California wineries and supporters of the wine industry are gearing up for their biggest fight in at least a decade: heading off Gov. Arnold Schwarzenegger’s proposed excise tax hike on wine.
Vintners are speaking out to whoever will listen, predicting the most dire economic consequences if the measure passes.
“It’s like shooting Charles Shaw in the eye,” says Fred Franzia, of his Two Buck Chuck. Franzia worries that the wine’s price could soar by 25 or even 50 cents per bottle.
The tax hike “is insanity,” says Joseph Filippi, of Cucamonga-based Joseph Filippi Winery and Vineyard. His near neighbor, Don Galleano, of Galleano Winery, in Mira Loma, predicts the new law “is going to be detrimental to business” if it passes.
Winery owners, small and large, see doom if they’re forced to raise bottle prices. Greg Popovich, president of Castle Rock Winery, in Sonoma County, says he’s been warned by Beverages, and More!, one of his leading retail accounts, “that if I raise my price by even a penny in this economy I will lose the account.”
The CBS local affiliate in San Luis Obispo quoted Gary Eberle, of Paso Robles’ Eberle Winery, as saying the tax rise “by itself probably could put a few people out of business. There are just so many things aggravating our business right now, I’ve seen a lot of people in serious trouble.”
Robert Koch, president and CEO of The Wine Institute, wrote Schwarzenegger, arguing, “[W]e strenuously object to the singling out of our industry to bear more than our fair share of the burden.” The Governor’s proposal would raise the state’s wine excise tax by 640 percent, sending it from 20 cents a gallon to $1.48 a gallon, and causing the loss of at least 6,756 wine jobs, Koch calculates.
The Wine Institute released this chart representing the effect of the proposed surtax on wine.
The industry is asking consumers to write the Governor opposing the measure. Care2, an online “healthy and green living” website, has launched a petition drive.
The last time California was confronted with the threat of a big sales tax hike, Wine Institute’s then head, John DeLuca, successfully fended it off. It will be interesting to see if Koch can do the same. With California hemorhaging money, Democrats in charge of the State Legislature, and a nominally-GOP Governor who’s been acting more like a Democrat the last few years than a Republican, I’m predicting taxes are going up on wine, regardless of whether anyone likes it or not. When push comes to shove, elected officials will protect the interests of cops, firefighters, prisons and schools over those of wine drinkers. And the truth is, people who buy Two Buck Chuck can shell out another 50 cents.
I’m here in the nation’s capital for the big Obama inauguration, making the rounds of parties, balls and fêtes, and man, is it exhausting! One thing after another, with not enough sleep. Just yesterday I was asking Michelle how she stands up to the constant commotion and shmoozing. And she always looks so good! We were in the Bedroom Suite of Blair House — you know, the one where everything’s in pink pastels — having a glass of Chard (K-J V.R.) while the tailor was putting the finishing touches on the I.G. (Inaugural Gown). No, I can’t and won’t say anything about it, you’ll just have to wait to see it like everybody else! Except I can tell you it’s STUNNING and nobody but nobody could look better in it than M.O. At one point The Man Himself popped in to say hi. He was with Rahm (who looks even more feral in real life than he does on the telly). They were going out for a jog and Barack had on these grey cotton sweatpants with wide blue sidestripes and a light blue T-shirt with PEBO in red letters. That’s short for “President-elect Barack Obama.” After he and Rahm left, Michelle joked that the girls are already calling him PEBO or “PEBO Daddy”! So that’s a little inside gossip. Now stay tuned for some big news: I have learned the contents of the Obamas’ wine cellar! And it’s not all K-J. They have a lot of Alsatian Riesling (Michelle’s fave) and some Barolo (which she says she’s learning to like under the tutelage of her personal wine guru, Karen MacNeil) and also some Zinfandel and Pinot Noir, not to mention Champagne. I asked Michelle what Big O. likes and she said he’s down with Napa Cabernet, but that he also has a thing for a good microbrew (which we already knew). She confided, “He’s never acquired a taste for liquor, but he’ll have a cognac after a nice dinner.” Back home in Chicago, they have some Illinois wine, but Michelle said they don’t really like it, and probably won’t be having it in the White House.
