Changes to liquor regulations- South Africa

Our discussion in class last week about wine regulations, got me thinking about other regulatory changes that have been made regarding wine in other countries. The country that quickly came to mind for me was South Africa. Having lived in South Africa for the first six years of my life, I was interested in seeing what has changed.

To my quick discovery, a lot has changed and a lot will continue to change. For instance, just this past summer, South Africa proposed a liquor products amendment bill. This bill seeks to amend the Liquor Products Act of 1989 and the Amendment Act of 2008. Under this bill, some of the key decisions were to include beer under the patrol of the Wine & Spirit board. The board will likely change its name to incorporate this. In addition, the bill has reduced the alcohol percentage that will classify the drink as a liquor product. Previously, alcohol content in beverages were allowed to be 1%, but the bill has changed this to be 0.5%. While the bill proposed to change the sell and intake of liquor from people under the age of 18 up to people under the age of 21, this was not passed.

The fact that regulations have recently changed, not only in the US but all over the world regarding wine and liquor in general, highlights the importance of keeping up with this ever evolving regulatory landscape that will impact wine businesses.

Wine´s Glass Ceiling

After the 2 classes, we have had, I reflected on the fact that both of our speakers had been women. As a woman in Business School, it is rare to find a class in which even one-third of the guest speakers are women, so I was happy to welcome what seemed like a change.
That led me to think that possibly this was an industry, were female leaders were more common - so I eagerly did some research. Boy, was I wrong.
A quick Google search on "Women in Wine Industry" led me down a rabbit hole of disheartening articles, denouncing the lack of female representation in this Industry. The irony of it all is that this is an Industry that thrives on marketing their products to women, and where women are one of their main consumers.

One of the quotes that particularly grabbed my attention noted that while the overall total female leadership in the industry is 10% (unsurprisingly low after reading many of the articles) there are ZERO female CEOs in wine companies that produce between 100K to 500K wine cases per year.
This is despite the fact that in many of the Viticulture and Enology courses in US university female students largely outnumber men.

While this trend is, unfortunately, found in multiple other industries, I think it is still an important figure to keep in mind as we read the cases in class and meet the speakers.

In case someone wants to take a look at some of the articles, I´m adding a couple of links below:

"Wine´s Glass Ceiling and the Winery Working to Shatter It": https://www.forbes.com/sites/kristifaulkner/2019/01/23/wines-glass-ceiling-and-the-winery-working-to-shatter-it/#6066f4e7314a

"Women and the Wine Industry" (Written by the author of The Wine Bible): https://winespeed.com/blog/2017/12/women-wine-industry/

Wine <> Four Loko?

While it was touched on a bit in last week's class, I left wondering how the laws of wine production, distribution and sale differ from that of other types of alcohol.  Specifically, I wanted more clarity around what powers the federal government and states have to monitor distribution of other alcoholic beverages and take action when they deem something unsafe or anti-consumer.

After trying to come up with an example of this I've seen in the past, I thought of the well-known (and often mocked) anecdote around the once-popular alcoholic drink Four Loko (and most people who read this post will start laughing and stop reading right about here).  Four Loko is a very sweet, sparkling alcoholic beverage probably best known by younger drinkers and often purchased in convenience stores.  It received quite a bit of press for mixing high quantities of alcohol with caffeine and taurine.  This mixture was so problematic and dangerous that the beverage was banned by the FDA in 2010.  Soon after modifying the recipe to remove caffeine and taurine, Four Lokos were available again but saw their sales numbers diminished greatly.

While a ban of this sort is made out of safety concerns which don't directly compare with the type of free speech or monopoly concerns we discussed last week, the Four Loko history is worth remembering.  While I myself have never had a Four Loko, I can understand why many consumers were angry over the ban of the old recipe.  They argued that this ban was anti-consumer and that they should be allowed to willingly choose what type of alcoholic beverages to enjoy.  Additionally, one could argue that the same effects as the old Four Loko can easily be achieved by drinking the new Four Loko with any energy drink bought at the same convenience stores.  Therefore, there's an argument to be made that the FDA's ban does not necessarily increase general consumer safety but also violates consumers' right to choose.

