The latest
information from the Cleveland Plain Dealer and Mark Fisher's Wine Blog: "Ohio's
wine-shipping laws: will legislators fix - or 'fix'? See
http://www.daytondailynews.com/o/content/shared-gen/blogs/dayton/wine/
A scathing report
released by the Specialty Wine Retailers Association (SWRA) suggests that
campaign contributions from wine and spirits wholesalers are suffocating free
trade to keep the three-tier distribution system in place.
Click
here to read more.
Political campaign
spending by wine and beer wholesalers hits $49.1 million between 2000 and 2006
at the state level. $1.8 million in Ohio. This is more than what was donated in
New York!
Click here
to read the article.
Ohioans Lose Direct Wine Shipments
Wine Spectator, Jenny Pavlasek
"...under the
new law, only 9 percent of the wine produced in the United States will be
available to ship directly to Ohio consumers, with the remaining 91 percent
available only via the state's wholesalers"...
The Cleveland
Plain Dealer reported that wholesalers contributed $91,350 to Ohio
politicians in the first half of 2007. But the new law also found support where
some might not expect it: Donnie Winchell, executive director of the Ohio Wine
Producers Association**. Typically, local producer associations encourage open,
direct shipping since, in theory, it helps small wineries grow their business
beyond the borders of the state."
**A members only
organization that does not represent all the wineries in Ohio
Click
here to read the entire article
Under the Influence and Out of Control
April report shows how Ohio's Wholesale Beer
and Wine Association used state's new higher campaign contribution limits to
become major player at State Capital. Click here.
Under Cover of Darkness...
Tom Wark, Daily Wine Blog
"A law based
purely on protectionism. Keep in mind, that's how the law is justified. If this
were really the case you might even be able to sympathize since the goal of
supporting an Ohio wine industry that is growing is a good thing.
But that's not
the real reason. This law was supported strongly by the Ohio alcohol wholesalers
who since 2000 have given more than $1.8 million in campaign contributions to
Ohio legislators.
Bottom line is
that this really ugly new regulation was put in place as a wholesaler protection
act..
Click here to read the article.
Ohio has Botched the Wine Laws Again!
by Nick Anthony, Akron
"The Ohio Wine Producers Association and Ohio's Wholesale Beer and Wine
Association are DEAD wrong. This type of legislation will ultimately hurt the
wineries they represent by prohibiting Ohio's wine lovers from purchasing
limited-edition bottles from ANY state except Ohio. Real wine lovers want BOTH."
Click here to read the entire article.
Stomping on Consumer Choice...
The Toledo Blade
FREEDOM of
choice in Ohio was needlessly trampled Monday when a law went into effect
banning direct wine shipments from larger wineries, a law that serves no one
except the state's greedy Wholesale Beer and Wine Association.
Two years ago, the U.S. Supreme
Court ruled that states had to treat in-state and out-of-state wineries equally.
This led to the voiding of an Ohio law prohibiting out-of-state producers from
shipping directly to Ohio consumers. Ohio's wine connoisseurs began ordering
online, joining wine clubs, and visiting wineries on vacation and having a few
bottles shipped home.
It also led to the ire of the
wholesalers' group, which saw its stranglehold on wine distribution slipping and
has been agitating to put a cork in the practice. At stake for the wholesalers
is the markup (at least 33.3 percent according to the Cleveland Plain Dealer) it
gets on the price of every bottle it distributes to restaurants and stores,
which tack on as much as another 50 percent.
Bowing to pressure from this
special-interest group, the General Assembly slipped into the state budget, with
no public discussion, a measure to stop direct shipments to Ohioans from
wineries producing more than 150,000 gallons per year. Curiously, the
150,000-gallon cutoff exempts all Ohio wineries from the ban. Indeed, most of
the nation's 4,000 wineries produce less than 150,000 gallons per year, but that
is of little comfort to fans of the grape since the top 50 wineries bottle 87
percent of the wine produced in the United States, according to the Web site
freethegrapes.org.
Click here to read the rest of the story.
Wineries
Could See Backlash From Law
To the Republicans controlling the legislature: What happened to the
party that believed in free and fair competition as the best way to give
consumers better choices at lower prices? To Gov. Ted Strickland: Where was your
line-item veto pen and your promise to end pay-to-play politics in
Ohio when this bill hit your desk?
Read more.
