CA wine industry groups at rare standoff over future of ‘American’ wine labeling
Picture a wine label. There’s the type of wine. The region of where the grapes are grown. The vintage year. The brand. The area or country where the wine is made.
Right now, a wine can be labeled “American” if at least 75% of the grapes used to make the wine are grown in the United States.
But three of California’s largest wine industry groups are at loggerheads over “American” wine, an unusual turn of events for groups that normally fight on the same side.
The Sacramento-based California Association of Winegrape Growers and the Sacramento-based Family Winemakers of California want stricter labeling standards. They want wine labeled as American to be produced entirely from domestic grapes. . The two groups say they want this label rule changed because it will enable their members to better compete against the larger players in the industry, while also allowing for more transparency to consumers. Many large wine companies buy imported bulk wine to blend into their American products, which allows for cheaper production costs.
“The large companies are wanting to continue to benefit from the American brand name without fully supporting the people behind it,” Natalie Collins, president of the California Association of Winegrape Growers, said.
The Sacramento-based Wine Institute is opposed to the label changes. Wine Institute says there isn’t a consumer transparency issue. Additionally, it argues that a new rule would add costs for companies and consumers and take away flexibility for winemakers.
“California wine labels are probably the most truth forward in the world,” Tim Schmelzer, vice president of California state relations for Wine Institute, said.
The disagreement over the future of the American wine label is a part of the larger debate in the industry over how to move forward as wine consumption dips to historic lows. Grapes are being left to rot on the vine and fields fallowed. Grape growers and winemakers are shutting their doors or are being forced to adapt their products and amend their marketing plans to accommodate changing consumer demands.
The wine and grape industries are billion-dollar enterprises in California. The state also produces the vast majority of American wine.
A recent bill in the California legislature would have required American-labeled wines be produced with winegrapes and wine that are 100% from the U.S. While the bill was pulled from the state Senate committee agenda Tuesday — indicating the bill may not have had enough votes to pass — some of its supporters have vowed to continue to advocate for this cause, both at the state and federal levels.
Dave Phillips knows the current industry conflict well. After 14 years on the Wine Institute board, he said he resigned last month when the association ignored his request to stay neutral on the wine labeling bill.
Phillips is a fifth-generation grapegrower and a multigenerational winemaker, with his Lodi winery producing half a million cases a year. He said he only found out six months ago that wines could be labeled American without 100% of the product being from the U.S. He wasn’t pleased.
In recent years, he’s seen first-hand Lodi grape and wine producers’ financial hardships, often visible through the uprooted grapevines around town. These growers and winemakers focus on wine made with locally-grown products.
“We want to help our whole community,” Phillips said. “And importing cheap foreign wine and blending it into California (wine) … It is fine to do that, as long as it is labeled correctly, and the consumer sees that.”
Historic disagreement
The California Association of Winegrape Growers, Family Winemakers of California and Wine Institute have worked together for decades on all types of issues affecting the wine industry.
The California Association of Winegrape Growers represents small to large growers and the Family Winemakers of California primarily represents small, family-owned and/or independent wineries.
Wine Institute represents winemakers of varying sizes, including some of the largest wine producers in California such as Gallo and The Wine Group. Those two companies sell tens of millions of cases annually.
The grapegrower association and Wine Institute could not think of another time in history when they have publicly disagreed over state legislation that affects the wine industry. The grapegrower organization said there have been two instances when the group had opposing views to Wine Institute, but stayed out of legislative deliberations to maintain unity in the industry.
Collins of the California Association of Winegrape Growers called the American wine label struggle a “David and Goliath type of fight.”
More than a decade ago, Collins’ association asked for the same American wine label changes at the federal level but were unsuccessful. The Wine Institute opposed those lobbying efforts.
Laws already exist in California that require any wine labeled “California” to be composed of 100% California-made products. For specific counties such as Napa or Sonoma, the 75% rule applies.
The recent state bill had legions of support from local wine associations and grapegrowers throughout California’s wine regions, as well as the California Farm Bureau.