Obviously Four Loko doesn't compare great with wine, but in light of the conversations we had last week I think that this sort of federal oversight and regulation is an interesting anecdote to keep in mind when surveying the wine industry today.

https://newyork.cbslocal.com/2010/11/16/schumer-feds-may-move-to-ban-alcoholic-energy-drinks/
http://www.cnn.com/2010/HEALTH/11/17/alcohol.caffeine.drinks/index.html?hpt=C1
https://www.chicagotribune.com/news/ct-xpm-2009-08-24-0908230370-story.html

Pisco's True Origin

I have a personal issue with origin appellations since there is a big dispute over the origin of Pisco. If you talk to any Peruvian person (like myself), you will notice pride in our voices when we call Pisco our flagship drink. However, if you ask a Chilean, you might hear them say that Pisco is theirs. After reading the case on Domain Barons de Rothschild, it left me thinking what is the difference between Bordeaux and Pisco, and why there is no doubt about Bordeaux Origin Appellation unlike Peruvian Pisco. After all, we also have a region called Pisco where the grapes to make it grow. 

I still haven't found the answer. I think we were slow in the global scene to claim Pisco as our own - maybe we didn't think we needed to do it. Only in some regions like EU and recently India, Peru has the Origin Appellation for Pisco and Chilean drinks aren't legally allowed to be called with that name. This article details how after a 9 year dispute, we recently got the Origin Appellation in India:  https://elcomercio.pe/economia/peru/chile-podra-denominacion-origen-pisco-india-litigio-peru-noticia-596331 

If you are curious about the topic, here is a more unbiased article that mentions a dispute in Australia about Pisco where we don't have the Origin Appellation:

https://www.abc.net.au/news/2018-08-19/winemaker-in-battle-with-peru-over-use-of-the-name-pisco/10133394

Barriers to Entry

In college, there was a craze known as "Sweet Tea Vodka." Created by a liquor salesman and a part-time vintner in South Carolina, Firefly tasted liked sweet tea - it went down easily.  However, it also had the same alcohol content as its vodka base - it took you down easily. Many people fell prey to the sweet, almost syrupy charm, of this ingenious concoction that was as friendly to your face as its southern roots would imply and as dangerous as a Myrtle Beach firecracker stand on the Fourth of July.
I interned for Firefly. Up until that point, the only industries I had been exposed to had been the law, finance and the travel company my mom worked for. I had never seen the liquor industry. It was much to my surprise (and delight) when my first meeting with my new boss involved the tasting of the new flavors of Firefly. Men dressed in jeans swapped stories about golf and family while tasting the new Raspberry, Peach and Mint flavors. There was little talk of actual business.
On my first tag along sales call, I realized that business talk was still noticeably absent. As I shadowed my boss across the bars of downtown Nashville, we took shots (before noon) with the bartenders on Broadway and swapped more stories about golf and family and drinking.
I did notice a pitch that was subtly delivered, about the same time I noticed that we were the only group authorized to sell Firefly in the region. At the time I didn't grasp how unique it was that the distributor I was working with had no competition in selling a product that they didn't create. They also had very little competition in selling alcohol at all. There were some other groups that they "competed" with, but their hardest sell wasn't convincing the bartenders to place an order for alcohol from them. It was simply to convince them of new products that they were licensed to sell. They were effectively operating in a competition-free market.
As we listened to the problems with regulation of alcohol in class, I remembered my internship and immediately understood why incumbents would be so loathed to open up these regional monopolies. If I'm on the only lemonade stand in town, why would I want to you buy lemonade through the internet, even if it might be more what you want? I also realized why having strong legal representation would be so crucial for this fight, along with having the proper allies in the statehouse.
I believe that disruption will occur, the same way Uber was able to change the paradigm in the taxi monopolies. However, I also understand that it will not be solely on the desirability of the wine being sold, but rather through the clever business plans and aggressively creative legal and political actions of disruptors.

For Better or For Worse

“One raw jalapeño and a PBR tallboy, please.”

That was my recent order at Davanza’s, a “laid back bar and eatery” in downtown Park City. Or at least, my order as dictated to me by the helpful Davanza server.

This past weekend’s ski trip provided an impeccable opportunity to do some very thorough first-hand, real-world research into Utah’s quirky alcohol laws that we discussed last class.

As I discovered, Davanza’s has a “Limited-Service Restaurant” alcohol license - which, among other restrictions, requires there to be food on the table before alcohol can be served. Hence one jalapeño.

Fortunately for Davanza’s, we proceeded to order very much pizza - as their LSR license also requires 70% of their revenue to come through the sale of food.

Unfortunately for me, my PBR was no typical PBR. This PBR, as indicated in fine print on the top of the can, was a lowly 4.0% ABV, a far cry from its usual 4.7%. According to Utah law, “beer” must have less than 3.2% alcohol-by-weight, or 4% ABV, and anything higher is even more strictly regulated.  In the case of PBR, this means drinking 6 Utah beers for every 5 “standard” beers to achieve the intended effect, a challenge I readily accepted in the name of science.

