Best Practices in Winery Tasting Rooms

If you have a tasting room, you know that following the letter of the law is the best way to stay under the radar (and off the naughty list) of the ABC. Violations, including serving minors or obviously intoxicated patrons, can have serious consequences, including jail time, criminal fines, administrative penalties, and civil liability. And you, as the owner, will always be held accountable for the actions of your employees, even if you were not present when a violation occurred. While insurance can cover general business liability, it never covers gross negligence, which is why it is so important to make sure that you and your team are trained in the best practices to avoid violations. In addition to or as a part of your employee training and handbook, here are a few things to keep in mind:

Do all of your employees know where your license is? The ABC requires you not only to be validly licensed, but to have your license posted. Every employee of your tasting room must know where that license is, and be ready to point it out to anyone who asks for it. If your business cannot produce a license, then the person serving alcohol is subject to arrest, and you as the owner are subject to an administrative penalty. In reality, the ABC is not likely to make an arrest until they have sufficient reason to believe that no valid license exists, but, even with a valid license, the posting is required, and the consequences are potentially severe.

Do your employees know where people can and cannot consume alcohol on your premises? All permanent ABC licensees have submitted defined spaces for alcohol consumption to the ABC. Consumption of alcohol outside that defined space is a violation. For this reason, you should make sure that all of your employees know and enforce these limits. If your defined space does not include your parking lot, for example, then it is up to you and your employees to ensure that people are not walking out of the permitted area with a glass of wine. Even a bus stop on a public sidewalk in front of your tasting room may be your responsibility. It is important to remember that consumption outside the allowed boundaries, even if the alcohol was not provided by you, is a violation, and you can be cited. That means no tailgaters.

Do your employees follow a policy of checking identification? Serving alcohol to minors is the most common ABC violation. As a classy tasting room owner, the idea of teenagers trying to crash your business to get a sip of wine might sound absurd, but the truth is that it happens every day. Each employee should be required to check the identification of anyone who appears to be under 35 years old. You may want to take this a step further and require that all customer identification be checked before they can taste. Employees should be trained to look for six items in order to validate an ID: 1) the ID must be issued by the government; 2) name of ID owner; 3) date of birth corresponding to an age of 21; 4) description matching the person presenting the ID; 5) photograph matching the person presenting the ID; and 6) the ID must not be expired.

Do your employees know when to cut someone off? It is an ABC violation to serve alcohol to someone who is obviously intoxicated. For ABC’s purposes, “obviously intoxicated” has nothing to do with a 0.08% blood alcohol level, and has much more to do with common sense. While this description leaves some wiggle room, it is best to have in place policies so that you and your employees never have to worry about infringing. Train your employees to observe your customers. If someone appears to have had one too many, make sure that your employees have a game plan. For example, tell your employees to let another coworker or manager know about the customer so that there is backup. Employees should be courteous to the customer, and explain that the ABC won’t let the employee serve any more drinks. If the customer is rude or belligerent, the employee should be encouraged to contact authorities. The employee should never bargain with the customer or back down. If possible, the employee should provide water and arrange for a ride for the customer. Any incident where a customer is cut off or has their drink taken away should be documented.

Remember, nothing prohibits you from doing more than is required by the ABC. In order to avoid violations and keep the ABC at bay, the best tasting room policies and practices go above and beyond the compulsory conditions.


Certified Farmers’ Market Permits: Wine Tastings Included

California winegrowers holding a Type 02 license have been able to sell their wine at farmers’ markets under a special permit (Certified Farmers’ Market Sales Permit) for some time. For a relatively nominal fee, now $50, a licensed winegrower may sell wine at a certified farmers’ market so long as the wine is (a) “produced entirely from grapes or other agricultural products grown by the winegrower” and (b) bottled by the winegrower. The permit is good for an entire year, but the winegrower may only sell wine one day a week at any given farmers’ market. A separate license is required for each certified farmers’ market at which the winegrower’s product is to be sold, but there is no limit on the number of licenses that may be held.

Annual sales for wine sold under all certified farmers’ market sales permits held by any one winegrower are limited to 5,000 gallons, and are to be reported to the ABC.

