When the fraud squad raided Verget from Verget.

Jean-Marie Guffens, a winemaker in Macon who founded Maison Verget, endured a decade-long investigation by French authorities, including Customs and Fraud office. It started in 2001 after the grapes were harvested but before the winery staff had even filed the harvest paperwork. And it continued ebbing and flowing, with allegations that Guffens was blending wine from the south into his Burgundies. In the 27-minute video, Guffens declares that “we live in a banana republic” with “mafia-style” raids including a surprise winery inspection with 25 officers, and accusations of complicity against the staff. His wife and members of the staff were even held in custody for two days. Eventually, in 2010, the charges were dropped. Guffens sued to have his name exonerated and– SPOLIER ALERT!–a judge in Beaune ruled in his favor in November.

This action and the heavy-handed tactics over Olivier Cousin’s whimsical labeling, set against the backdrop of declining domestic wine consumption, illustrate the difficult days for many French vignerons. I’ll add it to my file for updating Wine Politics.

That’s what state legislators were hoping when they voted a reform to New Jersey wine law this week. With the governor’s signature, which he has said he will provide, the state will become the 39th to allow the direct shipping from wineries to consumers. After Granholm, the 2005 Supreme Court decision that found it unconstitutional to allow in-state wineries the right to ship to consumers while out-of-state wineries were prevented, New Jersey was one of the rare states that didn’t open up shipments, but instead closed down.

The new law is certainly worth celebrating but don’t think about popping Champagne unless it is purchased at a store in NJ. The most glaring shortcoming is that the bill only legalizes shipments from wineries, not wine stores, thus disallowing free trade in over a third of the wine consumed in the US. For reasons of parity, that’s too bad. But since there are many innovative wine stores and the state has become one of the most competitive in the country, New Jersey residents are still well-served.

Anyhoo, not all wineries can ship to New Jersey under the new law, just wineries under 250,000 gallons (about 85,000 cases). These “capacity caps” are controversial and were struck down in Massachusetts (at a threshold of 30,000 gallons) as a form of discriminating against out-of-state wineries, which was what Granholm said was the big no-no. Further, wineries must purchase a license to ship, which is among the highest such fees in the country. Cathy Corison, proprietor of Corison in Napa Valley, tweeted “NJ opens up to direct wine shipment. $938 annual fee. Gee… thanks. #smallwinerytax.”

For an additional fee, licensed wineries are allowed to open more than a dozen tasting rooms for direct sales throughout the state, which also seems to advantage in-state wineries. But if an out-of-state winery opened a store, it would be a new and fascinating challenge to the three-tier system. (In this vein, Chateau Montelena just opened a “tasting room” in the Westin hotel in San Francisco; New Jersey also has many BYOB restaurants.)

So for NJ consumers, it’s a half-a-loaf law. It’s better than the status quo ante. But not ideal since buying wine from, say, NY wine stores is still illegal (and thus, I’m sure, never happens). New Jersey wineries may be the biggest beneficiaries of all as they can expand in-state (and out-of-state!) sales. Time to bone up on the terroir de Jersey Shore (although this map is much funnier).

What do you think? If you are a winery or New Jersey resident, are you excited or non-plussed by the change?

His transgression? Goofing around with names. The biodyanamic farmer of 25 acres in Anjou told Jim Budd that he left the AOC system in 2003 because it was too lax. “I stopped because the AOC is for industrial wines as the rules permit everything: weedkillers, huge yields, additives etc.” He thus marketed his wines as vin de table, the category at the bottom of the French administrative category as few are bold enough to do (as I detailed in Wine Politics). He marketed one of his wines as “Anjou Pur Breton,” which somehow made it past the authorities for several years despite containing a place name and a grape name (Breton is a local name for Cabernet Franc).

His distributor wrote “AOC” allegedly for “Anjou Olivier Cousin” on cases of his wines. This, coupled with his refusal to pay obligatory dues to an association, was the straw that broke the administrative camel’s back: He has been threatened with a significant fine, possible jail time, and one of his bank accounts have been impounded. The decision of how to proceed now lies with a prosecutor in Angers.

The crackdown on this sympathetic figure appears to have backfired. Thanks to the global reach of the internet, awareness of his treatment is high. Over 500 people have signed a petition on a French blog, his American importer is also mounting a campaign for signatures, and his UK importer is helping pay his legal bills. It’s sad that the Loire, site of so many distinctive wines that offer France a calling card overseas, is also the site of clashes with a moribund bureaucracy.

