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wine

What makes a Texas wine?

Texas grapes, obviously. Or maybe not so obviously.

Rep. Jason Isaac

Chris Brundrett sat in a barn surrounded by barrels of wine he helped curate and swirled a glass of water in his hand, perhaps imagining it was something else.

Brundrett, accompanied by others from the state’s wine industry, drove home his pitch: “If we can just pump out wine from California and slap a picture of the Alamo or a longhorn on it and sell it,” he said, should wineries be able to put a “made in Texas” label on it?

A co-owner and winemaker at William Chris Vineyards between Fredericksburg and Johnson City, Brundrett was explaining why he backed House Bill 1514 by state Rep. Jason Isaac, R-Dripping Springs, which would require that wines with a Texas label be made only with Texas-grown grapes.

Under federal law, wine can have an appellation of origin from a state if a minimum 75 percent of its grapes are grown in that state. The other 25 percent can come from anywhere.

“I believe having something labeled as Texas should be from Texas,” Isaac told the Tribune, adding that his bill would encourage more Texas grape production.

Last year Texas produced about 3.8 million gallons of wine, according to the Texas Alcoholic Beverage Commission, and the state had more than 400 active permits to bottle, produce and sell wine. A separate study in 2015 found the wine industry contributed more than $2 billion to the state’s economy.

Grape growers and vineyard owners are scattered on the labeling issue. Paul Bonarrigo, co-owner of Messina Hof Winery, the state’s third-largest wine producer in 2016, said he was opposed to the measure, and the Texas Wine and Grape Growers Association said they don’t back Isaac’s bill, either.

[…]

Back at the Capitol, Isaac said that while 100 percent Texas wine was the goal, some in the industry contend that it might be too challenging to use only Texas grapes by September when the bill would go into effect if passed.

Isaac said he would look into offering an amended version of HB 1514 that would phase in the change, with benchmarks at 80 or 90 percent before requiring 100 percent Texas grapes. Isaac also said his bill would allow the Texas Department of Agriculture to allow exceptions to the threshold if severe weather or drought damaged state grape crops.

I don’t have any particular objection to this bill, though I think the federal 75/25 standard is perfectly adequate. Surely there’s some value in giving the wineries a bit of slack in a bad year. As long as there is a standard that everyone can accept and it is fairly enforced, I’m okay with whatever.

Legalize moonshining

You can brew your own beer at home, and you can ferment your own wine at home, but if you try to distill your own spirits at home, you’re asking for trouble from the rev’nooers.

The movement to legalize marijuana dominates headlines these days, but another group is laboring in relative obscurity to legalize its chosen intoxicant: homemade liquor.

The newly formed Hobby Distillers Association, based in Tarrant County, aims to change a federal law that prevents anyone from distilling spirits in the home — even if you drink it all yourself and don’t sell a drop.

“A lot of people don’t realize this is illegal,” said Rick Morris, owner of Brewhaus, a Keller company that manufactures and distributes small-scale stills and related supplies to make liquor. “It’s an eye-opener for them.”

Morris, the driving force behind the new association, has scraped up the funds to hire a Washington, D.C., lobbying firm to convince Congress that hobby distilling should be put on the same legal basis as brewing beer and making wine at home.

“The beer and wine hobbyists are a little more organized,” said Paul Kanitra, president of lobbyit.com, which now represents the Hobby Distillers Association. “The hobby distillers are finally saying enough is enough.”

Federal law allows a hobbyist to brew up to 100 gallons of beer a year without getting a license or paying taxes. The same holds true for wine makers.

But distilling any amount of spirits — whiskey, gin, vodka, absinthe — could bring legal problems with the IRS and its subsidiary agency, the Alcohol and Tobacco Tax and Trade Bureau.

Federal regulators say it’s a matter of public health and safety: It’s easy, they say, to inadvertently produce homemade liquor adulterated with poisonous chemicals or start a fire with open flames used to heat a still.

Home distillers say those fears are overblown — that their hobby is safe and harms no one.

Kanitra said he and his lobby team hope to find a member of thee U.S. House or Senate to sponsor a bill and get it passed before the end of the year.

