Fermentation: The Daily Wine Blog

Important New Ruling For Wine and A New View of Alcohol Regulation

On September 3rd an important court ruling emerged out of a Federal Court in Illinois in the Case of  Anheuser Busch v. Schnorf (Download Illinois ruling). The ruling reiterated a holding implied in the Granholm v. Heald Supreme Court case and made explicit in the Costco v. Hoen case: States may not bar out-of-state alcohol producers from selling directly to retailers and restaurants if the same states allows its resident producers to sell to in-state retailers and restaurants.

The case resulted from the Illinois Liquor Control Commission earlier this year barring Anheuser-Busch, a Missouri company, from purchasing an Illinois distributor, holding a distributor license and thereby becoming its own distributor in Illinois...essentially, self-distributing. A-B claimed that by banning it from self distributing but by allowing two in-state Illinois brewers to self distribute, the state was violating the Commerce Clause of the U.S. Constitution by discriminating against out-of-state interests.

In fact, A-B relied primarily on the Granholm v. Heald Supreme Court decision to make its case.

In his decision, Judge Robert M. Dow, Jr. wrote:

"The result of this discrimination against out-of-state brewers is to restrict the ability of out-of-state beer producers to market and sell their beer on equal terms with in-state beer producers. Under Granholm, a state may not permit an in-state producer to operate at more than one tier of the state’s alcohol beverage licensing system or to bypass one or more of those tiers, without according the same right to out-of-state entities."

What's interesting about Illinois is that where wine is concerned it has on the books a law that allows wineries in-state and out-of-state that produce less than 25,000 gallons to self distribute up to 5,000 gallons annually. This law left two Illinois wineries that produce more than 25,000 gallons annually and thousands of wineries across the country that produce more than 25,000 gallons only able to distribute to Illinois restaurants if they use a distributor. This cap is nothing more than protectionism for Illinois wholesalers and my hope is that it will be challenged in the future.

Still the latest ruling is a reconfirmation that states are not given carte blanch under the 21st Amendment to do whatever they desire and there is no indication that at any time Congress or the American people intended states to have carte blanche where alcohol laws are concerned.

Current laws concerning alcohol are very complex and have been built up over the past 70+ years largely in response to bureaucratic inertia and response to powerful commercial interests. Courts have been critical in both bringing down laws that protect specific interests as well as propping up anti-consumer, special interest laws. In this case, fairness and commonsense and the Constitution were the victors.

Yet, one fundamental problem exists concerning state alcohol laws: Their basic structure was created in an era that looked nothing liked today's world. The business, logistics and commercial outline of the 1930s bares no resemblance to the 2010s. As a result, the current set of alcohol laws in the 50 states rarely accommodate in anything close to efficiency the needs of the marketplace. There needs to be a fundamental re-interpretation of the role of alcohol regulation and laws. I have an idea on that issue.

In my view, the 21st Amendment must be understood today as it was understood at its creation: as a vehicle for allowing states to allow or disallow the sale of alcohol. To this end, a state should have the right to regulate the sale of alcohol ONLY inside its own jurisdiction: inside its borders. It should not have the right to regulate how wine is sold OUTSIDE its borders. The three-tier system should be considered "unquestionably legitimate" if it concerns alcohol that is sold inside its borders and not yet in the hands of consumers. But a state should not regulate the way consumers, who are not part of the three tier system, obtain their alcohol. This means a state should not have any jurisdiction over consumers who choose to obtain their alcohol from out-of-state producers OR retailers. Out-of-state retailers and producers are not part of a given state's three tier system. And if a state does not prohibit the consumption of alcohol, it has no interest in where consumers get their alcohol. If a consumer in Texas wants to buy a bottle of wine from a California producer or retailer then that transaction is the concern of California, where the purchase took place.

This is a departure from the current system of alcohol regulation that has no place for the rights or needs of consumers, but rather is concerned primarily with tax collection and protecting and ancient regulatory system that supports very specific special interests. 

The ruling in Illinois is a good one for a number of reasons. It reasserts the importance of the Commerce Clause in relation to the 21st Amendment, it give more impetus to the relatively novel practice of "self distribution" and it reminds lawmakers and players in the alcohol regulatory system that a level playing field is critical.

Pale-Necks, Rednecks and Wine Quality

"I do not believe nature has any use for our democracies. Some things are better than others, and on of our functions is to guide our readers toward appreciation of these distinctions as gracefully a we're able."

This is Terry Theise, the great importer of wine, explaining his belief that quality is objective and can be discerned in wine. It is also Terry explaining that it is the obligation of the learned wine aficionado to tutor the less knowledgeable in a kind an gentle way.

I cam across this quote while reading through Theise's new book, "Reading Between the Wines" a new issue form the University of California Press that just goes to show that the ivory tower can churn out some pretty wonderful products.

But what Theise does not explain, as far as I can tell as of yet, is what philosophy of aesthetics determines how we can derive an objective criteria for determining quality in wine. Clearly, he's not convinced that "pleasure" derived from the drinking of a wine gets us toward a criteria for determining quality in wine:

"There are no 'invalid' moments of pleasure in wine. But there are higher and lower pleasures. Once you have graduated from the low you can always return. It's fun to return. You should return frequently, because it's good to stay in touch with your inner redneck."

Despite the downstream implications of possessing an "inner redneck", the fact remains that far more drinkers determine the value and even the quality of a wine based primarily on whether or not it gives them pleasure. Theise know this, yet he dismisses this tendency of the average drinker as philistinism. He dismisses it for what is surely the same reason nearly every critic, wine professional, winemaker, grapegrower, wine retailer and wine writer dismisses the simple "pleasure criteria" as too simple an approach to wine evaluation: They have developed a heightened level of discernment  where wine is concerned that they don't want to waste.

With a higher level of discernment, the non-wine redneck is able to do a number of things the average pleasure seeking redneck cannot. Among these things are:

-Detect and describe production faults in the wine
-Measure the length of a wine
-Determine the relative age of a wine
-Measure a wine against an historic model of its type
-Detect evidence of a region's terroir in a wine
-Discern and detect higher or lower levels of alcohol
-Detect the impact of vintage variation on a collection of wines

The list goes on and on. The point is that as soon as a motivated collection of people can discern more in a wine than the average person (because they care to), the next and most obvious step is ranking the importance of various characteristics wines might possess. This in turn inevitably leads to creating something of an objective outline for what constitutes quality in a wine.

But let's be clear about something. While Terry Theise and many others, including myself, obviously have adopted the notion that there are a set of factors that can help us delineate one wine from another based on its "qualitative" factors, these are subjective judgments.

No one can say with any degree of righteousness that to be of a "better quality," Chardonnay must exhibit some degree of acidity. No one can say with any guarantee that "fine" Bordeaux ought to have at least a bit of tannin. And no one can say with finality that "great" Red Burgundy ought to have some ability to age. All they can say is that these are the criteria and factors we have adopted to determine the qualitative differences in wines.

What is really interesting is that despite the Rednecks' proclivity to judge wine base primarily on the "pleasure" it delivers and not on whether it matches a pattern or principle or model, they are surely willing to admit that these models for quality they don't understand probably exist. There is no other way to explain the fact that "shelf talkers" that show up underneath wines on grocery and drug store shelves do indeed help sell those wines. The Rednecks, while not being able to judge the wines with anything like the same sophistication as the critic who is mentioned on the "Shelf Talker" underneath the wine, do appear to believe that there is some objective criteria that led the critic to bestow the wine with a score of 90 or with a description reading, "a beautifully crafted Zinfandel delivering harmony and intensity".

Of course the other side of this coin concerns the sophisticated wine drinker that has bought into the notion that wines can be judged objectively. If you've ever sat a formal wine tasting or judged a wine competition, you've likely heard a wine sophisticate say something like this, "While this is really an outstanding example of X, I simply don't like this style of wine."

The pale-necked wine drinker is admitting that while they believe in the notion of objective standards of quality, they return to hedonism where their own preference is concerned.

By the way, Theise's "Reading Between the Wines" is a pretty interesting work from a man who is as deeply involved and ensconced in the detail, romance, science and marketing of wine as you'll ever come across. It's well worth a read.

FTC Paper Says Wine Wholesaler Protection Laws Harm Consumers

Anyone familiar with "Franchise Laws" within the alcohol beverage industry will not be surprised to learn that in a working paper prepared by an attorney and economist for the Federal Trade Commission, such laws were determined to hurt consumers. Or, to put it as the authors of the Working Paper put it, such Franchise Protection Laws:

“are associated with harming consumers in the form of higher prices and reduced out-put”

Let me translate: protectionist legislation sought and obtained by wine wholesalers harms consumers. Who'd Have Thunk It?

