Organic Grape Growers Relieved
For more than six months, organic grape labeling was in limbo, but the term organic can legally be back on wine labels. Last May, the USDA disallowed wines made from organic grapes (99.99% organic ingredients) to make any organic statement on the label if any sulfites were added.
For 10 years, the USDA has been in the process of defining "organic" across all agricultural products. The May decree (called the Proposed Rules) was in advance of the Final Rule issued in late December.
A coalition of organic growers, Organic Grapes into Wine Alliance (OGWA), went into action to get that proposed rule changed to OGWA's standard on the use of sulfur dioxide in wine (not to exceed 100 ppm total). Bonterra Vineyards, the Organic Wine Company, Chartrand Imports, Fitzpatrick Winery, Badger Mountain Vineyards, Brick House Vineyards, and Organic Wines International (OWI) among others campaigned for the change.
USDA has now issued its Final Rule, with an exception for wine made from organic grapes, a reversal of its Proposed Rules. The USDA Final Rule has adopted OGWA's processing standards on the use of sulfur dioxide in wine.
The main points in the Final Rule are: Wines made from organically grown grapes can use sulfur dioxide in the winemaking process (up to 100 ppm) and be labeled "made from organic grapes." The more common label term, though, is the derivative "made from organically grown grapes" and it is unclear whether that phrase can be used.
Also unclear is whether the use of the USDA Seal on the wine label will be allowed.
The Final Rule was to become effective 60 days after its publication in the Federal Register and will be fully implemented 18 months after its effective date, when all agricultural products that are sold, labeled, or rep-resented as organic must be in compliance with these regulations.
US To Leave OIV
The clash between New and Old World wine producers culminated with the United States announcement that it will leave the Office International de la Vigne et du Vin (OIV), the international organization of 45 countries that shape international wine trade policies. New World wine producers were pressing for reform of the 75-year-old organization, but OIV members, dominated by the Old World producers, could not reach an agreement on several issues.
Among the issues of debate was OIV leaders' application to the World Trade Organization (WTO) to be the reference body on wine. The U.S., and other countries in the OIV, tried to prevent the OIV from being a "standard setting body", or what some have characterized as the wine industry's de facto arbitrator.
Some believe that would compromise the OIV purpose and inject a political element.
At last June's OIV meeting in Paris, U.S. trade representatives and wine industry officials urged to the Old World winemakers of France and Italy to accept several changes to the treaty that governs OIV members; a treaty that has not been revised since 1924.
One issue was over accepting wine that has gone through an ion exchange process into the EU market as well as other new winemaking technique. US trade representatives were also concerned about the organization's budget as well as its relationship with WTO.
Old World producers have dominated the OIV since its origin, leaving newcomers of the New World wine producing countries with little voice in the organization. One issue causing much of the discussion is the view of some countries that the OIV does not operate as a true international body. Part of the reason for that, said Ross, is that the OIV has received significant funding from the French, is headquartered in France and most of the staff is French, as well as founded by the French, resulting in a francocentric attitude.
Australia and the United States and other countries forced the organization to go through an operational audit by Arthur Anderson, which recommended a more democratic form of organization. New World winemakers formally proposed that decisions be reached by consensus. Nevertheless, the O.I.V. responded with a proposal that the New World viewed as even "less democratic" a voting method based on weighting membership according to share of market, production and percentage of vines planted, a clear advantage to the Old World producers.
California Governor Pledges Funds to Fight PD
Releasing his proposed 2001-2002 California state budget, California Governor Gray Davis proposed $19.6 million in new funding for the Department of Food and Agriculture to combat the glassy-winged sharpshooter and Pierce's disease. That sum includes $8.9 million from the general fund and $10.7 million from "other sources." Also included is $3 million for research.
The "other sources" will consist of some combination of federal funds, private industry dollars, and grants as most exotic pest programs are cooperative efforts between federal, state, and local government.
"We feel very strongly that it is government's role to give the resources for the containment program, because it requires cooperation between federal, state and local levels, California Association of Winegrape Growers' Karen Ross said. "This is a multiple commodity issue," she said. "It also has environmental and public health interests that must be addressed and that is why it is appropriate for government to put funds into the containment program."
