Monthly Archives: January 2015

Unified Symposium Recap, Part One

Over the past three days, Suzanne and I attended the Unified Wine and Grape Symposium. It was well-attended, extremely informative, and exhausting! The daily seminars and three floors of exhibits kept us busy. Over the next few days, we will be reporting back here with some highlights.

On the first day, we attended the keynote presentation by Rick Tigner, the President of Jackson Family Wines. Prior to this event, I had seen an episode of Undercover Boss, where Rick disguised himself as a job-seeker, and investigated how his company was working from the eyes of his employees, including the laborers, truckers, and wine tasting staff. He came across as a genuine, caring person on the show, and I was excited to meet him in person.

Rick’s talk focused on key issues affecting wine companies, and especially California wine companies. One point I found especially interesting is that California wines do not seem to be doing enough on the international scale to make a name for themselves. California wine shelf space abroad is limited, and California wine companies need to take on the challenge of educating the global consumer about what makes California wines unique and worth purchasing. In addition, Rick discussed some of the looming challenges specific to the wine industry, including water issues and sustainability. Rick touted Jackson Family Wines’ commitment to sustainability, and boasted about their recent achievements in reducing the amount of water used from vines to wines. Rick’s talk was engaging and entertaining. I was glad to see that he was as friendly in person as he appeared on television.


Going Green: Wine on Tap

A couple of months ago, I attended a “Wine Law Forum” put on by the CEB in Yountville, just north of Napa. It was a great day and a half, with seminars on a wide range of timely topics, from buying a winery, to pouring wines in alternative locations, to water regulation issues, to the legalization of recreational marijuana, which could be coming to California in the near future. One seminar that I found particularly interesting concerned alternative types of wine packaging. Specific alternatives discussed? Refillable growlers (which I’ll address in a later post), and wine on tap.

Wine on tap? That’s right – wine on tap – straight out of a stainless steel keg. Talk about alternative! Granted, it’s not hard to be “alternative” in an industry where bottle and cork are steeped in tradition, and constitute what many consider to be an integral part of the wine experience. Nevertheless, by the end of the seminar, I was convinced that wine on tap is an inevitable and exciting development in wine packaging. As consumers become more and more insistent on sustainable practices, and producers more and more concerned about efficiency, cost, and increasing competition, wine on tap has something for everyone.

Stainless steel kegs are impermeable to oxidation and can keep wine fresh for up to three months after they are tapped (six months untapped). For any restaurant or bar or tasting room that serves wine by the glass, that means less wasted wine. No one wants to serve their customer a glass from a bottle that was opened two days ago, and with wine on tap, you don’t have to. And, because the kegs are reusable, it also means less landfill waste. According to Free Flow Wines, a company that provides kegging and logistics services for wineries (and whose founder led the seminar I attended), the use of stainless steel kegs has saved over 2.5 million bottles from the landfill since 2011. That’s a lot. Less bottles in the landfill means less bottles and corks that producers need to buy on the front end. I’m guessing that can translate into quite a savings.

Of course, given the complexity of the regulations governing the wine industry, wine on tap is not without its challenges. With every state having its own regulations on matters ranging from fill volumes to labeling, developing a navigable system for the distribution of wine on tap is a work in progress. But in progress it is.

All in all, as a (relatively) “younger” wine consumer, I thought wine on tap hit all the right notes for a demographic of wine drinkers that are not only keenly aware of and interested in sustainable practices, but are willing to insist on such practices with their pocketbooks.


2015 Unified Wine and Grape Symposium

We are very excited to be attending the 2015 Unified Wine and Grape Symposium from January 27 to 29, 2015 at the Sacramento Convention Center. We are scheduled to attend exciting seminars including:

  • Keynote speech by Rick Tigner, President of Jackson Family Wines
  • Preparing Your Wine Business for a Transition or Sale
  • A discussion on the state of the winegrape industry
  • Wine Trends or Fads?
  • Regulatory Hurdles for DTC, Social Media, and Third Party Sales Channels
  • Future Proofing Your Business
  • Understanding the Marketing of “Craft” and the Opportunities for the Wine Industry
  • Sustainability Certification in a Global Market
  • Is California Special and Can it Stay that Way? Understanding California’s Position in the Global Wine Market

If you’ll be at the conference, we hope to meet you there! Look out for our summaries and reviews following the conference.


