Mark's Wine Blog

Saw an interesting short note this morning that Southern Wine and Spirits, the largest liquor distributor in the United States is seeking a 2 Billion dollar loan to get it through these tough times and allow it to restructure it’s current obligations.

http://www.thenewstribune.com/2010/05/07/1177597/southern-wine-seeks-loans-of-2.html

It brings up a couple of interesting, if divergent thoughts for me. To start I think it is in many ways a sign of the times that many companies (and individuals) are carrying more debt then the have in the past. Secondly and perhaps most importantly it doesn’t sound like getting the loan and line of credit is going to be a problem, so perhaps this just presents as a way to both encourage the passage of HR 5034(look we need you to pass this so we stay in business!) while taking advantage of historically low interest rates.

I hope that these type of debt restructuring, which are incredibly common for a company the size of Southern (about 20% of total wine distribution in the United States) doesn’t effect any one’s vote when it comes to HR 5034…..too big to fail is an interesting and debatable concept, but one I do not believe applies here.

As a reminder, I think Southern Wine and other large distributors serve a valid purpose in our alcohol distribution model and they have a ton of quality people working for them. That being said, I do believe that the government should allow other businesses, yes like my own, to compete with them without needing to pay them for the privilege.

Most of my friends and family have noted that I’ve been on my best behavior on this blog, not talking too much about baseball and the first place Padres….well I couldn’t pass this one up.

I’m 100% sure that running on the field isn’t worth the 15 seconds of fame, especially when it includes being tasered, spending a night in jail and a $1500+ fine. Pretty funny though and no, I really don’t feel sorry for the guy since he decided to run on the field.

San Diego Wine Meet Up

I’ve talked about the general lack of good wine bars, wine stores and wineries in the greater San Diego area in the past few months since starting Uncorked Ventures.

Given that situation and a number of friends and family encouraging me to start making a larger push to get our wine into the hands of consumers, we will be taking part in a San Diego MeetUp group in the very near future.

Tentatively titled the San Diego Wine Lovers MeetUp, we’re looking forward to our first first event within the next 30 days or so.

Depending on the response we’ll run them either monthly or bi-monthly and will look toward finding a nice dependable restaurant to host and pour the wine.

Any suggestions? We have a few ideas already, but any helpful suggestions are always appreciated.

Over the past weeks I’ve talked some in this space about HR 5034 and the negative affects it could have both on my business as well as on the wine industry in general.  I know that although this law would in fact cripple the only growth area of the wine industry in the United States (small family owned wineries dependent on shipping directly to consumers) I have to be concerned when I hear Tom Wark who is not only one of the three most influential wine bloggers on the planet, but also the President of the Specialty Wine Retailers Association say that he gives this bill a 30% chance of passing.

To me, although I’m interested in politics, being a registered independent means that I feel like politicians from both sides should be not only willing to hear my cares and concerns, but even court my vote.  My local representative in the House of Representatives is Duncan Hunter, who fits largely with the image of San Diego politics 30+ years ago, being intensely pro military (a very good thing) as well as being extremely conservative socially (personally, I like moderates best).

I wrote him an email explaining my side of the story which can be summed up in the following points:

-Wine already faces more strict shipping regulations then guns or ammunition.

-Does it logically make sense that an under-age drinker wants to wait 2 days to obtain their alcohol, even if we discount the fact that all common carriers (Fedex, UPS, etc) require a person 21 years of age to sign for the shipment?  Wouldn’t it be easier to pay that same 21 year old person to buy the alcohol from the local grocery store?

-The national wholesalers behind the bill have not been able to show a single study to show that direct shipments of wine lead to underage drinking.

-Although the stated intent of this lawsuit is to stop lawsuits fighting state specific shipping regulations, the same sponsors of this bill are currently challenging California’s shipping law in court in this state.  If lawsuits shouldn’t be used by consumers fighting for the freedom to choose their own wine, why can the industry use them?

Please don’t misunderstand my points, I am not asking for the rights to ship to any consumer anywhere without regulation.  I’m simply asking for the right to apply for a permit, pay taxes and deal with consumers interested in my wine and wine clubs.  I believe that freedom of choice should extend to as many states as possible.  If Utah’s consumers do not want to approve direct shipment of alcohol, I can understand that completely, but New York State should not be allowed to violate the commerce clause by allowing their in state wineries to ship to consumer in the state, while not allowing out of state wineries to do the same.

