Fermentation: The Daily Wine Blog

Integrity—Bloodied and Scarred

I tend to talk a loud game here at Fermentation about the corruption that surrounds the politics of wine distribution. I tend to accuse politicians of being in some people's pockets on the issue of the three tier system. But rarely do I have the opportunity to point my readers to an example of integrity so obviously bloodied and scarred by bald faced corruption. Allow me.

Late last year, the state of Michigan lost a court battle in which they vigorously defended their discrimination against out-of-state wine stores. Michigan allowed in-state wine stores to ship wine to Michiganders. It allow in-state wineries to ship wine to Michiganders. And it allow out-of-state wineries to ship to Michiganders. But out-of-state wine merchants? They were prohibited.

The Federal District Court Judge told both the state of Michigan and the Michigan Beer and Wine Wholesalers Association that their arguments in favor of denying adult consumers access to the wines they want and denying out-of-state wine merchants the right to fulfill Michigan consumers' demands was unconstitutional. The Judge, predictably, cited the Supreme Court decision and reasoning of Granholm v. Heald.

It was no surprise that the state appealed this decision to Sixth Circuit Court of Appeals where, I'm sure the Michigan wholesalers knew, their arguments in favor of blatant, anti-consumer discriminatory laws would be shot down by an even higher court. The problem the Michigan wholesalers in particular had was that a decision in favor of retailer direct shipping from an Appeals Court is a very powerful slap to their face and would have advanced the goal of allowing wine merchants outside Michigan and other states to be treated fairly where wine shipping was concerned.

So what happened? Rather than play out the Appeal, the Michigan Wholesalers decided to go to their bench. They decided rather than get a bad decision in a higher court, they'd fix their problem of having to compete on only a slightly more level playing field by getting a law passed that, while seemingly fair, would make sure there would be no retailer shipping at all in Michigan.

The Michigan Beer and Wine Wholesalers went to Representative Barbara Farrah and asked her to introduce a bill they had themselves written that would have banned ALL direct shipment of wine in Michigan by both in-state and out-of-state retailers, an approach to Direct Shipping policy that incredibly anti-consumer and anti-business, is constitutional.

The wholesalers also asked Representative Farrah to introduce this bill into a committee and to arrange to have that committee "hear" the bill without giving any notice to its opponents. Essentially, the wholesalers wanted to ram it through the Legislature under cover of darkness.

Representative Farrah did everything the Wholesalers asked. Everything.

Now, it just so happens that Representative Farrah counted Michigan Beer & Wine Wholesalers Association, the folks that  wrote the anti-consumer bill that was successful in killing retailer to consumer shipping in Michigan, as her largest campaign contributors during her three terms as a state Representative.

This was one of her last acts as a state representative. It also turns out she was a lame duck. Term limited out of office. Needing no more support from the Wholesalers, she could have done the right thing and denied the Michigan Wholesalers her involvement in screwing the consumers of Michigan and her representatives by engaging in a seriously dirty end run around representative government.

So why didn't she do the right thing? Because there was a job waiting for her after she left office.

Today, former Representative Barbara Farrah works for the Lansing lobbying firm "Governmental Consultant Services Inc." Imagine who one of their largest clients is:

The Michigan Beer & Wine Wholesalers Association, the very people that were giving her money throughout her political career and the folks for whom she choose to assist by taking a sharp carving knife and sticking in the side of Integrity, leaving it bloodied and wounded next to the capital steps while she went down the street to take a six figure job that was one can only assume was promised her if she did the deed for their benefactors.

If you are even a little bit appalled by Ms. Farrah's blatant lack of integrity in the Michigan Direct Shipping debate, you should write her and tell her. I did.

Can I Beg A Dose of Common Sense?

The American legal system really is a mess. Whether it's the reluctance of the two parties in congress to address nominees for various federal courts or the constant tort claims, it seems that justice comes at an obscenely slow pace.

One of the reasons, however, that justice is often very slow in coming is due to the various lawsuits that are filed that truly seem meritless, a nuisance and meant merely to aggrandize the lawyers filing the complaint.

