WineAmerica: U.S. Wine Industry Consumer Direct Sales Survey: “VinQuest™ 2011 – the U.S. wine industry’s annual survey of consumer direct sales trends at the country’s 3500+ bonded wineries. Qualif…”
By Michael Kaiser
The Alcohol Tobacco Tax and Trade Bureau has just announced a few changes for submitting Certificate of Label Approvals (COLAs) and Formula Approvals.
As many of you probably noticed it is taking longer than normal for COLAs to be reviewed. The current average is around 20 to 25 business days, which works out to close to six weeks. The TTB came out with the following statement today:
COLA and formula reviews will continue to be conducted in as timely a manner as possible. To achieve that goal, we will continue to review COLA and formula applications in the order they are received. However, to reduce review delays on these applications, we will no longer be accepting “Expedite Requests” or “Informal Reviews,” effective immediately. As we are experiencing considerable increases in the number of applications received, you should allow adequate time for a 90-day application review process within your business plan and anticipate that we may require you to make revisions to your labels or formulas.
Now, this does not mean that it will take 90 days for your label submission to be approved, but what it does mean is to allow 90 days for any issues that may come up with the label. The TTB is currently understaffed, and with the current Federal hiring freeze, they cannot hire new staff and if someone leaves the agency they are not replaced.
What is of particular concern is the suspension of “Expedite Requests”. In the past, with proper documentation, the TTB would expedite the review of a particular label(s). Label approvals could be turned around in less than a week. Now a winery has no recourse for an expedited label review if an unforeseen rejection occurs.
TTB is strongly encouraging people to use the COLAs Online system. Online applications are reviewed in half the amount of time that paper submissions are. Because of the amount of labels submitted and the staffing issues at TTB, it is currently taking around 10 business days for COLAs to be reviewed online.
If you are a WineAmerica member and are currently using COLAs Online or want to switch to that form of COLA submission, I am always more than happy to review the label before it is submitted.
If you have any questions about this TTB announcement please contact me at firstname.lastname@example.org or at 202-783-2756.
To read the notice from TTB, please go here: http://www.ttb.gov/labeling/label-formula-application-adjustment.shtml
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The following article appears in the February 2011 issue of Wines and Vines
by Cary M. Greene
The decision addresses New Jersey wine laws and directly threatens the rights of wineries to have satellite tasting rooms and self-distribute their wines—or it could allow out-of-state wineries to have those privileges.
Unlike direct-to-consumer shipping, the privileges at play are not particularly discrete and don’t lend themselves to easy remedy. It’s true that tasting room, event and festival privileges are usually offered exclusively to local winery licensees, but in the vast majority of cases, this has little to do with protectionism. Mostly, it’s because the privileges aren’t functionally the same in the hands of in-state and out-of-state businesses.
When dealing with local privileges like tasting rooms, we are dealing with the raw components of agri-tourism and the buy-local movement. Satellite tasting outlets, winery events, farmers market sales and winery festivals aren’t merely offered to local wineries to sell wine. They promote local agriculture, a state’s agricultural potential and heritage, and the preservation of rural landscapes. States are right to try to keep their rural areas vital and flourishing.
TheFreeman decision ignores these underlying purposes entirely. Instead it takes a cursory look at New Jersey’s law and finds that in-state wineries are “allowed to skip the first two tiers—wholesalers and retailers—while out-of-state wineries must involve both of these tiers in order for their wine to reach consumers.” While strictly true, Freeman’s analysis is flawed because it fails to wrestle with the practical realities of how tasting room, event and festival privileges function in the real world.
It’s axiomatic in Commerce Clause jurisprudence that state laws advancing a “legitimate local interest” that cannot “be served as well by available non-discriminatory means” are Constitutional. In other words, while states must attempt to level the commercial playing field for local and out-of-state wineries, the Constitution cuts them slack if the alternative would give out-of-state wineries a competitive advantage.
When operated by local wineries, tasting rooms are more or less farm stands with a more sophisticated image.Freeman’s characterization that tasting rooms allow wineries “to skip the first two tiers” is a gross simplification since agriculture is central to the operation of a tasting room.
On the other hand, “tasting rooms” operated by out-of-state wineries are wine bars with on- and off-premise sales privileges. Their natural competition is other local pubs and liquor stores. In other words, offering out-of-state wineries tasting room privileges—the available non-discriminatory alternative—does nothing to rectify the apparent discrimination identified byFreeman. It creates a market advantage for local retailers that happen to be out-of-state wineries.
The context of winery direct-to-consumer shipping is different than the context for tasting room and other local winery privileges. Unlike direct shipping, tasting room privileges are functionally different in the hands of in-state and out-of-state businesses. By followingFreeman, courts would be encouraging retailers to produce a few gallons of wine somewhere. Those few gallons would become a retailer’s ticket to lower costs of entry, broader sales privileges and mobility—without the related cultural benefits those privileges offer in the hands of local wineries.
WhileFreeman is important, the decision doesn’t justify rethinking long-held beliefs about the state of alcoholic beverage regulation. As a dynamic and growing industry, we need to advocate for thoughtful state policy approaches that better allow us to reach consumers. The existing distribution system doesn’t accommodate many of our products all that well. We need state legislatures to understand that adding flexibility to the three-tier and control systems is wise policy when deployed carefully.
Freeman doesn’t change everything, but it requires us to better defend the hard-fought privileges wineries have sought and won during the past four decades.
Cary M. Greene is the chief operating officer and general counsel of WineAmerica, the National Association of American Wineries. Learn more about WineAmerica atwineamerica.org.
By Michael Kaiser
I just returned from the 2011 Unified Wine and Grape Symposium in Sacramento, California. Once again, a very impressive and important event for the American wine and grape industry. It is always a good opportunity for WineAmerica to connect with current winery and SAC members and develop some new contacts.
The WineAmerica staff is going to be traveling quite a bit more in the next few months and we hope to see a lot of our current members and make more new connections as we continue to grow our membership this year.
Here is where the WineAmerica staff will be in the coming months:
Jennifer Montgomery, Director of Political Affairs and Grassroots will be attending the Midwest Wine and Grape Conference in St. Charles, MO from February 4 -7. She will also be attending the Cold Climate Conference in Minneapolis, MN from February 17-19. Jennifer will also be at Wineries Unlimited in Richmond, VA from March 29-31.
Cary Greene, Chief Operating Officer and General Council will be attending the Oregon Wine Industry Symposium in Eugene, OR from February 21-23.
Michael Kaiser, Director of Communications and Regulatory Affairs will also be attending Wineries Unlimited. Michael will also be attending License to Steal in Geneva, OH from April 12-14 and the Pennsylvania Wineries Association Meeting in State College, PA from April 18-20.
We hope to see many of you at these various events.