HR 1161, which we have discussed previously, would limit judicial challenges to state laws on the interstate shipping of wine (and beer and spirits). If this bill were to pass, it could impact wine shipments negatively and irrevocably. Consumer choice could be reduced; many small wineries depend on the wider margins of direct sales to keep in business. HR 1161 was written by beer distributors.

While distributors are well-organized and the bill has over 100 sponsors, wine consumers might have thought they could consider on representatives whose districts include wine production as allies. Apparently not.

Vintners in Oregon’s fifth district are dismayed, as the Statesman Journal reports. “This is all about money,” Jim Bernau of Willamette Valley Vintners said. A spokesman for Schrader said the representative “does not allow contributions to his campaign (to) impact the decisions he makes on questions of public policy.”

In other wine and money news, Steve Grossman, Massachusetts state treasurer whose office regulates liquor sales, raised $45,000 from the industry at an event last month according to Boston.com. The sum represents a quarter of the total he has raised this year. Few out of state wine retailers will ship to Massachusetts as a result of its wine shipment laws and a federal court had to overturn state policy that limited wine shipments. An aide to Grossman said it will not affect his policy decisions.

If you’ve turned on PBS during the past couple of nights, you’ve probably encountered slow zooms and pans of black and white photographs. And the people in those photos may have been women protesting saloons or men using hatchets to destroy barrels of whiskey. Yes, these are scenes from Ken Burns and Lynn Novick’s three-part series, Prohibition.

I’ve seen the first episode (available here online), entitled “A Nation of Drunkards,” that chronicles the social and political forces that led to enacting Prohibition. Part of it was that men were drinking Herculean amounts of whiskey. As Ken Burns told Stephen Colbert, men were each putting away 180 bottles of whiskey a year. To which Colbert replied: “How did we conquer the West?” Another factor was the rise in political activism among women. The episode is well done and very much worth watching.

But the one that I am most looking forward to is the concluding episode that airs tonight. It’s not because I merrily rejoice that the “noble experiment” was undermined by a lack of enforcement, double helpings of hypocrisy, and became such a miserable failure of policy. What intrigues me are the myriad unintended consequences of the policy, particularly for the wine industry. I detailed these in my book Wine Politics: How Governments, Environmentalists, Mobsters, and Critics Influence the Wines We Drink. Prohibition dealt the American wine industry such a disastrous blow that it left a lingering finish that can be measured in decades (not seconds, as wine tasting notes sometimes include). Paradoxically, grape acreage increased under Prohibition even though the making, transportation and drinking of wine (other than sacramental wine) was largely illegal. I say “largely” because of a loophole that allowed for the making at home of “non-intoxicating fruit juice,” a loophole that was relentlessly exploited. This decreased the quality of wine, needless to say, and associated wine with a cheap buzz, setting back the image of wine for decades in this country.

But the lingering effects of Prohibition are still felt in the form of the politics of distribution. Instead of having on national regulation, there are 50 state regulatory structures. Instead of allowing vertical integration or self-distribution, wineries must have a distributor in almost all states not their own. Online wine sales have been hampered. For many wine consumers, the selection suffers and prices are higher at the same time wine has become more popular than ever. I get into more details in my book; I hope Burns can highlight these lingering effects; he paid no attention to Jerfferson’s perception of wine as a drink of moderation in episode one, so I fear it is unlikely he will get into the continued effect of Prohibition today.

But either way, the documentary is definitely worth watching tonight. Preferably, with a glass of wine in hand.

PROHIBITION: a three-part, five-and-a-half-hour documentary film series directed by Ken Burns and Lynn Novick

If Medvedev’s approach has a similar ring to it, that’s because Thomas Jefferson also advocated wine as a drink of moderation as opposed to the “ardent spirits” of his day (mostly whiskey). Although Jefferson’s appeal fell on deaf ears, Medvedev’s has slightly more hope: the FT post says that as Russians travel, they favor wine over vodka. Also, Russia today, unlike the USA of Jefferson’s time, actually makes a fair bit of wine: Statistics vary, but it is somewhere between the seventh and thirteenth largest producer in the world. In fact, Medvedev made the call in the region of Krasnodar, which is on the Black Sea and is the home of Sochi, host of Winter Olympics in 2014. So expect more coverage of Russian wine in the next couple of years as they try to shake off the image that their wine is only one step above paint remover. (One sign that they are succeeding may be that the largest sparkling wine producer is having an IPO.)

Surprisingly, the eight liters of wine per person that Russians already consume places them only slightly less than the US and much more than their fellow BRIC countries, which are all under two liters per person.