Another thing Michelle was working on was the menu for the Inauguration Day luncheon. For all you little people not important enough to be invited, here it is:
Duckhorn 2007 Sauvignon Blanc
(My Wine Enthusiast score: 90)
Pheasant and Duck served with Sour Cherry Chutney and Molasses Sweet Potatoes
Goldeneye 2005 Pinot Noir
(My Wine Enthusiast score: 92)
Apple Cinnamon Sponge Cake with Sweet Cream
Korbel Special Inaugural Cuvée
I asked Michelle what she thought of Tom Wark’s remark last week that “I don’t expect…any public display of wine loving on the part of Barack Obama.” (She was fully aware of it, because she reads the major wine blogs every day.) She disagreed. “Wark’s a smart guy, but he’s wrong on this one. Barack will be the wine President,” she said confidently. She wouldn’t provide details, but it’s clear that we have friends in the White House, after eight low, mean, dry years of chili and milk.
Look, I fully recognize that some people have a substance abuse problem, whether it be with alcohol or drugs. So before you slam me for not “getting it,” let’s get the foregoing straight, okay?
Having said that, last week’s news that President Bush, for the first time, candidly talked about his history of alcoholism has me wondering why so many people who go through this struggle end up talking about Jesus Christ. I mean, do you have to be an ex-addict to discover that old time religion?
CNN reported on Bush’s fess-up, quoting him as saying, “I’m a faith-based guy. Sometimes, to help change a person’s behavior, you have to change their heart.” We have to understand “faith-based” in the context of another quote in the article, from a baseball player named Josh Hamilton, who told Bush that his own drug addiction was cured only after “I opened my heart, and that following night I committed my life to Christ.”
That’s what makes me uneasy with this entire anti-alcohol movement. I’ve posted many times on this site about neoprohibitionism and accompanying moves to curtail the use of alcohol, if not to eliminate it altogether. When I wrote my blog on “Seven reasons not to vote for Sarah Palin if you love wine” (Sept. 7), it alluded to this concern. I have little problem with professionals who rightfully point out the dangers of excessive use of substances, including alcohol, and I understand, as I explained above, that some people feel they just can’t take a single sip of alcohol without endangering themselves. Hell, I have relatives in that sad situation, and I feel sorry for them.
But why do so many of these crusaders have to juxtapose Jesus Christ and born-again Christianity with their recoveries? Do the two have anything to do with each other? Does that mean an agnostic can’t be a recovering addict, or a Jew, or a Buddhist? When my Jewish relatives went to AA and gave up alcohol, they didn’t run all over the place yakking about Moses and Abraham, they just quietly got their stuff together in a dignified way. Why can’t people like Hamilton and Bush do it the same way? It’s their religious certainty, and the need to pompously showcase it for everybody else, that bothers me about these recoverers — the same ideological certainty Bush displayed in his disastrous war in Iraq, in the anti-science bent of his administration, in his reflexive instinct against gay people, in the arrogant middle finger he gave to the rest of the world through his go-it-alone foreign policy. I could go on and on. I completely agree with Oliver Stone, who said:
There’s nothing more dangerous for America than an ex-alcoholic President who tells you to believe in Jesus.
And before you accuse me of being anti-Christian, I’m not. Hello! Jesus was a great Jewish rabbi. What I’m against are Christians who want to impose their narrow religious beliefs on the rest of us, tear down the wall between church and state, and replace the Constitution with Leviticus.
By the way, Mr. Bush, what about your use of cocaine?
On Monday, back to wine!
