Wednesday, January 24, 2007

Liquor wholesalers dumped nearly $1.7 million on Texas lawmakers in the weeks leading up to the 2007 Legislature while pushing for changes that would allow them to sell booze directly to restaurants and bars. Read the article at the Dallas Morning News

They've donated $1.7M in bid to sell direct to restaurants, bars; package stores worried

Tuesday, January 23, 2007
By ROBERT T. GARRETT / The Dallas Morning News

AUSTIN – Liquor wholesalers dumped nearly $1.7 million on Texas lawmakers in the weeks leading up to the 2007 Legislature while pushing for changes that would allow them to sell booze directly to restaurants and bars.

The law now allows only package liquor stores – not wholesalers – to supply establishments where patrons drink on the premises. Wholesalers say that's not fair; package stores say giant wholesalers would undercut their prices to monopolize the market, potentially costing thousands of people their jobs.

The wholesale giants, Dallas-based Glazer's Distributors and San Antonio's Republic Beverage Co., are placing a big bet on getting the law changed.

They spent nearly five times more on lawmakers in the past 10 weeks than they did in the entire year before the 2005 session. According to Texas Ethics Commission filings released last week, Gov. Rick Perry and House Speaker Tom Craddick each took $100,000 and Lt. Gov. David Dewhurst got $75,000 from officers of the wholesalers and their political committees.

There also were $20,000 donations to 23 of 31 Texas senators, $40,000 apiece to three other influential senators and at least $1,000 each to 130 of 150 House members. Almost half received $5,000 to $10,000 apiece.

The effort provides a clear snapshot of how money makes the Capitol go round.

"It shows that in Texas, we have a pay-to-play system," said Suzy Woodford of Common Cause Texas, which tracks ethics in government. "We have no limits on the amount of money that these individuals, their PACs and their officers can contribute. So it clearly demonstrates to the average Joe that if you don't have the big bucks ... the item you care about is not even going to be considered."

The wholesalers make no bones about what they want. Alan Gray, a spokesman for the Glazer's-controlled Licensed Beverage Distributors PAC, said it's unfair that liquor wholesalers can't sell directly to bars and restaurants when wine and beer wholesalers can.

"We think it's an inefficient and archaic system for the distribution of distilled spirits, and we're going to seek a change," the spokesman said. Asked if the $1.7 million was given to lawmakers expressly to change the law, Mr. Gray said: "We participate in the political process, but we don't comment on our political giving."

Package store owners, responding to the threatened loss of business, will travel to Austin today to urge lawmakers to rebuff the wholesalers' demand.

Dallas package store owner Greg Wonsmos said the two wholesalers told several of his colleagues in November "that they intended to pass legislation to prohibit package stores from servicing restaurants and bars, and take over 100 percent of that business for themselves."

"The monopolistic system sought by the wholesalers would inevitably result in higher prices and poor service," said Mr. Wonsmos, CEO of Centennial Fine Wine and Liquors and president of the Texas Package Store Association.

He said 500 stores supplying bars and restaurants would have to lay off thousands of employees.

The intensity and scope of the wholesalers' effort to blanket the Capitol with money caught the package stores by surprise: $1.66 million since the Nov. 7 election, nearly five times the $368,000 they gave in the 12 months before the 2005 session. The donations were split almost 50-50 by interests representing Glazer's and Republic.

Four owners of Republic wrote checks of about $350,000 each to BG Distribution Partners PAC in mid-October, the records show.

While that wholesaler's owners, members of the Block family of San Antonio and the Goldring family of Houston, mainly use their PAC as a conduit, the owners and executives of Glazer's in Dallas mix it up.

Chairman and CEO Bennett Glazer and executive vice president and chief operating officer Barkley Stuart write most of the big checks. Sometimes, they give directly as individuals. Sometimes, they give indirectly through their company's political action committee, the Licensed Beverage Distributors PAC.

Mr. Gray, that PAC's director of governmental affairs, said wholesalers haven't approached any lawmakers to sponsor legislation repealing Texas' law that requires bars, restaurants and nightclubs to buy their liquor from a licensed "local distributor."

Since Texas legalized liquor by the drink in 1971, only package stores have been allowed to obtain the licenses. An advocate for package stores said the law was drawn up to protect those businesses, which for decades had supplied Texas' private drinking clubs.

Mr. Gray said, "We think that it's an inefficient and costly system for the distribution of distilled spirits to bars and restaurants and that it's unlike how wine and beer are distributed – or ketchup and hamburger meat, for that matter."

Mr. Gray rejected package stores' prediction that wholesalers will use their market power to raise prices. Now, he said, "What you usually have are one or two dominant local distributor players in any large market." Letting wholesalers sell to restaurants and bars would likely increase competition, he said.

Ismael "Kino" Flores, D-Palmview, chairman of the House Licensing and Administrative Procedures Committee, said that while alcoholic-beverage bills routinely are assigned to his panel, he hadn't heard of a possible turf war among liquor interests.

"We generally have beer fights, but not liquor fights," said Mr. Flores, one of 26 House members who received $10,000 from the wholesalers.

Sen. John Whitmire, D-Houston, who has played a major role in liquor-related legislation in the past and was one of the three senators to take $40,000 from the wholesalers, said he learned that a fight was coming from his local package store owners last month.

"They were playing defense even before I knew anybody was on offense," he said. "Unfortunately, the Legislature gets pulled into a lot of industry fights."

Liquor wholesalers recently gave nearly $1.7 million to Texas lawmakers in an apparent move to cut in on the business of selling booze directly to restaurants and bars. Top recipients of the campaign contributions include:

$100,000: Gov. Rick Perry

$100,000: House Speaker Tom Craddick

$75,000: Lt. Gov. David Dewhurst

$40,000: Sen. Kim Brimer, R-Fort Worth, chairman of the Sunset Advisory Commission, which recently reviewed whether to extend the life of the Texas Alcoholic Beverage Commission.

$40,000: Sen. Troy Fraser, R-Horseshoe Bay, chairman of the Senate business and commerce committee

$40,000: Sen. John Whitmire, D-Houston, dean of the Senate and member of Sunset Advisory Commission.

$20,000: to 23 of 31 senators

$10,000: to 26 House members, including 9 committee chairmen

$6,000: to 27 House members

$4,500: to 9 House members

$3,000: to 39 House members

$1,500: to 17 House members

SOURCE: Texas Ethics Commission filings. Three other senators and 11 other House members received contributions in different amounts, ranging from $1,000 to $15,000 each.