Meanwhile, industry stakeholders are refining language for legislation that would require grape growers to pay an assessment on their grapes to help fund the battle against the further spread of the glassy-winged sharpshooter and Pierce's Disease.
Wine.com Enjoys "Record" Sales, Trims Staff
Wine.com announced that annual revenue increased 300 percent in 2000 as compared to 1999, including a record-breaking holiday season with the wine.com customer base growing by more than 300 percent. However, the company, which is still privately held, did not release any specific sales figures.
Meanwhile, roughly 75 staffers were let go, leaving wine.com with approximately 230 employees. The layoffs were expected as wine.com is streamlining operations and eliminating redundancies as a result of the merger with WineShopper .com.
"Our merger with WineShopper .com has put the new wine.com in the unique position of having the only comprehensive, legally compliant business model serving a wide range of international wine-buying markets," CEO Bill Newlands said. "With the holiday season behind us, we can now work on fully restructuring and integrating the companies.
"Actions are underway to go to a common website at www.wine .com, and streamline operations and fulfillment systems into a single warehouse. These steps will allow us to serve our customers better and reduce our costs in the areas of shipping, personnel and operations."
eVineyard Closes 2000, Sales 1000 Percent Over 1999
eVineyard.com announced that sales for 2000 were up 1000 percent over 1999 and said it "remains on track to achieve profitability in late 2001."
Robust holiday sales brought fourth-quarter 2000 figures to nearly 600 percent over those in the last quarter of 1999, the company said.
"We're very excited about this dramatic increase in sales, which surpassed our own expectations," said Larry Gerhard, president and CEO of eVineyard.
Dornfelder an Accepted Variety
The US Bureau of Alcohol, Tobacco and Firearms said it is adding a new name, "Dornfelder" to the list of grape varieties used in designating American wines. BATF said it determined that "Dornfelder is an accepted red variety which was developed in Germany in 1955."
Geographic Name Issue Could Hit Supreme Court
A California Appellate court blocked a law restricting the use of the "Napa" name on wines containing less than 75 percent Napa juice when it granted a temporary injunction. The law, signed by California Governor Gray Davis in late September, was to take effect January 1, but the court granted the stay after the California Department of Alcoholic Beverage Control declined to formally oppose Bronco Winery's request for a stay.
The ABC is responsible for enforcing the new law, which was supported by the Napa Valley Vintners Association and authored by California Sen. Wes Chesbro (D-Arcata).
Bronco filed suit against the ABC in December and argues, among other things, that the law violates its First Amendment rights.
The law at issue attempts to close a loophole that allows a few winemakers to put Napa Valley labels on their wines even though the contents came from other counties. The controversy dates back to 1986 when the Federal Bureau of Alcohol, Tobacco and Firearms revised its rule for the use of "geographic'' brand names in an effort to make wine labeling more accurate.
Wine brand names created after 1986 were required to be made of at least 75 percent grapes grown in the geographic area named in the label. However, labels that existed as of July 7, 1986 were exempt. A number of these grandfathered brand names were sold to wineries outside the Napa region after the 1986 rule change.
Bronco, which also owns the brands Rutherford Vineyards and Napa Creek, says the rule diminishes the value of its $40 million purchase of Beringer's Napa Ridge brand, that Napa Ridge is a consumer brand similar to Hawaiian Punch and London Fog, and that consumers understand the difference between a brand name and a contents label.
"The procedural laws in California provides that a party with a strong interest in a matter can intervene in these circumstances," said attorney Henry Bunsow of Kecker and Van Nest. Bunsow, who is representing the Napa Vintners in the case, said that depending on the court's decision, "it is my best guess that one side or another will probably appeal to the California Supreme Court." The loser of that decision may appeal to the US Supreme Court, he added.
Trinchero Family Estates Announces Australian Joint Venture
Trinchero Family Estates, the Napa Valley wine company that owns the Sutter Home, M. Trinchero, and Montevina wineries, announced a joint venture with Cabonne Limited, a publicly traded Australian wine company with extensive vineyard holdings and a newly constructed winery in the cool-climate district of Orange in New South Wales. Long a prime fruit-growing region, Orange, since 1980, has become home to 25 vineyards, which supply leading Australian wineries such as Rosemount and Southcorp.