“We have to educate members of Congress, and once we do that, they will see there is no reason to treat hobby distillers so differently,” Kanitra said.

It never ceases to amaze me how many archaic Prohibition-era laws are still on the books, being enforced. I see no reason why distilling at home should be treated any differently than home brewing or home fermenting. If there are safety concerns, then put regulations on the equipment. At least craft distillers have more freedom to operate in Texas thanks to a series of bills passed last year that were sponsored by Senator and Lt. Governor candidate Leticia Van de Putte. This one’s a matter for Congress, and they’re too busy repealing Obamacare and not passing immigration reform to pay attention to something like this. Nevertheless, it would be nice if at least one member of Congress agreed to sponsor a bill to legalize home distilling. Who wants to lead on this issue?

Amazon wine

You may soon be able to order wine from Amazon.com, depending on where you live.

Amazon.com Inc. AMZN -0.88% is planning an online marketplace for wine sales directly to consumers, said executives for several California wineries, marking the Seattle Web giant’s second foray into the business in three years.

Amazon hosted a workshop [last week] at a resort in Napa, Calif., and invited members of the Napa Valley Vintners association, said Terry Hall, a spokesman for the group. He said about 100 wineries attended the event.

At the event, Amazon said the marketplace would begin in the coming weeks and the online retailer will charge wineries a 15% commission of the sale price, as well as a monthly fee of about $40, according to people familiar with the workshop.

[…]

In 2009, Amazon pulled back from an effort to sell and ship wine after its partner, New Vine Logistics, suspended operations amid financial troubles. This latest effort would spare Amazon the cost and difficulty of shipping fragile and heavy wine bottles by passing that responsibility on to the vineyards themselves.

Wine sales online are challenging due to a patchwork of state-by-state rules that limit which companies can sell alcoholic beverages. And shippers must ensure that recipients signing for packages are at least 21-years-old, the legal limit.

The question you may be asking now is “Will I be able to order wine through Amazon to be shipped to Texas?” And the answer is…I’m not sure. Last year, the TABC cracked down on out of state resellers who were shipping to Texas without a state sales tax permit. The TABC addresses the question of direct shipping of wine to Texas consumers, and one of the things they say is “Under current state law, wholesalers / distributors are not authorized to ship wine directly to consumers in Texas”. However, out of state wineries may ship to Texas if they obtain a direct shipper’s permit, pay sales and excise taxes, and ship to a TABC permitted carrier. So I guess the question is whether Amazon would be considered a wholesaler/distributor in this scenario, or if the fact that the wineries themselves are doing the shipping opens a loophole for this to be permitted. I sense a legislative opportunity here, or failing that, future litigation. Anyone want to be a test case?

Brewers win one in court

From CultureMap:

A small but significant victory was had for craft beermakers and drinkers Monday when a federal judge ruled (partially) in favor of Austin’s Jester King Brewery in a lawsuit against the Texas Alcoholic Beverage Commission.

Jester King filed a motion for summary judgement in Federal court in October over what it deemed to be violations of both its First and 14th Amendment rights.

Its First Amendment right to free speech, Jester King argued (along with two co-plaintiffs — a distribution company and an Austin restaurant) was violated by the TABC’s oft-criticized demand that any beer stronger than 4 percent be labeled as ale and anything with less than 4 percent alcohol by weight be labeled beer. The celebrated craft brewery argued that misusing technical terms as shorthand for alcoholic strength ignored hundreds of years of beer-making tradition and, in effect, misrepresented its brews and brewing processes to the public.

Jester King also claimed its 14th Amendment right to equal protection is obstructed by Texas’ three-tier system, which mandates that breweries (which produce beer on-site and distribute it to consumers) may not sell their wares on site while brewpubs (which produce and sell on-site) may not distribute it to consumers.

