Bill worries state wineries
22.02.2008 03:00
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- Source: JS Online
State legislation that would create new restrictions on how wineries sell their vintages has again been introduced, and Wisconsin winery owners are again worried about the effects it might have on their businesses. The bill, SB 485, requires larger wineries, which produce over 25,000 gallons annually, to sell their wines to wholesale distributors, which then sell the wines to restaurants, taverns, liquor stores and other retailers. Wineries that produce less than 25,000 gallons annually may instead form cooperatives, which would then act as wholesalers to sell the wines to retailers. Of Wisconsin's 38 wineries, roughly three-quarters produce below the 25,000-gallon threshold, said Jerry Deschane, lobbyist for the Wisconsin Winery Association. Current law allows Wisconsin wineries to sell their vintages without using wholesalers, but forces out-of-state wineries to use wholesalers. The bill is designed to comply with a 2005 Supreme Court ruling regulating alcohol shipments. The state will face a lawsuit unless it treats in-state and out-of-state wineries the same, said Mike Wittenwyler, a Madison attorney for the Wisconsin Wine and Spirit Institute, the wholesalers lobbying group. One way to provide equal treatment would be to allow all wineries, including those outside Wisconsin, to sell their products directly to the state's retailers. But that could result in a legal challenge to the entire system of using wholesalers, Wittenwyler said. If that system fell apart, Wittenwyler said, the market could be dominated by large winemakers, such as Gallo, selling directly to large retailers, such as Wal-Mart and Costco. Some Wisconsin wineries sell all or some of their products to wholesalers. But many wineries sell directly to retailers, which cuts out wholesalers, and allows wineries to earn higher profit margins. Similar legislation introduced in 2006 was attached to the state budget bill. Winery owners opposed that bill, saying it would force many of them to sacrifice profit margins by banning direct sales to retailers. Small winery owners also said they didn't believe wholesalers would provide them with good service. Gov. Jim Doyle, citing those complaints, vetoed the wine sales bill. The latest legislation added the cooperative provision as a compromise to winery owners, Wittenwyler said. But some of the bill's language would place inflexible restrictions on how the winery cooperatives would operate, and could cause them to fail, said John Manske, a lobbyist for the Wisconsin Federation of Cooperatives. Kyle Gomon, co-owner of Mason Creek Winery in Pewaukee, said the idea of using cooperatives might work. But some of the restrictions contained in the bill's language need to be dropped, said Gomon, who both sells directly to retailers and uses a wholesaler for some of his sales. That same point was made by Marion Weglarz, who operates Weggy Winery, near Muscoda. But Weglarz said his comments fell on deaf ears during a Wednesday hearing on the bill before the Senate Committee on Transportation and Tourism. "They just don't care whether we survive," Weglarz said about legislators.
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