The News Post

Senate Works to Lower Wine Excise Taxes (April 13 Update)

April 7, 2016 by Tara Good

The amendment was dropped from consideration on the bill. We will be considering other legislative options with our alcohol industry coalition partners.

Craft Beverage Reform and Tax Modernization Act Introduced as Amendment to FAA Bill

by Michael Kaiser

4.7.16

Senators Ron Wyden (D-OR) and Roy Blunt (R-MO) have introduced the Craft Beverage Modernization and Tax Reform Act (CBMTRA) as an amendment to the Federal Aviation Administration (FAA) reauthorization bill. The FAA, like any independent federal agency, is required to be reauthorized every few years by Congress in order to be fully funded. Often times, other policy items (or riders) are added by amendment to an unrelated bill in order to secure passage. The FAA reauthorization is currently being debated in the Senate and could be voted on as early as next week.

As we reported last year, the CBMTRA is a comprehensive alcohol excise tax reform bill containing tax provisions for every alcohol commodity. WineAmerica was neutral on the bill as originally written (see our initial analysis here), but worked over the course of the Summer and Fall of 2015 to secure an agreement that was more beneficial to the American wine industry. The bill was close to being added to the FY 2016 Omnibus Appropriations Bill but that effort fell short at the last minute. The bill has now been revived this past week.

The specific provisions for wine are as follows:

Expands Tax Credits for All Wineries

Under present law, wine is subject to an excise tax of between $1.07 and $3.40 per gallon, based on alcohol content and carbonation level. Qualifying small domestic wineries producing 250,000 wine gallons or less are eligible for a tax credit (Small Producer Tax Credit) generally equal to 90 cents per gallon on the first 100,000 gallons produced, with that benefit phasing out between 150,000 gallons and 250,000 gallons. This provision removes the phase out and replaces the credit with a new tiered credit system for wine produced in the U.S. or imported as follows:

1.00 credit for the first 30,000 wine gallons produced
$0.90 credit for the next 100,000 wine gallons produced (30,001 to 130,000)
$0.535 for the next 620,000 wine gallons produced (130,001 to 750,000)
All wine produced over 750,000 will be taxed at the regular rate.
In addition, this provision removes the existing prohibition against claiming the credit for naturally sparkling wines.

Expands the Alcohol Threshold for Table Wine

Under current law, still wine is taxed at different rates based on alcohol content. Still wine containing not more than 14% alcohol by volume is taxed at $1.07. Still wine above 14% and less than 21% alcohol by volume is taxed at $1.57 per gallon. It is important to note that for labeling purposes alcohol content in wine may vary from the stated amount within certain tolerances, however no such tolerances exist for tax purposes. The CBMTRA would provide that wines up to 16% alcohol by volume qualify for the $1.07 tax rate, raising the threshold for table wine from 14% to 16%.

Increases Carbonation Tolerance Levels for Low Alcohol Wines

Current law provides a tolerance for still wine of 0.392 gram of carbon dioxide per hundred milliliters of wine, which is generally taxed at $1.07 per wine gallon. Wines exceeding this limitation are taxed as “sparkling wine” at either $3.30 or $3.40 per wine gallon. The CBMTRA would increase that tolerance to 0.64 gram of carbon dioxide per hundred milliliters of wine for wines produced primarily from grape or solely from honey and water (mead), which do not contain any other fruit and contains no more than 8.5% alcohol by volume.

WineAmerica supports the passage of the Craft Beverage Modernization and Tax Reduction Act. This is the first time wine, beer and spirits have all been supportive of the same federal tax reform package. We commend Senators Wyden and Blunt for introducing the CBMTRA as an amendment to the FAA reauthorization bill and look forward to working with them and our industry partners to ensure passage in the Senate and then turn our focus to the House of Representatives.

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Questions? Contact Michael Kaiser, Director of Public Affairs, mkaiser@wineamerica.org.

WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations. As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy

WineAmerica Commends Arizona Passage of Expanded Direct-to-Consumer Wine Shipping Bill

April 4, 2016 by Tara Good

4.4.2016

by Michael Kaiser

WineAmerica almost exclusively focuses on federal policy, but every once in a while we get involved in a state-specific issue if the end result has a positive outcome for the American wine industry. To that end, we commend Arizona for enacting a new law that would expand direct-to-consumer wine shipping.

Current Arizona law states that wineries producing 20,000 gallons or less (which works out to 8,412 cases) or less can ship wine directly to Arizona consumers unless the consumer was present at the winery when the wine was purchased. The new law (SB 1381) removes the winery visitation requirement and opened shipping to all wineries.

The new law provides for a limited, regulated and tax paid shipping by American wineries who obtain a license from the Arizona Department of Liquor Licenses and Control. The new licenses will begin to be issued no later than January 1, 2017. There is a gradual increase in the amount of wine that can be shipped to an individual consumer in the three years after the new law goes into effect: 6 cases through 2017; 9 cases in 2018; and 12 cases beginning in 2019 and thereafter. The law includes safeguards to prevent wine being shipped to minors.