Take for instance this lawsuit recently filed against Beverages & More that claims their "5 Cent Sale" is deceiving. In the Wine Business Monthly article on the lawsuit we have this little revelation about the claim in question:

“This practice of using a fictitious, marked up, or otherwise misleading regular price" is a deceptive, unfair and illegal practice,” alleges the filing. Plaintiff Peter Gray Jr. of San Francisco seeks restitution, damages, injunctive relief, and attorneys' fees, claiming to have been “actually injured as a result of BevMo’s conduct in an amount not less than the difference between what he paid for the two “regular” price bottles of wine (a total of $17.98 plus tax) and what he should have paid if BevMo had sole the bottles at their actual regular prices (a total of $12.98 plus tax).”

If you read this closely, the plaintiff in the case is claiming he was "injured" to tune of at least $5.00.

I'll tell you what, Mr. Gray, give me a call and I'll shoot you a check for four times that amount if you choose to drop your lawsuit and give our legal system a small break. I'll consider it the completion of my civic duty for the day.

Gray claims that with some wines the "regular price" advertised is in fact a higher price than what would be considered "regular" prior to the 5 Cent Sale. BevMo claims the lower-than-regular prices Mr. Gray has seen on some wines actually represents their "Club Bev" prices on some wines.

Who Cares? Really. Who Cares?

There's no question about it. Americans are in desperate need of tort reform as well as a dose of common sense. And some Americans need to do something with the time they have on their hands besides filing seemingly ridiculous lawsuits. Tell you what, Mr. Gray, in addition to giving you a check for 4 times the the least amount you were supposedly injured by BevMo, I'll also throw in a beginners book on wine. Maybe that will occupy your time and save us Californians from footing the bill so you can retrieve your $5.00.

A Collision of Wine, Politics and Commerce—How You Can Help

AND NOW A VERY SPECIAL MESSAGE FROM OUR SPONSOR, URGING WINE LOVERS WHO CARE ABOUT FAIR TRADE, THEIR RIGHTS AND THE FREE MARKET TO GET INVOLVED
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For Immediate Release: November 9, 2009

Politics, Wine and Fair Trade Collide at Online Wine Auction

Online Fundraising Auction Supports Efforts to Give Wine Merchants
Right To Ship Wine, Consumer right to buy the wines they want

(Sacramento, CALIF)—Beginning today and running through November 19th, Specialty Wine Retailers Association (SWRA) and WineCommune.com are sponsoring the "Wine Without Borders" Online Fundraising Wine Auction. The online auction of wine will raise funds to support the effort to overturn state-sponsored discrimination against  online commerce and give wine lovers real access to the wines they want, but can't find at their local wine outlets.

To view the various lots up for bid in the auction, wine lovers can go to: www.winecommune.com/help/swra.cfm. Wine lovers that support free trade in wine can quickly register, start bidding on wines and know they are helping the effort to bring down protectionist wine shipping laws.

"Between 2000 and 2008, more than $65 million was given to state political campaigns by special interests that oppose the idea of wine lovers buying wine online," said Tom Wark, Executive Director of the Specialty Wine Retailers Association. "We shouldn't be surprised then that today, in the 21st century, 36 states help these same well-healed special interests with protectionist laws that ban the shipment of wine into their states."

Among the wines on the block at the Wine Without Borders Online Fundraising Auction are: a 3 liter bottle of 2000 Chateau La Mission Haut Brion, Martinelli Jackass Vineyard Zinfandel, Bordeaux futures including cases of 2007 Chateau Petrus and Chateau Mouton Rothschild, a collection of 2004 Syrahs from across California, 1996  Veuve Cliquot La Grande Dame Champagne, a 6 liter bottle of 2006 White Cottage Napa Valley Cabernet Sauvignon, and many more hard to find and rare wines. In all there are more than 90 lots up for bid.

Specialty Wine Retailers Association is the only national organization that is working to overturn protectionist anti-wine shipping laws, give wine merchants access to the national wine market and allowing consumers to finally gain access to the wines they want by working to change laws in various states.

The proceeds of the "Wine Without Borders" auction will go toward helping fund the SWRA efforts across the country, including lobbying and media relations efforts.

"The 'Wine Without Borders' Online Wine Auction also gives consumers the opportunity to get involved and help with this effort to open up online wine sales across the country," said Wark. "To some this cause seems trivial, but in addition to supporting corruption and blocking wine lovers from accessing the wines they want, states that ban retailer to consumer shipping are losing millions of dollars in tax revenue that could be earned by simply letting their  citizens buy wines from out of state wine retailers when they can't find them at home."

