The Year Behind, The Year Ahead

Dear FWWS Member.

An excellent proverb reminds us that while we are measuring our aspirations by looking forward we should remember to measure our progress by looking back. 2012 has certainly been a year to look back upon with some satisfaction.

FWWS Tax Reporting Relief Bill Passed
After five long years of effort our small wineries tax reporting relief bill passed the legislature in 2012! With signature by the Governor and rulemaking completed by the WSLCB, wineries selling less than 6,000 gallons of wine in Washington may now report and pay their liquor taxes as infrequently as annually (previously required monthly). Aside from drastically reducing the paperwork burden for in-state wineries, this bill also makes Washington one of the nation’s leaders in reducing the burden of interstate shipping of small quantities of artisan wine.

What is a Winery Bill defeated.
Sometimes what is prevented from happening is as important as what is affirmatively created. This was the case with a bill intended to drastically raise the bar for what it takes to be licensed as a winery in Washington. This bill, which was shown to the world five days before it’s first legislative hearing last session, would have made wine “production” synonymous with “fermentation” (currently any change in federal tax class of wine is production from the federal perspective and “crushing, aging in bulk or blending” are considered production in the state view). It would also have required that a winery “produce by fermentation” at least 200 gallons of wine per year on a rolling two year average in a facility owned and controlled by the winery (currently the standard is “more than zero gallons” at least every other year). The most bizarre aspect of this proposal was that, while it prohibited the smallest wineries from making wine under custom crush arrangements, once the 300 gallon threshold was reached the prohibition completely disappeared. This would have allowed business as usual for the state’s largest wineries that produce literally millions of gallons of wine annually through such custom crush arrangements. By shedding light on the logical inconsistencies of this bill and raising questions over its purpose FWWS was instrumental in preventing this misguided and unnecessary proposal from receiving a vote. We will remain vigilant should another attempt be made to introduce and pass such a senseless proposal on short notice.

Initiative 1183 Implemented
Initiative 1183 was implemented in 2012 through state rulemaking. As a result, a number of new businesses such as Total Wine and More and BevMo took up residence in Washington and significant pricing and distribution channel reforms were enacted. During the rulemaking process, some of the members of the pro-initiative 1183 coalition sued the WSLCB with regard to the Liquor Boards restrictive interpretation of the retailer to retailer sales allowed under I-1183. A discussion of the issues involved is beyond the scope of this re-cap.


Rulemaking, Some Good, Some Not so Much
FWWS was pleased that The WSLCB sided with our position in continuing to allow retailers to price wine below cost of acquisition in order to meet a competitor’s price. Prior to passage of I-1183 this aspect of state law was meaningless since all producer prices except close outs were required to be uniform. With delivery charges and volume discounts now allowed in producer pricing, it makes sense to allow a retailer to reduce their prices in order to meet a competitor’s price assuming the lower price they are meeting is due to the lower acquisition cost of their competitor. We argued that the allowance should remain. The Board agreed in a 2:1 decision

Less welcome was the WSLCB’s unilateral decision to eliminate enforcement of NSF checks used to pay for wine. While FWWS was willing to accept this suggestion by the Liquor Board last legislative session as part of a comprehensive reform of the credit ban, also allowing voluntary limited credit terms for checks similar to what is allowed for Electronic Funds Transfers, the elimination of NSF check enforcement by itself is not in our view a reasonable or fair outcome. While wineries are still required by law to receive payment on delivery and are subject to WSLCB sanction for failing to do so, if the check they receive on delivery bounces, no specific sanctions against the retailer remain in law.

Looking Ahead
FWWS will continue to tirelessly advocate for positive improvements in wine regulation and will remain watchful to prevent burdensome and unnecessary changes in the law such as the “What is a Winery” proposal. A couple of things we hope to advance in the coming year are:

• Allowing the sale of Wine In “Growlers”                                                                                                                      Federal Policy prohibits the sale of wine in re-fillable “growlers” the way beer may be sold, unless such containers are filled at a bonded wine facility. FWWS has been pursuing this issue for over two years now and will continue work with federal legislators on the issue. We believe the popularity of this most “green” of all packaging formats (studies show that 65% of a winery’s carbon footprint is in the glass packaging) will continue to grow.
• Allowing Multiple Licenses for the Same Premise                                                                                                              A number of our member wineries have expressed interest in having activities in their premises which require multiple licenses for the same premise (i.e. serving beer in their tasting room, selling another winery’s wine in their tasting room). The WSLCB has indicated that they do not believe that they have the authority to issue such multiple licenses for a singe premise, but has not identified a public policy reason why this should be prohibited. FWWS will seek legislation to affirmatively grant the WSLCB such authority.

