A leaked Amazon confidential 2021 document shows that the e-commerce Goliath wanted to grow its alcohol sales by covertly lobbying to change liquor laws, Vice reported late last week.
The document, obtained by Vice technology site Motherboard, outlines Amazon’s plans for a multi-state lobbying campaign to eliminate state licensing caps, further legalize alcohol delivery and defend against legal challenges to its self-checkout physical stores.
The retail giant was planning to rely on the R Street Institute, a public policy think tank with a mission to promote “support of free markets and limited, effective government,” to push its agenda.
“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,” the document reads.
The document, titled 2021 Alcohol Public Policy Strategy, outlines the legal strategy to “unlock” the alcohol market in 2021 after achieving “wins in opening new states and geos to alcohol delivery,” but now needs “a more aggressive strategy to ensure our business is free to operate in more difficult states.”
A spokesperson from Amazon told Motherboard that the document was drafted in 2020, and “not only was it never approved or implemented, the items discussed in the document are no longer relevant.” But the spokesperson also said Amazon advocates for alcohol delivery across the U.S.
The document’s overarching strategy pointed to the company’s mission to “modernize” the three-tier system of alcohol distribution.
Amazon’s interest in entering the bev-alc distribution space has long raised eyebrows across the industry, particularly among beer wholesalers, who have a policy advocacy giant in their corner. The National Beer Wholesalers Association (NBWA) has long been fiercely protective of the three-tier system and advocates against any perceived threats, which have varied in recent years, and include a stalled movement to allow the U.S. Postal Service to ship alcohol, and Pepsi-owned Blue Cloud Distributing’s middle-tier entrance.
NBWA president and CEO Craig Purser told Brewbound: “It is concerning that a massive corporation is reportedly hiding behind a special interest shadow group to advance ways to circumvent a safe and effective alcohol ecosystem, including the local retailers that work every day to provide products in a competitive way to American consumers.”
Amazon wouldn’t be the first e-commerce company to wade into bev-alc sales, but its desire to do so via changing long-standing policy would be unprecedented. Other players operate within the frame of the three-tier system, such as e-commerce platform Drizly, which connects shoppers to licensed retailers on its website and app, and online convenience retailer Gopuff, which operates Amazon-style warehouses that function as licensed retailers that deliver to consumers who place online orders.
As part of the effort, Amazon was planning to engage “like-minded retailers” to eliminate or increase state licensing caps. The company was also planning to share Amazon Fresh warehouse space with other retailers to increase “efficiencies and afford the ability to negotiate quantity discounts with wholesalers.”
By aligning with large retailers like Walmart and Kroger, the company planned for a higher likelihood of success.
“In this debate, we will set ourselves against package stores and wholesalers, as well as reluctant regulators, and expect to face media scrutiny,” the document read. “This approach chips away at the three-tier system, without introducing new risk to our existing and future alcohol licenses.”
Another goal for Amazon was to secure as many alcohol licenses as possible for its outlets, with its sights set on seven states. It identified five of those states as requiring “a high degree of effort.” One of those targeted states was California, where the company anticipated a battle over self-checkout legislation. Amazon’s physical stores, Fresh and Go, often use its Just Walk Out (JWO) technology, which makes it difficult to verify a customer’s age when purchasing alcohol. The United Food and Commercial Workers, which represents 1.3 million grocery and retail workers, was expected to file a new bill redefining the cashierless technology as self-checkout, through which alcohol sales are prohibited under California law. The company intended to proactively defeat the impending measure by highlighting the company’s community engagement and job creation.
“We will need to employ [the public policy team] PP’s existing resources in the state to defeat this measure, as it will be a highly-politicized union issue,” the document read.
The company also planned to unblock delivery and “other alcohol-related blockers” in six states by introducing model legislation offering delivery fees as an increase in state revenue. The priority states – Colorado, Massachusetts, Nevada, Pennsylvania, South Carolina, and Wisconsin – were identified for their projected alcohol sales and the “weight of effort” to change laws.
The document indicates that Amazon has supported RSI in the past, which has generally advocated for freer alcohol policy. An amazon spokesperson told Motherboard that although the company provides general support to RSI, it is not currently working with RSI on alcohol policy.
The e-commerce giant’s ambitions shouldn’t come as any surprise to industry watchers. But Amazon’s efforts come amid an industry under a microscope thanks to the Biden Administration’s executive order to promote competition, and with a company that has seemingly limitless budget, it’s hard to know what to expect.
In 2019, Amazon was investigated by the California Department of Alcoholic Beverage Control for selling beer, wine and spirits via its Prime Now service. At the time, state law required bev-alc delivery providers to operate brick-and-mortar locations that were open for at least half the hours of their delivery operations.
Since then, Amazon has been slowly turning its lobbying efforts toward clearing a wider legal path for alcohol delivery. In 2019, as the company expanded its Prime Now service to more cities, it listed a job for an alcohol public policy manager to help lead state and local engagement and public policy activities related to alcohol regulation.
This story was updated at 6 p.m. ET Monday, May 6, to include a statement from Craig Purser of the NBWA.