About Specialty Wine Retailers Association
Specialty Wine Retailers Association is a national organization of fine wine retailers, wine clubs, auction houses and consumers that advocate for fair and well-regulated wine shipping laws. For more information about SWRA see http://www.specialtywineretailers.org or on Facebook at the Specialty Wine Retailers Fan Page.

# # #

Contact:
Tom Wark, Specialty Wine Retailers Association

707-935-4424 • twark@specialtywineretailers.org

Media interested in interviewing Tom Wark or wine merchants involved in this effort can contact Tom Wark at the above email address and phone number. A list of Auction lots is also available by contacting Tom Wark.

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WE NOW RETURN YOU TO YOUR REGULARLY SCHEDULED WINE BLOG

Fraud & Terroir

With the report out of Oregon late last month that the Geological Society of America poo pooed the notion that the "Minerally" taste in a wine has anything to do with the minerals in the soils that the wine's grapes were grown, we are once again reminded that the notion of "Terroir" may just be the a fraudulent, if not romantic, idea that marketers and PR types like me like to flog in front of the buying public.

But isn't it really one of the most compelling ideas you can imagine: The wine in your glass that comes from a small, ancient vineyard in Tuscany gives you a connection to that piece of soil because the wine TASTES like that soil. You visit this unique place via your taste buds.

But it just ain't true.

The announcement by the GSA got lots of coverage, including in Decanter, The NY Times and the Seattle Post Intelligencer.

But dispelling the idea that a wine's minerality comes from the minerals in the soils isn't such a big deal. Most thinking people know that's a little bit absurd, especially if they've been reading the literature over the past few years. What would be a big deal is if the idea that the difference between appellations could be tasted in the wines. The fact is, there is not specific "Russian River Valley Pinot Noir " taste. There is no specific "Alexander Valley Chardonnay" taste. This is a myth.

Whether it's an appellation association or a winery telling consumers they can taste the region in their wines, both border on fraud. I'd be willing to bet that if you lined up 10 different Pinots from ten different CA appellations, very few people in the world could correctly identify the appellation of even three of the wines.

That said, I am very attracted to the idea of promoting the special characteristics of small, single vineyard plots. Here is where I think consumers can be led down a path that connects soil and climate to taste in a very direct way. It's at this micro level when the interplay of soil composition, aspect of the land, micro climate, vine density, vine age, cover crop, irrigation routine and winemaker interaction can be explored in detail and some very good estimates can be made on how they affect the final wine.

The Wheels Fell Off The Wagon in Saint Helena

The city of Saint Helena in the middle of Napa Valley wants to prohibit tasting rooms in its city limits from tasting and selling any wines that do not carry the "Napa Valley" appellation or a Napa Valley sub-appellation on the label.

What I can't figure out is why the Saint Helena City Council doesn't just go all the way and prohibit the sale or tasting of any wines that don't cary the "Saint Helena" sub appellation on the bottle. With the approval of this new regulation, the Saint Helena City Council seems to want to appear as parochial and silly as they possibly can. Why take half measures? Why not jump the shark completely and appear completely nuts?

And it IS nuts to prohibit the sale and tasting of non-Napa Valley wines in it's city's tasting rooms. Is there really a danger that Saint Helena-based tasting rooms will degrade the Saint Helena or Napa Valley brands if they pour tastes of the wineries' Mendocino Pinot Noirs? Maybe there is.

I'm not a free market purist. How can you be when there is so much at stake where the environment and community planning is a critical part of the quality of life of any region. But actually dictating the appellation of wines that can and cannot be poured? When this sort of thing takes up city council time hasn't the moment come when the issue of disbanding the council for lack of legitimate things to do needs to be debated? Clearly the wheels have fallen off the wagon at Saint Helena's City Hall.

Hat tip to Marcia @ Cornucopia Creations for alerting me to the story.

Why Are America's Wine Wholesalers Giggling?

