Pinot Law

A couple of interesting articles caught my eye this week — one humorous and one quite telling for the wine industry.

First the humor, from an article here. TTB has ordered a California brewery to stop using the phrase “Try Legal Weed” on its bottle caps. On the one hand, I can understand TTB’s position that it does not want to condone drug use in any way, shape or form. On the other hand, the brewer in question is located in Weed, California. The article is very good and well worth the read (hat tip to Snark Hunting and Above the Law for bringing this to my attention).

Second comes the business article. According to this article here, equity fund manager Vinum Capital Management LLC has formed a $250-million private equity fund that will focus solely on acquiring and operating mid-size premium and super-premium wine properties producing between 20,000 and 150,000 cases annually. Wineries in California, Oregon and Washington are on the list.

I found the article interesting because it appears that the prospect of more significant consolidation in the wine industry may be upon us. Is this a good thing or a bad thing? On the one hand, this kind of capital can bring significant resources to wineries that may be underfunded and not operating at full capacity. On the other hand, is consolidation a good thing in terms of quality and diversity in the industry.

Time will tell, and until then I may see about getting some beer from Weed, California.

Weed used under a Creative Commons License provided by TooFarNorth.

TTB recently concluded the comment cycle of a rulemaking proceeding addressing nutritional label information for . . . wine. That’s right. The Federal Government wants to ensure that every wine consumer out there is informed of how many carbs, calories and other nutritional information is in each and every bottle of wine they purchase. Is this a good idea, or just the ‘Nanny State’ run amok.

From a policy perspective, this whole proceeding surprised me. Are consumers even interested in this information? Probably not. Are the ‘benefits’ associated with implementing these proposals enough to justify the substantial costs — particularly for small wineries? Doubtful.

TTB’s notice of proposed rulemaking (NPRM), sought to answer some of these questions. I found their answers lacking.

For example, on the consumer interest front, TTB claims “numerically significant” public support for its proposal based on the fact that about 18,000 consumers signed an online petition supporting such disclosure. But when you consider that some estimates put U.S. wine drinkers at 64 million consumers, that 18,000 is hardly “significant”. It’s downright tiny.

TTB acknowledged that much of that support was generated through the “Know Your Drink” website. That website — which extols the virtues of mandatory wine labeling — was sponsored by Diageo, which also happens to be a $3 billion dollar a year, multinational corporation with more than 22,000 employees in excess of 80 countries. Gee. Why would a multi-billion dollar, multinational corporation want to impose onerous regulatory obligations that will increase costs for wine and alcohol manufacturers, particularly smaller competitors who happen to be creeping into the market share of larger brand name companies? I wonder.

Anyway, I will be writing some more about this issue in the weeks ahead, but in the meantime, you can read comments I filed at the TTB on behalf of my vineyard here (my comments are on the last page).

Nutrition Info used under a Creative Commons License provided by blmurch.

I stumbled across an interesting article yesterday, that hits on a topic near and dear to many a winemaker’s heart: appellation. At its most basic level, the appellation on the wine label tells the consumer where the grapes in that bottle of wine come from. Appellations can include counties, states, multi-states, and what are also known as viticultural areas. There are about 200 viticultural areas in the United States, and they are identified in the code of federal regulations, here.

The article does a good job of highlighting a few points. First and foremost, it notes that obtaining label approval from the TTB (which regulates all domestic wine labels) can “be a real headache sometimes.” But it also points out that often times wineries must obtain grapes from outside of their area — so, for example, a Virginia winery, may need to buy grapes from California or New York to process their wines. Moreover, the winery can only use the appellation if 75% or more of the grapes come from that region, and the wine is made in the area of appellation.

And of course, the appellation can have a major marketing impact for the wine seller. A Chardonnay from Napa valley, will almost certainly fetch more than a Chardonnay from the North Fork of Long Island (not that I have anything against Long Island). Ultimately, it is about where your wine is from — and that can be a good thing . . . even if it’s from Long Island.

Horse’s Ass, used under a Creative Commons license provided by eamills.