First, let's understand what a Franchise law is. The FTC Working page has an excellent description of what a state Franchise Law does. Franchise Laws...

"make it extraordinarily difficult for suppliers to terminate their contractual relationships with wholesalers. These laws typically prohibit the termination of wholesaler except for  “just cause,” and set up elaborate administrative processes for proving “just cause.” Franchise protection laws may require that a demonstration of “good cause” include  revocation of a wholesaler’s license; bankruptcy or receivership of the wholesaler;  assignment for the benefit of creditors of the wholesaler’s assets; or failure of the  wholesaler “to substantially comply” with a “reasonable and material requirement imposed upon him in writing.”

In other words, if you own Chateau Joe and you contract with a wholesaler in a state that has a "Franchise Law" it is virtually impossible for you to leave your wholesaler for another if your wholesaler isn't selling your wine (yes, it happens).  In fact, the wholesaler practically has to go out of business in order for you to find another wholesaler. Now, it's not uncommon for contracts between two companies to set up such termination conditions. But in the case of Franchise Laws, it is the state that is protecting the wholesaler from having to perform. Not bad!...if you are a Wholesaler.

The FTC Working paper deals primarily with the issue of Post & Hold laws, which were determined to be unconstitutional in the Costco v. Hoen case in the 9th Circuit Court of Appeals. However, in the course of looking at the impact of Post and Hold laws, which require wholesales to post their price on a product for usually 30 days, the paper determined that this practice as well as others such as Franchise Laws harm consumers. They also determined that passage of H.R. 5034 would allow Post and Hold laws, despite the earlier determination by the Court that they were unconstitutional.

The FTC Working Paper, entitled "State Regulation of Alcohol Distribution: The Effects of Post & Hold Laws on Consumption and Social Harms", can be found HERE

Why the November Election Matters to the Wine Industry

The upcoming November 2nd election is among the most important for the American wine industry in a very long time. Two issues should be watched closely by the wine, beer and spirits industry: 1) the outcome of the race for control of the House of Representatives and 2) the outcome of Initiative 1100 in Washington State.

CONTROL OF THE HOUSE OF REPRESENTATIVES & H.R. 5034
Despite the 137 Co-sponsors of the Wholesaler Protection Bill known as H.R. 5034, the beer and wine wholesalers who support the legislation that would give state the legal and Constitutional ability to discriminate against out of state commerce have a difficult road to travel to get their bill passed. Standing in their way is House Speaker Nancy Pelosi who has reportedly said she does not support the legislation and would work to keep it from passing.

The Speaker of the House has great influence over what legislation moves to the floor of the House for a vote, despite what happens in committee. Were the wholesalers able to get the bill out of committee, they still would have to deal with the power of the Speaker's office.

However, if after the November 2nd election Republicans take control of the House of Representative, we are likely to be introduced to Speaker of the House John Boehner. Currently the House Minority Leader, Boehner has delivered the keynote address at the Beer Wholesalers of America's Annual Legislative Conference as well as accepted many 1000s of dollars from the very same wholesalers. There is little doubt that if elected Speaker of the House under a Republican controlled House that H.R. 5034 would move to the floor for a vote.

INITIATIVE 1100 IN WASHINGTON STATE
All you have to know about this initiative is that that if passed by the citizens of Washington State it would allow producers of spirits to sell directly to restaurants and retailers and not have to go through a wholesaler. In addition, Initiative 1100 would take the state of Washington out of the business of selling spirits at retail and put that job in the hands of the private sector.

As you can imagine, wholesalers are against such a change. It removes their unnecessary monopoly and with it some of their political power. Wholesalers across the country have contributed millions of dollars to defeat the bill, including $1,000,000 from the National Beer Wholesalers Association.

While wholesalers argue that getting rid of the archaic, prohibition-era, state-mandated three tier system is bad public policy, what they are truly afraid of is that Initiative 1100 will be a movement that will spread to other states. To quote from a recent Associated Press piece on the initiative:

"National wholesaler and liquor distributor groups are closely watching the outcome of the campaign, with some saying that it could be the first step for Costco to try and change the system in other states. "They'll try to replicate the rules in Washington state across the country," [Craig] Wolf [president of the Wine & Spirit Wholesalers of America] said."

One can only hope his fear is validated. The single most insidious thing that is preventing the development of artisan beer, wine and spirits industry from growing in the United States is the requirement in most states that producers of these small production brands are required to sell to a wholesaler to get their products on store shelves and into the hands of consumers. When wholesalers are the state-mandated choke point for the products that get into a state, you always have a severely diminished selection of goods since wholesalers are not required to carry brands. It means they have the final say on what products are available to consumers in a state. And the majority of wholesales, the most powerful ones, have no interest in seeing small production goods make it to market.

Under a system by which producers in any state may choose to sell their products either through wholesalers or directly to restaurants, retailers or consumers you get a distribution system that is fair and consumer friendly.

Every producer of artisan wine, beer and spirits ought to know this is their dream scenario.

Eminent Domain Used To Usurp Wine Label Real Estate

I was disappointed, though not surprised, to see that today a conjunctive labeling law dictating that "Sonoma County" be placed on every label on wines produced from grapes grown in Sonoma County was unanimously passed by the California Legislature . Pushed as an effort to promote "Sonoma County" wines and a consumer education effort, the new law instead forces vintners to needlessly sully their package and undermines their own marketing efforts. Yet, the law does nothing to educate consumers.

Passed unanimously out of the California Assembly and Senate, AB 1798 now awaits the Governor's signature, which it will surely obtain. According to Noreen Evans, an Assembly sponsor of the bill, this new conjunctive labeling law "requires that any wine labeled with an American Viticultural Area (AVA) located entirely within Sonoma County - – like Russian River Valley or Dry Creek Valley - must also include the word "Sonoma County" on the label, starting in 2014. There are 13 AVAs in Sonoma County."

The problem, of course, is that by placing the words "Sonoma County" on a bottle of wine that is made with grapes grown in "Russian River Valley", "Dry Creek Valley", "Sonoma Valley" or any other AVA in SonomaSonoma County" have any single distinguishing feature derived from the fact that they were grown inside the borders of Sonoma County. County, consumers learn absolutely nothing about the wine in the bottle. There no evidence that grapes grown in "

Assemblywoman Evans concludes, "By improving consumer education on each bottle, conjunctive labeling will unleash the full potential of our delicious wines to represent Sonoma around the world."

She's correct. Beginning in 2014, "Sonoma County" will receive a tremendous boost in recognition due to the conjunctive labeling law that forces vintners to add more wording to their labels—whether they think the words "Sonoma County" help or hurt their marketing efforts.

Frankly, if I was making high end wine from the "Sonoma Valley", "Sonoma Mountain" or "Sonoma Coast" AVAs that depended in part on the quality recognition that comes wtih these AVAs, I'd be pissed that I'm forced now to put a place-name on my label that told my buyers nothing of real value about the wine behind my label and, in some cases, demonstrably lowered its perceived quality.

Honore Comfort, Executive Director of the Sonoma County Vintners Association and an outstanding representative for Sonoma County wines noted this: ". "This moment ...marks the beginning of a stronger Sonoma County brand for generations to come."

Proponents of the new Sonoma County Conjunctive labeling law like to point to a similar law that demands "Napa Valley" be placed on all wines that are made from grapes grown in that appellation, rather than simply using a sub appellation. They point to the prestige that the "Napa Valley" designation carries. But this prestige has nothing to due with the law that demands "Napa Valley", in addition to simply "Rutherford", be placed on these wines. It has to do entirely with the promotional effort that has gone into making "Napa Valley" a place associated with great wines.

Such an association will not be made with "Sonoma County" wines...ever. The vintners in Sonoma County simply can't make a case for "Sonoma County" having any meaning or for a region as vast as "Sonoma County" delivering any degree of quality to the grapes.

Why is it important for someone making "Sonoma Coast Pinot Noir" or "Sonoma Valley Zinfandel" to help promote "Sonoma County", a designation that has no ability to define the quality or character of the wines in my Sonoma Coast Pinot Noir or my Sonoma Valley Zinfandel?

This is an example of a County usurping the private label real estate, and it's very valuable real estate, for the sake of promoting something that is of little use to private commercial interests. Ask yourself...If putting the words "Sonoma County" on one's wines was such a great thing, why don't more vintners who make "Dry Creek Valley", "Russian River Valley", "Alexander Valley" or "Sonoma Valley" wines already put these words on their label? They legally could...if they wanted to.

The new Sonoma County conjunctive labeling law is the equivalent of the State of California and the County of Sonoma claiming imminent domain over the labels of hundreds of vintners.

