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Winemakers toast high court ruling

Winemakers broke out the bubbly Monday, celebrating a Supreme Court ruling that should mean added sales, especially to owners of small vineyards.
Edison Voong packs up boxes of wine to be shipped from at the Internet wine retailer's warehouse in Oakland, Calif. In a rule that should benefit small vintners, the Supreme Court Monday struck down laws banning interstate shipments. Eric Risberg / AP file
/ Source: The Associated Press

Vintners broke out the bubbly Monday and began taking calls from East Coast customers eager to order after the Supreme Court struck down bans on out-of-state wine shipments.

In Northern California, Iron Horse vineyard co-owner Joy Sterling said her phone started ringing at 7:30 a.m. as word of the ruling got out.

“What’s exciting is that this evens the playing field,” Sterling said.

Sterling can’t fill those orders just yet.

Monday’s ruling means legislatures in the 24 states barring out-of-state shipments will have to review their laws to make sure in-state and out-of-state wineries are treated equally — and states could simply decide to ban all shipments.

Still, vintners were hopeful the ruling would uncork new markets in an industry with an estimated $21.6 billion in sales annually.

The ruling may have the biggest impact on California, which produces 90 percent of the nation’s wines. But with all 50 states producing wine in some quantities, it was expected to have a national impact as well.

“It will definitely expand sales opportunities and, just as importantly, expand the reputation of New York wines because now people around the country will finally be able to get them,” said Jim Trezise, president of the New York Wine & Grape Foundation. “It’s going to be sort of a snowballing effect: Wine writers will write about our wines, consumers will try them, so the industry will make more of them and that will create more consumers on the other end.”

In the 5-4 decision, the high court struck down shipping bans in Michigan and New York, saying it’s unconstitutional for a state to allow in-state wineries to ship direct to consumers while stopping out-of-state wineries from doing the same thing.

Although states could respond with outright bans, Robert Koch, president of the San Francisco-based Wine Institute, pointed out that wineries in other states are not likely to favor shutting down all shipments.

At issue is the traditional system in which wineries ship to wholesalers who then ship to restaurants and retailers.

Crazy-quilt system
A decade ago, only a handful of states permitted wineries to ship directly to consumers. But the number crept into the mid-20s in recent years, creating a confusing system where some states allow all shipments, some only allow in-state and some ban shipments altogether.

Wholesalers had argued against direct shipping, saying it would trample state rights, cut tax revenues and give teens unprecedented access to alcohol.

Wholesalers weren’t giving up the fight yet.

In a statement posted on the Wine & Spirits Wholesalers of America's Web site, president and CEO Juanita Duggan said the ruling gives states the option of “supporting face-to-face transactions by someone licensed to sell alcohol or opening up the floodgates.”

Duggan said WSWA would support strengthening alcohol laws, arguing in-person ID checks are best.

Striking down the bans was expected to have the largest impact on small wineries who aren’t big enough for national distribution — and on the wine connoisseurs who love them.
“Those very small wineries — that direct business is their lifeblood,” said Kathleen Schumacher, president and CEO of New Vine Logistics, a Napa-based company that specializes in wine shipping.

New Vine shipped a million bottles last year and is on track to double that this year, with almost 30 percent of shipments going to New York wholesalers.

Schumacher was cautious about how Monday’s ruling would play out but said if New York decides to allow out-of-state shipments “that would be an enormous impact for us. There’s a lot of demand in New York.”

The hodgepodge system of wine shipping laws has led to quite a few irritated Wine Country visitors.

“A lot of people aren’t aware of it and come in here and they’re like — 'What do you mean, you can’t ship wine to me?”’ said Doug White, tasting room manager of the Vintner’s Collective in downtown Napa, which features vintages from several small wineries.

In west-central New York’s Finger Lakes, a largely unspoiled setting of lakes, hills and valleys with 92 wineries, most sales are made in tasting rooms. Just a few wineries have become big enough to easily hook up with distributors in other states.

Peter Saltonstall, who owns King Ferry Winery on the eastern slopes above Cayuga Lake, predicted more shipping could put the Finger Lakes “firmly on the wine map.” He’s already thinking about expanding.

“It’s a great day,” he said.