DIRECT SHIPPING WARS

The Battles are Not Over Yet

So, you thought the Supreme Court decision the other year was the final word, did you? You remember that decision, the one allowing wineries to ship across state lines to consumers in other states - the Granholm Decision.

In fact, it was just another battle in the overall war. Since then, wine distributors have used their money and clout in attempts to stop the fine wine industry from selling direct to consumers, a practice that could eliminate these dinosaur - era industries out of the vinous profit loop.

One way the distributors are attempting to hold on to their prohibition-era, state-granted monopoly on alcoholic beverage sales is to attack retailers, rather than wineries. It has been their position that retailers who ship wine across state lines do not enjoy protection under the Supreme Court decision (aka the Granholm decision) - only wineries. As you will read below, that pathetic argument is going down in flames.

In a surprise twist, online wine retailer Wine.com has started attacking other online retailers, in a type of internecine warfare not seen so far among retailers of fine wine. The backlash to their actions was swift and strong, however, and new signs are that Wine.com CEO Rich Bergsund may have newfound appreciation for the error of his ways. Below are a few article excerpts that illustrate the latest skirmishes on the direct shipping battlefront.

JUDGE: GRANHOLM APPLIES TO RETAILERS In a 58-page decision, a Texas judge has ruled that retailers have the same protection from discrimination with regard to consumer-direct shipping that wineries do.

Judge Sidney Fitzwater of the U.S. District Court for the Northern District of Texas ruled that laws precluding out-of-state wine retailers from selling and shipping wine to Texas consumers are unconstitutional.

The judge also shot down familiar arguments about protecting minors, and arguments about tax collection, and the like.

"It's a sweeping decision rejecting the argument that Granholm (the 2005 Supreme Court Ruling on consumer-direct wine shipping) does not apply to retailers," Specialty Wine Retailers Association Executive Director Tom Wark said. "Retailers may not be discriminated against if a state is going to give its own in-state retailers the right to ship."
 
Winebusiness.com
January 15, 2008

WINE.COM SUPPRESSES FREE WINE TRADE Wine.Com has confirmed that its attorneys are sending complaint letters identifying by name wine retailers in nine states where laws require an instate presence for out-of-state retailers wanting to direct ship to consumers.

Wine.Com says it is taking the unusual and controversial actions because alcohol regulators that require out-of-state retailers to set up in-state operations for direct wine shipping are not uniformly applying and enforcing those regulations, putting the high-profile Wine.Com at a competitive disadvantage to its otherwise numerous illegal peers.

Wine.Com has opened facilities in each of those states. The move has dismayed some in the wine industry who fear that "turning in" companies that are violating various direct shipping restrictions feeds criticism that liberalizing regulatory controls will make it less likely that states effectively can collect taxes, monitor product safety and standards and be sure that minors cannot find a new channel for underage purchases.

"You have to ask yourself- Why would Wine.Com do this," said Tom Wark, executive director of the national Specialty Wine Retailers Association, which is funding lawsuits challenging states that currently allow only in-state wine retailers to ship direct. "The good that Wine.Com can do by joining with other retailers and their own peers in trying to gain more market access to wine for consumers is far greater than by doing what
they are now doing."

Wine Market Report on December 27, 2007

CLASSIC WINES RETALIATES AGAINST WINE.COM

IS WINE NUTRITIOUS? After more than 30 years of deliberation, federal regulators have proposed requiring the alcoholic-beverage industry to put nutrition and alcohol-content labels on their containers, setting off the equivalent of a barroom brawl among makers of beer, wine and liquor.

Pushed by consumer groups, the U.S. Treasury Department's Alcohol and Tobacco Tax and Trade Bureau for the first time would mandate disclosure of how many carbohydrates and calories and how much protein and fat alcoholic drinks contain, as food labels do. How and where to disclose alcohol content is generating heat.

The stakes are high for the half of the adult population that drinks alcohol and might seek health guidance, as well as for the $160 billion industry, which is split over concern that the content rules may give one sector an advantage over the other.

Though the labeling requirement would not take effect until three years after a final rule is published, beer producers already have taken the battle to Capitol Hill. In a letter last month, they asked lawmakers to convince the Tax and Trade Bureau that disclosing the alcohol in a serving would be "complex, redundant and could mislead consumers."
Vintners are concerned about the cost of the proposal, which would require lab testing of different wines. Besides, they complain, the nutrition-facts array would rob them of space for the artistic displays that are common on wine labels

Cindy Skrzycki, Bloomberg News

FEBRUARY WORLD CLASS WINES

 

2005 JK CARRIERE PINOT NOIR WILLAMETTE VALLEY 

Price: $45
Production: 275 cases
Drinkability: Starting to open up; Decant or cellar
Availability: Down to the last couple of cases

The thing about Oregon wine is, there are still quite a few very small wineries. They sometimes make wine in locations other than big, fancy wineries. J. Christopher makes wine in a garage attached to a house. Westry makes wine in a mini-storage unit.

Jim Prosser of JK Carriere makes wine in a barn.