The State of Online Wine Talk

Back around the early 1990s if you wanted to spend time on-line discussing wine with fellow oenophiles you frequented the "wine boards" on AOL and Compuserve. These were the premier "bulletin boards" where folks passionate about wine would post topics, comment on topics and discuss the world of wine. I was somewhat active in the AOL board and its where I first witnessed not only the kind of very deep and consequential wine conversations that could be had on line, but also the kind of deeply contentious conversations that on-line forums could provoke.

Today, while the AOL and Compuserve wine forums are long gone,  the same kind of forums for wine lovers still exist. In fact, for many years, it was the "Mark Squires Bulletin Board" located at eRobertparker.com where by far the most robust and interesting on-line forum was found. Numerous topics of conversation were posted daily. Thousands of "commenters" would weigh in on a variety of subjects. Tasting notes, new wine releases, wine politics, philosophies of collecting, issues connected to terroir, buying strategies, anything under the sun was discussed.

To say the least, the "Squires Board" at eRobertParker was the most dynamic site on the Internet for the discussion of wine and for meeting up daily with some of the most interesting wine-minded people.

All this ended on April 26, 2010, when Robert Parker and Mark Squires decided to make access to this forum "subscriber only".

Prior to this date, one needed only to register and you'd have access to the most robust wine forum on the Internet with "posting" privileges. Today, one must subscribe to the website at a cost of $100 annually.

The change to subscriber only access came swiftly and without warning to the thousands that used the forum at eRobertparker. However, their was an explanation given:

"Supervising the huge volume of posts has become increasingly time consuming and expensive. At the same time, we've noted that the subscriber-only forums we created some time back are increasingly popular and much easier to manage. Moreover, we're committed to providing even more functionality and greater coverage of wines for our subscribers in the near future. This will require us to spend wisely. We are a small company with limited resources and, after months of deliberation, we've come to the conclusion that it is in the best interest of the people who count most - our subscribers - that we change our policy with regard to the bulletin board."

The response to the change was not pretty. Many users of the forum felt like they had the rug pulled out from under then. Some felt like they had lost access to good and close friends. Many thought the move to subscriber only access was a response to contentious conversations in the forum over its administration. Among the response to the move posted at the Forum were these:

“Draining the board of the majority of its content and its value to make it easier to run is simply irrational.

But destroying the board -- and make no mistake that is precisely what you have done -- to solve that problem is an over-reaction of epic proportions. I am grieving the loss of community I suffered. I am angry that there wasn't any opportunity to prepare. An apology is warranted but I don't expect one.”“This was the WORST insult I have ever suffered on the www!

"THE WORST ever! I absolutely do NOT want to simply continue like nothing has happened! This was an attack-like action - WITHOUT any pre-information - without any chance for everybody to prepare (e.g. gain some contact e-mails of friends).....and the reason was simply the intention the prevent any discussion about it in advance."

Today the Forum at eRobertparker is a shell of what it once was with a hugely decreased amount of discussion primarily because so many who had actively participated in the forum went away after its privatization and chose not to subscribe.

One very active member, still, of the eRobertparker forum as well as other wine forums on the net describes the upshot of the privatization decision in terms that users of forums would understand:

"At present time many posts will remain on the 1st page for days before moving to page 2, as of today (8/20/2010) discussions that were posted on 8/14/2010 are only on page 2, in previous times they would have been on page 6 or 7 by now.  There far less postings of tasting notes or wine driven conversation in the 'Wine Talk' section.  There is little to no posts in the Social Hall section on a regular basis. Mark Squires and Robert Parker are generating more topics than I ever recall seeing them do so since I’ve been a member since 2004."

For those unfamiliar with the logistics of posting topics on wine forums, all this translates to their being very few new topics posted at eRobertparker forums than prior to the privatization. No forum is of much use if there is little or no discussion. After all, this is what folks primarily go to wine forums on the Internet for: discussion of topics that are their passion.

The on-line wine community is relatively small compared to those who come on line to discuss politics, celebrities, food, technology and any number of other subject matter. But, it is a passionate community. I think it can be said without exaggerating that the shuttering of the eRobertparker/MarkSquire wine forum to non-paying members was a real blow to the on-line community of wine lovers.

So, do wine lovers just stop their gabbing? Hardly. Conversation on the Internet is like water. If flows, as though a gravitational force is pushing it toward the densest community of conversationalists. It doesn't stop.

There are other wine forums on the Internet where wine conversationalists have found a home for robust discussion.

Take WineBerserkers.com, for example. Founded in 2009 by former users of the eRobertParker board who either left in frustration or were actually banned from participating at the forum (that happens!), WineBerserkers is today, by most accounts, the most active wine bulletin board in use. In just the past 85 days, more than 72,000 unique posts have been contributed to the site by users for an average of 855 posts per day. Like all other wine boards, Wine Berserkers generates conversations on any and every topic under the sun.

Wine Berserkers, like most other wine forums on the Internet, benefited greatly from the exodus (banishment?) of users form the eRobertParker forum when it privatized. Wine Berserkers has increased its membership base by 50% in the four months since the eRobertParker Forum privatization and now counts roughly 3600 registered members. What's important to realize, however, about this new influx of registered members at Wine Berserkers is that these new members are more likely to be active members since many of them came to Wine Berserkers as a result of being shut out of the eRobertparker forum.

Of course there are other wine forums on the Internet.

Wine Spectator Forums: Claiming over 15,000 registered users, the Wine Spectator forums are and have been very useful for a long time. However, a quick look at the number of daily posts shows that despite its larger number of registered members, it is not as active as Wine Berserkers.

WineTalk: Another relatively new wine forum, WineTalk also has fewer posts and users than WineBeserker.

West Coast Wine Discussion Group: A granddaddy of wine forums, the West Coast Wine Discussion group was founded in 1996 By Brad Harrington. It remains a place to find astute commentary on wine issues.

Wine Lovers' Discussion Group: Another long time wine discussion forum, the WLDG was founded by Robin Garr. It too remains a venue where wine lovers can find a daily discussion of wine.

eRobertParker: At this point it is difficult to know exactly what kind of usage the eRobertParker board gets. The benefit, of course, is that Robert Parker himself often weighs in and that's not a benefit to sneeze at. Parker remains the most influential wine critic in the world and access to his comments is not to be underestimated.

I've said it before, but I think it deserves saying again: The on-line wine forums are the single best internet-based venue for learning about wine and conversing about wine. They are the location where you will find the most passionate and most deeply involved wine lovers on the Internet. They are places where, if you put in the time you will make friends. Frankly, nothing rivals them for pure, interactive, wine talk.

But they can also be contentious. No question the eRobertParker wine forum made this clear. But that forum was not unique. Every wine forum I've ever participated in has had its moment of ranker and contention. And they always will because there's something about conversing with people form a distance that encourages some to get aggressive and petulant. Still, the upside is great.

I encourage wine lovers that want to talk about their passion to check out WineBerserkers as well as the other on-line wine forums.

Is The Recession Ending In the Wine Industry?

The Great Recession continues.

Like most folks who have an inkling about the linkage between economic growth, national greatness, prosperity and individual happiness, I am concerned that this recession could linger and create a new sense of "Normal" in which economic growth is slight to anemic.

The clearest sign that we would be pulling out of recession and seeing America's economy start to rev up again would be job growth and lower unemployment, currently at around 9%-10%—officially. A sucker for good news, I've been looking for good, positive, economic signs in the wine industry, my industry. One index does suggest real recovery.

WineJobs.com is the premier job listing site for the wine industry. Owned by The Wine Communications Group, which also operates Wine Business Monthly and Wines & Vines Magazine, WineJobs.com is a perfect place to look to get a sense of hiring in the wine industry. And hiring there is.

The latest WineJobs.com Index shows that there is a decided job recovery going on in the Winery sector if hirings are to be a guide. Consider the following graph showing the Index of Winery Job Postings at Winejobs.com in the areas of Winemaking, Hospitality and Sales & Marketing for the month of June, 2008-20110.

To quote the folks at WineBusiness: "The June 2010 increase in job postings occurred in all job categories. Winemaking jobs increased 72 percent from their level in June 2009 but were 18 percent below their level in June 2008. The sales and marketing index increased 7 percent. The index is 23 percent above its level in June 2008. The hospitality job index jumped 106 percent above its level in June 2009. The hospitality job index also is 60 percent above its level in June 2008."

The following 2009/2010 WineJobs index shows that 2010 intended hiring at wineries has been up over 2009 for the first six months of the year.

