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38 WINES&VINES January 2015 Viewpoint falling down in their houses and the loss of jobs at the retail and distributor level—it is nice to see that, as we all believed, none of the forecasted horror stories have come true. There is great synergy between the direct shipping efforts of wineries and the efforts of their distributors; yet the true value of the direct-to-consumer shipping effort is the mar- keting value. How else do wineries on a limited budget introduce themselves to customers or introduce new products? Further, our internal surveys and a number of external surveys show that wine purchases at retail and in restaurants by wine club members eligible to receive wine at their homes is higher than among other wine consumers and growing. Although costs associated with direct ship- ping may prevent the windfall many in the industry had hoped for, in the long run the entire wine and distribution system has ben- efited from the expanded availability, access and growth provided by the direct-to-consumer channel. I look forward to the remaining hold- out states affording their consumers the same benefits that 94% of the adult population in the United States currently enjoys. Dennis Cakebread is the treasurer and a board member of the Coalition for Free Trade, vice chairman and senior vice president of sales and marketing for Cakebread Cellars in Rutherford, Calif., and president and founder of Mullan Road Cellars. Editor's Note: The Coalition for Free Trade (CFT), established by vintners in 1995 as a nonprofit organization seeking judicial relief from laws prohibiting direct-to-consumer (DtC) shipments, announced Nov. 24 that it had ended all activities after achieving significant victories for wineries and wine lovers alike. T hink back to the 1980s and 1990s. Selling wine directly to people who wanted it seemed so simple. Commerce between producers and consumers was like any other product; they ordered, and we shipped. No one noticed, and seemingly no one cared. Then some states (Florida and Maryland) started enforcement actions against a couple of wineries, and in response, a very loose coalition of winery owners formed to pass the hat, knowing a legal defense was on the horizon. As many states started passing laws or regulations against shipping wine directly to consumers, it became clear that a focused effort would be needed. In the early days it was an uphill battle with rapidly moving foes and unclear objectives. The Coalition for Free Trade (CFT) was formally launched in 1997. Joined by the formation of Free the Grapes! in 1998 and with the lobbying efforts of the Wine Insti- tute (WI), a three-legged stool approach became the foundation of the effort to legal- ize direct shipping. A wonderful host of people and groups have supported these efforts for many years. In May 2005, CFT's efforts led to the U.S. Supreme Court affirming in Granholm vs. Heald that interstate commerce laws do apply, and that state wine-shipping laws were discriminatory in nature and thus unconstitutional. In many ways the ruling was just the beginning of the improvement in state laws, as Wine Institute and Free the Grapes! helped develop and guide model legislation that became the basis for most of the laws enacted by the states as they reacted to the Supreme Court ruling. Massachusetts in its wisdom created a new method of discrimination by introduc- ing 'production capacity' limits to its new regulatory scheme. CFT was the lead in bringing successful litigation (many thanks to our individual consumers and Family Winemakers as plaintiffs) in Massachusetts to prevent these limits from becoming reality. It is with some satisfaction that we will get to see wineries and Massachusetts consumers able to deal with each other starting in early 2015. What effect has this change in the regulatory landscape had on the wine industry? None on the trend of consolidation within the distribution tier, which seems to be slowing down, probably because those that wanted or needed to merge have already done so. Distributor sales also remain strong and are possibly even better as consum- ers have access to more types of wine. The biggest impact has been with the small or startup wine producer. Numbers usually have a story to tell, and the number of wine producers nationwide has grown from 1,820 in 1995 to 8,142 today. What is not completely appreciated by the dis- tribution tier is the impact direct shipments have to develop new startup brands that do not have a home in the three-tier system because no one has heard of them. While recent growth in small distillers and small breweries has been strong, wine producers' growth seems to be clearly dependent on their ability to legally ship di- rectly to consumers. When I think back to the early arguments used to oppose the model direct ship- ping legislation—tales of shipments to minors, the probability of drunken people ■ DENNIS CAKEBREAD Vintners Declare DtC Victory DENNIS CAKEBREAD " It is nice to see that, as we all believed, none of the forecasted horror stories have come true."