Quietly
Crafted Law Favors Ohio Wineries
So stealthy was the maneuvering to maintain the three-tier system that
even one of the lead architects of the bill, state Rep. Matthew J. Dolan, a
Republican from Novelty, says he didn't notice key word changes made in the
Senate finance committee that greatly expanded the protections afforded the wine
industry. Dolan, who organized the 2006 meeting of wine-industry officials, said
he thought the bill prohibited large wineries only from
selling directly to retailers, not to consumers.
Read more.
Ohio Consumers Lose...
by Jim Gordon, editor Wines and Vines
magazine
"My home state of Ohio has taken one giant leap backward, restricting Ohioans’
access to direct-shipped wines from out of state. Effective today, citizens from
Akron to Zanesville and everywhere in between can no longer order wine delivered
direct to their homes from out of state wineries that make more than 150,000
gallons (63,000 cases) a year.
This rules out the largest wineries
but also a lot of medium-sized high quality wineries, too, whose products are in
high demand. To me, it sounds like Buckeye-staters can no longer order wine
directly from biodynamically farmed Benziger Family Winery, or single-vineyard
Merlot from Duckhorn Vineyards, or Petite Sirah from Markham Vineyards.
Mark Fisher, probably the pre-eminent
Ohio wine blogger, has been on this topic, and
reading his post today it’s starting to look like a scandal (my word, not
his). Legislators are saying they didn’t understand the bill. Or they didn’t
read it. It had poor wording and outright mistakes, like a section that said
consumers were limited to no more than 24 9-liter bottles of wine per year for
direct shipment. Most people think they meant 9-liter cases, which are the
standard dozen of 750 ml. bottles"
click here to continue reading
The Enquirer - Ohio takes step backward by again stopping
wine-to-consumer shipments
One step forward, then one step back.
On Monday, a new law takes effect that will cut off Ohio wine lovers from
continuing to buy wines directly from many mid-sized wineries throughout the
United States.
click here to continue reading
Ohio watchdog group criticizes wine-shipment ban. Limits on
large wineries start Monday.
Columbus State senators who struck a behind-the-scene deal to
ban large wineries....
click here to continue reading
Free the Grapes: Ohio Wine Lovers to be Cut-off October 1
September 27th, 2007
Free the Grapes! just pushed a
press release about Ohio that condemns the new laws and calls for consumer
action. Below are a few excerpts.
A new law effective Monday,
October 1 will prevent Ohio wine lovers from continuing to purchase wines
directly from many popular mid-sized wineries, according to Free the Grapes!
During the closing stages of this
year’s budget process, an amendment was slipped into the budget bill that
prohibits medium and large wineries and wine companies whose total production
exceeds 62,500 cases from shipping wine directly to Ohio consumers.
Additionally, the law creates a
potentially unworkable system that may scare eligible wineries from shipping
any wine to Ohio consumers. The bill sets a 24-case annual shipping limit per
“family household,” rather than an annual limit per winery, per individual, as
is common in most states.
Click here to read the full press release
Ohio State uncorks law limiting wine sales
Wednesday,
September 26, 2007
Cleveland
Plain Dealer Bureau
Columbus- Jack
West likes a nice bottle of California wine now and then. For the last few
years, the Chagrin Falls man has belonged to the Merryvale Vineyards' wine club,
which ships him four bottles every couple of months.
But beginning
Monday, because of a new state law lobbied for by the state's powerful Wholesale
Beer and Wine Association, West's shipments will stop. And so will deliveries
for thousands of other Ohioans who order wine from out of state.
Click here to read the story
"You Will Not Drink Any F*$king Merlot! Ohio slyly changes wine-shipping
law." Click here.
Big Business Screws the Ohio Wine Customer. Click here.
THE OHIO CONSUMER LOSES!!!!
Many out of state wineries will cease shipping to Ohio.
Mark Fisher (Dayton Daily News):
Seven weeks ago, I posted an entry entitled
New wine laws dropped into state budget bill with little examination or
debate, attempting to raise the alarm of sorts that Ohio legislators
were poised to slip into law, very quietly, some new language concerning
wine shipping. The legislators succeeded in their efforts: the new language
was incorporated into the state’s budget bill and approved with little or no
scrutiny, let alone analysis.