On Nov. 24 I wrote here that “Rep. Mike Thompson, the Democrat from Napa, Sonoma, Lake and Mendocino counties, is said to be Barack Obama’s pick for Commerce Secretary.” Today’s news, which is being widely reported, is that Thompson may well be Barack’s Interior Secretary. So I was close! Now, I don’t know that it’s a done deal, but the push is on. Rep. Thompson, who’s in his tenth year as Congressman from California’s 1st District, is in the mold of those secretaries Obama already has picked: smart, experienced policy wonks with star power.
The 58-year old Thompson sits on some of the House of Representative’s most powerful committees: Ways and Means and the Permanent Select Committee on Intelligence. He’s Chair of the Subcommittee on Terrorist, Human Intelligence, Analysis and Counterintelligence. A spook! But of more interest are Thompson’s deep and abiding ties with the wine industry. He co-founded and co-chairs the Congressional Wine Caucus, and is the go-to guy in the Congress for elected officials who want to know more about wine.
Thompson is considered a moderate, Blue Dog Democrat, and there’s been some grumbling on the Left about his possible nomination. There are also more ethnically diverse candidates out there; Obama may feel he does not need another white guy in the Cabinet. But when you look at the others Obama has nominated — many of them centrists — a Thompson choice makes sense.
A few years ago, I spent a day with Rep. Thompson up in Lake County, where he owns a Sauvignon Blanc vineyard, and I got to know this charming politician. (We’ve run into each other at various times since.) He also has a great sense of humor. Here are some excerpts from our conversation.
SH: How did you get into wine?
MT: My father was the first vineyard manager for Stony Hill Winery. His father owned a vineyard in Napa Valley. My mother was a bookkeeper for Beaulieu for years, and when Mike Grgich started the winery, she was his first bookkeeper. I was born and raised in St. Helena. As a young man, I used to prune the Catholic Church’s vineyard [in St. Helena].
Tell me about the Congressional Wine Caucus.
When I first went to Congress, I started it, with George Radanovich [R-Fresno], and we’re now over 250 members, from every state, and Senate members too. We use that caucus to make sure that folks in Congress know the issues that are important to the wine industry. We’re a good go-between between the industry and Congress and Congress and the industry. I’ve been very active in research funding, specifically for glassy winged sharpshooter/Pierce’s disease.
Besides you and Radanovich, are there any real geeks in Congress?
Bart Gordon, D-Tenn and Sue Kelly, R-NY [left Congress last year]. She’s into it to the point where she gave me the devil one day because we didn’t have anyplace to spit wines. And in the Senate, Ted Stevens, Dick Durban and [Barbara] Boxer.
Why are the wholesalers so powerful?
Because there’s wholesalers and beer distributors in all 435 [U.S. congressional] districts, and the wholesalers, be it beer, wine or spirits, think this is the proverbial camel’s nose inside the tent. And there’s only a handful of people who represent wineries. Wine may be made in every state, but there’s only 4 or 5 states where it’s a real big industry.
What other issues are you working on?
I’m working on a bill to get wine into the School Lunch Program.
No. Just teasing. [laughs]
I was stunned.
I wanted to see how long it would take you to react.
Do you have a cellar or collection?
I have a wine closet in my office in Washington, temperature controlled. And I have a wine refrigeration unit, 200-300 bottles, at my home in St. Helena. And we have a basement at our house in Washington with a cabinet that holds 60-80 bottles.
If you were stranded on a desert island, what wine would you want?
Oh, without a question, Sauvignon Blanc.
The last time anyone proposed a big tax hike on alcoholic beverages, including wine, was back in the early 1990s. I dont recall all the details, but the industry widely regarded this as an attack by neoprohibitionists (a term that, I believe, Wine Intitute’s then-chairman, John DeLuca, coined), and DeLuca himself led the charge against the “sin tax” hike. He didn’t entirely succeed in eliminating it, but the eventual rise amounted to only a penny for a glass of wine.