Shipping Wine In, Out, and Around California

Are you considering shipping your wine within California, or even out of state? Like everything else in the wine industry, shipping can be complicated and difficult to stay up to date with. This article is written as a guideline for wineries to use prior to shipping any bottle to anyone. Please note, it is illegal in every state for any consumer to ship wine to any other consumer. This article is written as a guide for licensed wineries to ship wine to consumers.

Within the state of California:

The ability of California wineries to make retail wine shipments to adult California consumers is a basic privilege for a California Winegrower Licensee (Type 02 license designation). However, just because you have the privilege of shipping wine does not mean that any shipper will allow it. The United States Postal Service does not accept packages containing alcohol. UPS provides wine shipping services to wineries with valid Type 02 licenses. However, this is on a contract basis only. FedEx has a similar service, with stringent regulations for wine shipping containers. Regional carriers, such a Golden State Overnight, provide similar services, and can often beat the national carrier prices. No matter what carrier, all deliveries must have a person over age 21 sign for the package.

From outside of California to California:

Non-California wineries may ship retail wine to California residents over the age of 21, provided they have a Wine Direct Shipper Permit, available through the ABC. This is a Type 82 license designation. The permit application (Form ABC-248) is $10 per year, and can be found here. Once the California Board of Equalization receives the permit application, the non-California winery must provide the Board with a Certificate of Use Tax, and other reporting as required by the Board. If a non-California winery fails to report their sales, the Board will notify the ABC for further action.

From California to a state other than California:

California wineries do have the ability to ship wine to many non-California adults, but there are restrictions and exceptions, and regulations vary from state to state. For example, for the state of Tennessee generally, California wineries may ship a maximum of one case per month, not to exceed three cases per year, directly to individual consumers. And, as in many other states, Tennessee requires a one-time non-refundable application fee of $300.00, in addition to the annual license fee of $150.00, which is pretty hefty if you only have a few customers in the state. Other states, like Utah, prohibit California wineries from shipping any wine direct to consumers. This is why it’s so important to check the local laws and regulations for any state to which you are considering doing direct-to-consumer shipping.

For more information about shipping wine in and out of California, or for specific information about your needs, contact the author of this article.


TTB Font and Sizing Label Requirements

A major hurdle that most wine producers hit is the dreaded label design. Although information about TTB requirements is readily available, it can sometimes feel like the regulations are written in a foreign language. Certain TTB terms and font sizing requirements can be tricky. This article is intended to take some mystery out of this aspect of label design for American wines. Of course, exceptions apply, and this article should be read as a foundation of knowledge, and not as specific legal advice for your individual label design. For assistance with your label’s compliance, or to discuss your label’s design, contact us.

All wine labels must include the wine’s brand name, class, name and address of the bottler or packer, net contents, FTC yellow dye #5 (if applicable), color additives (if applicable), sulfites declaration (if applicable), alcohol content statement, and the government warning statement. While all of these categories have their own special substantive requirements, font size and spacing requirements also exist.

BRAND, CLASS, NAME and ADDRESS, NET CONTENTS, DYES, ADDITIVES, and SULFITES:

For wine containers up to 187 ml (splits), the brand, class, name and address, net contents (as opposed to alcohol content), FTC yellow dye, and sulfites declaration must be, “in script, type, or printing not smaller than 1 millimeter, unless contained among other descriptive or explanatory information, in which case the script, type, or printing of the mandatory information must be of a size substantially more conspicuous than that of the descriptive or explanatory information.” For wine containers larger than 187 ml up to 3 liters (half bottles, bottles, magnums, double magnums, etc.), and wine containers larger than 3 liters, the requirements are identical, except that the millimeter size is increased from 1 to 2.

So what does this mean? Let’s start with “script, type or printing.” Script is a way to describe handwriting. Most people think of this as cursive writing, but it actually encompasses any font that has the appearance of being lettered by hand, even if the letters are not in cursive. Type and print both refer to using block lettering, one by hand and one with either a typewriter or printer. Easy enough so far.

Next comes sizing, which is a bit trickier. The 1 millimeter measurement refers to the space between the baseline and cap-height. The baseline is the location that the letters appear to sit on. Think of the lines on lined paper. The cap-height is the height from the baseline to the top of an uppercase letter. Fontshop.com’s handy glossary graphic provides a picture for those of us who are more visual:

_Header

If a wine label has lower case lettering, even the lower case letters need to meet the minimum height standards. For wine containers up to 187 ml, this information has to be presented in a font that is at least 1 millimeter tall. For larger wine containers, the size increases to 2 millimeters.