As of July 2014, the ABC also allows instructional tasting events to be held at certified farmers’ markets under this license, “subject to the authorization and managerial control” of the particular farmers’ market operator. Restrictions on instructional tasting events are as follows: (1) the event area must be separated from the rest of the market by some type of physical barrier (chain, rope, wall), with only one licensee conducting the event; (2) consumers may not leave the instructional tasting area with an open container; and (3) tastings are limited to 3 ounces per person per day.

Winegrowers undoubtedly welcome this expansion of their rights under this particular license, as it allows them to provide their potential consumers with the full farmers’ market experience of sampling the product prior to purchase.

Interestingly, as of January 1, 2015 licensed beer manufacturers are also allowed to sell their products at certified farmers’ markets, but the ABC restrictions differ from those applicable to licensed winegrowers. Most notably, tastings are not permitted, and the licensee can only sell at farmers’ markets located in the same county or an immediately adjacent county to that in which the beer manufacturer is located.


Placer County Considering Amending Winery Ordinance

Wine regulations can get complicated. Federal and state regulations must be followed, but one must also be aware that mandatory local ordinances can vary from county to county and city to city, adding further hurdles to the success of winemakers and wineries. Localized winery ordinances often regulate the size of tasting rooms, the number of events allowed, and other activities. One such ordinance affecting wineries that host events in Placer County is causing a stir.

As it currently exists, Placer County’s Ordinance 17.56.330 of the Planning and Zoning ordinances, adopted in 2008, is designed to “provide for the orderly development of wineries… encourage the economic development of the local agricultural industry, provide for the sampling and sales of value-added products, and protect the agricultural character and long-term agricultural production of agricultural lands.”  It includes provisions that keep special events and crowds to a minimum. All wineries are required to have a permit for up to six promotional events per year. Promotional events are limited to those that are related to producing wine at the facility, i.e. barrel tastings or relase parties of the host winery’s wines.

Recently, the Placer County Vintner’s Association has expressed concern that the ordinance is too restrictive, and has requested from the Planning Commission changes that would allow more leeway in holding larger and more diverse events.  According to the Association (and a County staff report on the issue), the current ordinance is more restrictive than the ordinances in neighboring Sacramento and Amador counties, and is the only ordinance in these three counties that requires promotional events to be specifically related to promoting the winery or its products. The Association’s goal is to have the ordinance amended to define promotional events more broadly to include private functions such as fundraisers and weddings, and to allow wineries to have more than six promotional events throughout the year. In addition, the Association would have any event with less than 75 people present labeled a “routine activity,” which would need no special permit. The Association argues that the proposed amendment will “help support the 20 wineries located on the Placer County Wine Trail, create local jobs, provide tax revenue to the city and county and keep our landscapes beautiful.”

Not everyone is on board with the potential changes. Some local residents fear that additional events will cause more traffic, which can be especially scary on Placer County’s winding country roads. This fear increases with the idea that people will be consuming wine at the events.  Increased traffic also means increased road maintenance, and some residents are not interested in footing that bill. Increased noise from events is also a factor that the opposition wants considered. Marilyn Jasper, who represents the Sierra Club and Public Interest Coalition, said that current protections safeguard against “de facto conversion (of farmlands) to commercial uses,” and opposes the proposed amendments.

At the end of February, the Planning Commission decided to send the proposed amendments to municipal advisory councils for comments before revisiting the issue later in 2015. We will be looking out for final word later in the year.


Craft Beverages: Where Can Wine Fit In?

It’s no secret that the craft beverage industry is booming. In the past few years, hundreds of craft breweries have opened across the state, with over 40 now in the Sacramento region alone. The liquor industry is also getting on board, with specialty flavors, blends, and other creative concoctions designed to woo the growing number of consumers who have expressed a desire for smaller, more artistic beverages. The craft industry has gotten so popular that one beer industry giant paid millions of dollars to address the issue head-on in a Super Bowl ad. With all of the hype (and, naturally, dollars) involved with “craft,” why hasn’t wine joined the movement?