WineAmerica worked with the Wine Institute, Washington Wine Institute, Oregon Winegrowers Association, and the Arizona Winegrowers Association to ensure passage of the new law.

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Questions? Contact Michael Kaiser, Director of Public Affairs, mkaiser@wineamerica.org.

The Craft Beverage Expo and ShipCompliant Direct: WineAmerica Registration Discounts

April 4, 2016 by Tara Good

WineAmerica members qualify for registration discounts at two exciting and dynamic conferences.

Craft Beverage Expo

WineAmerica is a supporter of the third annual Craft Beverage Expo, being held in Oakland, California this May 18-20. The Craft Beverage is a cross commodity conference and trade show focusing on post production products and education. WineAmerica members will receive a 15% discount. To get the code for the discount please contact us at mkaiser@wineamerica.org. For more information, please visit the Craft Beverage Expo website.

ShipCompliant Direct

Join the wine community and help shape our industry as we Build Tomorrow at ShipCompliant’s 11th annual DIRECT Conference on June 23-24 in San Francisco!

Come hear from industry experts and motivational keynote speakers who will discuss innovation and the future of our industry, build relationships in the wine community, and share best practices with your peers. DIRECT is the most well-attended event in the industry every year, with hundreds of wine industry representatives present, including wine club managers, heads of marketing and hospitality, compliance managers, shipping department managers, winery owners, third-party marketers, and trade media.

This year’s conference will feature industry experts including:

Steve Gross, Vice President, State Relations, Wine Institute
Susan Evans, Executive Liaison for Industry and State Matters, Alcohol and Tobacco Tax and Trade Bureau

Learn more and register here.

WineAmerica Members receive 10% off registration. To get your promo code, send and email to mkaiser@wineamerica.org.

TTB Publishes FAQ on Tied House Ruling

March 21, 2016 by Tara Good

3.21.2016

by Michael Kaiser

The TTB has issued a set of frequently asked questions in response to their ruling on federal tied house violations (see our analysis here). The ruling was issued last month and was in response to Kroger’s proposal to allow a large distributor to control shelving in their stores.

The TTB has made it clear that industry members may provide retailers a plan for shelving, but nothing further. An industry member may not provide and “inducement” or a “thing of value” to the retailer. While not mentioning Kroger by name, the TTB notes that any category management arrangement between an industry member and a retailer may not result in the exclusion of a competitor’s products. Any such practice would be considered a violation of the Federal Alcohol Administration Act.

When the ruling was published, it was not clear if there were to be an exceptions to what is considered a “thing of value”. The TTB has clarified a few exceptions to what is and is not allowed. They are as follows:

Product displays not to exceed $300 per brand
Advertising items such as posters, coasters, paper napkins, foam scrapers, calendars, ash trays, cork crews, shirts and caps
Consumer coupons and contests
Consumer tastings and samplings

To read the full FAQ as published visit the TTB’s website.

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Questions? Contact Michael Kaiser, Director of Public Affairs, mkaiser@wineamerica.org.

Mandatory FDA Menu Labeling Delayed Until Next Year

March 14, 2016 by Tara Good

3.14.2016

By Michael Kaiser

Chain Restaurant Menu Labeling to be implemented in 2017

As a result of language in the omnibus appropriations bill enacted December 18, 2015 FDA is delaying enforcement from December 1, 2016, to the date that is one year after it issues final guidance on menu labeling. It is unclear when the final guidance will be issues, but we expect it sometime later this year. Restaurants of twenty or more locations will be required to list the nutritional information of all standard menu items when the rule is implemented. Alcohol is included in the labeling requirements.

WineAmerica has been following this issue for some time now, as alcohol is not exempt. The FDA was required to establish the rule under the nutrition labeling requirement contained within the Affordable Care Act of 2010. Alcohol, which originally was proposed to be exempted by the FDA, is now included in the labeling requirement for restaurants.

A restaurant that meets the parameters will have to list the calorie and nutrition information for all beer, wine and spirits listed on a menu. Mixed drinks not listed on a menu are exempted from the requirements, as are liquor bottles on display behind a bar. Restaurants have significant flexibility in choosing a basis for nutrient contents disclosures. This can include the USDA’s National Nutrient Database for Standard Reference. The USDA’s National Nutrient Database for Standard Reference includes the categories, “alcoholic beverage, wine, table, red,” “alcoholic beverage, wine, table, white,” among several other general categories for alcoholic beverages. The USDA will allow covered establishments to use these entries as the bases for their nutrient content disclosures for alcoholic beverages that are standard menu items.

The FDA will not be encroaching on the TTB’s regulation of the alcohol industry, and all of the nutrition labeling requirements will comply with TTB requirements. Alcohol producers will not be required to disclose the nutritional content of their products or conduct laboratory analyses of their products. The burden for disclosure is on the covered establishments (restaurants) and they will be allowed to use the accepted USDA measurements for caloric and other nutritional content.

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Questions? Contact Michael Kaiser, Director of Public Affairs, mkaiser@wineamerica.org

WineAmerica is the national voice of the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations. As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.