Here’s some background and analysis of the ruling, along with the wit and wisdom of Judge Sam Sparks, courtesy of Freetail’s Brewed And Never Battered blog. Briefly, this is what the ruling means:

To summarize, the ruling has the following effects:

TABC cannot prohibit you from telling customers or advertising where they can buy your products
TABC cannot require you to label your products by their definition of “beer” and “ale”
TABC cannot prohibit you from advertising the strength of your products by prohibiting words like “strong”, “prewar strength”, “full strength”, etc

There’s more to it than that, so go read all the links. The bits about how the TABC was essentially unable to justify its regulations was fascinating, and I hope inspiring to the next Legislature. That will be necessary, because the ruling did not strike down the regulations that forbid breweries to sell their wares directly to visitors even though wineries can do so. Keep pestering your State Rep and State Senator about this, because in the end it’s their job to make this happen. Plaintiff Jester King, I Love Beer, and Beer, TX have more.

Put that wine bottle down and slowly back away

Don’t buy wine over the Internet, kids. The State of Texas says so.

State officials have teamed up with FedEx, UPS and other shippers to ferret out wines being sent to Texas by websites that don’t have proper permits.

That has prompted Wine.com and several other resellers to restrict sales to consumers in the Lone Star State.

Wine.com has 30,000 active customers statewide, CEO Rich Bergsund told the American-Statesman on Thursday. Those customers were notified via email this month that the company had halted shipments of wine to Texas.

Other sites not currently shipping wine to Texas include TheWineBuyer.com, WineBid.com, WineExpress.com and WineLibrary.com.

A law blocking the deliveries isn’t new, but the Texas Alcoholic Beverage Commission has ratcheted up enforcement efforts this year.

“Anybody who is going to sell to Texans has to have a permit,” TABC spokeswoman Carolyn Beck said.

And, right now, Beck said, there’s no law enabling out-of-state resellers to obtain permits allowing them to sell wine here. “They haven’t been authorized by the Legislature,” she said.

Nasty little conundrum there, isn’t it? You need to get a permit to sell wine in Texas, but there’s no law that allows an out-of-state retailer to get such a permit. Thus are crackdowns like this born. There is one potential workaround for businesses like Wine.com, but it’s at best a partial solution:

In its message to customers, Wine.com indicated it was working to set up a warehouse in Houston in hopes of securing a state permit. A lease could be signed soon, Bergsund said.

“We are hoping the state government will see this as a win-win,” the company wrote in its email, “because we will bring valuable jobs into Texas, but there are no guarantees.”

A question-and-answer section on Wine.com indicates the company has used a similar approach in other states with similar restrictions.

“We’ve opened a network of Wine.com warehouses in a number of states, giving us a local presence in those states. This enables us to legally ship wine to our customers in those states while also reducing the shipping time to get you your wine. Unfortunately, in some states not even that will suffice, so keep those letters and emails flowing to your state legislators!”

Beck said Wine.com would only be able to ship to residents of Houston, Harris County and areas within a two-mile radius of Houston’s city limits if its proposed warehouse materializes.

Given that Texas wineries can sell and ship to any customers within Texas, one presumes that Wine.com would either have to open a storefront or start growing grapes here to qualify.

Unlike many industries, online wine sales are a minimal share of the total – about one percent, according to the story, though the potential for growth is there. It’s never going to be a dominant force, but that’s not stopping state regulators here and elsewhere from intervening. It’s hard to see this as anything but an anti-competitive move, one that like the byzantine restrictions we have on selling beer in this state will do nothing for the consumers. From my perspective, as long as the Internet retailers pay the same taxes as the brick and mortar folks, it’s all good. And speaking of such things, let me give the last word to the Austin Contrarian, from whom I saw this story:

Thankfully, Texas booksellers didn’t have the political clout wielded by wine merchants and wholesalers when Amazon was getting off the ground back in the 1990s, else the State would have banned buying books off the internet, too.

Good thing there isn’t a state agency equivalent to the TABC for books.

More cork recycling

I’m always interested in recycling stories.

The [Oregon-based nonprofit Cork Forest Conservation Alliance], whose donors include vineyards, want to remind oenophiles that cork products are made from the bark of the cork tree, which regenerates and is harvested every nine years, director Patrick Spencer said.

With no severe shortage of corks, he said, there is no reason to eschew cork corks for plastic corks.

The corks will eventually be taken to Whole Foods, a partner of the alliance. From there they’re trucked to Missouri, where they’re recycled into cork flooring and other products for sale. The company that recycles and sells the material is an alliance donor, Spencer said.