Located a short distance off of Highway 99 not far from Newberg, Oregon,  it's not even a big barn.  But he's insulated the place, and has been turning out pinot noir and his Glass rose of pinot noir there for about seven years now. (He also has a picture of a bug on his label - not your usual waterfalls-and-puppydogs fare. That's how he rolls.)

His winemaking philosophy matches my wine drinking philosophy very, very well. Here it is, from the winery literature: "Ours is focused winemaking of classically structured, ageable, high-acid, smooth-tannin Pinot noir. Nuance, movement and grace are the goal. Small production - 1700 cases for the 2005 vintage - allows us to make the highest quality wine on a barrel-by-barrel basis."

Lucky for all of us, the wine he turns out is excellent - and it's been getting better steadily for years. With the release of his '05 Willamette Valley, he's produced his best "normale" release so far. It has intense black fruit flavors surrounded by supple tannic structure, and the whole is inflected with a deep minerality and supported by vibrant acidity. It's showing as a pretty wine with depth and structure, but is still quite approachable. Like most of the '05s from Oregon, it will benefit from a couple of years in the cellar, but I was able to enjoy a bottle all the way to the end last week, with no harmful side effects. Decant this one for an hour, or cellar for 1 - 5 years.

2006 Shea Wine Cellars Pinot Noir Estate!

Price: $45
Drinkability: Decant now, or hold 1- 5 years
Availability: Good now

We are pleased to offer this stellar wine, an Oregon classic, to our membership as a World Class Wine of the Month.

2006 Spangler Pinot Noir 

Price: $24
Drinkability: Good now, will improve
Availability: Good for now

The Umpqua Valley is a growing region just south of the Willamette Valley. There's a strong grape-growing tradition there - Oregon first post-prohibition vines were planted in the Umpqua by Richard Sommer, who made wine under his Hillcrest vineyard imprimatur for many, many years.

While there have been wineries there since the 1960s, most have been small, family-run operations that have relied on the tourist trade, locals, and a few wine festivals to keep things going. One winery, Henry Estate, has become quite sizable by making friendly, inexpensive wines for the supermarket trade and for export. But for many years, there were no "serious" wineries. In fact, the Umpqua became synonymous with eccentric winemakers and some really crazy stories.

That has begun to change in recent years. There are now two wineries in the Umpqua making serious wine, with aspirations to make world-class wine: Spangler and Brandborg. We have offered wines from them both in the past.

(Some readers may jump in with the suggestion that Abacela is among the notable wineries there. While Abacela certainly gets press for growing a large number of uncommon grape varieties, and while a FEW of their wines are desirable (notably the viogner and the dolcetto), I find many of their wines to be unvarietal in character, excessively oaky and tannic, and worse. I won't put them in the Umpqua's upper echelon yet.))

Winemaker Pat Spangler and wife Loree emigrated to the West some years ago, fleeing the high-stress lifestyle of a Chicago Board of Trade floor trader. They purchased the old La Garza winery, including most of their unsold inventory - much of which went down the drain. Over the past couple of years, Pat has focused on picking ripe fruit from quality sources, and the results show in his wine.

This '05 Willamette Valley bottling is rich, with broad flavors of blackberry and black cherry. It tastes riper than most Oregon '05s - because it was grown in a warmer region! It's layered, juicy and bright with a terrific finish. It's a contrast to the lean, often tannic pinots that often come from the Umpqua, and worth opening up for dinner soon.

>> Click here to purchase from the OPNC web site

2006 Territorial Vineyards Pinot Noir
Price: $19
Drinkability: Not bad at all!
Availability: Good

For many years - heck, All of them so far - The Oregon Pinot Noir Club has been in Eugene, Oregon. Eugene is at the southern end of the Willamette Valley, which is about 100 miles long.

We do make wine at our end of the Valley. But generally, I feel that Eugene is the poor cousin on the wrong side of the vinous tracks.

Up North (centered around Yamhill County) there are hundreds of wineries. Around Eugene: perhaps as many as twenty now.

Up North, there is a concentration of suppliers, producers, labor, and knowledge that has produced a critical mass of wine, igniting the passion of pinot noir lovers worldwide. In Eugene, folks still say things like: "I hear that there's some good wine in Oregon these days."

Up North, there are rich, famous producers who get huge critical scores and command amazingly high prices for their wine - because they will do anything required to make great pinot noir. In Eugene, I must reject most local wines for low quality. Most wineries here rely on local residents to drink their wine, and their products do not receive critical attention.

Now that I've bashed Eugene's wine culture and producers, I must also say that there are good producers here who want nothing more than to make good wine. King Estate does a fine job for a winery of their size. Broadley certainly has its fans. And, for my money,  Territorial Vineyards does a very good job delivery excellent quality pinots - and other wines - at reasonable prices.

This Willamette Valley bottling is their entry-level wine. It's fresh and juicy, with plenty of fruit, just the right amount of tannin and acidity to keep things balanced, and a lingering finish. With the ripe '06 vintage, many pinots in the under - $25 range are exhibiting gooey, soft and over ripe character.  This pretty offering from Territorial avoids those pitfalls, and delivers the goods at a very fair price. Even better, it's only going to get better in the bottle over the next couple of years. Drink now, or hold.