Well, the
fallout is now being felt. Take a look at
this entry from ShipCompliant Blog entitled “Ohio Adopts Restrictive Permit
System”. Wineries such as
Paloma Vineyards are
copying Ohio customers who have previously purchased wine from the winery on
the warning letter of sorts, which reads:
On June
30th, Ohio Governor Ted Strickland signed the fiscal year 2008-09 budget
bill. Similar to the current legislative maneuvering in Wisconsin, this
was an unusual development to see wine shipping provisions inserted into a
state budget bill. As we reported earlier, the law changes Ohio’s court
ordered open status for shipping wines to a limited/direct permit shipping
state. This bill presents a number of issues. First, the capacity cap
restricts wineries that produce more than 150,000 gallons (roughly 63,000
cases) annually from receiving a permit. Additionally, the following
sentence in the bill has everyone scratching their heads. Sec. 4303.233.
No family household shall purchase more than twenty- four cases of
nine-liter bottles of wine in one year. What exactly does “family
household” mean? Did they really mean to say “nine-liter bottles”? I don’t
think that any family in Ohio would ever really purchase twenty-four
Salmanazars in one year, but how would one convert that into standard 750
mL bottles? Is this a Massachusetts/Indiana-style volume limit where the
limit applies to the household across all wineries? If so, how could a
winery in California possibly know how much volume has shipped to their
Ohio customers from other wineries across the country? Finally, does one
year mean one calendar year or any rolling 365 day period? Hopefully Ohio
will answer all of these questions very clearly. If they don’t, most will
likely choose not to ship to Ohio given the uncertainty around shipping
the 25th “case”. The new law is set to take effect 90 days after being
signed, in this case September 28th, but the Division of Liquor Control
may push this to October 1st. Stay tuned for more information once Ohio
promulgates or clarifies these rules.
Oh great,
now we have newly minted laws that have the very entities being regulated
“scratching their heads” in confusion.
Does
anybody think this will end well?
http://shipcompliantblog.com/blog/2007/07/30/ohio-adopts-restrictive-permit-system/
Also see
Mark Fisher's Blog:
http://www.daytondailynews.com/wineblog
Jim
Fearing's letter: **Please note: The Ohio Wine Producers Association is a
members only organization that does not represent all the wineries in Ohio.
The members pay dues to belong. The organization that does represent all the
Ohio wineries is a taxpayer funded body called the Ohio Grape Industries
Program (OGIP)
Recently,
the Ohio Legislature enacted a law that, depending on how it is
interpreted and enforced, may effectively ban direct sales of wine from
producer to consumer, except what is bought at the actual winery. This ban
is already effecting sales both within and without the state. People who
are in wine clubs that ship a bottle or two every month were abruptly cut
off by this legislation. The law was enacted in near secret and was
quietly attached to a budget bill. I think we can prudently ask what the
source of urgency was to so pass such legislation.
The Ohio
Wine Producers Association** is fond of passing off that the Ohio wine
import ban is all about protecting Ohio jobs. The OWPA does not specify
who's or how many. This concept is expressed in sound bytes and other
brief, unqualified, statements that imply more than they say.
For this
argument to have merit at least three things need to be considered.
First, is the assertion about jobs true or provable and does the
legislation NET more jobs than it eliminates? Secondly, if the first
assertion lacks enough evidence to be compelling, how can we justify the
government stepping in and smashing the free market? And lastly, is this
notion of government enforced jobs protection consistent with other
actions, or lack thereof, by the state?
First, I
would challenge the Ohio Wine Producers Association to produce economic
studies indicating what jobs have been lost because of direct shipment and
where and over what period of time these jobs were lost. I would caution
them to also include an unbiased prediction of jobs lost in wineries here
in Ohio because of the ban. We already know that wineries INSIDE Ohio are
now afraid to ship wine, even within the state, because of the Ohio Liquor
Control Board's ambiguous and potentially far reaching interpretations of
the law. Further, jobs will be lost as other states ban the import of
Ohio wines also because of the ambiguity in the law. And lastly, Ohio
wines are on the rise in quality and national respect, can we get a handle
on the potential future markets lost because of this protectionism? I
suspect the OWPA has no such studies.
Secondly,
is it appropriate for the government to step in at this stage and risk
smashing the direct sales market for Ohio wines? Some economists believe
that government interference is always wrong and always damages the free
market. Although I have some sympathy for that notion, I do not
necessarily agree with it. But thinking about that does point us in an
interesting direction. The only place I think regulation might be needed,
and I think most would agree with me, is in the case of rogue monopolies
or groups that function like monopolies. If we look at all sides of this
debate we see that, on one side we have the Ohio Wine Producers
Association, the Beer and Wine Distributers, and retail wine interests.