Utah liquor laws have rapidly liberalized in the past few years. If we had visited prior to 2017, our drinks at restaurants like Davanza’s would have been prepared behind a “Zion curtain” - a 7-foot-high sheet of frosted glass that hides the ever-tempting alcohol from our debaucherous view.

This Zion curtain law was repealed in 2017, but replaced with a new law requiring establishments with a bar and restaurant in the same building to have them in different “rooms” - begging a definition of “room,” and prompting the awkward floor plans that we found at the High West “Distillery & Saloon” and Collie’s “Bar & Grill.”

Utah liquor laws are a Byzantine quagmire of prohibitions and comical loopholes. But they are hardly unique.

Walk through a Las Vegas casino, and you’ll find a wide walkway of colored carpet guiding you from one end of the casino floor to the other. Under-21-year-olds must remain on this carpet and cannot wander between the rows of tables and slot machines, and if they linger a bit too long they’ll be told to get a move on by a security guard.

Try to buy cigarettes in San Francisco, and you’ll find they’re locked up behind the counter, requiring a clerk’s help to access them.

Buy a 12-oz can of Coke in Berkeley, and you’re contributing an extra 12 cents to the general fund of the City of Berkeley, thanks to the “soda tax.”

Regulation in the name of public health is hardly unique to Utah, or to the alcohol industry. We know gambling is addictive. We know smoking causes cancer. We know sugary drinks lead to obesity and diabetes. And so we create regulations, some more misguided than others, to curb these harms for the greater good.

We have known of the negative effects of alcohol, or gambling, or tobacco for decades, if not millenia. But more recent inventions call into question our government’s role and ability to react to threats to public health.

As of recently, we now know Facebook usage leads to depression. We now know mobile game addiction is real, and can lead to significant costs for those afflicted. We now know that phone notifications trigger a dopamine feedback loop not unlike that created by the flashing lights of a slot machine, causing us to crave more.

Tech companies explicitly design their products to be addictive - or in tech terminology, to “maximize user engagement.” Indeed, there are only two types of product-sellers that refer to their customers as “users” - tech companies, and drug dealers.

Yet unlike drug dealers, or alcohol companies, or tobacco companies, these tech giants can run thousands of experiments a day, tweaking features in real-time to maximize this addiction, and personalize the appeal of their product to each individual user. The power of A/B tests and machine learning to create addiction far outstrips the ability of our human brain to adapt to and discount these new stimuli. Where gambling may take our wallets, alcohol may take our livers, smoking may take our lungs - consumer tech may be taking our minds.

There is a lot we can learn from effective - and ineffective - regulation of the alcohol industry to apply to emerging new industries that pose a threat to public health. Will we see small-but-steady curbs to the worst excesses, designed by knowledgeable insiders? Or will we see a sea-change backlash to tech’s influence on life and democracy, followed by a tech version of Prohibition?

I vote, at the very least, that you should have to eat a raw jalapeño before you can send your spicy take of a Tweet.

Bizarre drinking laws in the US

Our discussion in class of the stringent wine regulation in Utah got me thinking that there must be some other peculiar laws out there, and with a quick Google - there are a ton! Some of them make you wonder what must have happened for the law to have to be written in the first place (Missouri / North Dakota / Ohio)! Here are a select few standouts:

Alaska - It is illegal to be drunk in a bar (either upon entering or exiting)
Arkansas - If you are caught with alcohol between the ages of 18 and 21, you must write a themed essay on liquor, wine or beer as part of the punishment
Hawaii - It is illegal to have more than one alcoholic beverage in front of you
Indiana - It is illegal for grocery stores and convenience stores to sell cold beer (only liquor stores can)
Missouri - It is illegal in one part of the state to provide beer to elephants and it is illegal in St. Louis to sit on the curb of any city street and drink beer from a bucket
Nebraska - It is illegal to have any physical contact or PDA with a bartender
New Jersey - If you get a DUI, you are not allowed to get a vanity license plate
North Carolina - NO HAPPY HOURS!
North Dakota - It is illegal to serve beer and pretzels at the same time
Ohio - It is illegal to give alcohol to a fish
Texas - If you are standing up, you can legally only take three sips in a row before having to sit back down

Be careful out there, it's a minefield!

Source: https://craftbeerclub.com/blog/post/weird-drinking-laws-in-our-50-states