With your help we’re making a difference! Happy holidays and best wishes for a prosperous New Year.

Your FWWS Board

Wineries Required to Register with FDA before December 31st

Dear FWWS Member,

As part of the federal "Food Safety Modernization Act" wineries are required to register with the US Food and Drug Administration as "Food Facilities".

Those of you who have been in business since 2002 probably recall that wineries were notified that such registration was required under the federal Bioterrorism Act.  The Food Safety Modernization Act requires that this registration now occur between October 31st and December 31st of even numbered years ( like 2012).

You may register your winery by using the following link.  Online registration is available by clicking the tab under "Guidance, Requirements and Regulatory Information" at the upper left corner of the page.

Your FWWS Board

http://www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/RegistrationofFoodFacilities/default.htm

2013 Winemakers Basecamp Last Call for Early Bird Registration

Dear FWWS Member,

 

The following is an invitation to the fourth annual installment of a popular and rewarding technical symposium series affiliated with the Washington Wine Technical Group. This is also a great and relaxing networking opportunity. Please see “Who attends?” for eligibility requirements. This conference should fill up so don’t wait to register. Also note that Early Bird registration pricing ends December 1st.

 

Please direct any questions to Katy Perry or Kendall Mix at the email addresses below.

 

Your FWWS Board

_______________________________________________________________

2013 Winemaker’s Base Camp in Mazama!

Base Camp: (Noun) A place where one prepares for a journey or expedition

Announcing the fourth (somewhat) annual Winemaker’s Base Camp in Mazama, February 2013.

When is it?: February 19-21, 2013

Where is it?: The Mazama Country Inn in beautiful Mazama, located in Washington’s North Cascade mountains

What is it? Inspired by the Steamboat conference in Oregon, in 2007 Katy Perry invited a bunch of friends and colleagues to bring challenging wines to Mazama and discuss them in an atmosphere of confidentiality and scholarly support. The idea was that we all make mistakes and these can be some of our best learning experiences. Since then we have also added trials and experimental wines to the agenda. The Base Camp is further a place to relax, exercise, and network with colleagues in a fun, beautiful and energetic setting. This importance of this latter part of the experience cannot be overstated.

Who attends? Professional winemakers and others directly involved in the winemaking process. Members of the Washington Wine Technical group or others who would qualify for membership except for their geographical location. In short, this is a conference for winemakers, cellar workers, enologists, wine researchers and wine technicians.

Who does not? Winery administrative, sales or non-technical staff. No vendors or suppliers. No wine critics, bloggers, writers, and non-professionals such as home winemakers.

The cost?      The early bird conference fee is $110* for those registering and booking accommodations before December 1^st, 2012. (accommodations NOT included). Book your room directly with Mazama Country Inn, see details below**.

On December 1^st the "procrastinator’s special" is $150*.

*The conference price includes two dinners (including corkage!) on Monday and Tuesday, lunch Tuesday, après ski snacks and beer, conference supplies and materials.

**A limited number of spaces are available for non-participating spouses at $75/person.

Refunds?       Refunds for conference fees will be made up until Jan 15, 2013. A $10 cancellation charge will deducted from your refund. Refund questions for room cancellations should be discussed directly with the Inn, not WWTG.

Accomodations?

The Mazama Country Inn is where the group is staying, where all the meetings will be held, and where both dinners will be. We have a special group rate for this event. Please contact Mary Milka at the Mazama Country Inn (509)996-2681. Email at Marymilka@mazamacountryinn.com. Mention that you are booking for the Winemaker’s Base Camp on Feb. 19^th and 20^th, 2013. Room sizes vary, so book yours early.

What else is Mazama is a premiere cross country skiing and winter

There to do?recreation center. The Country  Inn is located right on the Methow Valley Sport trails Association (MVSTA) ski trails, comprising the largest system of groomed cross country ski trails in North America. Snowshoeing, snowmobiling and shopping in the old west town of Winthrop are also nearby, as is relaxing in the hot tub. Lessons in skate and Nordic style skiing are available.

What isthe Agenda? Monday February 19^th. Arrive in the afternoon (check in at 3:00 pm) book a ski lesson, go for a ski or tour nearby Winthrop. Drop off your conference wines for the morning sessions. Settle in and relax. Happy hour is at 5:00-6:00 PM . Dinner is at 6:00 PM. Corkage is included in the package so bring some of your finest!