Meanwhile, job listings for distributors at WineJobs does not show a similar robust increase in listings over 2009 or 2008. Perhaps just as important, it does not show a steady downward trend.

Where the job market recovery is concerned, this is all very interesting and I think positive information for the wine sector of the economy. However, as many people have noted, "alcohol" tends to be recession proof. Of course nothing is truly recession proof, but it does appear that the alcohol industry and its constituent parts do tend to react more mildly to a recession.

All that said, I think anecdotal information is important also. I can tell you that here in Napa, nearly every hospitality person I speak to tells me that sales and visits are WAY up over last year. Clearly, folks are visiting Napa and Sonoma in larger numbers than in 2009. In addition, the word I hear from retailers across the country is that sales of wine at retail are up, in some cases significantly, over last year. Now, granted this all may mean that 2009 was ridiculously bad. Or it may mean that there is a real recovery in the wine industry.

I'm going to continue to watch the WineJobs.com index of job listings very closely. I view it as a leading economic indicator for Northern California and for he alcohol sector of the wine industry, I see its also as a slight indication of the degree of economic confidence the industry possesses

Liquidity Preference is a Great Read...Go Find Out Why

The embarrassment I feel when I come across a long running editorial outlet that is both extremely well done and relatively unknown to me is palpable. I also get a bit angry with myself because I know now that had I been reading this editorial outlet I'd be a smarter person today.

This is exactly how I feel about Jacob Grier's "Liquidity Preference", a blog that delves into "Cocktails, Coffee and Commentary". I've been reading through Jacob's work on this blog that he writes from his position as a freelance writer, barista and mixologist from Oregon. It is a GREAT READ and insightful to boot.

If you want to see just how well Jacob can write, how lucidly he can address complex issues, and how smoothly he can deliver a well thought out and hard hitting opinion, look at his most recent article (outside his blog, it turns out) about H.R. 5034: "Beware of CARE". Jacob nails the issues at hand as well as anyone has.

But it's to his blog, Liquidity Preference, that I want to encourage readers to turn.

As he points out, his interests are eclectic. While writing often about the politics of alcohol regulations, branding, cocktail and coffee cultures, Oregon and products, Jacob is just as likely to deliver his take on issues of no relation to these core subjects. But what makes him really interesting and a good writer, is the breadth of his interests. It means that when he does address alcohol and drinks issues, they are explored from unique and even unusual perspectives. This creative approach to issue exploration is the mark of every important thinker writing in every industry and writing about every issue.

It's no surprise that Jacob is good at this. He's been at his blog now since 2003. One of the things I always do when I run across a new blog or new writer is look at their first post and look at how they describe themselves in their "about" section. Prominently displayed on Jacob's "About" page is this:

GUIDE TO GOOD BLOGGING:

Rule #1: Be meaningful.

Rule #2: If meaning is elusive, be amusing.

Rule #3: If meaning and amusement are both out of reach, be brief.

In his first post at Liquidity Preferences, Jacob writes this:

"More importantly, the new site is interactive, so feel free to add comments to anything posted. Now if I write something stupid, you can point that out in public instead of just sending me an e-mail!"

Smart, insightful, a good writer..AND funny. There's a lot to like here.

Jacob spent time in the world of Think Tanks in Washington, DC before devoting himself to cocktails and coffee and his blog, as well as writing. Think Tanks, I've always felt, are where really bright people go to be inconsequential. However, the are also places where people go to spend time making well thought-out and well-stated arguments. Its where they learn how to be graceful polemicists.

Liquidity Preference most definitely displays those qualities.

As I said, I'm a bit embarrassed that I've not been a regular reader of Jacob's for many years now. But I'll rectify that today. My advice is that if you want a good read on a regular basis (he writes nearly daily) you should be reading Jacob Grier's Liquidity Preference.

Reapers of Vines

If we can just find a way to assure that the various diseases and virus that attack grapevines continue to thrive, it's likely we can make this a better world. But who can we call on to advance this worthy goal of assuring that grapevines continue to wither in the face of disease and viruses? Who can we place our hope with in our battle to assure the prosperity of a diseased and virused wine industry?

Enter LES FAUCHEUR, aka, "The Reapers".

As reported by Decanter, this shadowy group of heroes bravely destroyed a research facility in the town of Colmar in northeastern France where villains posing as researchers were conducting "research" on ways to halt the spread of Grapevine Fanleaf Virus, a naturally occurring gift from God that "can reduce yields by 50% before killing the vines and rendering vineyard soil unviable for future plantations."

Oliver Florent, one of the 60+ brave "Reapers" who was arrested for his good deeds told the media in the aftermath of their victory over progress: "In about half an hour we neutralized, not vandalized, the vines."

Take note of the speed and rapidity with which nature's protectors were able to neutralize the devastating results of man's war on nature. Could we, here in the United States, be lucky enough to have such speedy Reapers correct the abomination called "progress"?

America's Wine Essayist

Despite his claims, Matt Kramer is not a Journalist. This should be clear within the first few moments of cracking his new book, a retrospective of his columns from various venues entitled: "Matt Kramer on Wine: A Matchless Collection of Columns, Essays, and Observations by America's most original and lucid Wine Writer."

Matt Kramer, best known for his long-running column in the Wine Spectator and his classic "Making Sense" series of books, is an essayist. And he's the best one currently working in wine. This should be clear within the first few moments of cracking his new book.

What makes Kramer's retrospective so compelling and so necessary is the perspective it offers. Kramer's compilation of past columns from the Wine Spectator, the Oregonian, and the New York Sun offers the reader a well-trained and insightful eye on the development of a wine culture in the United States. Despite the fact that many of the columns in the new book focus on wine outside the United States, Kramer's eye is decidedly American in nature. Throughout the columns one reads under various chapter headings, there is a sense of discovery and uncovering that is the decidedly American approach to wine appreciation over the past three or four decades. 

Kramer is at his best when he is taking the long view, when he is deconstructing wine myths and "wine hokum", and when he looks for the essence of a wine idea. These themes show up throughout his work.

One of his best pieces, "The No-Wine Magazine", concerns the determined approach taken at the New Yorker magazine to ignore the American wine culture when it is not denigrating wine appreciation in general. Kramer once received a $15,000 kill fee from the magazine when a story on Angelo Gaja he was assigned to write was killed from publication. In outlining the evidence for the New Yorker's disdain for the American wine culture, Kramer wades into the meaning of that culture, how Americans have adopted wine as a truly American artifact and the disappointment many of us feel when our honest belief that wine can uncover truths about us and the American way are dismissed as inconsequential. 

The new crop of wine bloggers will be interested to know that Matt Kramer has taken on all the issues that get them riled up and writing. Terroir, corkage, the wine business, wine writers, wine reviewing, etc. The entire stable of wine blogging "go-to" topics have already been explored by Kramer and often much better than any of us could hope to ourselves. I mention this because I'm one of those people that know for a fact that the best way to become a good writer is to read good writers. Kramer is decidedly a good writer.

As you read through the essays that are arranged by topic and not sequentially, the writers reading Kramer should try to note that as time has progressed, Matt's edge has not diminished one bit. And there is an edge to his writing. Kramer is known for possessing great reverence for certain wines, wineries and winemakers (read is words on Mayacamus Vineyards Chardonnay). Yet even in writing about his greatest wine loves, his prose and the ideas they explore maintain a steady, even heightened, pace that gives the reader a sense that an important conclusion is coming you won't want to miss. And that conclusion often arrives just as you expect. "Pace" is not easy to maintain throughout an essay, nor throughout three decades of writing.

I don't know if retrospective editions and compilations get recognized by those who give out writing and publishing awards. They might be seen as akin to a musical group releasing a "Greatest Hits" album for the sake of making a bit more money off something that has already been created and is now just being repackaged for commercial reasons.

It would be a mistake to understand the new "Matt Kramer on Wine" in this manner. What we have here, and it's very rare in the wine publishing world, is an open window on the developing mind of one of America's most important wine writers and, just as important, an idiosyncratic path through the history of the American wine psyche of the past 30 years as it has developed, taken turns, stopped to ponder and moved on to new ideas.

"Kramer On Wine" should be purchased and read by those interested in this path as well as those interested in understanding what the work of one of America's greatest wine essayists looks and feels like.

To Freshmen: Liberal Arts and a Life With Wine

I'm going to offer a contention I think might piss off a few people:

A liberal arts education is the best foundation for a life of enjoying wine and working in wine.

Yes, I have one; an education grounded in the study of History. But I swear, I'm not defending my choices here.