“We have a system set up in this country for distribution (of wine) that is designed to create accountability and responsibility. Amazon to their credit tried to abide by the laws that created accountability. When they found out they were unable to do so in a cost effective way, then they had to at some point bail out. The larger issue is if Amazon and its resources couldn’t do it legally, obviously these other companies aren’t doing it legally and taking advantage of the lack of state enforcement.”
Craig Wolf, CEO, Wine & Spirits Wholesalers Association

Mr. Wolf should be extraordinarily proud of the success that he, as CEO of the largest wine wholesaler organization in America, and individual wholesalers have achieved in their attempt to limit as much as they can consumer access to wines. Their latest victory is Amazon.com's retreat from selling wine on-line. The inane, archaic, and wholesaler-supported regulations that define the three-tier system are what Amazon.com was up against. America's wine wholesalers support these anti-consumer, anti-competitive regulations precisely to be able to blunt and stop entry into the wine business by companies like Amazon who might be able to demonstrate the nonsensical nature of much of the three-tier system, not to mention the redundancy inherent in having state's mandate the use of wholesalers to get wine to market.

However, that said I think it's important to look closely at the statement above, made by Mr. Wolf in an interview with Wine & Spirits Daily.

“We have a system set up in this country for distribution (of wine) that is designed to create accountability and responsibility."
Even if this were true, what are the odds that a system designed in the 1930s, when there were hardly any wines being produced in the United States, when Americans rarely drank wine and when it was impossible to ship wine across the country without ruining it, would have any relevance to today's wine market? That's a rhetorical question. What was once a system set up to give states accountability and promote responsibility has turned into a welfare and bailout system for America's wine wholesalers. "Designed to create accountability and responsibility" is really just a euphemism for "a system that guarantees wine wholesalers control of the market at the expense of wineries, retailers and consumers".

"Amazon to their credit tried to abide by the laws that created accountability. When they found out they were unable to do so in a cost effective way, then they had to at some point bail out."
Wholesalers has spent millions and millions of dollars that only they in the middle tier of the three tier system could afford to spend, to influence legislatures to pass and keep in place laws that make it as difficult as possible for companies like Amazon to safely bring wine to the consumer; wines that the wholesalers have no interest in bringing to the consumer. What Mr. Wolf does not say is that there are any number of ways the regulations concerning the distribution of wine could be changed that not only allowed for accountability, but also provided consumers with real choices, created a fair playing field for all parts of the three tier system, promoted competition, and forced wine wholesalers across the country to actually work for the money they make rather than having it handed to them on a government issued plate.

"The larger issue is if Amazon and its resources couldn’t do it legally, obviously these other companies aren’t doing it legally and taking advantage of the lack of state enforcement.”
Mr. Wolf is making statements here about which he knows nothing. He doesn't name the names of those that he says are shipping illegally for a very good reason: he's a lawyer and knows better than to make that kind of reckless accusation. But more importantly, he gets the whole issue wrong. The larger issue is not about illegal shipping. The larger issue is why wholesalers spend millions of dollars to preserve a system that in states across the country produces terrible selections of wine relative to what's really available in the U.S. Market? Why do wine wholesalers ALWAYS oppose proposals that allow consumers to access the vibrant selection of wines in the U.S marketplace, forcing them to choose from the rudimentary selection that wholesalers want consumers to stick with?

The bottom line? Right now, across the country, wine wholesalers are jumping with joy, laughing and giggling uncontrollably because they were able to successfully thwart a program that would have given consumers better access to wine.

Yes, I know its just more bitching and moaning. Fine. If you want to do something about this there are some options.

1. Find out who your STATE legislators are and write them telling them you want to be able to have wine shipped to you from both wineries and retailers.

2. Educate yourself about retailer-to-consumer shipping laws and politics.

3. Educate yourself about winery-to-consumer shipping laws and politics.

4. Become a Facebook Fan of Specialty Wine Retailers Association

5. Write Craig Wolf and express yourself regarding wholesalers' agenda.

Amazon and the Three Tier System of Wine Distribution

When a company of the size, power, influence and lawyering capacity of Amazon.com can't figure out how to get into the wine business, you have to ask yourself, what's wrong with the wine business?

Let me tell you what's wrong: It's the death grip that is the Three Tier System. It's one thing to have each and every state deliver different regulations for the sale of wine. But it's an altogether different thing to have that regulation be in the form of the  stifling, archaic, competition dampening, discriminatory, corrupt and barely useful of the Three Tier System.