I’m not even saying that I think distributors should go away completely.  We deal with some of these folks on a daily basis and some of them provide an incredible service and the widely distributed wines offer people an entry into the market and help to create a market of consumers that my company, Uncorked Ventures focuses on servicing as their wants and needs change over time.  To be even more clear, there are distributors that do an outstanding job including some of the people at Monterrey Bay, TGIC and even Southern Wine and Spirits.  The employees that we deal with in those companies don’t see my company as a threat, one of the wineries we represent makes 650 cases of wine a year.  Many distributors can’t represent anyone who makes under 10,000 because of their wide distribution channels.

Although I was quite impressed to have received a response from Mr. Hunter I was somewhat disappointed at the content, simply because it seems to include a number of talking points taken directly from the wholesalers.

Response from Duncan Hunter

The bold is my addition to bring your attention to a part which sounds pretty familiar:

According the Wine and Spirits Wholesalers of America:

It is important that states retain their constitutional power to regulate the distribution of beverage alcohol and are able to fend off litigation, which serves to destabilize or destroy that authority. Although we may oppose direct shipping and self-distribution as a matter of policy, our goal is not to overturn existing state laws. We simply believe the proper forum for resolving legitimate differences over these issues is in the state legislatures – not the courts.”

I will additionally point out that aside from the obvious inconsistencies which come up in the Wholesalers statement (how do you have adequate choice when there are 5 national distributors and 6,000 wineries in the United States?) I also wonder why using the courts would be used for such things like integrating schools, the death penalty and literally every social issue of our time, but somehow alcohol distributors and certain states should be exempt from those same challenges.

My overall frustration comes mostly from the fact that the Supreme Court just decided this exact issue in 2005 in GRANHOLM V. HEALD in which the court decided that State or territorial regulations may not facially discriminate, without justification, against out-of-state producers of alcoholic beverages in favor of in-state producers.”

I don’t think it’s asking too much to have a state prove why they need to break the commerce clause before they are allowed to do it.  If they can break it with impunity, what does that say not only for the judicial branch of our government, but the Constitution itself?

Mr Hunter, all we’re asking for is a fair playing field, one which is already accorded to our competitors which are based outside of California.

Enjoyed the most recent video in regard to the direct shipping of wine, yes it’s a bit over the top, but pretty funny none the less.

Enjoy!

At Uncorked Ventures we’re happy to announce that we’ve partnered with both Alana’s Restaurant, the Redwood City location and our favorite South African wine importer Smith Wines to bring another wine tasting Meet Up to the Bay Area.

Wine Tasting Flyer copy [Converted]

Alana’s will be hosting our initial meeting on Thursday May 13th at 7pm.  The cost is $20 per person to attend, which will allow you to try some outstanding value wines from producers both near and far.

Hope to see some of you there!

Given my previous post about the attack on direct shipping of wine, I thought it would be nice to offer an alternative that respects not only individual right to choose, but state rights as well as the Constitution itself.  At Uncorked Ventures we realize that being overly political isn’t necessarily good for business, but please remember even as a licensed distributor, direct shipping with safety standards is good for the industry.

The model direct shipping bill is a joint project between wine related services such as Family Winemakers of California as well as the National Conference of State Legislatures.