On January 29, 2015, I attended a seminar titled, “Understand the Marketing of ‘Craft’ and the Opportunities for the Wine Industry” at the Unified Symposium. The panel consisted of J.E. Paino, general manager of Ruhstaller Brewery in Sacramento (you may have seen their hops being grown on the side of Highway 80 in Dixon), Kellie Shevlin of the Craft Beverage Expo (Suzanne and I will be exhibitors this year), Adam Johnson from the Kentucky Bourbon Trail, and Cindy Molchany of Craft Beverage Media. The first point that was made involved the definition of craft itself– everyone on the panel agreed that there was no set definition (or a need for a set definition), but that authenticity, lack of pretentiousness, and transparency about methodology were foundations.

The panel discussed some of the challenges that wine faces in fitting in to the “craft” scene, the first being that wine is perceived as a very traditional, stuffy, established beverage. This is contrary to the modern, younger image often marketed in the craft world. Being creative with wine also comes with some regulatory hurdles. Although ingredient regulations also exist in the beer and liquor worlds, wine regulations are the most stringent. A list of allowable and prohibited additives to wine can be found here. As one frustrated commenter at the panel stated, “Wine isn’t like beer. I can’t just dump a bunch of honey and vanilla into my wine and call it craft!”

The panel offered some alternative methods to attract craft consumers, including the finishing of wine, and advertising and marketing strategies. First, the idea of using alternative barrels was presented. For example, used bourbon or whiskey barrels can create a unique flavor profile to wine, and offer the consumer something unexpected. In addition, the panel suggested that, contrary to the traditional, customary, ahem, boring(!), labels that we’re used to see plastered on wine bottles, labeling can be a little bit more fun and creative. If the winemaker is also an artist, for example, have them render an original work for the label, or, if there is a special method that the winemaker uses, showcase that on the label! If you have a tasting room, consider adding a tour, or other special service aimed at giving the consumer a more personal experience with your wine. When consumers are able to experience the wine making process from the soil to the glass, the transparency of the process, as well as the consumer’s association of your product with the craft of the industry, increases.

If you’re in the wine business, you know that wine making is certainly a craft, in addition to being a labor of love. It’s time that the industry showcase this artistry to consumers.

 


Going Green: Sustainability Certification in California

A few weeks ago, Aerin and I attended the Unified Wine & Grape Symposium in Sacramento. One of the seminars I attended dealt with sustainability, a topic that seems to be popping up with increasing frequency in the wine industry.

Sustainability is an interesting concept, primarily because it lacks any single definition or set of criteria. And, when it comes to certifying your wine as “sustainable” there are several programs to choose from. Wineries need to do their research to uncover the criteria for each certification program, and evaluate which program best fits their current practices and goals for sustainability.

One of California’s main sustainability programs is the California Sustainable Winegrowing Program. It advances and provides resources for practices that are “environmentally sound, socially equitable, and economically viable.” Its certification program – Certified California Sustainable Winegrowing (CCSW Certified) – provides third-party verification of a winery’s implementation and ongoing improvement of nearly 200 sustainability practices/criteria drawn from a publication called the “California Code of Sustainable Winegrowing Workbook,” which is available for free to California vintners and winegrowers here. According to its literature and website, CCSW emphasizes conservation of water and energy, soil health, protection of air and water quality, employee/community relations, and the preservation of local ecosystems and wildlife habitat.

Another third-party certified sustainable winegrowing program is Lodi Rules for Sustainable Winegrowing Certified Green. According to its website, the Lodi Rules take “a comprehensive approach to farming that goes beyond just pest management to promote practices that enhance biodiversity, water and air quality, soil health, and employee and community well-being.” A fact sheet can be found here, which summarizes the Lodi Rules’ standards for Certified Green. The program does not restrict its certification to wines from the Lodi Appellation; in 2012 about 1/5 of its certified acreage was outside the Lodi region.

Napa County vintners and winegrowers have their own local certification program: Napa Green. Napa Green describes itself as the wine industry’s “most comprehensive ‘best practices’ program for land use and wine production.” Two certifications are available: Napa Green Certified Land, and Napa Green Certified Winery. The Land Certification seeks to protect and preserve the Napa watershed, and involves creating a plan unique to each landowner’s property that emphasizes wildlife habitat, protection of riparian environments, and sustainable agricultural practices. The Winery Certification emphasizes the conservation of water and energy, prevention of pollution, and reduction of waste.