I was against a tax on alcohol, especially on wine, at that time, as I believed wine to be a civilizing influence, and things that calm and relax adult humans ought not to be taxed. But here we are, some 17 years later, and once more a serious proposal is on the table to tax wine, beer and spirits. This time, it comes, not from neopros, but from California’s Republican Governor, Arnold Schwarzenegger, who according to what I’ve heard enjoys a little nip of something now and then. Here’s a link you a YouTube that seems to be Arnold in a Japanese drink commercial, and back in his weightlifting days he made no secret of his affection for beer and wine.
That ain’t no girlie-man Chardonnay
Anyway, this time around, I have to reluctantly support the Governor’s proposed tax hike on alcoholic beverages. The particulars, according to Meininger’s Wine Business International, are that the proposed tax increase will amount to about five cents for a glass of wine. If you assume 8 glasses of wine per bottle, that’s a rise of 40 cents per bottle, which doesn’t seem like all that much to me, if it will help bail California out from the enormous fiscal hole we’re in.
Republicans, who never saw a tax they liked, have reacted predictably. Here’s a snippet from former Republican presidential candidate Ron Paul’s website, which contains an official statement by the Sonoma County Republican Party, in which they censor the man they call, without affection, the Governator:
“Governor Arnold Schwarzenegger…has reached across the aisle and found his true niche as just another, run-of-the-mill tax and spend liberal.” The declaration of censorship also says that the proposed excise tax hike “would equate to a tax on wine grape growers of $217 a ton of grapes, more than the average cost per ton for the majority of wine grapes grown in California.” Actually, this isn’t true. According to the 2007 Grape Crush Report, published by the California Dept. of Food and Agriculture, the average price per ton of wine grapes, red and white, last year in California was $565. But, hey, what’s a little exaggeration when you’re making a political point?
Look, nobody wants to see taxes go up just for the hell of it. But anyone who hasn’t been living in a cave knows that California is broke, with all that implies for roads, schools, cops, the environment, fighting fires, hospitals and the rest of the infrastructure and services upon which we depend every day. In my judgment, 40 cents per bottle of wine isn’t too much to pay for keeping our state alive.
You’d never know it, but Dec. 5 marks the 75th anniversary of the Repeal of Prohibition, an historic landmark we should all be celebrating. Instead, the date seems likely to come and go with hardly a murmur in the wine industry.
Our friends in the beer industry have taken notice. The National Beer Wholesalers Association (NBWA) yesterday issued a press release calling the anniversary “a great time to recognize the success of the past 75 years of effective, state-based alcohol regulation.” I’m not sure how successful our “state-based alcohol regulation” system has been, what with the confusion and obstructionism in certain states following the Supreme Court’s 2005 Granholm decision. But we should certainly have learned some valuable lessons from the debacle of Prohibition. Chief among them is that you cannot legislate morality. (People opposed to same-sex unions should heed this lesson well.) Another lesson is that we should always be on the lookout for signs of neoprohibitionst revanchism.
Who brought us Prohibitionism? The folks in the temperance movement, that’s who — priests and ministers who told their flocks that alcohol was sinful (despite the fact that Jesus seemed to rather like it). They were aided and abetted by organizations such as the Anti-Saloon League and the Woman’s Christian Temperance Union, as well as crazy zealots like Carrie Nation, who invaded bars wielding a hatchet.
The delightful Ms. Nation. Note the warm smile and twinkling eyes
It was they who drove Prohibitionism forward, putting intense pressure on (hypocritical) legislators who voted for the 18th Amendment. President Wilson properly vetoed it, but the Congress overrode his veto. Once again, we see a Democrat struggling to preserve an existing freedom, while conservative zealots try to take that freedom away from the people.
Anyway, even though the wine industry isn’t planning on any formal celebrations, that shouldn’t stop us individually from recognizing Dec. 5 as a special day, and vow to never again let government take away our rights.