I have no insight on the deliberations that went on inside Amazon.com that would lead to them scrapping their program, but I'd bet case to bottle that it had everything to do with the over-regulated structure of the three-tier system that serves the purpose of propping up by state mandate the profits of a tired wholesale tier at the expense of entrepreneurship, consumer access to wine, economic development and the entire wine industry in general.

Take for example the case of shipping wine. Only 13 states allow out-of-state wine retailers to ship wine to their residents, making real access to wine for consumers a joke. And why do most states prohibit this activity? There's no policy basis behind the prohibitions. There is only an obstinate, slavish, pandering dedication on the part of politicians to the money that wine distributors give them in order to keep their out-dated place as the bottleneck inside the three tier system from collapsing under the weight of the reality of a modern communication economy.

Had 50 states allowed direct shipment of wine to consumers from retailers, Amazon would have been in business a year ago and states would have been shoveling tax dollars into their coffers. But no. We need to make sure this doesn't happen. You see, wine is a "special product", as America's wholesalers like to call it. We can't just be carding people at their home then give them the wine they ordered and paid for. UPS and FED-EX drivers are just too dumb to read a drivers license. It's too dangerous.

Another example of the absurdity of regulation in the wine business is the determination by the California Alcohol Beverage Commission that a company that takes a "commission" on the sale of a winery's products for having found and delivered the buyer, is committing a crime. Rendering clarity from that bit of interpretive leap frogging demands the services of a sophist.

There is a wine industry in the United States despite the fact that the three tier system still exists in most states.  The fact that Amazon appears to have dropped its plans to enter the wine business in the United states likely happened because of the Three Tier System. The fact that many states will and are foregoing significant tax revenue is due to the Three Tier System. The fact that consumers can get some of the wines they want happens despite the three tier system.

How Not To Do A Walkaround Wine Tasting

I remember being very, very new to the wine industry. Fresh with a graduate degree and recently hired at a wine PR firm in Santa Rosa called Gracelyn Associates, I knew just enough about wine to get myself in trouble. And of course I did just that.

One of the best places for the wine neophyte to get in trouble is at a large walkaround tasting. That's where I chose to embarrass myself; at my first, large, walk-around wine tasting. I blame my boss and more experienced colleagues. They should have warned me.

I recall walking into the cavernous ballroom and being shocked. All I saw were suits, countless tables manned by more suits, the flash of glasses and wine. Lots and lots of wine. The only thing I knew was that my badge allowed me access to all of it.

This sunday I'll be attending what, by all past accounts, is an outstanding walk-around tasting. It's the Grand Tasting of Pinot On The River at Rodney Strong in Healdsburg. More than 100 Artisan Pinot Noir producers will be pouring multiple bottles of their best. Here's the things I won't do at the Grand Tasting of Pinot on the River because I have the capacity to learn from my mistakes:

1. Swallow
2. Wear white of any kind
3. Carry anything in my hand but a glass
4. Attempt to sound smarter than I am.

So picture this: A drunk wine neophyte wearing a wine stained white shirt and no jacket, holding a glass in one hand and fumbling a bevy of brochures and dropping them on occasion while I explain to Paul Draper of Ridge Vineyards why his Lytton Springs bottling would have been better if it had a higher percentage of Petite Sirah in the blend. What made this impromptu lecture at one of America's greatest wine producers a piece of art was the slurring.

The walk-around tasting gets a bad wrap by many wine professionals primarily because it often means crowded rooms, not enough time to talk to the producers pouring the wines and because it's difficult to really assess individual wines when sampling so many in a milieu not best suited for serious evaluation. There's something to be said for this criticism. But the criticism really only applies if you are looking to use a walk-around tasting to seriously evaluate wines.

Don't do that.

Use the walk-around tasting to do three things:

1. Acquaint yourself with wines with which you are not familiar.
2. Network
3. Learn from the folks behind the tables pouring

This is what I'll be doing on Sunday at Pinot on the River's Grand Tasting. This must be one of the most impressive gatherings of serious, truly artisan Pinot producers anywhere. The line up of wineries is ridiculously attractive. There are more than 100 of them including AP Vin, Ahh, Failla, Halleck, Hirsch, Kanzler, Keefer Ranch, Morgan, Peay, Roar, Sea Smoke, Testarossa and The Donum Estate, to name only a few.

