Vice reporting has revealed a confidential Amazon document that outlines how the retail giant planned to make an aggressive lobby push into the alcohol delivery market by launching a multi-state lobbying campaign to change alcohol licensing laws and regulations, in concert with a neo-liberal think tank.
The document, titled 2021 Alcohol Public Policy Strategy, outlines the objective of the lobby campaign, according to Vice reporting: to defeat Amazon-specific legislative threats related to self-checkout in California. Amazon enlisted the R Street Institute (RSI) as lobby front group get shield Amazon itself and to provide cover when involvement by by the retail giant would be detrimental to reaching the lobby campaign objective. Amazon wanted to push its public policy agenda via a third party without the public understanding it was behind this effort.
Amazon.com, Inc. is an American multinational technology company focusing on e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. It is one of the world’s most valuable brands, according to Wikipedia. Amazon is one of the Big Five American information technology giants, alongside Alphabet (Google), Apple, Meta (Facebook), and Microsoft. As such, Amazon has come under serious scrutiny for their unethical business practices.
The R Street Institute is a public policy think tank based in Washington, D.C., according to Influence Watch. The RSI’s budget was $10.5 million in 2018. RSI is a center-right think tank promoting a free market agenda on most issues. The RSI is working with other alcohol industry front groups, such as the Beer Institute and the Distilled Spirits Council of the United States (DISCUS) to further the agenda of alcohol companies to worsen and disband existing alcohol laws on favor of alcohol industry profit maximization. The RSI pursues a clearly partisan, alcohol industry-friendly agenda of attack against the alcohol control state system in the US.
Amazon made plans to hire RSI, the leaked document reveals. For the lobby campaign against existing alcohol laws across the US, RSI was meant to provide evidence for convincing governments that alcohol delivery is good. It has long advocated for a revision to the three-tier system and, generally, freer alcohol policy—a particular focus of resident senior fellow C. Jarrett Dieterle—and the document states that Amazon supported it in 2019 for the 2020 legislative session, as per Vice.
As we engage in these higher-profile, higher-risk activities, we will rely on RSI to shape the discourse in each state with a series of strategic media engagements, timely research to inform our advocacy tactics, and be the public face of overall reform efforts,” the document states, according to Vice.
Through RSI, we will facilitate allied activities with Walmart, Kroger, and other retailers to drive our three-tier modernization plan. They can shield us from sensitive issues through their established Free the Drinks initiative, providing cover when involvement by large retail brands is detrimental to progress.”
Leaked Amazon document
Lobby campaign goals exposed
The leaked document exposes Amazon’s political influence. The document also reveals internal discussions about exerting pressure and changing alcohol laws across the country to benefit Amazon, establish market dominance, and drive profit maximization.
Amazon planned to change state alcohol laws to its benefit in order to “unlock” the alcohol market in 2021, according to the document, Vice is reporting. The company wanted to take a “more aggressive strategy” to completely change how alcohol could be distributed.
The online retail giant’s lobby push had three main goals:
- to eliminate state licensing caps,
- to ensure all limits to alcohol delivery would be disbanded, and
- to be able to compete directly with package stores and wholesalers in alcohol retail.
Our state-by-state approach has proved successful the past three years in securing key victories and opening new geos for expansion,” the document reads, according to Vice.
Unfortunately, it grows more difficult each year to achieve business wins as Amazon’s profile increases, and we are forced to spend more time and political capital defending our current geos and policies rather than proactively changing alcohol laws.”
Leaked Amazon document
With its lobby campaign, Amazon pursued the goal for all its outlets to hold as many alcohol licenses as possible.
It planned to license facilities and open alcohol-carrying stores in seven new states across the US, five of which would require a “high degree of effort” to authorize, as per Vice.
As part of the lobby campaign Amazon would be doing “political outreach” in its target neighborhoods up to a year in advance to garner community support.
Inability to follow basic alcohol laws, such as age limit compliance
In the physical Amazon stores, called Fresh and Go, the retail giant often uses the Just Walk Out (JWO) technology. This makes it difficult to verify a customer’s age to purchase alcohol and comply with the US alcohol age limit law. Customers can simply leave the store before an employee can get to them.
Amazon therefore identified not its responsibility to comply with the existing, well proven alcohol age limit law, but the “threat” of this law to Amazon’s profit maximization agenda.
Through its lobby campaign Amazon would “need to defend against Amazon-specific legislative threats” regarding Just Walk Out, because in California – one of Amazon’s target alcohol licensing states – alcohol self check out is not allowed, for reasons of properly implementing the alcohol age limit.
Already in 2019, Movendi International reported that Amazon had joined Big Alcohol as it commenced delivering alcohol to customers in San Francisco, California. The online retailing giant had filed a licensing request with the San Francisco Board of Supervisors to allow the company to sell beer, wine and hard liquor in the city.