Globally, 13 billion wine corks are produced each year, the majority in Portugal, Spencer said. The alliance has recycled 35 tons of cork since 2008, mostly through 290 participating members in the United States, he said.

You can read more about the alliance and Cork ReHarvest at the Whole Foods blog. All Whole Foods markets are drop off locations for your used wine corks, which was not yet the case at the time I last blogged about this. And if you happen to buy wine that has a synthetic cork, that’s basically plastic and should be recycled as well.

Compromise on microbrew bills

As Brewed and Never Battered noted, HB660 and HB602 were scheduled for a public hearing in committee today. I’m delighted to say that it looks like there was progress achieved on them.

Rep. Mike Villarreal, D-San Antonio, laid out HB660 before the House Licensing and Administrative Procedures Committee today. The measure, in its original form, would’ve allowed brewpubs — restaurants that brew their own beer — to distribute directly to other bars, restaurants and stores. But after a compromise with the Beer Alliance of Texas, the bill would only allow brewpups to sell their bottled wares via a beer distributor.

Villarreal told the committee that brewpubs are already manufacturing beer, and that Texas’ regulatory system is stunting their growth. Brewpubs in other states are allowed to sell to distributors, meaning Texas is losing out on what could be a growing business, Villarreal said.

“If it is putting our playing field at a built-in disadvantage to our brewpubs, versus out-of-state brewpubs, then it needs to change,” said Villarreal.

But opponents of the bill, including the Wholesale Beer Distributors of Texas, say allowing brewpubs to sell to distributors would break down the three-tiered system that regulates the production, distribution and retail sales of beer separately — and which has been around since Prohibition. The system is meant to make it easier to regulate and tax beer sales and keep any one company from gaining a monopoly.

They suggest a round-about alternative: HB602, which would allow breweries to charge admission for tours and include up to two six-packs of beers to give to tourists at the end of the tour. Keith Strama, who represents the Beer Distributors, told the committee if HB602 passes, brewpubs could change their licenses to become manufactures of beer, so that they could sell to distributors, sell during tours, and open a restaurant on the premises.

Rick Donley, president of the Beer Alliance of Texas, told the committee that he is a staunch supporter of the three-tier system, but that after working with Villarreal and the brewpub owners, a compromise was reached. Originally, the bill would have allowed brewpubs to sell a limited amount of their product directly to stores and other restaurants and bars, bypassing the distributors. The amended bill makes the distributors the middle man.

Scott Metzger, a brewpub owner and executive director of Texas Beer Freedom, said he’s pleased with the compromise. Being able to sell his beer to a distributor will help him grow his business, Metzger told the committee, but would also help grow the state’s economy and its tax revenue. Metzger, who is also an economics professor at the University of Texas at San Antonio, told the committee the bill has the potential to create $680 million a year in economic activity, 6800 new jobs at brewpubs and $57 million in new tax revenue per year.

Personally, I’d prefer to see the three-tier system thrown onto the ash heap of history, but if Scott Metzger is happy with this compromise, then so am I. If what they say about HB602 is true and it gets passed, it’ll be a huge step forward. I’m genuinely optimistic about their chances now. Kudos to Metzger, Rep. Villarreal, Rep. Jessica Farrar (the author of HB602), and everyone else involved in brokering this deal. Now let’s get this bill passed so we can all enjoy the benefits of it.

Elsewhere in alcohol-related news, two other bills moved along, though neither are bills I’d been following.

The first will require liquor stores to begin reporting the final sales destination of booze they sell — and could boost state revenues as much as $25.8 million — was approved this morning by the Texas Senate.

State Sen. Kevin Eltife, R-Tyler, the author, said that under current law, the stores do not have to report the final destination of liquor sales like they do for beer, wine and malt liquor.

“This changes the reports filed with the Comptroller, and is expected to increase tax revenue to the state,” Eltife said, noting that the improved tracking of sales is expected to improve auditing and tax collection.

The second bill, by Sen. Craig Estes, R-Wichita Falls, will increase the limit for Texas winery off-premise tasting room sales from 35,000 gallons to 50,000 gallons. More wine sold will mean more revenues for the state, officials said.

