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Information on the Issue of Direct Shipments of Wine

The American Vintners Association (AVA) is the national association of American wineries with 530 members in
41 states.

Many of the issues raised "Wine by Mail Order" are subject to misstatement and distortion by parties who seek
to protect their businesses from ordinary and reasonable competition. From the wine lover's point of view, there
should be a way to order and receive a wine which may not be available at the local wine shop - just as they have
become accustomed to doing with thousands of other items of merchandise. Wineries - especially smaller ones
with less access to the "three tier system of distribution" - are in need of a means to satisfy the requests of their

Key objections by opponents of consumer access to wines and our responses follow. We urge members of the
media to contact us in order to maintain balanced and fair reporting.

1) Delivery to underage purchasers

While it is not inconceivable for an underage person to order and receive beer, wine or spirits by mail order the
actual use of that mechanism is rare and does not present a regulatory problem in the normal sense.

Over the past ten years some 12 states have reciprocal wine shipment legislation allowing mail order purchases
from suppliers in other states (Includes CA, WA, OR, ID, CO, NM, MO, IA, MN, WI, IL and WV). New York,
California, Connecticut, Hawaii, Illinois and Virginia have permitted intrastate delivery of wine by common carrier
for many years. If underage purchase by mail order was a significant regulatory problem it would have surfaced
long time ago.

The logistics of an underage person ordering, having a secure credit card available, being present at the time of
delivery and fooling the delivery person for receipt of a package clearly marked "Adult Signature Required" is
risky and very daunting. It is unlikely that underage persons would risk the paper trail. Underage drinkers are
price-sensitive, and obtaining alcohol products by direct shipment - at full retail price plus shipping costs - is
relatively expensive alcohol. Underage drinkers want immediate access and satisfaction, and are not inclined to
wait the week or longer for mail-ordered alcoholic beverages to be delivered.

There is a huge amount of underage drinking in U.S., even before consideration of any nominal impact of direct
shipment sales. According to a study by the Department of Health and Human Services, 50% of 18-20 year olds
and 31% of 6-17 year olds reported drinking in the last month. Alcohol consumed by the underage is primarily
procured through retail outlets.

2) Losses of state excise taxes in current non-collectable structure

Very little wine is shipped for delivery by common carrier, even in states where shipment and delivery of wines or
other alcoholic beverages is legal. The largest wine consuming states, New York and California, allow intrastate
shipping. Reciprocal shipment of wines is permitted between the West Coast states of Washington, Oregon,
Idaho and California and 8 other states. Estimates of the maximum amount of wine shipped either intrastate or
through reciprocal laws are approximately 5% of the 12% of wine which is $7 or more per bottle, or 0.6% of the
total market.

As an example of potential for loss excise tax revenue, Maryland collects approximately $3.6 million in wine excise
taxes each year. Even if wine shipped illegally to Maryland without the payment of taxes grew to the national
average of 0.6% of total wine sales, an unlikely scenario, the loss of revenue to Maryland would be $21,600 per

In the general retail merchandise category (not beverages), mail-order catalog sales represent less than 5% of
total sales.

3) Access to wines not currently available should be allowed.

Wine lovers have typically visited wineries in other states, have discovered uncommon wines through word of
mouth, or are interested in sending wine gifts to friends. It is outrageous to suggest that these reasonable
activities should be prohibited.

4) Summary

There are effective and reasonable counters to virtually all arguments presented against direct shipment. Our
membership and a united wine producing community is committed to the passage of state permit laws to allow
direct wine shipment, similar to the law passed by Louisiana in 1997, which provides reasonable access to market
while ensuring the collection of all sales and excise taxes, licensing and court jurisdiction for all shippers, and
establishing protections against the shipment to underage and to customers in dry areas.

The Mission of the American Vintners Association is to enhance the public perception and business
environment of American wine-growing through marketing, public information and grassroots government
representation initiatives.

Simon Siegl of the American Vintners Association
800-879-4637, ext. 122

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