The state Assembly approved the American wine label bill in a 67-0 vote, with some abstentions, last month.
Large wine companies such as Constellation, Delicato, Gallo and The Wine Group — all of which have multiple representatives on Wine Institute’s board — hired lobbyists for work related to the bill, state lobbying disclosure records show.
Ross Buckley, the lobbyist hired by The Wine Group, Delicato and Constellation, said that The Wine Group opposed the bill, but he is “not aware of any position” from his other clients. The Wine Group declined to comment.
Gallo did not respond to requests for comment.
Wine and Spirits Wholesalers of California also did not support the legislation. The wholesaler group did not respond to a request for comment.
Part of the tension among the California Association of Winegrape Growers, Family Winemakers of California and Wine Institute stems from their dispute over how much bulk wine is imported — and how much the imports are affecting local growers’ and winemakers’ businesses.
The grapegrower and winemaker associations argue that bulk wine imports have increased in recent years, hurting the local wine industry. Wine Institute argues that imports have decreased and are not to blame for plummeting business. Both groups cite different data from bw166, a U.S. alcoholic beverage data provider.
GinaLisa Tamayo, board president of Family Winemakers of California, said her members want to support local grapegrowers, and consumers want to know where their wine is coming from.
“Wine has won on its authenticity and connection to the land,” Tamayo said, who is based in Santa Rosa. “We can’t let an outdated labeling loophole … get people to look elsewhere.”
Schmelzer of Wine Institute said consumers don’t care about an American label and that the bill would have made it harder for winemakers to include label details such as wine type. On top of that, he said bulk wine imports allow for key flexibility for winemakers at a time when changing weather patterns are negatively affecting crop production. Blending wine, he said, also makes the product “unique and interesting.”
“The nature of this business is that you have to pivot faster than a vine can grow and produce grapes,” Schmelzer said. “We are in a tough rebalancing period right now and feel it on all sides, growers and wineries alike.”
Path ahead
Following the bill’s withdrawal, wine industry groups’ feelings ranged from relief to disappointment.
For Schmelzer, it was relief.
“We hope that we can gather back together with our grower friends and work to address what we think is the real problem that we are facing right now: to increase demand for wine products,” Schmelzer said. “We think that will help lift everyone up.”
While certain that her organization will continue to work with Wine Institute, Collins is unsure about the exact road ahead.
“We are at the most challenging point that this industry has ever been at,” Collins said. “And we can’t agree on the most basic foundational principle that American wine should mean American grapes. I think we have a lot of issues in front of us (since) we can’t agree on the most foundational piece to start rebuilding our industry.”
For Collins, the fight is not over. Her association feels the bill did not get a fair shake and will continue to advocate for it in California and for a federal law equivalent. The grapegrower association met with federal officials this month to discuss a variety of industry concerns, including the American label, and is working with wine associations in four other states on advocacy efforts.
Sen. Susan Rubio, D-Baldwin Park, the chair of the committee where the bill was supposed to be heard Tuesday, did not respond to multiple requests for comment.
Assemblymembers Damon Connolly, D-San Rafael, and Rhodesia Ransom, D-Tracy, the co-authors of the wine labeling bill, both said in statements that they will continue to advocate for this issue next year.
Greg La Follette has made wine for 42 years, spanning five continents and 68 harvests, the majority in California.
He’s worked as the little guy, as he does now, and previously worked for the big guys — referring to himself as a “conslutant” for the “large, godless, faceless” wine companies.
La Follette prefers his winemaking as a smaller family affair focused on growing and buying grapes from California to produce wine with 100% local fruit. It’s why he supported the state label bill and emailed Wine Institute expressing his disappointment in its opposition. And it’s why he said he’ll continue to fight for the legislation again.
“By using the American label on imported bulk wine and selling it as American, the large multinational beverage companies are harming the entire California wine industry,” La Follette said, who is a renowned winemaker within the industry and the co-founder of Marchelle Wines in West Sonoma County.
“I need a fair playing field.”
