Archive for October, 2006
Lawsuit filed in Tennessee
October 22nd, 2006
Add Tennessee to the list of at least nine states that have ongoing direct to consumer litigation. A “wine enthusiast” recently filed a lawsuit in Tennessee to challenge the laws prohibiting the direct shipment of wine to consumers. Tennessee currently is a felony state that allows for a one gallon federal onsite provision, but otherwise forces wineries to use the three tier system to get wine to consumers.
Interview with Jeremy Benson from Free the Grapes! – Part 1
October 12th, 2006
Below is the transcript from the first part of an email interview with Jeremy Benson, Executive Director of Free the Grapes!
Q: Can you start with some background on Free the Grapes! and its mission?
Free the Grapes! was founded in 1998 as a result of the wholesaler’s success in making Florida a felony state for direct shipments to adult consumers in late 1997. Several groups met to discuss how to best work with consumers in Florida and other states, who form a natural constituency, and were vocal despite the Florida defeat. Soon thereafter the Wine Institute, Napa Valley Vintners, WineAmerica, Coalition for Free Trade and Family Winemakers of California formed the organization and conducted an agency search. Fortunately Benson Marketing Group was retained to manage the consumer and media outreach campaign starting in May 1998.
Our mission has never changed: to ensure consumer choice in wine. We focus exclusively on this issue, that is, the domestic direct shipping of wine from wineries and retailers to consumers.
We are a national grassroots coalition of consumers and wineries. We’re not lobbyists or attorneys, but we work closely with the organizations and firms that conduct these services. The Board of Directors of Free the Grapes! is comprised of professionals representing these areas, and wineries and retailers of course. In effect, Free the Grapes! serves as the table around which the wine industry can discuss the issue in a constructive, positive manner.
And this cooperative approach has been extremely successful. In 1998 there were 17 legal shipping states, now there are 32. Wineries now have the option of shipping directly to consumers in states that represent 78% of US wine consumption. The attorneys and plaintiffs had a huge victory in the U.S. Supreme Court. We have the support of the Federal Trade Commission. We have 300,000 consumers on our mailing list that sent 60,000+ letters to their state legislators in 2005.
There’s still a lot of work to do to do. Namely, we need to support lobbyists who are quietly cleaning up overly burdensome regulations. We need to oppose wholesaler campaigns that aim to set wineries and consumers back with new burdens on shipping. And because wine retailers can ship to, at most, consumers in just 12 states, we need to ensure that wine retailers also participate in a national marketplace with reasonable compliance requirements.
But I hope, and trust, that one day soon we’ll achieve our mission and fold up our tent, knowing that we’ve helped consumers, wineries, retailers and, yes, even wholesalers, to further wine in America by augmenting the 3-tier system with limited, regulated direct wine shipping. That will be a great party!
Q: What are the biggest challenges in your current efforts to remove direct shipping restrictions?
There’s really only one obstacle, and it’s the wholesalers, who mistakenly believe that direct-to-consumer wine shipments somehow infringe on their market. But direct shipping is a consumer-driven issue, and we know that direct shipping actually helps ALL tiers of the wine industry. Wine clubs, tasting room sales, and online and email sales are a significant portion of revenue for some wineries, but they help 3-tier sales for any sized winery. Clubs are like a pay-for sampling program that pulls those wines through the retailer-wholesaler tiers. So it is perplexing, to say the least, that wholesalers in positions of leadership continue to oppose these shipments and take an aggressively anti-consumer stance.
Q: What are the best ways for wine enthusiasts to get involved?
Consumers can log onto www.freethegrapes.org and sign-up for our free email list. We’ll contact them with periodic updates and when there is legislation pending in their state. It’s the best way for wine lovers to get engaged, and it doesn’t take many to really make a difference!
Clarifications on Direct Shipping Laws
October 11th, 2006
The enforcement and interpretation of various state laws for Direct-to-Consumer wine shipments continue to evolve. Following are three recent updates that wineries should be aware of.
Connecticut: Wineries of any size are eligible to apply for an Out-of- State Shippers Permit in CT. The cost of the permit is $250 and there is a $100 filing fee. Wineries producing 100,000 gallons a year or less that have an approved Out-of- State Shippers Permit are allowed self-distribution privileges in addition to shipping direct-to-consumers.
Georgia: Wineries shipping direct-to-consumers in Georgia are not required to pay sales tax, unless they have a nexus (an office or employees) within the state. The Special Order Direct Shipping License in GA does not trigger a sales tax requirement.
North Carolina: Wineries that have an approved Direct Shippers Permit for NC are allowed to ship direct-to-consumers throughout the entire state, including dry counties. Direct-to-consumer shipments are legal in the 4 dry counties because the transaction is not taking place outside of the restricted area.
Virtual wineries taken to court
October 10th, 2006
Last week the California Department of Alcoholic Beverage Control took three “virtual” wineries to court stating that they violated the provisions of their licenses by pouring wine for consumers at a wine festival. So called virtual wineries typically hold two licenses in combination, a type 17 which is a wholesale license and a type 20, which is a conditional retail license allowing the licensee to sell wine directly to consumers via a wine club or internet sales. This combination of licenses allows a business owner to have a lot of the same privileges as a winery or type 02 license holder without having a bricks and mortar winery or the on-going compliance requirements that wineries have. The main prohibition of the 17/20 combo is that those licensees are not allowed to pour wine at consumer tastings and they cannot have tasting rooms. California is the only state that allows wholesalers to sell wine to consumers. The three wineries are arguing that the prohibition on public tasting is unfair to small proprietors and the charitable organizations that host the tasting events and are challenging what they claim is a “little known” law. The penalty for pouring wine at a consumer event without the correct permits is a 15 day suspension of the license or a fine. An administrative judge will give the ABC a decision within 30 days and the ABC will act on the decision within 100 days. At this point the California Assembly is not proposing a change in the law.
New COLA form available
October 9th, 2006
TTB published a new Certificate of Label Approval or Exemption (COLA) form in June of this year and is now requiring that all applicants use this new form. According to Customer Service Staff at the TTB Labeling and Formulation Division in Washington, D.C, they will reject all applications submitted on the old form that were received after October 1. If you have submitted applications this or last week on the old form, you should go ahead and resubmit them on the correct form. TTB staff admitted that they will not catch and reject all those submitted on the old form because the forms are nearly identical so if you have time to wait it out you may still get approval.
The new form can be downloaded at http://ttb.gov/forms/f510031.pdf