The next section, beginning with the dreaded “UNLESS” is actually pretty simple. If contained among other descriptive or explanatory information, the brand, class, name and address, net contents, yellow dye, and sulfite declaration must be “substantially more conspicuous” than that of the descriptive or explanatory information. By providing this non-specific requirement, the TTB actually gives label designers some discretion. For example, if this information is included among a flowery description of the wine, the required information must be set apart with larger, bolder, or otherwise more noticeable font.

ALCOHOL CONTENT STATEMENT

Next things next. The alcohol content statement tells the consumer what percent of alcohol the wine contains. Per the TTB, “Alcoholic content statements must not appear in script, type, or printing larger or more conspicuous than 3 millimeters nor smaller than 1 millimeter on labels of containers having a capacity of 5 liters or less.” Even though it’s worded a little differently, the alcohol content statement must be in script, type, or print. So, for bottles 5L or less (all the usual sized, and most of the very large bottles), the size requirement on the alcohol content text is between 1millimeter and 3millimeters in height and readable.

GOVERNMENT WARNING STATEMENT

This label requirement is the most direct, and allows for zero creativity.  For all wine container sizes, TTB requires that the first two words of this statement appear in all caps and bold, i.e. “GOVERNMENT WARNING.” The rest of the description does not have to be bold, but should stay in all caps. For wine containers up to 187 ml, the type must be at least 1 millimeter tall. For wine containers between 188 ml and up to 3 liters, the font size increases to at least 2 millimeters. For wine containers larger than 3 liters the minimum font height is 3 millimeters.

In addition to the font height requirement, there is also a linear text requirement to ensure that this portion of the label isn’t smashed together. For containers up to 187 ml, this part of the label may have a maximum of 40 characters per inch. Characters include letters, numbers, and marks (including punctuation). Spaces are excluded. For 188 ml to 3 L, the spacing becomes 25 characters per inch. For larger wine containers, the spacing increases to 12 characters per inch.

Clearly, there is a lot to know, font and size requirements are just the tip on the wine label iceberg. Regulations and restrictions of content will be the subject of future posts.

 


Beware the Use of “Volunteers” at your Winery

Over the past few months, as I’ve been mulling over topics for this wine law blog, several people have expressed their surprise at the news that a Bay Area winery was recently cited and fined for labor violations involving over 20 unpaid volunteers. The Department of Industrial Relations investigated when one of the workers was injured and, unsurprisingly, was not covered by workers’ compensation insurance. The fines assessed were so prohibitive – roughly $115,000 – that the winery was forced to shut its doors. It has come as a shock to many in the wine industry that the use of volunteers not only violates California labor laws, but can have such devastating consequences.

The Bay Area case is a wake-up call. For those in the industry who have used volunteers in the past, you should re-think that practice.

If you are a for-profit business (there are exceptions for non-profits, religious, and charitable organizations), you may not use unpaid volunteers without running afoul of California labor laws. California law defines the term “employ” very broadly to include “to suffer or permit to work.” Your volunteers may not be suffering, but they are performing work for you, and so are technically considered employees entitled to minimum wage, meal and rest breaks, and overtime pay. You as their employer are required to make payroll deductions, and to provide workers compensation coverage. The penalties for non-compliance can be severe, and include back wages, liquidated damages, and various other penalties.

You might be able to use unpaid interns in your for-profit business, but there are several criteria that must be met if your interns are to avoid classification as employees. For example, the internship must be primarily for the intern’s benefit, your intern must not displace other employees and must work under close supervision of regular employees or staff, you may not derive any “immediate advantage” from the intern’s activities, the internship must be similar to training that would be provided in an educational environment, there can be no guarantee or expectation of a job for the intern at the conclusion of the internship, and it must be understood that the intern is not to be paid for his/her time. In short, your intern’s experience must be primarily an educational one to avoid application of state and federal labor laws. Interns who are used simply to supplement or augment your existing workforce will be considered employees entitled to minimum wage and overtime.

Wineries that are considering the use of volunteers or unpaid interns should reconsider, or at a minimum seek the advice of counsel before doing so. Those that find themselves facing enforcement proceedings for labor law violations should do the same, as employers are entitled to all the normal due process protections, including the right to notice, an opportunity to be heard, and to be represented by counsel.