Feds: Big Wine means less choice and higher prices

Treasury Department says consolidation may have increased wine prices as much as 18 percent

The U.S. government may be about to do something that many experts said it would never do – and couldn’t be done anyway.

That’s rein in Big Wine, as well as the largest companies in beer and spirits.

Reuters reported yesterday that the Treasury Department “suggested stiffer Department of Justice and Federal Trade Commission oversight, tougher enforcement of existing rules and development of new ones. …” The comments were released in a report that is part of the Biden Administration’s promise last July to look at concentration and anti-competitive behavior in the U.S. in markets that include alcohol, meat packing, and hearing aids.

The Treasury report focused on beer, which is even more concentrated than wine; the two largest companies control almost two-thirds of the market. In wine, the top five control about 65 percent of U.S. production.

Still, it noted that concentration in beer, wine, and spirits has resulted in higher prices. Beer consumers alone pay $487 million more a year than they should, said the report, and found that concentration can increase the cost of a bottle of wine by as much as 18 percent and a bottle of spirits by more than 30 percent.

Even more shocking? A Justice official sounded like the Wine Curmudgeon: “Enforcement and regulatory authorities should have the courage to learn and the fortitude necessary to enforce the law and protect competition.”

The report also noted that change will be difficult, since the states are responsible for much of the liquor regulation in the U.S. In addition, the Byzantine knot that makes up the country’s liquor laws would not be easy to untangle even if it was all under federal jurisdiction.

But that the report was released at all is good news for anyone who thinks consolidation has led to higher prices, less choice, and poorer quality wine. I wrote a trade story last year where a variety of anti-trust experts said unequivocally that nothing could be done. Which, hopefully, means they are wrong.

Photo: Maria Orlova from Pexels