Returning to the scene of my first real wine crime, I was finally led away from Paul Draper by a colleague while in mid-lecture. Based on future meetings with Mr. Draper, he appeared not to recall the incident. I was guided into the foyer of the ballroom, sat down on a bench and lectured by my more experienced, unstained colleague. Nicely. It wasn't a fall down drunk or anything. But just enough to teach me the benefits of spitting and keeping my mouth shut most of the time. 

Pinot on the River will be my first walk-around tasting in a while. It's conveniently located in my home county, produced and sponsored by The Pinot Report and has the endorsement of one of the legendary Walk-around Tasters in our business, Alder Yarrow: "Pinot on the River...is one of the best wine tastings I've ever attended."

If you are looking for me, I'll be the guy in black.

Gary Vaynerchuk and The Cult of Passion

Gary Vaynerchuk is coming to Napa Valley.

I'm not sure this is news. He's been in Napa Valley before. This time however he is coming to promote his latest book, "CRUSH IT: Why Now is the Time To Cash In On Your Passion."

Where: V. Sattui Winery, Saint Helena, Napa Valley, CA
When: Saturday, October 24
When: 11am to 1pm
Who: Open to the Public
Price: Free

I don't often mention events on this blog, but I make the exception in the case of Gary Vaynerchuk because frankly, he's remarkable. He's remarkable for the well of passion he possesses for life, family, and work. His rise to phenomenon status has been a remarkable thing. More remarkable is how he has used his knowledge of wine, technology and his passion to rise above wine and move into the realm of inspirational personality. This kind of transition has never occurred with any wine personality that I know of.

CRUSH IT is described as a book that explains how to deploy modern Internet strategies to turn your passion into a business. Gary is correct about one important thing: if you want to use the Internet as the primary tool by which you succeed at what you love, then you better have LOADS of passion  (and not a little personality: read "charisma" that can be translated to an electronic environment.)

FERMENTATION Wine Blog Reader Survey Results

The survey taken last week of FERMENTATION readers yielded some interesting results. I have a pretty good picture of my readers' demographics. For example:

GENDER
Males:    76%
Female  24%

AGE
21-30    21%
31-40    24%
41-50    29%
51-60    18%
61-70      8%
70+        -1%

HOUSEHOLD INCOME
Up To $25K              6%
$25-$50K                 9%
$50K - $75K           13%
$75K - $100K         20%
$100K - $150K       23%
$150K - $200K       15%
$200K - $500K       13%
$500K -$1mil            1%
$1mil+                      1%

EDUCATION LEVEL
High School Degree            9%
Junior College Degree        3%
Four Year Degree             52%
Post Graduate Degree     31%
phD                                    5%

MARRIAGE
Married    66%
Single      34%

WORK IN OR AROUND THE WINE INDUSTRY
Yes    62%
No     38%

In this demographic breakdown you get a picture of the average FERMENTATION reader as a married middle aged man with a college degree making around $75K to $150K per year. Interestingly, this sounds a lot like me.

But it's that last statistic, about working or not in the wine industry, that is really interesting. As I noted in an earlier post, the percentage of readers that work in the wine industry has increased nearly 25% since I took this survey 3 years ago. The reasons are obvious. Simply look at my content. But even more interesting is the differences between industry readers and non-industry readers.

THE AGE DIFFERENCE (yes=works in industry)
 

THE EDUCATION DIFFERENCE (yes=works in industry)

 

THE INCOME DIFFERENCE (yes=works in industry)

 

THE DAILY DRINKING DIFFERENCE (yes=works in the industry)

 

THE MEDIA CONSUMPTION DIFFERENCE (yes=works in industry)

 

Turns out that those who don't work in or around the wine industry tend to make more money, tend to have a higher education level and tend to be older. However, those in the industry drink are more likely to drink on a daily basis. And of course industry types tend to read more wine publications more often.

THE GENDER GAP
And what about a gender gap? My women readers tend to be slightly younger than the men, they tend to make less money, they are less likely to drink every day, women are much less likely to own more than 300 bottles of wine, they tend to pay less for their wine, they are much less likely to read this blog on a daily basis, and they are much more likely to read Food & Wine Magazine and Bon Appetit than are my male readers.

Click here to see all the raw results of the FERMENTATION Reader Survey for yourself.

And once again, I want to thank everyone who took the survey.