On the other side we have small Ohio farms who grow grapes and make wine.
Clearly, this legislation was not designed to regulate monopolies, this
legislation was designed to protect monopolies.
Lastly,
we need to consider if this action is somehow consistent with other
actions taken to protect Ohio jobs in the wine industry. I cannot imagine
wineries in Ohio, most of whom are small, have lost jobs by shipments from
out of state wineries directly to consumers. Ohio wineries use the direct
sales approach to circumvent the rigid mark up structure used if they go
through the distributer-retail system. In that system they get perhaps
33% of what they do if they sell direct to the consumer. Most Ohio
wineries are barely surviving, they simply cannot do so if they have to
loose 66% of every sale. In fact, the direct sales model will help our
wineries as people both in Ohio and outside it try our wines. Direct
sales is a potential way for the small winery to be rewarded for crafting
excellent wine. Direct sales is a great tool to get our fledgling wine
industry to add jobs in agriculture. We know this to be possible, for
nearly a century Ohio was the number one national exporter of wine, and in
fact the American Wine Industry was founded in Cincinnati in the 1820's by
Nicholas Longworth. Ohio could do this again because we indeed have the
climate and soil. This could net 1,000's of jobs if it was allowed to
take place. If our state government was interested in jobs they would
take a look at retailers who discount daily under $4 per bottle, prices
that are close to the cost of the label, cork, glass, and trucking. Such
retailers are using wine as a loss leader, something I cannot imagine is
good for jobs in Ohio. This legislation was obviously not part of a
consistent approach to jobs protectionism at all, nor is it clear any
action was needed on such an urgent basis.
Wineries
do not need our state’s interference under the guise of “protectionism”.
The scariest words of all are “trust me, I am from the government...”.
Wineries need the state off their backs so they can continue to farm
grapes and make excellent wine. We need to call on our legislators to
repeal the ban.
WISCONSIN SIMILARITIES TO OHIO. Just as in Ohio, an amendment was stuffed
into a must pass budget bill with no public scrutiny. Wake up Ohio!
Wis.
Wineries: New Rules Would Hurt Biz
By RYAN J. FOLEY 06.29.07, 5:08 PM ET
A budget amendment that would prevent Wisconsin wineries from
selling their products to retailers would hurt the state's growing
number of wineries and make their wines harder to find, critics said
Friday.
The amendment backed by Sen. Russ Decker, D-Weston, and beverage
distributors was made public as part of hundreds of pages of changes
to the budget shortly before the Democratic-controlled Senate approved
the document Tuesday.
Under the changes, wineries would have to hire distributors to sell
to retailers. Critics say the added step would drive up the cost of
Wisconsin bottles and hurt wineries' profit margins.
Winery representatives also said the plan would hurt their ability
to ship wine directly to consumers by requiring them to obtain
expensive permits and fill out extensive paperwork.
Tim Lawrie, owner of Simon Creek Vineyard and Winery in Door
County, called the legislation "probably the most anti-competition,
anti-small business, political payback piece of politics that I've
ever seen."
The regulations would hurt his ability to expand and stop him from
selling directly to two local stores, he said.
"Something like this is going to start driving wineries out of
business," Lawrie said. "If this was in existence when I started the
winery five years ago, I probably wouldn't have done it."
Bill Nelson, president of WineAmerica, a trade group that
represents wineries in 48 states, called the plan "bad government at
its worst." He said the rules would stunt the growth of the state's
wineries, which have tripled in number to 41 since 2000.
"Putting something like that in the budget with no scrutiny and no
evaluation of the effects on Wisconsin wineries is outrageous," he
said.
Search www.winebusiness.com
for the rest of the story. |
TIME IS ALMOST OUT!
We have been working diligently to insure Ohio has a fair and
constitutional solution to the direct shipping issue.
Last Tuesday June 5th, over the objections of our Senator Tom Niehaus and
Senate Finance Chair Carey, Senate President Harris attached a wine
amendment to the budget bill.
The amendment, if implemented, will eliminate your ability or order wine
from medium and large wineries. Orders from small wineries are permitted,
but with many "only in Ohio" restrictions and such bureaucratic excess
that in fact little wine will likely be shipped
The bill's amendment has been reviewed by WineAmerica, a national winery
trade organization. We were told that at least some of their
recommendations had been implemented. They were not.
