Seven months after Supreme Court ruling, wineries find industry's change is sluggish

Wednesday, January 11th 2006, 6:12 am
By: News On 6

NAPA, Calif. (AP) _ Napa vintner Dennis Cakebread is finally sending out cases of wine to thirsty New York state customers, seven long months after a Supreme Court ruling paved the way for the shipments.

``What we've learned about this is patience and persistence,'' said Cakebread. ``These lawsuits aren't like an episode of 'L.A. Law' _ after one hour you win your case and you're off and running.''

A lot has happened since the U.S. Supreme Court opened the door to shipping wine across state lines. But change hasn't been swift in an industry that sometimes seems as rich in red tape as it is red grapes.

``We're in a highly regulated industry. This isn't like selling sweaters,'' said Jeremy Benson, executive director of Free The Grapes, a Napa-based group that has been working to loosen shipping restrictions. ``The regulations are there and we have to work through them.''

The Supreme Court struck down laws last spring in New York and Michigan that allowed wineries to ship directly to in-state consumers but forbade out-of-state businesses from doing the same thing.

The court said either all wineries should be allowed to ship directly to consumers or none, a blow to the old distribution system that required a wholesaler to sell to restaurants and retailers. States have been acting to adjust their shipping laws ever since.

The ruling was particularly important to smaller wineries that don't have the volume for wide distribution in liquor stores and supermarkets and rely on direct sales to consumers, many of whom have developed a taste for their products on winery visits.

``It makes a huge difference,'' says Cakebread, part-owner and senior vice president of sales and marketing at Cakebread Cellars, which began with a 156-case vintage in 1973 and now makes about 95,000 cases a year.

For a small winery like Elan, which makes about 1,000 cases a year, being able to ship is crucial, said owner Linda Elliott-Smith, who has had 15 cases of cabernet sauvignon paid for and ready to go to New York for a while.

They were delayed from shipping even further in January, when floods knocked power out. Customers who are big fans of Elan's elegant reds have been willing to wait. ``It's nice that we have customers who are true followers,'' she said.

Since the Supreme Court ruling, New York, Michigan and Ohio have loosened shipping restrictions. Texas also made shipping easier just prior to the high court ruling.

In December, shipping to New York became practical when the New York State Liquor Authority approved using UPS for wine shipments. FedEx also is working to get approval.

The New York law only allows shipments from states that extend similar privileges to New York vintners, which some experts say may not be constitutional. Michigan's new law says wineries can't ship more than 1,500 cases per year in direct-to-consumer shipments and also prohibits out-of-state wineries from selling direct to restaurants and retailers.

Still, the overall shipping picture is brighter for wineries, who have seen their potential shipping audience increase considerably.

At Joseph Phelps Vineyards, president and CEO Tom Shelton celebrated the California-New York connection when he hosted a dinner last year for New York Gov. George Pataki, who was visiting wine country.

``We got the flow going both ways,'' he said. In a bit of bottle diplomacy, they served wines from New York state.