Myth of the Family Winery:Is there another Agenda?

Posted by Richard Beaudin on Dec 16, 2009 in Featured Article, Wine Issues | 3 comments

Yesterday I read a very interesting report (December 2009) from the Marine Institute (Alcohol Industry Watchdog) entitled: “The Myth of the Family Winery: Global Corporations behind California Wine”. Even as a passionate wine enthusiast I would have to agree or at least acknowledge that many of the  statements in the report are accurate.

• As an example, a very high percentage of production of wine from California is controlled by a small number of global organizations (won’t list them here… you can easily identify them in the report).
• I must also acknowledge that these same organizations do in fact fund lobbyists across the nation (and I assume abroad as well) to try and keep the status quo from changing. This of course is also done by powerful organizations across all types of business as a way to support continued growth and profitability – not perhaps humane, fair or reasonable, but still legal.
• Again I have to agree that these large corporations are not only wine focused, but are usually also well invested in beer and spirits.

So where do I differ with the report?

As with any facts, the key is in understanding the background and the numbers to the degree that one has an accurate picture by which to evaluate. In this case, the facts are presented from one point of view; that is, from that of an “Alcohol Industry Watchdog”.

So my humble perspective:

• Yes… alcohol in general is controlled by a few very large corporations. This is true today and it was true at the turn of the century in America, one reason why wine was included within Prohibition. In both instances the main focus is and was on profitability. However, wine is produced also by hundreds of dedicated grape growers and winemakers who have a passion for their craft and who are firm believer’s as am I that wine is and should be a part of your everyday life – not as a beverage with which to binge, but as an integral part of a healthy diet.  Yes… there are huge conglomerates in the wine industry, but there are dozens and dozens of family run wineries that are under constant financial pressure due to the economy and the difficulty of getting their product to the consumer under the current 3-tiered system.  These are very hard working individuals and families who are not wealthy, take great pride in their work, and also provide employment, pay taxes, and produce a quality product.
• Yes … these very large corporations do fund lobbyists .. but not fully as the report suggests. While these large corporations own the majority of production, they are also distributors of the product.  High volume production in any industry requires tiered distribution to support the large volumes that must flow from producer to consumer. Small producers are often shut out of distribution since there isn’t sufficient volume to interest the large volume distributors. So yes there is large scale funding and lobbyists, but not to support direct shipments or alter 3-tiered distribution. One of the issues before Prohibition was the fact that the producters (yes.. again very large scale corporations) controlled the flow of alcohol, often putting pressure at the retail level to the point of exclusivity as a way to stymie the competition. The system put in place after Prohibition (3-tiered system) was engineered to avoid this from happening again. However, over the last 70 years since the repeal in 1933 the situation has changed whereby distribution is now the controller not the producer. I will leave it up to the reader to determine which is better.

In reality, the United States has been debating the role of wine since the mid 19th Century when Nicolas Longworth worked to make wine a part of daily life (keep in mind drinking water at the time was very hazardous to your health with the alternative mostly distilled liquour) and Samual Carey, a strong advocate of temperance, insisted wine was no different than any other alcohol.

As with many aspects of life, the “truth” for the majority of people likely lies in between.

QUICK UPDATE:  According to Linda Reiff, executive director of Napa Valley Vintners, “The strength of the family business is evident in Napa Valley — 95 percent of our appellation’s wineries are family owned. And, yes, 70 percent produce less than 10,000 cases annually and 60 percent less than 5,000 cases annually.”

For more on Napa Valley, its wineries, and the last 10 years, read “Wine Tales of the Decade”.wine

Welcome to the 21st Century .. or not?

Posted by Richard Beaudin on Jun 8, 2009 in Wine Shipping & Distribution | 0 comments

All right … this ever happened to you?

Let’s say its your child’s birthday and you want to purchase a special toy for him/her. You go to your local Toys R Us and they tell you that they don’t carry it in your state, but you can purchase it at a store in another state.

You go home, get on the net and look up the store. You find the toy you are looking for and put it in your shopping cart. You enter your information and hit the “buy” button. Instead of providing you a comfirmation page you get the following message:

“We are sorry but our records show that this toy represents the 13th you have purchased from us over the past year and your state only allows you to purchase one dozen yearly. Please buy from us again after (the date)”.

That’s nonsense, rediculous you say … well not so fast. This is one of the many rules in place or being put in place in many states  where you can purchase as much wine from an in state winery as you would like, but you are limited when purchasing from an out of state winery.

Sound a bit unfair? Or, perhaps do you smell private interest or influence?

Unfortunately since the repeal of Prohibition in 1933, states were given the right to setup their own rules and regulations when it comes to alcohol. Frankly, many of the restrictions made sense at that time based on the illegal activity prevalent during Prohibition and the state of distribution, licensing and administration.

I am sure you have heard the old adage “if it ain’t broke, don’t fix it”. Well here we have a situation where for the wine consumer it is often broken both in terms of cost and choice, but for those involved in distribution monopolies and/or those that have businesses that thrive on the staus quo, it is working  just fine!

One recent example is a new wine shipping law   in Tennessee (Senate Bill 166) that would allow out-of-state wineries to ship up to 3 cases per year if they obtain a $300 non-refundable application fee and then a $150 annual permit fee. Tennesee is not alone in setting fees and limitations on shipments of wine or the size of the winery.

If availability (volume) is the issue, why then isn’t there a limit on in-state purchases from wineries or retailers?

Is the limitation in place to safeguard state revenue? Nope.. Taxes can’t be an issue either since the out-of-state wineries must be licensed.

Alright .. is it access? No not really since the state can mandate that all shipments must be signed for by someone over 21. OK … so perhaps the issue is that the delivery companies don’t have trained drivers? Not likely, most drivers have families to feed and are just as likely as any clerk in a retail outlet to safeguard their jobs.

My point: states are little by little opening up to the 21st century (internet) when it comes to wine sales, but we have an awful long way to go before consumers finally have freedom of choice when it comes to wine purchases, and the “it ain’t broke” crowd are working overtime to ensure it happens as slowly as possible.

There I go .. talkin’ up the grapes again!