The budget bill (HB119) is due to be voted on Wednesday the 13th of June.
After that it will go to conference where changes can be made.
Now is the time to make your views known to your elected representatives.
At a minimum, all of WineAmerica's recommendations should be inserted into
the amendment in conference. At best, the amendment should be pulled and
submitted as standard legislation.
The wholesalers, a few Ohio wineries, and the Senate President have
demonstrated a disregard for wine consumers and the legislative process
which should not go unchallenged.
Yesterday we sent
the following email to Ohio wineries. The amendment did not make it into the
House must-pass budget bill. Now we are hopeful it won't make it into the
must-pass Senate bill, without input from wineries, consumers, and retail
outlets.
To: Ohio Wineries
As most of you know,
in July 2005 based on the Granholm decision and pending remedial
legislation, the state of Ohio agreed in the Stahl case to open up the state
to direct sales from out-of-state wineries.
In response, the beer
and wine wholesalers (WBWAO) have proposed an amendment which strips A-2
permit holders of their ability to sell directly outside of their tasting
rooms. In adding two new B2-a and S permits, they appear to return the
provisions for direct sales. The problem here is that the B2-a and to a
lesser degree the S permit are at high risk of being thrown out by a Federal
court... perhaps before the amendment even becomes law.
If this happens Ohio
will be in federal compliance and WBWAO may be ecstatic, but as in Virginia,
Ohio wineries will be devastated. As an industry we cannot afford the loss
of our crucial marketing privileges.
Please join us in
contacting your legislators and Representative Dolan to let them know that
you want this amendment proposed as standard legislation, subject to review,
comment and testimony, rather than having this stuffed without much scrutiny
into a must-pass budget bill.
Time is of the
essence, the Senate version of the budget bill (HB119) is due out June 1st.
Your contact
information for your state representatives and state senators can be found
on the following link.
Representatives: (by
name)
Senators: (search by
name or by your zip code)
You may be
familiar with the wine distribution and sales amendment which was (nearly)
inserted into a 3300 page must-pass budget bill (HB119). This amendment is
essentially a creation of the wine and beer wholesalers (WBWAO) represented by
Andy Herf and twelve Ohio wineries represented by lobbyist Belinda Jones. The
Ohio Wine Producers (OWPA) board was also apparently involved. Other wineries
(ours included), members of the retail trade and wine consumers were left in
the dark. This amendment was to be inserted into HB119 by House Finance Chair
Matthew Dolan with no chance for any testimony or debate on its merits.
As to its merits,
though I have yet to see the latest amended version of the amendment, I will
say that in my opinion, few wineries will be willing or able to ship wine to
Ohio if this becomes law.
I called
Representative Dolan's office this A.M. (April 23) and after some discussion
arrived at the conclusion that they too have been kept in the dark. They were
not aware that large segments of the wine industry and other interested
parties such as fine wine consumers had not been involved in vetting this
legislation. They want and need to hear from you on this topic and can provide
you with copies of the current version of the legislation. I believe that Rep.
Dolan and his aide Claire want to do the right thing by everyone.
I am less
sanguine about the old guard of the Ohio Wine Industry. I am frankly baffled
why they have apparently aligned themselves with the interests of the
wholesalers and against the interests of their customers. Perhaps Belinda
Jones can answer this question and any others you may tender.
I am optimistic
that all parties will ultimately be able to agree on a compromise bill, but it
won't be pretty or easy getting there. Your input will accelerate the process
not inhibit it.
An update: As of
April 25 (PM) the word is that the amendment will indeed be considered as
separate legislation.
In Vino Veritas
Ron
Contact
information:
Representative
Matthew J. Dolan
Vern Riffle, 77 S. High Street, 13th Floor, Columbus OH 43215-6111
614-644-5088
Fax: 614-719-6998
Email: district98@ohr.state.oh.us
Lobbyist:
Belinda Jones
Capitol Consulting Group
37 West Broad Street
Suite 820
Columbus OH 43215
614-224-3855
Fax (614) 224-3872
Email:
bjones@capitalconsulting.com
____________________
Click
here to read the Common Cause
report about Campaign Contributions to Ohio Legislators from the Beer and Wine
Wholesalers.
"Under the Influence"
A profile of the Wholesale Beer and Wine Association of Ohio: How they have
influenced legislation and used the increased campaign finance contribution
limits to their advantage.
