Wine Territory Integrity:  Protecting Businesses, Jobs, Fair Play

Under Michigan's three-tier distribution system for beer and wine, a distributor must be appointed by a wine or beer supplier to service a specific geographic area, or territory, within the state.  For all alcoholic beverages except wine, Michigan prohibits a supplier from appointing more than one distributor for the same products in a given territory, thereby ensuring territorial integrity for the State of Michigan and each distributor.  The practice of appointing two or more distributors to the same product(s) for the same territory violates territorial integrity, a system that protects consumers, small businesses and local jobs.

Michigan law first mandated territorial integrity for beer distributors in 1976.  Legislation mandating territorial integrity for wine coolers and spirit coolers was enacted in 1989 and the Michigan Liquor Control Commission is the "exclusive" distributor for spirits throughout Michigan.  This needs to be extended to wine.

The Advantages of Territorial Integrity:

From a regulatory perspective, territorial integrity accomplishes three important public policy objectives:

• Protects consumers from tainted, counterfeit or defective products by enabling the enforcing agency to know exactly who to contact to get a brand removed from a distributor's warehouse and retailer's shelves in the event of a product recall.
• Simplifies the audit system and the enforcement of trade practice violations.  State regulators know exactly who is responsible for selling a particular brand to a retailer in a given area and can determine how much of the brand is being sold, the prices being paid by the retailer, the terms of sale and if the appropriate taxes are being paid.
• Allows suppliers and state regulators to guarantee that every retailer, regardless of size, has access to every brand and package variety of products sold in that market area on a timely basis.  This ensures that consumers have the widest choice of brands and packages at convenient locations, thereby enhancing competition, strengthening local businesses and protecting jobs.
   

Wine distributors should be treated the same as beer, wine cooler and spirit cooler distributors.  As proven in the over 30 years since legislation was passed giving beer distributors territorial integrity, such a law promotes inter-brand competition, consumer choice, product integrity and tax accountability, while upholding the spirit and intent of beer and wine wholesaling franchise laws and protecting local businesses and jobs.  It is time to protect the territorial integrity of wine distribution and pass laws that level the playing field and ensure everyone follows the same fair rules.