dd new Section —– to the Alcohol Beverage Control Act as follows: Section —-

1. Notwithstanding any law, rule or regulation to the contrary, any person currently licensed in this or any other state as a wine producer, supplier, importer, wholesaler, distributor or retailer who obtains a Wine Direct Shipper License, as provided below, may ship up to twenty-four (24) 9-liter cases of wine annually directly to a resident of [State] who is at least 21 years of age for such resident’s personal use and not for resale.
2. Before sending any shipment to a resident of [State] the Wine Direct Shipper Licensee must first:
   (a) File an application with the Department of Alcoholic Beverage Control (Department),
   (b) pay a $100.00 registration fee,
   (c) provide to the Department a true copy of its current alcoholic beverage license issued in this or any other state, and
   (d) obtain from the Department a Wine Direct Shipper License.
3. All Wine Direct Shipper Licensees shall:
   (a) Not ship more than twenty-four (24) 9-liter cases of wine annually to any person for his personal use and not for resale.
   (b) Not ship to any address in an area identified by the Department as a “dry” or local option area.
   (c) Ensure that all containers of wine shipped directly to a resident in this state are conspicuously labeled with the words “CONTAINS ALCOHOL: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED FOR DELIVERY.”
   (d) If located outside of this state, report to the Department annually the total amount of wine shipped into the state the preceding calendar year.
   (e) If located outside of this state, annually pay to the [State Revenue Agency] all sales taxes and excise taxes due on sales to residents of [State] in the preceding calendar year, the amount of such taxes to be calculated as if the sale were in [State] at the location where delivery is made.
   (f) If located within this state, provide the [State Revenue Agency] any additional information deemed necessary beyond that already required for retail sales from the winery tasting room to ensure compliance with this section.
   (g) Permit the Department or the [State Revenue Agency] to perform an audit of the Wine Direct Shipper Licensees records upon request.
   (h) Be deemed to have consented to the jurisdiction of the Department or any other state agency and the [State] courts concerning enforcement of this section and any related laws, rules or regulations.
4. The Wine Direct Shipper Licensee may annually renew its license with the Department by paying a $50.00 renewal fee and providing the Department a true copy of its current alcoholic beverage license issued in this or any other state.
5. The Department and the [State Revenue Agency] may promulgate rules and regulations to effectuate the purposes of this law.
6. The Department may enforce the requirements of this section by administrative proceedings to suspend or revoke an Wine Direct Shipper License, and the Department may accept payment of an offer in compromise in lieu of suspension, such payments to be determined by rule promulgated by the Department.
7. Shipments of wine direct to consumers in [State] from persons who do not possess a current Wine Direct Shipper License from the Department are prohibited, Any person who knowingly makes, participates in, transports, imports or receives such a shipment is guilty of a misdemeanor punishable by [insert fine and/or jail]. Without limitation on any punishment or remedy, criminal or civil, any person who knowingly makes, participates in, transports, imports or receives such a shipment commits an unfair trade practice.

*Limits Freedom of Choice
*Kills small business
*Circumvents the Commerce Statute
*Will cause at least 100 wineries to close immediately and perhaps 1,000 within a year

Does this sound like the type of bill you want your local Congressman voting for?

In the past, I’ve featured a few of the best known wine blogs out there. Today, I thought I’d mention one that I don’t think earns the type of critical acclaim and accolades that it deserves although it is extremely well received within the wine community.

Benito’s Wine Reviews has been around since 2005 and does one of the best jobs on the web at combining reviews of wine with recipe’s as well as reviews of other adult beverages. I also appreciate that Benito is willing to taste wines which aren’t available at your local grocery store, he’s willing to push his palate and try wines from non traditional wine making regions. To me, that adds a level of interest to his blog.

If you have some free time and are looking for another great wine related, check it out!

Jon’s Article on Cork’d

What makes a millennial?

Saw an interesting article over at Cork’d which talks a bit about the impact that millennials are already having on the wine industry.  I think Jon, who I’ve gotten to know fairly well since starting to write for Cork’d myself, does a great job of explaining where millennials differ from some of our older counterparts.  Specifically wineries and wine clubs alike are going to need to focus more and more on sharing information because those of us 30 and under are accustomed to having information on our fingertips.  As an example:

How did you hear about the tragic earthquake in Haiti?  When did you see the first images of the aftermath?

For me, it occurred on Twitter and I’ve found that I get more and more local news through various Facebook feeds.

Aside from sharing information certain brands are going to find pretty quickly I think that millennials are more comfortable with international wines (like travel) then previous generations. For higher priced wineries that don’t offer anything under $50 a bottle, tread carefully. Once buying practices are established, they are incredibly difficult to break. That may mean that Italian, Chilean and Argentinean wines become more popular over time. It also makes me question if those wines which are typically bigger in style, might in fact tip the balance when it comes to the California versus France wine debate.