__________
AP story Sunday April 22, 2007
Ohio Wine-sales amendment called flawed.
Click
here to read the story.
__________
New winery legislation hurting small wineries in
Virginia. Don't let it happen in Ohio!
http://www.charlottesvillenewsplex.tv/news/headlines/3281831.html
___
This week, the state of Minnesota agreed to a consent judgment
acknowledging that the internet and advertising ban is unconstitutional and
agreeing to stop enforcement of that portion of the law. Specifically, the
state said that it could not prohibit wineries around the country from
accepting internet orders from Minnesota consumers, nor could it prohibit
wineries from truthfully advertising the direct sale of wine to consumers.
This means that if you live in Minnesota and are interested
in Kinkead Ridge wines, we can ship directly to you.
*****
OHIO
HB 306/SB 259 FACT SHEET
If you care about the free flow of wine at fair prices, you may want to
consider writing a letter of support for these bills. For additional
information, check out the actual bills on the Ohio.gov web site or check
www.fairwinelaws.org.
Q. Will this legislation reduce wine prices?
A. These bills abolish fixed price markups at the distributor level, which
will require wholesalers to compete on price for business. Virtually all other
states have deregulated this tier and wine prices have tumbled as a result.
Kentucky is a good example of how far wine prices could drop with this
legislation.
Q. How will this legislation affect wine availability?
A. These bills repeal the franchise laws, which make it nearly impossible for
a winery to terminate a relationship with a distributor. Often wineries are
stuck with a distributor who either won’t stock or won’t promote some of the
winery’s most interesting wines. The wines never make it to the shelf and
consumer choice suffers.
Q. Will this bill hurt my favorite wine shop?
A. Both bills (identical) protect the small retailer by specifically
prohibiting quantity discounts for large retailers. Wal-Mart, Kroger, etc.
will pay the same wholesale price as your corner wine shop. A provision allows
for the issuance of credit to retailers, which should allow them to put more
wine on shelves while their minimum markup is preserved. The little guy should
benefit.
Q. How will this change affect Ohio wineries?
A. Some Ohio wineries feel that reduced wine prices will make them less
competitive at their price points. Wineries in other states with progressive
winery laws have prospered under open market conditions. Ohio wineries should
be able to compete with anyone if they are allowed unfettered direct access to
both wholesale and retail customers.
Q. Will this change cost wholesaler jobs and can it hurt Ohio’s economy?
A. The history of deregulation and monopoly breakups is instructive. Think of
the effect of the breakup of AT&T or the deregulation of airlines. Adjusted
for inflation, long-distance rates and airfares are a fraction of what they
once were. There may well be some short-term turmoil, but ultimately
competition will force wholesalers to become more efficient and consumers will
have more money to spend which will create a surplus of jobs elsewhere in the
economy. That’s the way the free-market works.
Q. Does this legislation do anything to encourage underage drinking?
A. Since these bills only affect the distribution chain, they have no impact
on this problem.
Q. Do these bills have anything to do with the issue of “direct shipment”?
A. This legislation does not specifically address the direct shipment of wine
from winery to customer. It is however, similar in spirit, in that it
modernizes and liberalizes liquor law to the benefit of the wine consumer and
the general public.
Please read this article from the Cincinnati Post about direct shipping.
The Wine Wars
Available on line at
http://news.cincypost.com/apps/pbcs.dll/article?AID=/20060302/EDIT/603020303
It wasn't long after they arrived
in the region we know today as Greater Cincinnati that settlers discovered
that its rolling hills, climate and soil were good for growing grapes.
In time vineyards became familiar
sights, and the region acquired a national reputation for the quality of the
wine it produced.
(One of Cincinnati's leading
citizens, Nicholas Longworth, had much to do with that. He established
vineyards across the city and, in 1830, the history books say, bought up much
of what we know today as Eden Park and Mount Adams - he called it the Garden
of Eden - and planted Catawba grapes. From them he produced a sparkling wine
that was good enough to inspire poet Henry Wadsworth Longfellow to write a
tribute asserting that "the richest and best is the wine of the West that
grows by the beautiful river...'')
A blight that struck in the 1850s,
however, destroyed the region's wine industry. Vineyards in upstate New York
and later California came into vogue, and local farmers discovered they could
more profitably use their land for development, tobacco or other crops.
