Australians are known for having a fondness for drinking alcohol. This is all part of the general easygoing Australian lifestyle, beaches, beer, BBQ’s, and an all round good time.
As you can imagine, those killjoy statists in government here have always found this to be deplorable.
No government in Australia has ever had the courage/suicidal tendencies to actually try to impose prohibition, but in general, the trade in alcoholic beverages is one of the most highly regulated type of commerce in Australia.
And, as we have a Federal system of government, and the regulation of the sale of alcohol is a state matter, we have in effect seven different regulatory environments.
Although in nearly each case, the regulations started out as a Puritan attempt to regulate the drinking habits of Australia, over time the regulations have become a way for various rent-seekers to protect their interests at the expense of the consumer.
This can have unforseen consequences… I live in the state of South Australia, and this state is the largest producer of wine in Australia. We’ve lots of famous wineries that are exporting their product all over the world. This has seen a boom in wine production, with smaller, more enterprising producers trying to cash in on the action.
They are not being helped, though, by the regulatory framework in which they are required to operate. The problem isn’t so much in producing wine, but in selling it.
The laws in South Australia require that wine, and indeed all other liquor products, be sold in specialist stores or hotels. You cannot get alcohol at a supermarket. And these specialist stores are increasingly in the hands of two large supermarket chains. And it is not so easy to get your hands on a licence to open a competiting store.
These large chains are resisting pressure to deregulate the liquor licencing laws, and using their market power to control the wine market. Because they have the cushion of increasing control of the sale of wine products, they are able to squeeze the wineries into charging less for their wines, and also, restricting who the wineries sell to.
The Adelaide Review, an oddball monthly publication hereabouts with no serious online presence covered this story last month, and told the tale an enterprising chap called Tom Hesketh, who established cleanskins.com.au to sell a range of unlabelled wine from some of the smaller wineries. His site is providing some good wines at great prices. The Adelaide Review takes up the story.
Hesketh would like to establish a shopfront to compliment his internet trade, though he estimates it would cost $30,000 to apply for a liquor licence that he probably won’t win under corrent laws. He also alleges that anti-competitive practices are affecting his business. Some wineries have withdrawn prodcuts from the cleanskins.com.au site under pressure from their wholesalers. One small winemaker who did not want to be identified for fear of commercial retribution issued this notice: “I have had to field a couple of phone calls from my current wholesale customers that buy my cleanskins and they have complained about the listing on your website. These guys are a fairly major part of my business and they won’t buy any further stock until the listing of … is removed. So I’m sorry to say that I would like to cut our brief relationship short ASAP”.
Of course, on one level this sort of thing happens all the time, and there’s actually nothing wrong with it. If you’ve worked hard to dominate the market, then it’s fair enough that you’ve got commercial muscle that you can use to wring the best terms you can out of your suppliers.
But these wholesalers haven’t worked hard to dominate the market. They are using the commerical anabolic steriod of government regulation to cheat their way to market prominence. They are the commerical equivilent of drug cheats.