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Gov’s excise tax hike on alcohol is needed

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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.


Prohibitionism: the “noble experiment” that ended 75 years ago

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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.


New course for tasting room employees

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Wines & Vines Magazine (which is edited by my former boss at Wine Spectator, Jim Gordon, who in turn used to blog for Wine Enthusiast’s unreserved — it’s a small world out there!) has an interesting new article, Pros to Teach Tasting Room Management, explaining how Sonoma State University’s Wine Business Program is teaching a new class for tasting room staff. It will bestow on them what I believe is the nation’s first Tasting Room Management (TRM) Certificate.

Now, I’ve never been big on these certification programs. There’s too many of them. Whether it’s a mail-order divinity license that lets you marry people, or some fancy-pants piece of paper you get from taking a two-week course in wine appreciation, they make it too easy for somebody to become an instant expert. It’s like when the Wizard of Oz gave the Scarecrow a diploma, proving that he had a brain. But Sonoma State’s certification program is one I fully support, for the simple reason that tasting rooms — which have become vital customer centers for wineries — all too often have abysmal staffs. My biggest gripe is when a tasting room person can’t answer a simple question about the wine, such as where the grapes are from.

I do have one apprehension about the Sonoma State course: I hope they’ll let the tasting room employees be themselves and remain warm, friendly human beings, instead of over-educating them to become little marketing managers who see walk-ins as nothing more than dollars on legs.

As part of the Sonoma State program, Jean Arnold, president of Hanzell, will teach a course on “Marketing Wine as a Luxury Product,” which Hanzell certainly is. I’m of two minds on the wine-as-luxury thing. Part of me hates the elitism and snobbery that can accompany it. The other part of me totally relates to it. (So I’m vinously bipolar.) Sit me down to dinner and serve me up ‘61 Latour and I’m impressed! A course on “wine as luxury” flirts with the danger that it reinforces the notion you have to be rich and wearing black tie to enjoy wine, but Jean Arnold is the perfect person to teach it. She’s solid and down-to-earth, as has been everyone I’ve ever met who worked at Hanzell.

Incidentally, a Master of Wine by the name of Sheri Sauter Morano, who’s a spokesperson for the Wines of France campaign, is running a poll on her blog called “Which Wine Will You Open on Election Night?” Speaking for myself, next Tuesday I’ll have a bottle of Roederer Estate 2002 L’Ermitage in the fridge. Here’s what I hope and expect will happen. Shortly after the polls close in California, the national news outlets will declare Barack Obama the winner by a considerable margin. (I’m predicting a minimum of 340 electoral votes.) That’s when I’ll pop the cork, lift the glass high, and shout out L’Chaim! to toast President-elect Obama.

Please vote tomorrow, if you haven’t already. And if you live in California, vote against Prop 8, a vicious, mean-spirited and misguided attempt to deny civil rights to thousands of people. As Bob Dylan wrote, in Slow Train Coming:

But the enemy I see wears a cloak of decency
All non-believers and men stealers talking in the name of religion
And there’s a slow, there’s a slow train coming up around the bend.


Alcohol advertising: Is there a reasonable solution?

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The issue of alcohol advertising is heating up worldwide, as problems of underage drinking, abuse, drunken driving, illness, injury and death are sparking debate over whether governments ought, or have the right, to set limits.

Yesterday, in Australia, the Health Minister of New South Wales, John Della Bosca, set off a firestorm when he called for no alcohol ads on television before 9 p.m. Going even further, he suggested a complete ban on all alcohol advertising if that didn’t work. He told a local newspaper: “The power of persuasion of alcohol advertising is the most sophisticated and seductive I have seen. As a student of the art of persuasion for electioneering, the alcohol industry is almost unbeatable.”

Della Bosca’s comment was immediately challenged by New South Wales’ opposition leader, Barry O’Farrell, who said that promoting personal responsibility, not government censorship, is a better way to encourage responsible alcohol use. It’s the old education vs. regulation debate.

The brouhaha brought to mind last week’s explosion in this country when MillerCoors’ plan to introduce a new, high-alcohol drink clearly aimed at youth, Sparks Red, was opposed by 25 state Attorneys General. Under intense fire, the company last Tuesday announced it was shelving the launch. If Sparks Red had ever made it to store shelves, you can just imagine the ads deep-pockets MillerCoors would have created to sell it.

The European Union, like the U.S., forbids targeting minors in alcohol advertising, but individual member states have imposed far more stringent restrictions. France, for example, completely bans alcohol ads on television, while Norway and Sweden allow no advertising of alcoholic beverages that exceed 2.5% (Norway) or 3.5% (Sweden). Numerous other countries allow alcohol advertising on T.V. only at night.

The arguments over whether advertising increases alcohol consumption, or if it encourages underage people to drink, are eternal and probably impossible to resolve. Obviously, if alcohol beverage manufacturers didn’t believe advertising worked, they wouldn’t invest hundreds of millions of dollars in it. But human beings have shown a penchant for alcohol (and mind-altering substances in general) throughout our history, and long before the concept of “advertising” existed, drunkenness was a problem, as the tale of Noah in his tent reminds us. (See Genesis 9:21-24.)