Attack on the three-tier system
An Amazon spokesperson said the following in an email, as per Vice:
It’s common for people at Amazon to put ideas in documents that never make it past the draft stage and are never used to make decisions. The document referenced was drafted in 2020—more than two years ago—and not only was it never approved or implemented, the items discussed in the document are no longer relevant.”
Amazon spokesperson
An Amazon spokesperson told Vice that the retail giant funds RSI but that they were not currently working with RSI on alcohol policy.
The spokesperson also said that Amazon lobbies for alcohol delivery across the U.S.
Movendi International has previously reported about Amazon’s agenda to push for on-demand delivery of alcohol. The retail giant has been engaged in a lobbying campaign against the three-tier system since 2019.
In the US, federal and state laws generally divide the production, marketing, and sale of alcohol products into three tiers:
- Producers/importers,
- Distributors/wholesalers, and
- Retailers.
It is prohibited for entities of one tier to have an interest in another tier. For example, when selling alcohol products, producers/importers must sell to distributors/wholesalers who will then sell to retailers who can sell to customers. Neither producers/importers nor distributors/wholesalers can directly sell to customers.
In April 2019, Movendi International report the online retail giant hired a lobbyist to deal with alcohol policy. This suggested at the time that Amazon was planning to expand further into online retail alcohol sale. Already then Amazon dominated general online retail and had expanded into the grocery business and food delivery. Selling spirits has long been in the sights of the company. But Amazon has been limited due to the state and local laws governing alcohol sale.
In the US, alcohol is largely controlled through a state legislated three-tier alcohol distribution system. Producers of wine, beer, and liquor are only permitted to manufacture. Between the tier of the producer and the tier of the retailer there is a middle tier, the wholesaler. Alcohol wholesalers are regulated by state law. Producers are not allowed to sell alcohol directly (with a few minor exceptions). Retailers are allowed to sell alcohol at any price, as long as it is at or above the minimum price set by the state (according to laws in many states).
The control state system
The National Alcohol Beverage Control Association (NABCA) informs that currently 17 federal states and jurisdictions in Alaska, Maryland, Minnesota and South Dakota adopted forms of the “Control” model. These states and jurisdictions control the sale of distilled spirits and, in some cases, wine and beer through government agencies at the wholesale level. 13 of those jurisdictions also exercise control over retail sales for off-premise alcohol use; either through government-operated package stores or designated agents.
According to NABCA, control jurisdictions currently represent approximately 25.2% of the country’s population and account for roughly 22% of distilled spirit sales and a significantly smaller percentage of beer and wine sales.
In a time where more and more federal states are pursuing their own policy goals more independently and oftentimes in opposition to regulations and policy objectives at the federal level, the three-tier system is coming under pressure from Washington State (the home state of the Amazon headquarters) dismantling the three-tier distribution system – this could set a precedent for other states.
A lucrative opportunity: profit over alcohol control
Analysts report that online wine retail is big business, exceeding $500 million in sales in the period between September 2017 and August 2018. According to Rakuten International data wine is the dominant type of alcohol sold online, making up 79% of alcohol online retail.
Therefore, business insiders call Amazon’s new push into alcohol lobbying “perfect timing”. According to one estimate, retailers that focus on e-commerce “are poised to gain significant market share in the home delivery of beer and wine to consumers.”
Rabobank wrote in a report last year that online grocery shopping “will develop into the most important driver of online alcohol sales.” Amazon is the leader in the online grocery space as well, selling about $3 billion in those items annually. Google data suggest that the share of alcohol sales coming online (currently 1.6%) will eventually catch up to, or even surpass, grocery overall, Rabobank reported.
Big Alcohol is already working on online alcohol retail and delivery. ZX Ventures, the disruptive investment arm for AB InBev – the world’s largest beer producer – is working with retailers like Walmart, Kroger, Drizly, as well as Amazon to better understand online shoppers and share those insights with retailers and help them drive the alcohol sales.
Amazon may be looking to sell their alcohol brands at the cheapest prices and deliver them wherever necessary, increasing availability, and making alcohol even cheaper, going against all evidence based recommendations on alcohol policy and disregarding the high and rising levels of alcohol harm in the US.
For instance, an estimated one in eight deaths of Americans aged 20 to 64 is the result of injuries or illness caused by alcohol, according to a new study from the Centers for Disease Control and Prevention.
Deaths fully attributable to alcohol have risen in the past decade.
The findings are a conservative estimate because there are deaths that alcohol likely contributed to but the researchers could not include in their estimates and researchers were not able to determine if someone who died of an illness used to consume alcohol heavily but then stopped. Thirdly, people often underreport how much alcohol they are actually consuming.
Greater implementation of evidence-based alcohol policies could reduce the alcohol death toll. But companies like Amazon are pushing into the opposite direction, putting their profits over the health of people and communities in the US.