Today, wine-making is making a
comeback. Small wineries have been launched throughout Ohio, Kentucky and
Indiana. Kentucky alone has 32 licensed wineries and this year expects a 25
percent increase in vineyard acreage, according to the Northern Kentucky
Vintners & Grape Growers Association.
Some of this represents the work
of farmers looking for an alternative to tobacco as a cash crop. Public and
private economic development interests are also trying to help, hoping to see
enough wineries open to create not just a boutique industry but also a bona
fide tourist attraction.
As it happens, the wine industry
has become a matter of legislative interest in both Columbus and Frankfort.
Last year the U.S. Supreme Court ruled that states must treat in-state and
out-of-state wineries the same with regard to direct shipments to customers.
Both Ohio and Kentucky, it appears, will have to amend their laws sooner or
later.
In both states, however, the
debate is focusing more on the competing desires of big-box retailers and
politically-connected distributors than it is on the welfare of in-state
vineyards or consumers.
In Ohio, Rep. Bill Seitz, a
Republican from Green Township, found himself facing a packed hearing room
when he offered sponsor testimony on a bill that would dismantle part of the
state's archiac regulatory framework and eliminate at least one layer of its
mandatory markups on wine. So far, it's unclear what direction the General
Assembly will take.
In Kentucky, the Senate has passed
and sent to the House a bill that would, among other things, open the door to
direct shipments by out-of-state wineries to Kentucky residents. But the
measure is still quite restrictive, and as it stands is drawing vehement
opposition from Kentucky's small wineries because it would take away their
right to deliver their product directly to stores or restaurants - something
they've been able to do for the last decade.
According to the Northern Kentucky
vintners group, the objection involves more than the hassle of trying to
convince a distributor to handle a small volume. (Most Kentucky wineries, the
association says, produce fewer than 2,500 cases a year.) The real problem,
growers say, is that in order to get a bottle of wine into a retail store at a
modest price they would have to be willing to sell it to a distributor at a
steep discount. If they make the delivery themselves they can realize a better
return and still get the product on the shelf at the target price.
The small growers have been able
to convince a few lawmakers - among them Sen. Katie Stine, the Fort Thomas
Republican - to push for continuing to allow direct shipments by small
wineries to retailers and restaurants. But so far the big players seem to be
carrying the day.
That's just wrong. Small wineries
should be free to ship their product themselves, and price it as they see fit.
And customers should be able to buy from them as well, either on location or
via a catalog or the Internet. It's not the business of government to
artificially inflate the price of consumer goods.
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Senate Uses Deception to Insure Passage of SB82
Sponsored by Kentucky Wholesalers and
Liquor Barn
February 6, 2006. Mark
this date down as a win for money and a loss for democracy for
Kentuckians. February 6, 2006, is the day the Kentucky
Senate voted on SB 82, one day earlier than the date reported to the
citizens of Kentucky. This was done to mislead well-meaning
senators that there was no opposition to this bill. This was
done so Andre Brousseau and Jerry Kushner, the only supporters of SB
82, could be represented as the voice of the Kentucky grape and wine
industry in favor of this bill.
This was done so your voice would not be heard in
Frankfort.
For politicians and lobbyists this was business as
usual. For Kentucky farmers and small business this was another
loss in Frankfort. The monopoly granted to the wholesalers
insures their success; they do not need the help of Frankfort, small
Kentucky farmers and business do.
Contact your state representative in Frankfort (
http://www.lrc.ky.gov/Whoswho/whoswho.htm) and tell them you are
opposed to SB82.
The wholesalers have hired a pack of lobbyists and
have paid a great deal of money to have their voice heard in
Frankfort. As you can see they are doing a very good job.
The Kentucky Vineyard Society, The Washington County Growers
Association, and The Northern Kentucky Vintners and Grape Growers
Association, are working hard to oppose SB 82. All of these
organizations are working with volunteers who are taking time away
from their work and families to stand up for the Kentucky wine and
grape industry. We do not have any lobbyist or piles of money to
spread around Frankfort. The one thing we have is the support of
the citizens of the state and we are forced to ask you once again to
contact your representative and express to them that you do not
support SB 82, and that you do support HB 507.
What we hear in Frankfort is Kentucky wineries are
too much trouble. Kentucky wineries are unprofessional,
unreliable, poor business people who are not worthy of the support of
the government and large business of Kentucky. The ABC is not
willing to consider compromise legislation proposed by Kentucky
wineries because they do not have the time to deal with additional
regulations. If Kentucky wineries are forced to go through
wholesalers the ABC will not have to bother with the wineries at all.
