Tour buses roll up to Three Rivers Winery in Walla Walla all spring and fall, but only a handful of the 2,000 tourists who tumble out can...
Tour buses roll up to Three Rivers Winery in Walla Walla all spring and fall, but only a handful of the 2,000 tourists who tumble out can have the signature Columbia Valley Merlot sent back to their home state.
“These people are from all over the country,” said Duane Wollmuth, managing partner of the mid-size winery. “They may want to ship a case home. There’s a lot of times where people live in states we simply can’t ship to.”
Corks popped and glasses clinked around the state and nation yesterday as winemakers toasted a Supreme Court decision that could allow wineries to ship their nectar to more states.
In a 5-4 decision, the court overturned long-standing laws in New York and Michigan that had prevented out-of-state wineries from sending wine to consumers, while in-state wineries faced no such ban.
The ruling is a potential boon to the booming U.S. wine industry, which rang up an estimated $21.6 billion in sales last year.
Washington is the second-largest wine-producing state in the country, and vintners hope the ruling will lead to greater sales out of state for the smaller wineries that lack national distribution networks. Washington already allows shipments from states that allow Washington wineries to ship there.
The issue 24 states forbid out-of-state wineries from shipping directly to buyers. Those states account for about 35 percent of U.S. wine sales.
Today’s decision The U.S. Supreme Court said New York and Michigan can’t discriminate against an out-of-state business. If in-state wineries can ship directly to buyers, wineries elsewhere must have the same opportunity.
States with ban The Washington-based Institute for Justice says the 24 states that ban direct shipments from out-of-state wineries are Alabama, Arizona, Arkansas, Connecticut, Delaware, Florida, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Ohio, Oklahoma, Pennsylvania, New Jersey, New York, South Dakota, Tennessee, Utah and Vermont.
Business impact in Washington Small wineries hope an expanded ability to ship wine will let them reach more customers who order by mail, phone or online. That could help the state’s industry grow beyond the estimated 5.5 million cases it sold last year.
Consumer impact in Washington Buyers here can already order directly from wineries in Washington and 12 other states that give Washington wineries the same opportunity. That reciprocal approach isn’t changed by the court ruling. As more states allow Washington wine to be shipped in, Washington buyers can buy from those states.
What’s next State legislatures will hear from wholesalers who oppose any direct sales, and from wineries that want the field opened up. “It’s going to be brass-knuckle politics from here on out,” said James Bernau, president of Willamette Valley Vineyards of Salem, Ore.
Source: Bloomberg, The AP, Seattle Times staff
The court ruled that it’s discriminatory and anti-competitive to ban wine shipments from out of state if in-state wineries can ship to customers. “States have broad power to regulate liquor,” Justice Anthony Kennedy wrote for the majority. “This power, however, does not allow states to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers.
“If a state chooses to allow direct shipments of wine, it must do so on evenhanded terms,” he wrote in an opinion joined by Justices Antonin Scalia, David Souter, Ruth Bader Ginsburg and Stephen Breyer.
The ruling means that legislatures in each of the 24 states that bar shipments will have to review their laws to make sure that in-state and out-of-state wineries are treated equally.
However, the ruling doesn’t mean that all states will allow shipments from out of state. A state’s lawmakers could allow all wineries to ship to residents directly. Or they could choose to ban all wineries from doing so.
While Washington state’s 300-plus winemakers are toasting victory, it could be years before they taste the results of the Supreme Court decision.
Ste. Michelle Wine Estates in Woodinville, the state’s biggest producer at 3.5 million cases a year, said it will see little if any benefit from the decision because it is large enough to sell wines through distributors in all 50 states. Thus, shipping directly to consumers is not a big priority.
Wineries too small to attract distributors are the big winners, since the ruling opens the door for them to ship cases to individual customers in other states. However, they can’t start shipping until legislatures in those 24 states decide whether to allow interstate sales, a process that could take many months.
“Nothing is going to change overnight,” said Steve Burns, interim director of the Washington Wine Commission. “But clearly the momentum is in the favor of wineries serving their customers.”
Washington state ranks second to California in number of wineries while Oregon ranks third.
“It’s hard to imagine how this will open the floodgates of shipping,” said James Bernau, president of Willamette Valley Vineyards in Salem, one of the largest in Oregon.
Yet his winery felt the effect of the ruling immediately. He said he was paged by his stockbroker in New York, who told him Willamette Valley’s stock price had soared after the decision.
At Three Rivers Winery, located at the confluence of the Snake, Columbia and Walla Walla rivers, Wollmuth was planning to open a nice bottle of wine to celebrate. “This is really going to help us with sales in the winery,” he said. The 6-year-old winery produces about 15,000 cases a year.
But others weren’t so sure. John and Peggy Bigelow sell about 2,000 cases a year from JM Cellars in Woodinville, also 6 years old. They would like to sell more wine directly to individuals, since distributors buy their wine for about half of the retail price, said Peggy Bigelow.
Bernau, at Willamette Valley Vineyards, predicted that wine wholesalers would increase pressure on the 24 states that now must choose whether to allow everybody, or nobody, to ship directly. Distributors oppose direct shipment because it cuts out their middleman role.
“It’s going to be brass-knuckles politics from here on out,” he said, “because wholesalers will have to get really tough and shut down [the influence of] in-state wineries, and that’s going to create lots of political problems.”
Material from The Associated Press was included in this article. Alwyn Scott: 206-464-3329 or email@example.com