Tuesday February 20^th. Have breakfast at the Inn or grab a pastry and espresso at the Mazama Store next door. Arrive at the conference room at 8:00. Tasting starts at 8:30 and goes until 12:30. Wines will be categorized in flights. We will review the wines in groups while taking notes. The wine’s owner will then discuss why they brought the wine. What they know about the issues expressed and may have tried to remediate the wine. Participants will then brainstorm solutions and/or discuss similar issues they have experienced before moving on to the next wine. 12:30-1:00 PM. Soup and sandwiches catered by the Mazama Store. 1:00 – 5:00 PM free time. See activities listed for Monday. John Morgan will help in coordinating group lessons or tours for those who are interested. 5:00-6:00 PM happy hour networking and reflections on the day’s wine discussions. 6:00 PM dinner. After dinner think about a soak in the hot tub or join a moonlight ski led by party coach John Morgan (bring your headlamp).

                       Wednesday February 21st. Check out and breakfast at the Inn or the store. 8:00 convene at the conference center. 8:30-12:00 finish wine tasting. Get on the road home or join others for lunch on our own at the Mazama Store.

Questions about Base Camp can be answered by Katy Perry(katy@tildio.com or 509-679-6831) or Kendall Mix( kendallm@gooseridge.com or 509-439-3902).

Base Camp 2013 Registration Information:

*December 1^st 2012 is the deadline to register for the early bird conference fee at $110*/person. Remember, if you are a Washington Resident you must be a member of WWTG in good standing to attend. Join now, we’re worth it! WWTG Registration form follows.

*Prices include corkage, gratuities and taxes for the dinners and lunch.

*Spouses/partners not attending the meetings are $75**/person.

**Prices include corkage gratuities and taxes for the dinners and lunch.

*The procrastinator’s special starting December 2^nd is $150*/person.

* includes corkage, gratuities and taxes for the dinners and lunch

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Please call The Mazama Country Inn directly and book a reservation for your room @ (509) 996-2681 or Marymilka@mazamacountryinn.com . Registration for Base Camp does not secure a room for you! You must make your own reservations.

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Fill out the contact information below and mail in with your check, your payment is your reservation.

After you register for Base Camp you will be sent additional information as the date approaches. You will also be sent a wine data sheet that has to be filled out and returned before the conference.

Base Camp 2013 Registration Form:

Your name & Job title:

Winery name and address:

Are you a current WWTG member? ____yes ____no (2012 membership is acceptable for early bird registration.  Eligibility requirements and application forms follow)

Phone number:

E-mail address:

Credit cards can be processed for Base Camp with an additional $5 fee, call Katy Perry at 509-679-6831 or email katy@tildio.com arrange for this transaction.

Make checks out to: “Base Camp” ($110 before December 1^st, $150 thereafter)

Mail to: Winemaker’s Base Camp

C/O Katy Perry

POB 303

Manson, WA 98831

Refunds will be made upon request until January 15^th, 2013. A cancellation fee of $10 will be deducted from your refund. After January 15^th refunds will be made if your spot can be filled.

Questions?

Katy: 509-679-6831, or email katy@tildio.com

Kendall: 509-439-3902, or email kendallm@gooseridge.com

Washington Wine Technical Group Application Form:

Washington Wine Technical Group

2013 Membership Form

The Washington Wine Technical Group is organized to:

· improve the quality of Washington State wines through education

· foster fellowship and understanding between wineries

· aid members in technical problem-solving

· encourage enological and viticultural research

Name:

Title:

Company:

Mailing Address:

City, State, Zip:

Phone:

Email:

Cell:

Fax:

To help us identify our members, please briefly share your pertinent education, training, and experience in the wine industry:

Current Position (please indicate duration):

Past Positions (pleas indicate duration):

Education:

Degree:

I’d like to volunteerfor a committee:

ð _______________________(i.e.Communication, Base Camp, Tasting, Seminar, WAAG,OpenPreference)

Membership:

ð ProfessionalMembership $70/person

Professional Membership extended to working professionalsin wine production and technology with a pertinentBachelors degree orhigher, or 5 yrs wine industry experience in commercial production, or alliedtechnology

ð Academic Membership$25/personAcademic Membershipextended to permanent, full-time faculty members in extension, research, orteaching positions in a Viticulture and/or EnologyProgram

ð Student Membership$25/person

Student Membership extended to full-time studentsenrolledin an accredited associate, undergraduate, or graduate Viticultureand/or Enology Program

Total Payment:$___________________

Please remit form with payment and make check payable to:

Washington Wine Technical Group

PO Box 3935, Pasco, WA99303
Phone: 509.783.4676orFax: 509.783.4674

Special Halloween Bulletin: Zombie regulatory proposal stalks Olympia, threatens to consume winemaker’s brains!