Liquor Barn testified that they do not have enough time to deal
directly with Kentucky wineries either, they are willing to sell
Kentucky wine but do not want to deal directly with Kentucky wineries
because they are too small and do not live up to the professional
standards of Liquor Barn. Liquor Barn says let the wholesalers
deal with Kentucky wineries. Of course there is no guarantee
that the wholesalers will handle Kentucky wine, in fact the Kentucky
wineries have been saying along they are too small and need to deal
directly with retail stores and restaurants. If Liquor Barn does
not want to deal with Kentucky winners then they do not have to sell
Kentucky wine, there are plenty of retailers that are glad to deal
with Kentucky wineries and support this industry.
The wine industry of Kentucky has more friends in
the House of Representatives and we will get a fair hearing there.
Representatives Rick Rank, Tommy Thompson, and Ruth Ann Palumbo are
cosponsoring HB 507 on our behalf and are working hard to educate
their fellow representatives. In additional to Representatives
Rand, Thompson and Palumbo we have been in contact with many other
Representatives who realize that this is a complicated issue that
requires balance in how the issue in handled by the state of Kentucky.
They are willing to think in realistic terms as to how the wholesalers
of Kentucky rights need to be preserved and at the same time think in
realistic terms as to how the rights of Kentucky wineries need to be
preserved.
You did a great job in contacting your senators, we
are sorry that much of your effort was stolen by dirty tricks – this
will not happen in the House. So we have to ask you to please
call your representatives, they want to hear from you.
http://www.lrc.ky.gov/Whoswho/whoswho.htm--
VOTE NO to SB82!
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WineAmerica
News Brief
"News when it
happens"
MA Governor Vetoes
Shipping Bill
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On
November 14, the Massachusetts House approved a bill that would allow
small wineries producing under 30,000 gallons annually to ship wine
directly to consumers. While the legislation is a step in the right
direction, supporters of direct shipping argued that the size limitation
was too restrictive and would have hurt many of the state’s wineries.
Yesterday, Massachusetts Governor Mitt Romney vetoed the bill, saying
that it was anti-consumer and restricted their choices in wine. He
stated that the proposed law "would benefit a cartel of liquor
wholesalers that do not want to give up their monopoly on the
distribution of wine." Furthermore, he noted that the "bill does not
give wine lovers the opportunity to purchase the bottlings they want,"
and that "it creates artificial barriers to protect Massachusetts
wholesalers at the expense of a free market." Please click on the ‘read
more’ link to view the Governor’s press release on his decision.
It now falls to the state legislature to decide when and how to
revisit this issue. Though this decision leaves Massachusetts without
shipping regulations, it is progress that a bill has been vetoed because
it does not do enough to open up a state to shipping.
We will continue to keep you updated as this issue progresses. Please
let me know if you have any questions.
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WineAmerica News Brief
"News when
it happens"
OHIO OPENS
TO SHIPMENTS FROM OUT-OF-STATE WINERIES
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On July 19, a U.S. District Court Judge for the Southern
District of Ohio signed an order enjoining the State from
enforcing its prohibition against direct-to-consumer shipments
from out-of-state wineries. The order was the product of
negotiations between the Ohio Attorney General and the lawfirm
of Epstein, Cohen, Donahoe & Mendes to settle pending direct
shipment litigation.
The Ohio order means that out-of-state wineries can begin
shipping immediately to adult residents of the State with no
restrictions whatsoever. However, recipients of such shipments
are required to complete an Ohio Excise and Use Tax Filing, and
to pay all applicable taxes.
Now that the Supreme Court has ruled that states must treat
out-of-state wineries in an evenhanded manner on the issue of
direct shipment, more such administrative orders can be expected
in the next few months from so-called "discriminatory states"
seeking to settle costly and unwinnable litigation. The State of
Florida is rumored to be close to reaching such an agreement.
Orders of this type are not uncommon in the wake of a Supreme
Court decision, particularly when state legislatures are out of
session, as are many at this time of year.
In all probability, the Ohio Legislature will debate
legislation to establish new shipment rules when it reconvenes
in September, and the July 19 court order increases the
liklihood of this. A major effort is underway to get the State
to adopt an interstate shipment law, similar to the laws
recently enacted in Connecticut and New York.
David P. Sloane
President
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