I was reading a book review in the Times this weekend of a new book by Martha Nussbaum entitled, "NOT FOR PROFIT: Why Democracy Needs the Humanities". The Times reviewer didn't give the book a good review. But still, the reviewer notes:

"The trend in education at all levels and around the world, Nussbaum fears, is toward rote instruction in “applied skills suited to profit-making” and away from cultivation of 'the ability to think critically' and 'to imagine sympathetically the predicament of another person.' ”

These are the exact skills necessary to properly appreciate a wine and the meaning of a wine (that is, if you don't count the education of your palate.) In fact, the ability to critically think about a wine and its context and the ability to sympathize with a wine's place in the world and your world—no matter how lowly or inconsequential that wine may be—is what allows us to derive meaning, real intellectual delight and even knowledge from a wine in our glass and on our table.

The fact that a wine tastes good to me, or smells interesting, is really a momentary piece of knowledge that provides me very little to think about. But if I'm practices at finding creative ways to contextualize the wine through it's place in the history of wine, the history of this kind of wine, perhaps even the political implications of the wine (consider a wine purposely bottled to have a lesser carbon footprint or one that strikes a strident pose on its back label in support of "natural" wine), or through the wine's perhaps unique and old school character that buck's a trend, then I can advance a more meaningful life in wine.

Creative contextualizing is one of the primary skills one ought to gain from a liberal arts education that demands the student investigate the inner life of mankind and the ways by which mankind tells its story and understands the context of human relations.

This is not to suggest that an education in the hard sciences or the not-so-hard sciences (economics, psychology) can't help one lead a more interesting life in wine. And of course if winemaking is your desired profession, then a little bit of chemistry and biology is going to be pretty important. But these courses of study wont' so naturally lead one to think about meanings as a liberal arts education will.

Of course this suggests that wine appreciation is an interpretive activity—something hard to argue with. And it means too that, then, wine is a subjective experience. Again, no great discovery.

So, if any Freshman are reading this and if you have the idea that wine may become an important part of your life after scholarship, and if you think you may want even to make a career in wine, let me suggest Literature, History, Philosophy, Fine Arts.

Halting the Momentum for HR 5034

H.R. 5034, the bill written and sponsored by the National Beer Wholesalers Association and supported by the Wine & Spirit Wholesales Association, has yet to receive a hearing in the House Judiciary Committee. And despite it having 136 Co-sponsors in the House of Representatives, there is yet to be introduced a companion bill in the Senate.

What has appeared to happen to this legislation that, if passed, would give states the unassailable right to pass discriminatory bans on wine shipping and producer self-distribution, is that it is losing momentum as word of its onerous and wholesaler protection qualities spread. Critical in spreading the word of H.R. 5034's destructive marketplace qualities have been the various organizations both within and without the alcohol industry that have publicly opposed the bill.s. 

The list below of public statements of opposition to H.R. 5034, along with much more information about the bill can be found at http://www.stophr5034.org.

STATEMENTS OF OPPOSITION TO H.R. 5034

Specialty Wine Retailers Association
Specialty Wine Retailers Condemn Distributor Bid to Ban Wine Shipping

National Association of Manufacturers
Letter to Leadership of House Judiciary Committee Asking Opposition to H.R. 5034

The California State Legislature
The California State Legislature has approved Senate Joint Resolution 34, urging Congress to oppose H.R. 5034.

42 Free Market Public Policy Groups Coalition Letter
A Coalition Letter signed by 42 Free Market public policy organizations opposing H.R. 5034

America’s Alcohol Producers
In a joint statement by the Beer Institute, Wine Institute, Wine America, Brewers Association and Distilled Spirits Council of the United States asking Congress to oppose H.R. 5034

Kentucky Distillers Association
Kentucky Bourbon Producers issue letter to Congress denouncing H.R. 5034 and describing how it would harm the bourbon industry.

Wine Institute/Wine America
Joint statement representing more than 6,000 U.S Wineries Opposing H.R. 5034

Oregon Winegrowers Association
Oregon Winegrowers Association Strongly Opposes H.R. 5034_

The American Wine Society
The Board of Directors of the largest and oldest American wine education organization opposes H.R. 5034

Brewers Association
Brewers Association, organization of over 1000 American Brewers, issues position statement opposing H.R. 5034 for its “lack of protection for the legitimate concerns of America’s smaller brewers.”

Distilled Spirits Council of the United States
Controversial State-Based Alcohol Regulation Bill Will Undermine Longstanding Framework of Alcohol Control

The California Wine Institute
Beer Wholesaler Proposal Promotes Discriminatory State Laws, Hurts Wineries, Breweries, Distilleries and Consumers

Wine America
Wine America H.R. 5034 Statement

Free The Grapes
Stop The Monopoly Power Grab

Family Winemakers of California
Family Winemakers of California Oppose H.R. 5034

Napa Valley Vintners
Urgent Challenges Coming Before Congress

Washington Wine Institute
WWI Opposes H.R. 5034

Family Wineries of Washington State
Family Wineries Strongly Opposes H.R. 5034

Illinois Wine Consumer Coalition
Illinois Wine Consumer Organization Opposes Anti-Wine Shipping Legislation

In Congress, Representatives Mike Thompson and George Radanovich have come out squarely opposed to H.R. 5034.

Return on Investment and Social Media Marketing

People listen to Tim Atkin. At least wine people and  wine industry people do, if not others who just think him a nice guy. But the reason the winiest among us listen to him is because for many years now he has ranked as one of the foremost wine communicators and educators. A Brit and Master of Wine, Tim has written for numerous VIPs (very important publications) and his talents are sought out by other across the globe.

So I "listened" and thought when I saw Tim write the following at his website:

"As in is so many other fields, the way that wine is sold, described, criticized and presented is changing for ever. The surprising thing is that many of the people who work in and around wine haven't noticed or are in denial about the power and scope of the revolution."

Tim provides good evidence for the notion that many around the wine "haven't noticed or are in denial" about the dramatic scope of change that social media and electronic communications have brought to the wine industry. And in the end, he urges that the wine industry, essentially, get on board or be left behind.

I like to think that I've noticed this revolution. I like to think that I play in the sandbox of that revolution. And yet, I'm here to tell you, and I guess Tim too, that diving in deep to the sandbox of social media and electronic communications is not always the best choice for a wine company. I'm thinking here about Return on Investment.

I've yet to see a real good study that can show me what the solid return is for wineries of different sizes and different product lineups who dive face first into Facebook, Twitter, the multiple other social networks, interactive media and websites, blogging, etc. That's not to say that I've not personally seen a good ROI for doing such things. I have. I've helped bring them about. But in almost every case when a company or organization does find an acceptable ROI for their interactive marketing, it's after putting in considerable work.

It's important to consider what that considerable work amounts to.

Twitter: Significant time building your following and herding them with regular and significant tweets.
Facebook: Significant time building fans and delivering your message to them and interacting with them to build brand ambassadors.
Yelp & other Peer Review Sites: Monitoring them, building them out, interacting with users
Blogging: Posting regular and intriguing articles that build interest and loyalty and interacting with those that comment.
Bloggers: Reaching out to comment on various blogs to assure that your brand is represented in among the influencers that tend to navigate their way around blogs regularly.
Monitoring and Measuring: Regularly monitoring the impact and visibility your work is having within the digital domains.

The beauty of using interactive media to promote and market is that it can be accomplished with relatively few hard costs. But note, the real cost is the time it takes. And time is, in my view, the single most critical commodity in the realm of marketing.

How many smaller wineries have the manpower available to devote the kind of time to these endeavors? Some have the resources. Some don't. If they don't they can hire someone like me. But I don't work cheap and few others that have the chops work cheap either.

Again, I don't wan to give anyone the impression that interactive marketing doesn't provide a decent return on investment. In many cases, disregarding traditional public relations, which works, for a purely interactive and social media-aimed strategy can play a significant role in increasing sales, retaining club members, finding new niche markets and establishing one's brand message in a targeted fashion.

But what I would say to Tim and others who are beginning to believe that "getting on board" is the key to victory is this: There are other ways to spend one's time and money that deliver a GREATER return on that investment. It is not a matter of jumping into the electronic pool and seeing profits mount, even if you make a big splash.

It may be that pursuing great traditional media coverage or focusing on educating on-premise accounts or focusing on visiting markets and riding with a distributor representative or creating a stellar tasting room experience will sell more wine at greater profits. That's not to say that interactive marketing can't help successfully carry out these "old school" tactics. 

The bottom line is this: The toolbox is large and heavy and not every tool is the right one for the job at hand, even the shiny new one. It's critical to put in place a marketing plan that utilizes the most efficient tools that are most likely to deliver the greatest return on investment. Take chances and try new things. But be wary of the the shiny tool. It's pretty and some very smart people want you to wield it with gusto. But will a well executive Twitter Campaign sell more wine at higher margins, faster? You better know before you suit up in your pajamas and forgo the trip to a market for the sake of shooting out a well-crafted 147 character message to your followers.