Dear FWWS Member,

You will probably recall that with your help FWWS was able earlier this year to defeat a sweeping change in State winery licensing laws. This proposal which would have created an entirely new and unprecedented category of “non-producer” was shown to the industry 24 hours before its first legislative hearing. This proposal confused brand ownership with premise ownership, premise ownership with premise licensing, and production with manufacturing. Unfortunately some bad ideas, like zombies, are hard to kill and this bad idea threatens again.

While we are fully prepared to continue to fight this fundamentally misguided proposal, we are concerned that a number of you have expressed sympathy with one aspect of the proposal that we believe is misleading, unfair and generally a head fake;  namely that a “Winery” as opposed to a “Non-producer” must actually “produce by fermentation” at least 200 gallons of wine annually on a rolling 2 year average. 

Let us say right up front that we completely understand the underlying sentiment this provision addresses. Specifically that those who don’t put their hands on at least a ton and a half or so of grapes every other year aren’t, in our opinion, “Real Winemakers” for whatever that’s worth, and whatever that means. The devil, or perhaps we should say zombie, is in the details of “for whatever that’s worth and whatever that means.”  We believe it is vitally important that FWWS members are in solidarity in their opposition to this concept as well as the remainder of the misguided “Non-producer” proposal which, as we hope you will come to understand by taking the time to read and consider the following discussion, accomplishes nothing beyond putting financial stress on the smallest wineries and misleading consumers. Please read on, if you dare...

Please remember that we value your input and in fact this posting is in response to such input.  The best way to continue this discussion is to make a detailed response to this posting.  We look forward to hearing from you.

Happy Halloween and best wishes for a successful conclusion to the 2012 harvest!

 

Discussion of the “What is a winery?” or “Minimum Fermentation” proposal

The current federal regulatory situation.

·         A winery must have a “Basic Permit” to make wine.  This can be as a bonded winery, bonded wine cellar, or tax paid wine bottling house.  The Feds do not make a distinction as to who may “call themselves” a winery.

·         A Bonded Winery, probably the most common form of winery Basic Permit must “produce” “more than zero gallons” of wine (federal policy specifically recognizes one gallon as “more than zero”), at least every other year. “Production” is defined as either the creation of wine by fermentation or any change in the tax class of the wine so created. The most obvious and common of these tax class changes would be blending across the 14% alcohol threshold.

·         The TTB does not require that wine sold under a winery’s brand be produced on the winery’s owned premise.  In fact, the only reason that the federal government is concerned about where such wine is “produced” is to correctly apply the ninety cent per gallon federal “small producer’s tax credit” and to be sure that this credit is earned, and is not applied twice to the same wine.

Current State regulatory situation

·         Current Washington State law defines wine “manufacturing” but not wine “production”.

·          The winery licensing statute grants “Domestic wineries” what the LCB considers “special privileges” (e.g. tasting rooms, direct wholesale privileges, direct to consumer shipping etc.)  which apply to wine of their “own production.” Arguably the term “production” is unnecessary and manufacturing would serve equally well since Washington has no small “producer” tax credit.

·         The State’s working definition of “wine of its own production” is based on a Memo from the 1990s memorializing a discussion between the State Attorney General’ office and WSLCB licensing staff. This Memo suggests that production must include “Crushing, aging in bulk, or bottling“ (notice that the word “fermentation does  even appear in this working definition).

·         Deceiving the public through false labeling claims is already specifically prohibited by State law.

·         There is no limitation on the use of custom crush by wineries.

Situation if “Non Producer” proposal is enacted:

·         Creates new category of “Non-producer”

·         Defines wine “production” as synonymous with “Fermentation” and only fermentation

·         Introduces the unprecedented concept of a minimum production requirement (by fermentation, and substantially above the federal minimum) for all wineries.

·         Production requirement for Domestic Wineries would be raised from the prevailing federal standard applied to Bonded Wineries of “more than zero gallons” to a new standard set at a minimum of 200 gallons on a rolling 2 year average (by fermentation only).

