Women for WineSense members and guests gathered at Sebastiani Winery on Thursday, January 21, 2010 to hear the latest updates on issues and policy affecting the wine industry. Representatives from the offices of Congresswoman Lynn Woolsey and State Assembly Member Noreen Evans were joined by 6th District Assembly Member Jared Huffman and members of the wine media. The subject was recent events, initiatives and possible legislation of which industry members should be aware.
Cyril Penn, Editor in Chief of Wine Business Monthly, started off the evening with an overview of hot issues from the media’s point of view. It is no news to many of us that the economy is affecting wine sales. Consumers have traded down in wine spending. Market analysts are predicting that about 50% of consumers who have traded down to less expensive wines over the past 18 months will continue to spend less, even if their income improves. Only 30% of consumers expect to return to their old wine spending habits as more income is available to them. This may be bad news for the luxury segment.
The news is mixed for wineries hoping to move inventory more quickly. Distributors are reducing costs using “Just In Time” techniques to meet demand. Instead of filling their warehouses with wine, they are waiting until they have sales orders to purchase from suppliers. The good news: backlogs of un-depleted inventory are disappearing. The bad news: wineries should expect smaller, more frequent orders along with gaps in availability of wines in the market for consumers to purchase. Could this backfire for distributors and create an opportunity for wineries to expand direct-to-consumer sales?
Tom Roth represented Congresswoman Lynn Woolsey at the event. As senior policy advisor, focusing on environmental, agricultural, transportation and disaster issues, he has a clear view on issues at the Federal and State level affecting Napa and Sonoma counties. His presentation highlighted the efforts of the recent Farm Bill to increase spending for local conservation districts through matching funds for projects such as water quality and water recycling.
One threat facing the wine industry on both a state and global level is the threat of a “luxury” or “sin” tax levied on wine along with excise taxes added to U.S. wines exported to Europe. Roth stated that both Lynn Woolsey and Congressman Mike Thompson belong to the U.S. Congressional Wine Caucus and oppose legislation to tax wine on a federal level and are seeking ways to improve trade relations and tariffs for wineries that export their products.
Sixth Assembly District Representative Jared Huffman discussed initiatives affecting the wine industry on a state level. Huffman charmed the industry crowd by admitting he was a home winemaker, who proudly placed 2nd in the Marin County Fair with his H3 Syrah last year. He agreed with Tom Roth on the importance of finding a solution to the overuse of Russian River water, especially by non-permitted entities, and felt there were options that would allow for both agricultural and frost protection, while still keeping salmon habitats healthy. He emphasized, “I like wine and salmon. “ This blogger agrees they make a tasty combination and would hate to lose either of them in the environmental scheme of things.
The state budget woes are not going away. Huffman gave an honest assessment of the latest round of cuts that are coming. Expect a new round of “painful cuts to take place” until the current leadership gets serious about solving the budget problems.
As with the Federal Government, there have been initiatives on a state level to raise taxes on wine to be used primarily for health care and drug treatment funding. Huffman opposes these initiatives pointing out that wine continues to create an “economic glimmer of hope” for California. “We need the wine industry to succeed.”
Laurie Puzo, representing Assembly Member Noreen Evans, and one of the original founders of Women for WineSense, weighed in on some of the same issues as Roth and Huffman and shared some of her insights working with the State Wine Committee. One of the committee’s priorities is helping representatives from more urban districts understand the impact of the wine industry on California’s economy and the importance of protecting and creating sustainable agriculture.
Evans has sponsored several bills to clarify and expand winery permit privileges through the Picnic Bill and the Duplicate License Bill that gives wineries more freedom to sell by the glass or bottle as well as to open additional tasting rooms in off-winery locations.
We wrapped up the event with comments on opportunities in the industry from Grant Raeside, Executive Director of the Sonoma Valley Vintners and Growers Alliance and radio host of Heard it in the GrapeVine on KSVY fm 91.3. Raeside pointed out the increase in wine consumption in emerging markets such as Russia, China, India and East Asia are wide open and ripe for U.S. wine exports. He also supports increased emphasis on wine tourism for the region and the Sonoma County conjunctive labeling initiative. Conjunctive labeling would give 100 million additional impressions to help, “people remember Sonoma.”
The Napa/Sonoma Women for WineSense group would like to thank all of the speakers who gave generously of their time and all the attendees who came out on a rainy evening to enjoy a glass of wine, network and learn. The Legislative Updates and Industry Issues event gave everyone who attended insights on what to expect in the coming year and an increased understanding of issues that affect the industry.
We hope to see you at the next event, open to members and non-members alike. Join us for a panel discussion of Wine Buyers on Thursday, February 25, at 5:45 pm at The Lodge at Sonoma. Speakers include buyers from Costco, JV Wine and Spirits, The Bounty Hunter, Cyrus, Bouchon, and Sonoma and Glen Ellen Village Markets. Click here for more information and to register for the event.
Author, Leah McNally, WWS Blog Intern
Editor, Thayne Cockrum, WWS Communications Director