Estes said that the increase is expected to allow the wine industry to continue growing at its current rate. Between 2007 and 2009, the economic impact of the Texas wine industry grew from $1.35 billion to $1.7 billion annually.

The bills in question are SB576 and SB411. With the news about HB602, I’d say it’s been a good day for Texas beer and wine lovers.

The last bill of alcohol-related interest is SB595, which is a bill to allow Sunday liquor sales, and on which there has been no further action. There’s still time in the session for it, but as Yogi Berra once said, it gets late early out there. I’m not nearly as optimistic about this bill’s chances.

Cork recycling

Isiah Carey asks “Have you ever heard of cork recycling?”

I’ve heard of bottle recycling, plastic recycling, and even computer recycling but never cork recycling. Apparently, some Houston area liquor stores are on a campaign to recycle corks from wine bottles. In fact, one store in The Woodlands will donate 2 cents for every cork turned in by its customers. That money will be used for cancer research and care. The store I encountered has plans to match the 2 cents for every cork turned in.

As a matter of fact, I have heard of cork recycling. What I hadn’t heard of was where you could do it locally. Unfortunately, Carey’s post doesn’t really answer the question. And even if it did, it wouldn’t really be economic for me to drive up to the Woodlands to drop off some wine corks. Maybe as single stream recycling gets introduced to more neighborhoods in Houston, wine corks can be added to the list of accepted items, if they aren’t already.

Blue laws

Ever wanted to buy some booze on a Sunday? Maybe soon you’ll be able to.

Most Texans are familiar with the Blue Laws.

Put into effect decades ago, they prevent the sale of hard liquor on Sundays, among other things.

“There is certainly an inconvenience there, no doubt about it,” Spec’s Liquor Warehouse customer Bud Hall said.

And it’s inconvenient even for customers wanting to buy beer or wine. The same laws make it illegal to sell those items before noon on Sundays.

“If we are having a barbecue on a Sunday or something like that, and it is before noon, we have to sit there and wait,” Spec’s customer Scott Moody said.

Now, a bill filed in the Texas Legislature is looking to repeal those restrictions for good.

There’s no information given about said bill or its author in the story, so I’m not sure what its number is, or whether there may be more than one such bill. The closest thing I could find is HB863 by Rep. Robert Roland Gutierrez (D, San Antonio), which would allow for liquor sales on Sundays between noon and 6 PM; it doesn’t mention anything about beer or wine. That doesn’t quite fit the description in this story, but it’s all I could find.

But that’s not good news for Spec’s owner John Rydman.

“In the 2,500 or 2,600 package stores that there are all over the state of Texas are family people. We don’t want to necessarily work another day. It’s not good for my employees. They need a day off,” Rydman said.

It would also add more overhead to the store’s bottom line, Rydman said.

With the economic downturn, state lawmakers are looking for different ways to generate revenue. Selling booze on Sundays is just one of their ideas.

“I think this is a good source of revenue without having to increase taxes or cut valuable state programs,” District 143 State Rep. Ana Hernandez said.

Hernandez said Sunday liquor purchases could generate upwards of $5-8 million for the state.

Rydman disagrees.

He said his sales wouldn’t go up. Instead, he believes they’d just be spread out over seven days instead of six.

“Those who filed the bills are still convinced there is extra money somewhere. They just think we are crazy—that we people in business don’t know what we’re talking about,” Rydman said.

I support repealing the blue laws because I think they’re a relic of a bygone past that doesn’t really serve any purpose today. I think there would be a modest increase in state revenue from such a change; in context, five to eight million bucks is pretty modest and is probably in the neighborhood. It also likely would spread existing sales around more, but that sounds like a convenience customers have wanted. I appreciate Rydman’s concern about his employees and his bottom line, but I feel confident he can make it work. Spec’s notes that its hours of 10 AM to 9 PM Monday through Saturday are “The maximum allowed by law”, which suggests to me they’d do more – certainly that their customers would want them to do more – if they could. So whether it’s HB863 or some other bill I was unable to locate that’s the vehicle for this, I support the effort to extend the allowable hours for the sale of alcoholic beverages.

UPDATE: Roland Gutierrez, not Robert. My apologies.