks blogging in support of the status quo. Bloggers, being a rather liberatarian lot on the whole are mostly falling on the side of free trade. That is why I was so surprised to find a Live Journal posting expressing the same kind of mixed feelings I have about this. Here's an excerpt from John Gorentz's post:

I have mixed feelings about it. On the one hand, I am instinctively in favor of free trade. On the other, though, I don't like what will happen when this ban goes away.

Some wineries will do more business, but a lot of small ones will also go out of business because they can't compete. When you take down the admittedly artificial trade barriers, we'll have more of a winner-take-all situation. -- John Gorentz

Small wineries going out of business...now that is a scary thought! Since small wineries represent the entire Oklahoma wine industry, it would be the end of Oklahoma wines. However, I find it hard to believe the current state restrictions are effective at protecting local wineries. One look at the national statistics on wine sales offers support for the free trade advocates position.

The $21-billion retail wine business is lopsided, with just 2.4 percent of wineries producing 87 percent of the wine sold in 2002, according to Wine America, a leading trade group that's actively involved in pushing for change. At a disadvantage is the thriving cottage industry of 1,659 wineries that produce less than 25,000 cases annually but comprise a whopping 81 percent of the total number of wineries.

So, the Big Boys now control 87% of the U.S. market? Sounds like protectionism hasn't helped the small wineries compete, so far. My personal view is that protectionism just allows the government to pick the economic winnners, but at an overall cost to the market. When the government does the picking, you can bet they will pick the biggest wineries that buy the most 'access'.

Oklahoma citizens are aware of the massive exodus of young professionals from our state. What they may not be aware of is the large number of displaced Okies who miss Oklahoma and long for a 'taste' of home. Just because my Dad's Elderberry wine doesn't compete with Opus One, doesn't mean there isn't a market niche for Nuyaka Creek Winery. It may just mean that the success of his products requires the kind of global presence that only the internet can provide. However, without interstate shipping...e-commerce means practically nothing!

I would love to hear some more opinions on what this case might mean for small wineries. Got insight? Leave us a comment!

Live Journal Comment - Wine across state lines