For Sale in Texas Only: The lawyers strike back
by Wine Curmudgeon Posted On
Lawyers may know law, but they don’t necessarily know regional wine – and the FSO rule changes are good for regional wine.
When the federal government proposed rules to stop wineries from confusing customers by using the For Sale in Texas Only dodge, those of us who care about regional wine wrote glowing reviews of the regulations. Finally, producers would have to call a non-local wine a non-local wine, instead of using some fine print on the back label to get around appellation laws.
Now, though, the lawyers for the other side are taking shots at the proposal, and you’d think those of us who want Texas wine to be from Texas – or Virginia wine to be from Virginia, Missouri wine to be from Missouri, and so forth – were Commie pinkos trying to undermine the American way of life.
“… [C]onsumers right to know where the grapes in their wine come from is compromised,” says the blog post describing the proposal, written by two attorneys from the prestigious Hinman & Carmichael law firm in San Francisco, well known in liquor law circles (and who are not related to me, though one is named Siegel). The post says the rules are unfair and will penalize hard-working winemakers who genuinely want to make great wine using out-of-state grapes.
It also defends “small wineries in remote states” who “won’t be able to provide their consumers with truthful and accurate information about the wine they are drinking locally” if the rules are accepted. Which may be the first time in more than 25 years writing about regional wine that I’ve seen anyone in California take up the cause of small wineries in remote states.
The proposed regulations require wine that doesn’t meet appellation laws for local labeling to be labeled American, or else not list the vintage and the grapes the wine is made to be allowed to a For Sale in Only, or FSO, label. There is nothing onerous about that, and especially for producers who aren’t trying to pull a fast one by using the FSO rules to make wine drinkers think the wine is local. Because FSO rules allow wine that can be mostly out-of-state grapes to carry a label that makes it look like the grapes are all local. As I have written, “This is unfortunately common in regional wine, and has been an especial problem in Texas for the past decade or so.”
I would never try to explain law to a lawyer, and there may be something legal in the Hinman post that I’m missing. But I do know regional wine, maybe better than all but two or three people in the country. And to argue that this law penalizes well-intentioned winemakers is specious. Well-intentioned winemakers are already labeling their wine American, so this law won’t hurt them at all. It will hurt everyone who wants consumers to think a wine is local when it isn’t, and what’s wrong with that?
I’m a winemaker here in Michigan. I moved out here from Washington State, where I was making wine for 4 years. Back in Washington, the need to place “For Sale in Washington Only” was 100% unnecessary, as no one was buying fruit from outside the area since WA had such a great name.
Fast forward to Michigan and we’ve had some terrible winters which has killed many of the vines potential to grow anything for the past few years. Michigan has always pulled in juice, wine and fruit from other areas but the past few years, almost 100% here in Northern MI has come from other states. The preponderance of “For Sale in Michigan Only” has exploded and so many wineries are doing this to hide the fact the wine isn’t coming from Michigan. Michigan consumers are very Pro-Michigan, which is fantastic. But, the industry is completely masking where it comes from because they want their consumers to believe everything is Michigan based. Brands which used to be 100% Estate only hide it by removing Estate and placing the FSMO tag on there.
As a winemaker who believes in making a great product with little intervention and being truthful and transparent to the customer, this marketing really drives me nuts. Customers come in all the time wondering why our grapes are from out of state when everyone else is making “Michigan” wines. I have to explain to them the realities and most don’t believe me.
The fact is, customers don’t know what most of the designations mean on the labels. If I put Washington on the bottle, it doesn’t mean the grapes came from there, it means the wine was actually made there. If I bought the grapes and made the wine here, I have to call it American wine. The FSMO allows everyone to hide every aspect of where the wine came from, whether it be grapes, juice or wine brought in.
Additionally, TTB has always stressed to me on the phone about being transparent to the customer. Yet, when I ask questions about that, they tell me to simply put FSMO to avoid having to negotiate any of the hurdles. It’s very frustrating to someone like me who wants to be very upfront with my wines. I believe even if I have to bring the grapes in from another location, I should tell my customers. Because, even if the grapes did come from somewhere else, I’m still making the wine. If I have the connections to the growers and can tell them how I want everything grown, i’m basically doing everything I can to make those grapes my own. And, when we’re faced with tough winters, I think that’s very admirable and the customers should be able to appreciate the entire story.
I go back and forth over this proposal. First, the FSO issue could be solved by requiring an appellation of origin on the label as in CO. However, the American appellation does little to inform me where the grapes were grown other than more than 25% came from outside the state. Using a CA AVA or state appellation along with FSO may bring down the reputation of said region (as is claimed by the originators of this proposal), but it also helps inform the consumer that the grapes are not local (assuming we’re talking about non-CA producers). Who is the label to benefit, the consumer or the reputation of a region??
And there are more loopholes than the FSO loophole for wine labeling. Josh, you may put WA on your label if you use FSO. If you don’t use FSO, you may still put WA on your label, as you said, if the wine is fully finished (except for cellar treatment and/or blending which does not alter the class and type of the wine) in the labeled appellation of origin or an adjacent state in the case of a generic state appellation.
Gotta love how complicated wine labeling can be!
The law of untended consequences is again at play in this question. As a compliance consultant that is looking at ,and filing labels all day long, there are many more reasons to use the Certificate of Exemption. For craft ciders that are 7% or over alcohol, the most common reason to request a “FSO” Certificate of Exemption is mandatory standards of fill. Craft ciders under 7% are not restricted in size and can use, for instance, a 12 oz. bottle or can. If the same cider is over 7% and requires a COLA the 12 oz can is not legal and they need a Certificate of Exemption. I can name dozens of other examples for reasons to request the certificate than grapes not fully finished and bottled in the same state, or adjacent state, as the appellation.
I echo Josh’s experience in MI–when winters devastate crops, as they have in several previous years here in Colorado, even wineries fully committed to “Colorado Grown” wines have had to go out of state for grapes or just not make wine at all. And as Kyle said, our laws require an appellation on all grape wines to let the consumers know where the grapes come from.
That said, most consumers, and many wine industry veterans, don’t know how to read a wine label. If you like it, does it really matter where the grapes come from? Yes, Jeff, for local wine purists, it does matter. But the average consumer probably does not care. This is evidenced by the popularity of what I call “franchise wineries” that make New Zealand Sauvignon Blanc or even Barolo in Denver or Dallas.
I also see another potential unintended consequence of this rule. The rule could thwart the growth of potentially outstanding appellations in states outside of California. If a poor harvest forces a Missouri winery to buy grapes from Colorado vineyards in the few years when we might have a grape surplus, the rule mandates an American appellation on the label, preventing Missouri consumers from learning that the West Elks or Grand Valley AVAs in Colorado can produce world-class fruit. It seems that the rule only benefits the established high-profile AVAs and discourages the growth and recognition of lesser known regions. My concern is that under this proposed rule grape growing regions in emerging wine states will always be limited by the size of their wine industry’s production, since out of state wineries will be discouraged from using that appellation.
And cider needs a whole new set of labeling rules, too.
I am all for truth in labeling and for calling out locally grown wines. But let’s not let Napa dictate how the rest of the country has to do business, and focus instead on celebrating and nurturing the local wines that want to be local but still need to run a business.