Trinchero Family Estates and Cabonne will create an Australian wine brand, to be named Reynolds, which Trinchero Family Estates will market and sell internationally, except in Australia and New Zealand, where Cabonne will handle distribution, and in the United Kingdom and Ireland, where the new brand will be sold by D&D Distributing.
The Reynolds brand, eventually to include several quality tiers, will feature Shiraz, Cabernet Sauvignon, Merlot, Chardonnay, and Sauvignon Blanc, all produced from Cabonne's 900 hectares of grapes in the Orange district. Anticipated retail prices will range from $10 to $25, with the first wines, from the 2001 vintage, to be released early in 2002. Trinchero Family Estates, whose wines are distributed in 70 countries worldwide, anticipates year-one sales in excess of 100,000 cases.
"Australian imports to the United States have been growing in excess of 25 percent per year for the past five years," said Roger Trinchero, Trinchero Family Estates president and chief operating officer. "With Cabonne's high-quality vineyards and production capabilities and our well-honed marketing and distribution abilities, we think our joint venture will have a major impact in both domestic and international markets."
Cabonne Limited is a publicly traded Australian wine company with extensive vineyard holdings in the Orange district of New South Wales. The company acquired its first property, called Little Boomey, in 1994. In 1995, 315 private investors financed the cultivation of 153 hectares at Little Boomey, with Cabonne contracting to sell the fruit to Southcorp Wines. Subsequent projects in 1996 and 1997, also financed by private investment, added another 336 hectares of vines at Little Boomey. In 1998, Cabonne leased and developed two additional properties at Angullong and Wirrilla totalling 366 hectares, for a total which now exceeds 900 hectares, or 2,200 acres. Of these, 80% are planted to red varieties (Shiraz, Cabernet and Merlot) and 20% to white (Chardonnay, Sauvignon Blanc, Semillon, Riesling and Marsanne).
In 1999, Cabonne began constructing a winery--eventually to reach a 20,000 ton production capacity--which includes a 10,000 barrel underground storage facility. Also in 1999, Cabonne had its first public offering on the Australian stock exchange, with a market capitalization of $70 million. In September 2000, Cabonne acquired the Reynolds Wine Company, a small, high-quality Hunter Valley producer which is being relocated to Orange for the 2001 harvest.
LVMH Acquires a Majority Stake in Newton and MountAdam Vineyards
Luxury Products company LVMH announced that it is acquiringa majority stake in Newton Vineyard, Napa Valley, California, and in MountAdam, Eden Valley, South Australia, through its subsidiary Veuve Clicquot Ponsardin. Veuve Clicquot will also distribute the brands worldwide. Newton Vineyard is an estate of 60 hectares in the hills above the Napa Valley, producing high quality Chardonnay, Cabernet Sauvignon and Merlot. Newton was founded by Su Hua and Peter Newton, who will continue to manage the estate and make the wines. Adam Wynn will continue to manage MountAdam. LVMH said the "total amount of these two transactions is approximately $50 million."
Glenora's Ironwood Plans
Still in the process of consolidating its recent acquisition of Knapp Vineyards, Glenora Wine Cellars of Lake Seneca, New York, is moving ahead with the construction of a third winery, Ironwood Wine Cellars.
"We hope to have Ironwood operative by June of this year," says Gene Pierce, CEO of Glenora, which, at about 50,000 gallons capacity, is the largest of the wineries in the Finger lakes, with the exception of giant Canandaigua and its Taylor and Great Western operations.
Glenora acquired Knapp from owners Doug and Suzie Knapp, who founded the Seneca Lake winery in 1973. The acquisition of the 15,000-gallon capacity winery, with its 65 acres of vines, bring Glenora up to approximately 65,00 gallon capacity and a total of approximately 515 acres of vineyards. It also gives Glenora access to grapes, which are becoming harder to get as more and more wineries open in the region.
"Knapp gives us some of the less common grapes such as Vignoles, which we haven't been growing and it also gives us a unique-to-the-region brandy distilling operation," Pierce said. Ironwood, he said, will be used for other varieties such as Cabernet Franc and Pinot Noir, but it will not be a strictly red wine house. Glenora also operates a hotel and conference facility along Lake Seneca and Pierce says the three-year-old hostelry has been doing excellent business. wbm