Friday, April 20, 2018
Business

Why the liquor industry wants to get self-driving cars on the road

Automakers and tech firms have long been the ones hustling to get self-driving cars on the street. But they’ve lately been joined by a surprise ally: America’s alcohol industry.

In recent weeks, two industry groups -- one representing wine and liquor wholesalers, and another representing large producers -- have thrown their weight behind coalitions lobbying to get autonomous vehicles on the road faster.

Inherent in their support, analysts say, is an understanding that self-driving cars could revolutionize the way Americans drink. Brewers and distillers say autonomous vehicles could reduce drunk-driving.

Without the need to drive home after a night at the bar, drinkers could also consume far more. And that will boost alcohol sales, one analysis predicts, by as much as $250 billion.

"It makes a lot of sense that the industry is interested," said Jim Watson, a senior beverage analyst at Rabobank, the multinational finance firm. "It’s a win-win for them: Self-driving cars could boost alcohol sales and simultaneously reduce drunk-driving."

Read More: Ford and Miami to form test bed for self-driving cars

Industry groups say they have kept tabs on this technology for years. On March 1, the Wine and Spirits Wholesalers of America, a group representing nearly 400 U.S. alcohol brokers, officially joined the Coalition for Future Mobility, which has lobbied in favor of self-driving cars.

That same week, the Foundation for Advancing Alcohol Responsibility -- an industry-funded nonprofit that battles underage drinking and drunk driving -- signed on in support of a pending bill that would speed the commercialization of self-driving vehicles. FAAR’s members include Diageo, Pernod Ricard, Bacardi and Constellation, four of the world’s largest liquor and beer producers.

Both organizations say they are concerned about drunk driving and public safety. The industry has long supported technologies that keep impaired drivers off the road, such as alcohol sensor monitoring and ignition interlocks, said Ralph Blackman, FAAR’s president and chief executive.

But despite a steady, long-term decline in drunk driving rates, alcohol-related crashes still kill 28 people each day, according to the Centers for Disease Control and Prevention.

That statistic has been a black eye for the industry. It has also prompted some jurisdictions to levy alcohol taxes and limit the density of bars and liquor stores, which reduces alcohol consumption.

"Safety is a constant concern for us," said Craig Wolf, the president and chief executive of the wholesalers group. "When we see a new technology that could improve safety, we want to learn more about it and share our unique perspective."

Experts say there is some evidence that true self-driving cars would reduce DUIs. These differ significantly from the semi-autonomous cars currently on the market, which still require active input from a human driver. (In January, a San Francisco man was charged with a DUI, even though his semi-autonomous Tesla was set to "autopilot.")

Studies of ridesharing services such as Uber and Lyft, which give drinkers easy, affordable alternatives to driving their own car, have generally shown that they decrease drunk-driving accidents.

Similar observations have been made of public transit: When the Washington D.C. metro extended its hours, DUI arrests in nightlife districts fell. At the same time, other alcohol-related arrests in those areas jumped, probably because people stayed out later and drank more, said Brad Greenwood, a researcher at the University of Minnesota who studies the unintended effects of technological innovations.

"This is purely speculative, but based on what we know, I do think drunk driving will go down [with the advent of self-driving cars]," Greenwood said. "And on the margins, I think some people will drink more, as well."

How much more people will drink remains to be seen. In September, analysts at Morgan Stanley published a blockbuster report suggesting that self-driving cars could increase global alcohol sales by as much as $250 billion, assuming that the cars prompt current drinkers to consume an extra two drinks per week.

Greenwood is skeptical that self-driving cars will inspire drinkers to imbibe significantly more: For most people, he points out, transportation is probably not a major obstacle to drinking, particularly given the rise of services like Uber and Lyft. But for people who live in rural areas, or cities with unreliable ride-sharing networks, the effect could be significant, he said.

New sales aren’t the only way that the alcohol industry stands to benefit from self-driving cars, said Watson, the Rabobank analyst. For years, the industry has also suffered through a major social shift, with consumers drinking more at home and less at restaurants and bars. If autonomous cars can push some drinking back outside the home, Watson said, alcohol producers and retailers will be able to take advantage of higher margins and better brand recognition there.

On top of that, autonomous delivery trucks could significantly reduce labor costs for distributors. Brewing giant Anheuser-Busch partnered with car technology company Otto in 2016 to transport a shipment of beer across Colorado -- the world’s first commercial shipment by self-driving truck. The company has placed preorders for 40 Tesla semi-trucks with "autonomous driving capabilities," the company said in a December statement. Most experts believe self-driving technology will come to trucks and other commercial vehicles before it is widely available to consumers.

"That’s where the first iteration of self-driving vehicles will have an effect, and it will be a big effect," Watson said. "Then you can get into the issue of increased consumption."

Read More: It’s the end of the World Liquors sign as we know it (w/video)

Wolf strongly disputed the notion that his association might be interested in increasing sales or automating delivery, particularly since so many of the employees at the wholesalers his group represents are themselves delivery drivers.

But Greenwood, the technology researcher, says it would be short-sighted to ignore the "spillover effects" of self-driving technology. This is one innovation, he argues, that could have far larger implications beyond drunk driving.

"I don’t see the shift happening quickly," he said. ". . . But how this plays out in the long run will be fascinating."

 
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