Does Big Business Control the American Wine Industry?

In honor of the great Michael Broadbent's 400th column for its magazine, Decanter Magazine today ran a story touting this achievement as well as giving us some insight into Mr. Broadbent's current and highly educated view of the world of wine today. One comment in the story struck me:

"He [Broadbent] mourns the demise of the smaller players. 'Big business seems to be taking over and I don't like the way things are going' "

Does "Big Business" really have a grip on the wine industry? I'm not so sure. And I'm not so sure that Broadbent is speaking about the American wine marketplace. But I will.

There are a few ways of looking at this issue.

From the PRODUCER's Perspective
There's simply no way to argue that the producer sector of the wine market is controlled by BIG BUSINESS. While the vast majority of wine in America is produced by 50 wineries, the vast majority of wineries are small, family-owned, artisan affairs. And their numbers keep growing year after year. Add to this the enthusiastic American importers who seem to find new and interesting small ventures from the Old World and the Newer World and you start to get the picture that despite the big producers that dominate wine sales, the small producers just keep on coming like there is no one in their way.

From the RETAILER'S Perspective
The largest producers of wine in the world do tend to have greater access to the brick and mortar retail sector of the wine industry. In fact, if you look at the four shelves at grocery stores, the bottom two, and a lot of the third will be holding the wines from the largest of the world's wine producers. This is not always so of the top two shelves however, where smaller brands have a distinct foothold, particularly in metropolitan areas where demand for quality and higher prices wines is greatest. But then you have to ask to what degree BIG BUSINESS Retailers control the retail sector. It goes without saying that consumers can if they like shop for wine at the big grocery stores and the Costco's of the world...and they do, in huge numbers. Yet when you look around the country, there is no dearth of small, independent retailers who provide consumers with a remarkable selection of wines from both big and small producers. Finally, the Internet provides consumers looking for diversity and looking or the those wine producers hanging on to the Long Tail unprecedented selections of wines produced in the tiniest amounts and produced by wineries located in every region of the world. In fact, there has never been anything like the selection of wines now available if you look at the marketplace from the perspective of the Internet retailers. It is the Golden Age of the wine consumer. Across the Internet you find all sorts of smaller retailers that specialize in a region's wines, in wines of a particular price and in wines of the highest quality. While wine retailing probably is big business heavy, it isn't dominated by bigger businesses. And with the Internet, the barrier to entry is lower than it ever has been for prospective retailers.

From the WHOLESALE Perspective.
Certainly when two wine distributors control 20% of the U.S. market and five control 50+% of the wholesale market you have to admit this sector of the wine market is controlled by big business. Consolidation among wholesalers continues at breakneck speed even as smaller wholesalers try to get into the business. Here, Mr. Broadbent, were he looking at the American marketplace, would be correct.

The American wine marketplace has issues. An often inflexible three-tier system. Trade barriers. Often absurd restaurant pricing. Consumers that still think wine is for the Tuxedo-Class. However, Big Business I don't think is our biggest problem here.

The Consequences of Our Cold Wave in Wine Country

It's overcast in the town of Napa at 8:00am. It will be overcast in the town of Napa at 9:00am. And probably 10:00am too. Later in the afternoon, the temperature spring northward to somewhere around 79 or 80 degrees. When the sun starts to go down around 5:30pm to 7pm, the fog will come back to certain areas and the wind will kick up. This evening the temperature will fall down into the 50s.

This was the weather story last week. This is what the weather will be like this week. And by all educated accounts, next week the most we can expect in Napa Valley is a high of around 85 degrees—in the northern part of the Valley.

What does this survey of the recent meteorological trends mean? What's the upshot of Northern California experiencing the summer that wasn't? It means grape growers (and winemakers) are starting to get a little worried. Strike that. A lot worried.

I spoke with one Napa winemaker who (and I checked) hadn't made a Cabernet Sauvignon in ten years that came in at less than 14.7% alcohol. I asked them about the weather. There response was spinalicious:

"I'm not too concerned. I'll just deal with what Mother Nature gives us and make the best wine possible. We've seen this kind of cooling trend before. I'm not worried."

The problem this kind of weather poses to grape growers in this neck of the woods is not that the grapes won't get ripe. They will get ripe. It's just that they won't get REALLY ripe, a condition upon which so many wineries have staked the reputation of their Cabernets, Syrahs and Pinot Noirs. In fact, if this weather keeps up, its entirely likely that some winemakers are going to have to learn how to make good Napa or Sonoma Cabernet with an alcohol content of (brace yourself)...12.5%.

Many Northern California Pinot Noir producers are going to have learn to live with a 13% alcohol content instead of 14.5%.

Of course the other problem that comes this kind of Republican weather pattern (cynics have come to call cold weather "Republican" in honor of their frequent dismissals of global warming) is the potential to see the grape crop rained upon as growers leave their grapes on the vine well into November hoping to pull out as much ripening as possibly form the dwindling hours of sunshine.

Clearly 2010 is looking to be a better vintage for early ripening grapes like Pinot Noir. But even the Pinots are likely to suffer a diminishing alcohol content. The question is this: is that a bad thing? I think it might be for many winemakers, particularly those that tend to produce big, fat, huge unctuous Pinots with high alcohol content. However, this will be the year you want to be sure to seek out the wines from vintners that make a habit of using or growing grapes in areas that are on the edge; who regularly make delicious wines in the 13% to 14% alcohol range due to the cool location of the grapes used to make those wine. You know the folks I'm thinking of.

But who knows what's going to happen after next week? It could brighten up, lots of sunshine will come, summer will arrive, grapes will ripen and the old adage that "every year is a vintage year in California" will be true once again.

Or, it might get even colder. Napa Valley restaurants will either shut down their outdoor eating areas altogetehr or invest in more heaters. Vineyard workers will wear coats and sweaters to keep the chill off instead of bandannas to keep the sweat out of their eyes. Visitors will simply think, "this sucks!"

I'm just saying...It's pretty cold here in Wine Country and there's no sign of relief.

Alcohol Wholesalers Are Responsible for Wine Shipping Lawsuits

A recent comment by the head of the Wine & Spirit Wholesalers Association got me thinking about an important question: Who is responsible for all the lawsuits that supporters of H.R. 5034 claim is the reason for this legislation?

In a recent Los Angeles Times article concerning the impact of H.R. 5034, a bill that would allow states to pass any and all discriminatory legislation concerning alcohol, Craig Wolf, the president of the Wine & Spirit Wholesalers of America, stated the following:

"[By introducing H.R. 5034] distributors were simply trying to protect states' rights to regulate alcohol."

What gives Craig Wolf and the wholesalers the idea that they are responsible for protecting state laws on Alcohol? Well, it turns out it's not just Mr. Craig who believes he is the protector of the state.

In the same article, Mr. Paul Pisano, General Counsel of the National Beer Wholesalers Association, explained this way why his organization wrote and introduced H.R. 5034:

"It's the cumulative effect of all these lawsuits, and the confusion. We're asking to make sure that states aren't having their hands tied when they're trying to defend their alcohol laws."

What Mr. Pisano doesn't say is that wholesalers have been responsible for these lawsuits that they say tie the hands of states.

When Mr. Pisano or Mr. Craig argue that we need to protect the state laws from challenges in court, he doesn't mention that Glazer's Wholesale of Texas sued the state of Kansas arguing that Constitution's Commerce Clause made the state's residency requirement for wholesalers unconstitutional?

Neither Mr. Craig or Mr. Pisano ever note that Southern Wine & Spirits, the largest wholesaler in America, also used a Commerce Clause argument to sue the state of Texas to allow them to operate in that state by overturning a state law saying distributors had to be Texas citizens?

One can be sure that if H.R. 5034 ever gets a hearing in the House Judiciary and when the wholesalers start going on and on about how all these lawsuits by wineries and retailers must be stopped in order to protect the states and their alcohol laws, it will be noted publicly that wholesalers actually LIKE lawsuits, when the outcome suits them.

The fact of the matter is that the wholesalers are themselves the responsible parties for all the lawsuits that have gone forward up to and including the Granholm Supreme Court case as well a subsequent lawsuits.

Back in the 1990s and early 00s, had the wholesalers simply got on board and supported the commonsense reforms to the wine distribution system advocated by consumers, wineries and retailers that would have allowed consumers to have wine shipped to them from out-of-state wineries and wine merchants, it's likely that changes in the laws would have flown through state legislatures, that consumers would have been provided access to the explosion of new domestic wines and newly imported wines hitting the market and, most of all, that there would have been no lawsuits for the states to defend.

