Throughout last class my thoughts went from confusion via utter disbelief ending up purely at the question "but ... why?" I generally understood that the states in the United States are a lot more independent and have more to say as compared in other countries. However, I was just in disbelief of the regulations in a country that at least according to my impression promotes free markets and capitalism. Let me summarize both European and German wine distribution laws to provide some juxtaposition.
Wine laws in Europe, or more specifically the European Union
The European Union wine regulations are part of the Common Agricultural Policy (CAP). The Wine Regime within the CAP consists of set of rules that govern the wine sector, with the aim of achieving a balanced and open market and go beyond production and sales encompassing labeling, classification and designation of origin. The wine industry in the EU is heavily regulated, e.g. there are regulations on where certain wines can be produced and where not, yield restrictions, spacing between vines, quantity, quality, price and so on. Nevertheless, researching the regulations I did not come across any limitations in shipments from one to another members state of the EU to another - which could have been comparable to the US.
Wine distribution in Germany
German wine distribution shows a structure similar to other traditional wine countries with a strong focus on the retail market. But not only the flows totally leave out the "middlemen", i.e. the wholesaler, but also the margins and entry prices are a lot lower than in the US. A low-cost wine is around €5 (which now is basically equivalent to $5) compared to $8 in the US. As discussed in class, one reason is the double marginalization (tax) system in the US.
What does this leave me with? I am still confused and puzzled, but definitely gained more appreciation of the simplicity of wine distribution, purchase and consumption in the EU, with which I grew up.
Resources:
http://academyofwinebusiness.com/wp-content/uploads/2013/04/Zhang-Bouzdine-Chameeva.pdf
https://en.wikipedia.org/wiki/Wine_law
http://www.wine-economics.org/aawe/wp-content/uploads/2014/01/Vol8-Issue03-01-Giulia-Meloni-and-Johan-Swinnen.pdf
Thanks for sharing, Hanna. Any idea what kind of restrictions there are on shipments from member states to non-member states? Is there any sort of consistency, or are those restrictions / limitations all negotiated bilaterally?
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