·         Custom crush would be disallowed for wineries “producing” below the new threshold. These wineries would now be categorized as “Non-producers” and presumably prohibited by rulemaking from using the term “winery” on their label or enjoying the many so called “privileges” of being a full-fledged winery.

·         Wineries meeting the minimum threshold for production through fermentation could continue to make unlimited amounts of wine under custom crush arrangements. Same as the current situation.

·         There are numerous other bizarre aspects of the proposal including a prohibition on wineries importing bulk wine from out of state (currently permitted if the wine is appropriately labeled). Even more bizarre is that such importation would be allowed by “Non-producers.”  This and other aspects of the proposal are beyond the scope of this discussion.

Discussion and FWWS Objections to the Proposal

We believe that the “what is a winery” licensing concept accomplishes nothing beyond disadvantaging the state’s smallest wineries, confusing manufacturing with production, and misleading the public with regard to, for lack of a better description “wine authenticity.”

Disadvantaging the smallest wineries:

Currently a winery can literally meet the requirements for compliance with their federal basic permit in a broom closet, assuming said closet has plumbing and climate control.  More to the point, virtually every winery in the state can meet the federal standard in a corner of their tasting room and then make their wine in a custom crush facility. The proposed change would require that all wineries must purchase a “bricks and mortar” facility large enough to ferment 200 gallons of wine.  Otherwise the change in law has virtually no effect.  Imagine if California had required Steve Jobs to rent a large manufacturing facility to build his first computers.  Even today’s Apple more than likely does no manufacturing in house. What purpose is served by making a winery owner who may have just dumped their entire 401(K) into a twenty acre biodynamic vineyard to invest in a garage sized crush facility if that’s not in their business plan for the immediate future? These are exactly the businesses, namely the smallest startups, who can least afford this significant expense and most need to conserve their capital.

Confusing Manufacturing with production.

“Production” is a term that the federal government uses to define an activity eligible for the small producer’s tax credit. The state has no need of such term since it has no such tax credit. Winemaking is simply “manufacturing.” Linking the manufacturing of a product to ownership of the facility is nonsensical. What matters is who owns the product (the brand) how they sell it and, as far as the consumer is concerned, whether they execute well.  Consider Apple again.  Their iPhones are made by entirely by others. Do consumers care? Does their home State of California care? For another example does a prospective homebuyer care if a home builder owns, rents, or leases his shop and equipment? For that matter does the buyer care whether the builder put’s another company’s carpenter or even foreman on their payroll for a particular job?  More likely the homebuyer cares about the end product and the reputation of the builder.  If the state wants to micro manage this aspect of a small winery’s business plan, what’s next?  Suggesting that a small winery can’t borrow crush equipment?

Deceiving the Public

 Presumably some proponents of the minimum fermentation requirement believe that some people without any crush facility “aren’t really making wine” because their wine is made at a custom crush facility.  If so, how is it different than what the largest wineries do?  How do we know if this hypothetical small winemaker isn’t haunting the crush facility on a daily basis like an anguished spirit?  Even if they only make cursory visits to the crush facility how is this any different than the Seattle business tycoon who “always wanted to be in the wine industry,” buys an Eastern Washington winery, never  gets their hands dirty and visits only for media events?

So let’s assume a small winery without a crush facility is labeled with the odious title of “non producer” under the proposed licensing scheme. What should the public take away from this?  That if they buy wine from a “real winery” they are somehow buying authentic wine made by the hands of a real winemaker?  And how are the millions of gallons of wine made by the state’s  largest wineries more authentic than 199 gallons of wine actually made by hand (or foot) of a real person?  Is the big commodity produced wine “real wine” because the owner of the brand fermented more than 200 gallons of wine?

Conclusion

We believe there is no problem that needs to be fixed.  It’s already illegal to say anything misleading on a wine label.  The proposal as conceived does nothing to provide regulatory clarity (far from it) and discriminates against the business practices of the smallest wineries while doing nothing to curtail the identical practices by large wineries. 

 

SAVE THE DATE on your calendar NOW:  Nov. 16 - 17 -18

This is a 3-day event!

FWWS is again hosting the Wine Garden at the Best of the Northwest art show at Pier 91

(Smith Cove Cruise Terminal in Seattle)

Wine store on site

Limited to 15 total FWWS wineries -- first to confirm will be guaranteed a spot.  (please reconfirm if you told us last spring that you would attend)

More details to come soon.