Total bans on things rarely work the way they’re intended. Prohibition was a joke and a disaster. The “war on drugs” has failed. Some people who call for a ban on alcohol advertising undoubtedly do so because of their own ideological or religious beliefs, and it’s not unlikely that some of them would prohibit the sale of alcohol in America, if they could. It’s reasonable to restrict alcohol advertising, but we have to be vigilent not to let the camel’s nose of neoprohibitionism get into the tent of our right to drink. There’s also obviously a huge difference in the way that alcohol is portrayed in advertising. Wine ads tend to be aimed at smart adults and emphasize issues of greenness, respect for the land, pairing with food, family, and a balanced life. Beer ads target juveniles of all age whose hormones are out of control. We shouldn’t lump them all together.


Industry braces for rules on label disclosure of wine additives

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Tom Wark, at Fermentation, alerted us yesterday to the British newpaper Telegraph’s article on “unauthentic ingredients” in wine in the form of oak chips, but this was only the visible tip of a gigantic iceberg roiling the waters in Great Britain over the use of additives, and about to spill over bigtime to our shores.

In what looks like a testing of the waters, the defense of the use of wine additives a few days ago by the CEO of Britain’s largest wine industry lobbying group, The Wine and Spirit Trade Association, signaled that the alcoholic beverage industry is taking seriously threats to require labels to disclose all the ingredients in the bottle, and is fighting back.

The CEO of the 320-member group of producers, wholesalers, bottlers, retailers and others, Jeremy Beadles, told Channel 4’s Dispatches (a kind of Sixty Minutes program) that “The winemaking process is governed by strict regulations designed to ensure products meet stringent health and safety standards.” Dispatches aired a segment highly critical of additives, of which the European Union allows at least 50, in the form of flavorings, preservatives, enzymes, fining agents and so on. The Dispatches program provoked a storm of controversy throughout England, with bloggers like Jamie Goode yesterday slamming Channel 4 for producing “a desperately poor programme,” while consumers praised it for alerting them to facts previously unknown. Check out this commentary from Jane Moore, a columnist for The Sun newspaper, who’s in favor of complete disclosure on labels. She wrote, “One producer told us it [disclosure] would be tantamount to ‘commercial suicide,’ presumably because it might put the customer off and result in lower sales.”

On this side of the pond, Bonny Doon’s Randall Grahm famously came out for full label disclosure last December. The federal Tax and Trade Bureau issued a proposal of rulemaking (Notice No. 62, updated by No. 64) that would require disclosure of all potential “allergens,” which seems to be simply a synonym for additives. Wine Institute, California’s leading association of producers, strongly opposes such a new law, as evidenced by this remarkable 34-page letter to TTB from Wine Institute’s President, Robert P. Koch.

At this point, Wine Institute’s Gladys Horiuchi says she has no idea when or if TTB will issue their final ruling. But TTB spokesman Art Resnick says there will be one, sooner or later. The holdup: the Food and Drug Administration is holding hearings on its Food Allergen Awareness program, “and we [TTB] need to be consistent with what FDA does,” Resnick asserts. TTB, in other words, is dotting its “i”s and crossing its “t”s so they can build up a scientifically airtight case for mandatory disclosure. With heavyweights like TTB and Wine Institute squaring off, the food allergy lobby mobilizing, and bloggers just waiting to stir things up, this smackdown is going to be interesting.


Napa Vintners: Wineries in “information-gathering” mode re: Amazon’s bid to sell wine

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Yesterday’s Reuters announcement that Amazon.com, the world’s biggest online retailer, will be selling wine starting next month hit the industry by storm. I got through to Terry Hall, the communications director for Napa Valley Vintners, late in the day.
SH: What role is NVV playing?
TH: We held a workshop for 29 wineries on Sept. 4 for them to meet the Amazon folks, and we’ll have another one on Sept. 12, with 50 wineries signed up.
Has Amazon been meeting with wineries in other parts of the state?
Well, 26 states are part of the program, based on reciprocity or on in-market pass-through distribution. Amazon’s been talking to wineries up and down the West Coast. They were in San Luis Obispo and were able to go door-to-door, but because of the number of wineries in Napa Valley, we did the workshops as a member service.
Can you tell me which wineries signed up for the workshops?
That’s not for the public record, but it ranges from small family wineries to large wineries.
Have people been expressing skepticism, or excitement, or what?
It’s information-gathering now.
How will the logistics work?
It’s a traditional Amazon direct-to-consumer model. They’ll use New Vine Logistics, the former wineshopper.com, in American Canyon, which has an incredible fulfillment facility. Amazon will store the wine in a temperature-secured location, and then sell it, through orders from the Amazon hub. Amazon makes money because they buy the wine FOB and sell at retail.
Why would a winery sell to Amazon instead of through their own direct-to-consumer program?
They don’t have to worry about staff or packaging. And Amazon’s staff will be able to make recommendations.
Amazon has a wine staff?
They have a group of wine buyers. The head is a guy named Nate Glissmeyer, based in Seattle. He contacted us for the program.
How much quantity is Amazon expected to handle?
It’s sort of infinite. They’re trying to get as many American wines online as possible.


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