Instead, wholesalers used their enormous powers in the state legislatures to twist arms and whisper in lawmakers' and regulators' ears incendiary claims about disasters coming from direct shipping. This led directly to the the passage of unconstitutional laws that discriminated against out of state wineries and retailers and that resulted in lawsuits.

We know now that the direct sale of wine makes no dent in wholesalers' profits. It amounts to no more than 2% of the marketplace. We know that when retailers ship wine across state lines it is wine they procured first from wholesalers. And we know that minors have not been able to use direct shipping to affect any significant increase in their ability to obtain alcohol, as the wholesalers claimed it would.

It has been wholesalers who are purely responsible for the lawsuits they now decry are hampering the states ability to regulate alcohol sales by their stubborn, self-serving and anti-competitive efforts to prevent any reforms from coming to the 75 year-old three tier system.

However, it should again be noted that when it suits them, wholesalers are happy to try to reform the three-tier system via lawsuits.

Make no mistake. The Wine and Spirit Wholesalers of America, the National Beer Wholesalers of America and their members across the country are not the defenders of states and their alcohol laws. They are demonstrably the reason why all the lawsuits have been filed and why the states have been forced to spend citizens tax dollars defending them.

------------------------------------------------------
-For recent commentary on H.R. 5034 see:

1. The WSWA Wants to Revoke Your Right to Freely Purchase the Wines You Want
The Wine Cellar Insider

2. HR 5034: An Attempt to Legalize State Discrimination in Alcohol Markets
Newcomb Law Group

3. Bill Uncorks Brawl Over Interstate Sale of Wine
Los Angeles Times

4. http://www.stophr5034.org

On Happiness...

Wine is one of those rare products that in nearly every case in which it is used, it adds to the happiness of the occasion.

In my world, I measure the value of a person, product, occasion, situation, place or time in terms of the degree to which it provides me and others with happiness. This makes wine a pretty valuable commodity in my world.

And yet, for all the happiness wine brings to my life, both personal and professional, it comes not even close to providing the kind of happiness as Kathy's presence in my life brings. So imagine how happy, overly giddy and profoundly blissful I felt when Kathy said "yes" to my proposal concerning the rest of our lives.

I'm a man that comes with a bit of baggage, both heavy and oddly light in some cases. I can never be sure how the weights and measures of that baggage will impact others. And so when a person as profoundly thoughtful, as carefully opinionated, and as constantly contemplative as my Kathy accepts my proposal, I find myself completely astonished by just how beautiful my life really is, how lucky a man I am, and how surprising life remains.

Of course, my responsibility now is to work constantly to become as valuable to Kathy as I possibly can be; to prove her intuition and thoughtful response had the greatest value to her and will always hold the greatest value; to become the finest wine on her table.

Targeting the Market of Atheist Wine Drinkers

Gallup's annual poll of who drinks and how many drink alcohol was released today. It turns out those who claim to drink alcohol is up, while those that claim to drink wine is slightly down.

What' most interesting is what can be gleaned from the poll on who the most likely drinkers are. It appears that if you want to identify a likely drinker, what you are looking for is someone with the following characteristics:

-A woman

-Between 21 and 54 years of age

-Who makes much larger than average annual income

-And who is an atheist.

It's the athiest/non-church goer characteristic that interests me. I understand that many denominations within the Protestant sector of the Christian religion either have prohibitions on drinker or discourage it. And so this goes a certain way toward explaining why a characteristic of a likely drinker is "Atheist" or "non-church goer."

However, what I'm wondering is if there is anything about the condition of being a non-believer that would make one more likely to drink? Does the uncertainty about end-of-life promote an inclination to ingest mind altering substances? Or is it merely a matter of having fewer prohibitions on how one lives their life that comes with a lack of sectarian influence that makes one more likely to drink?

Personally, I count myself an agnostic, always being open to the possibility that a Creator might take a particular interest in me and disclose their existence. So far I don't rate quite that high. Also, I'm willing to give the potential Creator the benefit of the doubt: I'm aware that were there a Creator, they likely have lot more pressing issues than Tom Wark's understanding of reality. On the other hand, it strikes me that were there a being capable of creating all things, informing me of their existence in a way that would be conclusive on the issue God/Gods/Creators shouldn't be that tough a thing to do.

Of course I've always wondered how faith-based tee-totaling works. I've wondered what justification a Creator might have for prohibiting the consumption of the fermented results of Their creation. To take but one faith, Christianity, it's pretty clear that what the revealed word of the Abrahamic God says is not so much "DON'T DRINK ALCOHOL", but rather that intoxication is the sin. This implies that the Christian Creator prefers his followers to always possess a nimble mind. Not a bad recommendation.

On the other hand, the same creator appears to appreciate the numbing effect alcohol can have, particularly when the drinker is in failing health or distraught:

Give strong drink to the one who is perishing,
and wine to those in bitter distress;
let them drink and forget their poverty
and remember their misery no more.
Proverbs 31:6,7

In any case, one wonders how marketers of wine can successfully pick out and target the Atheist Market, the market of the Dying, or those experiencing intense suffering and distress.

Wine Blogs and The Law

Of late, this blog has concentrated a bit more than usual on the the politics and regulations concerning the alcohol beverage industry. The introduction of H.R. 5034 has prompted the relative increase in political posts. However, Fermentation is hardly the only blog that focuses on issues of politics, regulations, legislation and the legal aspects of the alcohol beverage industry. A number of other blogs, some quite new and promising, speak to these issues and should be considered resources for those concerned with these issues.

Among those blogs one might consult include:

SHIPCOMPLIANT BLOG
Maintained by ShipCompliant, the wine compliance software firm that serves producers, retailers and distributors, their blog is often the source of information not only of changes in the regulatory sphere but on the legal background to court cases concerning alcohol. It is a very reliable source of information.
Most Recent Post: "Hawaii Amends Due Date for Gallonage Tax"

ON RESERVE: A WINE LAW BLOG
A relatively new addition to this genre of wine blogs, On Reserve gives itself a substantial mission: "On Reserve’s mission is to provide wineries, vineyards, law students, lawyers, and those with a general interest in wine and/or the law with the most comprehensive source of information on wine law." Written by Lindsey Zahn, On Reserve has shown substantial promise with its early posts and is highly recommended.
Most Recent Post: "In Support of Pending NY Wine Legislation"

PENNSYLVANIA WINERY & HOSPITALITY LAWYER
Written by attorney Judy Young, PWHL focuses on general compliance and legal issues aimed at aiding those working in the Pennsylvania marketplace
Most Recent Post: "Does your Pennsylvania Winery, Restaurant or Hospitality Business Embrace The Millennials?"

THE WINE LAW BLOG
Written by one Rohan Shrikhande a law student at California Western School of Law, The Wine Law Blog has attacked some very interesting issues such as intellectual property, H.R. 5034, water wars and labeling issues, just to name a few. It is an ambitious projects and deserves close monitoring.
Most Recent Post: "Letter To The House Judiciary Committee"

THE WINE LAWYER
Written by attorney Brian Pedigo, The Wine Lawyer provides not only commentary on current affairs in wine law but also basic background information for readers such as reporting procedures and basics on the California Alcohol Beverage Commission. Unfortunately, the blog is rarely updated.
Most Recent Post: "Reporting to the TTB"

ALCOHOLIC BEVERAGES LAW BLOG
Written by a team of attorneys at the Portland firm of Stoel Rives, LLP, this blog was launched last June and shows tremendous promise. It appears to take a wide view, so far covering a range of topics form Washington's dueling initiatives concerning the three tier system to issues surrounding the impact of greenhouse gas reduction at wineries.
Most Recent Post: "Oregon Home Brewers Stymied by Interpretation of Law"

RETHINK WINE BLOG
Published by IBG, the wine marketing and logistics company, Rethink Wine Blog often deals with changes in the legislative, legal and regulator landscape of concern to its clients, primarily wineries. While marketing issues are often covered, the legal and regulatory side is not ignored.
Most Recent Post: "Recent Direct Shipping News"

BEVLOG
An interesting blog written from inside a Virginia law firm, Bevlog tracks new alcoholic beverage label approvals coming out of the TTB. There is little commentary on issues of law and regulations but its continually updated posts concerning newly approved labels is quite interesting as are its comments on TTB labeling policy.
Most Recent Post: "Nut Beer"

HOSPITALITY LAW BLOG
Published by the attorneys at the multi-office firm of Davis, Wright, Tremaine, this blog would be quite useful if regularly updated. Unfortunately it is not. Though posts tend to focus on issues related to the wine and beer industry in the Northwest, it's overall approach to discussing various regulatory and legal issues is very well done.
Most Recent Post: "Organic Labeling and Advertising of Beer, Wine and Spirits"