Yet another statewide program out is Sustainability in Practice, or SIP Certified. This program focuses on habitat and water conservation, energy efficiency, pest management, economic stability, and human resources.  According to its website, SIP Certified wines reflect the implementation of sustainability practices that are broader and more comprehensive than even USDA Organic standards. A link to SIP Certified frequently asked questions can be found here.

All of these programs are based on the fundamental premise that ultimately, sustainable practices are not only good for the environment, but good for business as well. After all, the wine industry is heavily dependent upon both natural and human resources, so it only makes sense that business practices emphasizing the protection and health of those resources will ultimately contribute to the industry’s continued vitality and growth.

Room for improvement may lie in the specificity of information available to the consumer about sustainability certification. Certainly consumers find value in knowing which wines are “certified” sustainable, but at present they have no easy way to differentiate between the various certifications they may find on the labels. Do they want that information? Or is it enough to simply know the product has been through some form of certification process? I suppose time and the market will tell. Meanwhile, wineries interested in letting their consumers know more specifics always have the option of describing their sustainability practices where the consumer can’t miss them: right on the label itself. Of course, don’t forget to check the regulations governing labeling before you do – particularly those prohibiting any statements that could be considered misleading. That’s a topic for another day.


Social Media is Advertising: Know the Basics

There’s no question that social media is critical to marketing one’s product. For wineries, however, maintaining a social media presence comes with some serious restrictions. That’s because social media is considered advertising, and is subject to both federal and state regulations governing the advertising of alcoholic beverages. This post is intended to give you the basics on regulations governing the use of social media by wineries. It is, however, not exhaustive. If you have questions about whether something you want to post is permitted, it’s best to look into it or seek advice before posting, rather than risk an inquiry by the TTB or ABC.

Federal regulations set forth both mandatory and prohibited content for any advertising. As for mandatory content, regardless of what social media platform you are using (i.e., Facebook, Twitter, YouTube, blogs, etc.), you must post the name and address of the permittee responsible for the advertisement. This information does not need to be repeated in each individual post, but should be readily accessible to anyone visiting the page. The best place to put this information is in the “About” or “Profile” section of the page. If you are posting about a specific product, your post is required to have “a conspicuous statement of the class, type, or distinctive designation to which the product belongs,” corresponding to that which appears on the product label.

Turning to prohibited content, your page cannot contain any of the many prohibited types of statements set forth in 27 CFR 4.64. That means no misleading statements, no “obscene” or “indecent” statements or designs, no statements that are disparaging of a competitor’s product (even if you’re comparing your product to a competitor’s product), no statements relating to alcohol content (with a few limited exceptions), no statements inconsistent with your labeling, and so on. Check the regulation: it’s pretty comprehensive and includes other restrictions on statements relating to the age of your product, its origin, and any health-related claims.

Of course advertising directed at minors is prohibited. Your online platforms should include an age-screening tool, where the user must either confirm they are of legal age, or enter their birth date to proceed to your content.

California law prohibits wine manufacturers from giving anything of value, “directly or indirectly, to… any person engaged in operating, owning, or maintaining any off-sale licensed premises.” In other words, you can’t give anything of value to a retailer. Posting where your products are sold is providing something of value to the retailers that sell your products. Fortunately, there is an exception to be found: in response to a direct consumer inquiry, you may post the names, addresses, and other contact information for two or more unaffiliated off-sale retailers selling your product as long as you satisfy certain conditions. Those conditions are that you cannot post the retail price of your product, your listing is the only mention of the off-sale retailer in your post, you have to refer to more than one retailer and they cannot be affiliated in any way, and you are exclusively responsible for making, producing, and paying for said listing in response to the consumer inquiry.

Remember that all advertising restrictions apply to the permittee. That means if someone else posts something on your page that does not comply with federal or state regulations, you as the permittee will not be held responsible for that third-party content. However, if that third-party content is re-posted or shared by you, you will be held responsible. While not strictly required, it’s probably a good idea to monitor user-generated content on your sites to make sure it doesn’t fall too far outside the scope of permissible content, or your own bounds of good taste.


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.