WINELAW.CA
WineLaw.ca deals with wine law in Canada and British Columbia. Written by Vancouver lawyer Mark Hicken, the site is updated regularly and deals in issues of marketing, direct shipping, labels, environmental law and trademarks as it relates to the wine industry in Canada. Very impressive.
Most Recent Post: "Border Wine Taxes and Fees Modified for HST"

THE BREWERY LAW BLOG
This fine blog concentrates on exploring legal issues of concern to brewers and the brewing industry in Washington State. Written by attorney Douglas Reiser, it takes on a number of eclectic issues including Initiative 1100, trademarks and advertising. It is relatively new, but since its launch in April it has consistently posted substantial articles of interest to most people in the alcohol beverage industries.
Most Recent Post: "TTB and USDA Work Together to Review 'Organic' in Labels and Advertising"

MINNESOTA WINE LAW AND POLITICS
An attempt at crafting a blog around the politics of wine in one state. Relatively new.
Most Recent Post: "Minnesota Wine Industry"

ALCOHOL LAW REVIEW
Published by the National Beer Wholesalers Association, Alcohol Law Review tends to focus on Three-Tier issues with a decided anti-consumer, pro-wholesaler slant.
Most Recent Post: "South Carolina Supreme Court Raises Stakes on Retailers"

DUI BLOG
Written by well-known DUI lawyer Lawrence Taylor and generally written to oppose various aspects of DUI law, this blog is regularly updated, comprehensive, controversial and fascinating to read as it takes on various DUI laws across the country, the players involved in them and all issues surrounding drunk driving laws.
Most Recent Post: "Charity Watchdog Gives MADD Low Score"

COMPLI BLOG
Begun late last year, this blog is written by the folks at Compli, a wine industry compliance services company. Updated fairly regulatory it deals in compliance and legal issues primarily of concern to wineries and consumers.
Most Recent Post: "SENDING SAMPLES: Federal Versus State Requirements"

Free Market Advocates Stand Up for Free Trade in Wine

The current state of H.R. 5034, a bill introduced into Congress on behalf of wholesalers that would give the middlemen the power to initiate and see passed state laws that protect their state-mandated control of the market in beer, wine and spirits, remains somewhat unaccounted for. That is to say, no hearings in the House Judiciary Committee, where the bill is parked, have been scheduled since a tentative July 14 hearing date was canceled.

However, that has not stopped the furious lobbying by opponents and proponents of the bill. Specifically, it has not stopped the work done by many folks not related to the alcohol beverage market who believe the bill has strikingly anti-consumer and anti-free market implications.

FREE TRADE/FREE MARKET ADVOCATES STAND UP FOR WINE CONSUMERS
Yesterday, a coalition of 42 public policy groups, led by the Competitive Enterprise Institute, issued a letter to members of Congress announcing their collective opposition to H.R. 5034. The collection of policy groups includes anti-big government organizations, tax-payer advocates, conservative activists, Tea Party-related organizations, consumer advocates, free market advocates and libertarian-oriented organizations. The list includes:

Competitive Enterprise Institute
National Organization for Marriage
Common Sense Institute of New Jersey
Cascade Policy Institute
Howard Jarvis Taxpayers Association
Minnesota Free Market Institute
American Land Rights Association
Freedom Action
League of Private Property Voters
Rio Grande Foundation
Wyoming Liberty Group
American Grassroots Coalition
Congress of Racial Equality
Pelican Institute for Public Policy
Small Business and Entrepreneurship Council
American Conservative Union
Americans for Prosperity
FreedomWorks
Caesar Rodney Institute
Individual Rights Foundation
Tea Party Express
Frontiers of Freedom
Institute for Liberty
Hispanic Leadership Fund
60 Plus Association
Center for Individual Freedom
Tea Party WDC
American Society for the Defense of Tradition, Family and Property
American for Tax Reform
Tennessee Center for Policy Research
National Taxpayers Union
American Family Business Institute
Pacific Research Institute
Center for Freedom and Prosperity
National Center for Public Policy Research.
Council for Citizens Against Government Waste
Institute for Justice
The C.L.A. Group
Political Economy Research Institute
The Weekly Wine Pick
Illinois Policy Institute
The Rutherford Institute

The letter sent to Congress over the signatures of folks heading the above groups notes the following:

"Yet H.R. 5034 could impede these positive trends. It would allow states to reverse course and
pass protectionist laws for just about any alleged reason at all. And it makes it nearly impossible
for anyone to challenge those laws in court. This bill would harm consumers while serving only one special interest: wholesalers who support protectionist laws to protect their role as middlemen."

Angela Logomasina from the Competitive Enterprise Institute has been a vocal opponent of H.R. 5034 and, in announcing the delivery of the Coalition Letter to Congress, went a bit further and addressed the politics behind H.R. 5034:

"Wholesalers fear that if states continue to allow direct-to-consumer sales, they might eventually allow retailers to buy direct as well, reducing wholesaler profits. 'While wholesalers play an important role in the distribution process,' she notes, 'they should have to compete like everyone else for their place in the market rather than gain it by regulatory fiat.”

We agree.

WHOLESALERS SUPPORT FREE TRADE—APPARENTLY
Recently Craig Wolf, President of the Wine & Spirit Wholesalers of America, one of the primary organizations pushing H.R. 5034, announced that his organization has seen the light and no longer supports discriminatory laws that prohibit the direct shipment of wine by wineries. In an interview with Wine & Spirits Daily Wolf said:

We think that the Granholm decision was correct when it comes to facial discrimination. You should not be able to facially discriminate when it comes to producers."

This is a significant revolution in wine wholesalers' view of the issue. In his Friend of the Court brief written for the Supreme Court in the Granholm v. Heald case, Wolf stated:

"The theory advanced by the plaintiffs—that if a state permits in-state vendors to sell alcohol directly to consumers if must allow out-of-state vendors to do so as well—contradicts more than 70 years of regulatory history under the twenty-first amendment...Despite plaintiffs' arguments to the contrary, the dormant Commerce Clause does not prevent States from instituting local control over alcohol sales....In limiting the right of direct selling to in-state entities over whom the States can exercise the greatest possible oversight, the States are employing just the kind of regulatory authority that the Twenty-first Amendment is meant to protect."

While we are happy that the Wine & Spirit Wholesalers Association claims to have seen the light, we note that their new position somehow implies that while they think producers should not be discriminated against, they still believe that states should be allowed to discriminate against out-of-state retailers—a position that, when applied in state law, significantly hinders consumers access to the vast majority of wines available in the United States.

H.R. 5034 AND STOPPING MARKET EFFICIENCIES
However, this issue brings us back to the primary reason why H.R. 5034 is being pushed by wholesalers and to Ms. Logomasini's statement concerning retailers buying direct from producers. Undoubtedly, wholesalers most fear the notion of beer, wine and spirit producers selling directly to retailers and restaurants across state lines without the state-mandated use of a middleman wholesaler. If the Granholm decision instructs that an out-of-state producer must be allowed to sell directly to consumer if in-state producers are allowed to, does this not also mean that an out-of-state producer must be allowed to sell to a retailer or restaurant if in-state producers are allowed to go around the wholesaler and deal directly with retailers in their state?

The answer is yes and this answer most certainly disturbs wholesalers. While I've read a number of wholesaler advocates claim that that producer-to-retailer shipping is too difficult and not efficient and that the ability of producers in one state to market and sell their goods to retailers in another state is inefficient, this is certainly not always the case. Furthermore, it appears that logistics technology combined with the transaction technology associated with on-line sales makes such a marketing channel more and more realistic.

Just like it happened in Washington State in the Costco case, it is quite possible that other states may see lawsuits that challenged discriminatory laws currently in place that allow all in-state producers to sell directly to retailers in that state, but prohibit out-of-state producers from selling to the same retailers and restaurants. And just as in the Costco case, under the Granholm ruling those laws would be found unconstitutional.

With the passage of H.R. 5034, such discriminatory laws concerning "self distribution" by producers would be unchallengeable.

There are any number of reasons to oppose H.R. 5034 and to work to assure it never passes out of the House Judiciary Committee if it ever gains a hearing. Maintaining the principle of Granholm v Heald is the most important reason, however. The Granholm decision provides the basis for allowing the alcohol beverage market to modernize and become more efficient. If H.R. 5034 passes, that hope for a more efficient and robust and modern alcohol beverage market that retains an underpinning of state regulation—an necessity, no doubt—will disappear.