But if Medvedev really wants to take the Jeffersonian mantra to heart, he needs to purge the market of non-grape, ersatz wines that give real wine a reputation for cheap swill and cut taxes on wine instead of raising them. As Jefferson declared, “No nation is drunken where wine is cheap.”

The article did remind me of the Congressional Wine Caucus, an informal, bipartisan group of over 200 members of Congress–”the anti-Tea Party” as @sippingsister put it–that Thompson heads. Although most caucuses rarely meet, I placed a call to Thompson’s office (as well as the Wine Institute) requesting the names of the members of the Caucus. My thinking was that these members would presumably be stalwarts in supporting wine consumers and opposing the nefarious HR 1161 if that well-financed bill should ever see the light of day in the chamber. Sadly both responded to say that the list of members is not available to the public. That’s too bad since wine is becoming more popular in congressional districts every year across America as we are now the thirstiest wine country in the world. Also, wine in America is frustratingly intertwined with political machinations. Since it’s not hard to find out who is on, say, the Congressional Bike Caucus or the Congressional Black Caucus, you’d think wine would be no different.

If the membership list ever does surface, I hope there’s no overlap between Caucus members and the 94 cosponsors of HR 1161. That would have more than a whiff of inconsistency.

Across town and upstate, specialty wine shops such as Chambers Street Wines and Crush Wine and Spirits or Grapes the Wine Company, often broker collections of rare older wines that individual collectors are selling. And even though wine auctions have shifted to Hong Kong with astonishing speed over the past couple of years, the gavel still does come down on wine lots at places like Sotheby’s and Christie’s here in New York.

All of these facets of the wine business mean that, with a bit of effort, a wine enthusiast can hunt down an enormous range of rare bottles in New York. It is arguably the best city on earth for wine lovers.

But the status quo is under threat thanks to new proposed legislation in Albany. Representative Robin Schimminger has introduced a bill to the Assembly that would make it possible for restaurants and retail shops to only purchase wine from a “primary source,” that is to say, only from the distributors authorized to sell the wines. So the wine director at a restaurant like Nice Matin who wanted to acquire old vintages of certain wines could only do so through the distributor. And if the distributor did not carry the wines, then the wines could not be purchased from collectors. And such a wine list would likely not exist then in NYC.

Older or rare bottles often find their way into New York via what’s called the “gray market.” It’s a legal yet untraditional channel that brings many exciting back vintages and other hard-too-find wines, wines that may not be of interest large distributors yet are the very wines that quicken the pulse of wine enthusiasts. Not all states offer such a channel for sourcing wine; Connecticut, for example, has a “primary source” bill that prohibits stores and restaurants from buying older collections. And I know plenty of Connecticut wine enthusiasts who do much of their wine shopping in New York.

The new legislative proposal in Albany frames the attempt to shut down the gray market as consumer protection against counterfeits. While counterfeits are certainly an issue in the world of fine and rare wine, I doubt that having a single distributor for many wines would curb counterfeits. Instead, what I fear, is that it would squelch the diversity, sophistication, and excitement out of the New York wine market by reducing selection and raising prices for what’s left. Further, the state’s coffers would suffer from a loss of sales tax revenue on these wine sales.

The bill, known as A06884, has not garnered any attention since it was introduced on April 5. So help shine your light on it by talking about it with your wine friends. And maybe you’ll get so worked up about it, that you will want to contact your legislators in Albany.

Full text of A06884
Find your state representatives in Albany

He’s not going to rank up there with Rosa Parks. But Terry Mulligan is trying to have his illegal actions make a larger point.

The Canadian “media personality” is willfully transporting wine across provincial lines. According to this story, he will stand on the border on May 13 and take a bottle of wine made in British Columbia into Alberta. Then he will take a bottle of wine made in Ontario back into BC with him. Such activity is illegal. But he will let the Mounties know in advance! The lack of intra-provincial shipping is “killing small, boutique wineries” and the Liquor Control Boards amount to “a cash grab” and are run by “bullies,” Mulligan says.

Sure, the event is choreographed. But just imagine if an American celebrity stood up for sanity in wine shipments in a similar way? Will Oprah have a case of wine sent to her condo in Chicago from an out of state retailer (which is illegal) and have the cameras rolling when it gets there? Or a chef like Grant Achatz? Or Martha Stewart who actually markets a wine? That would certainly bring a lot attention to the matter.

On a related note, the WSJ weighs in on HR 1161 with an editorial in today’s paper. Nugget: “CARE will reduce choices and raise prices for consumers.”

Further discussion of the political coloring of beer and wine donors.

Now known officially as HR 1161, and unofficially as the Wholesaler Protection Act, the bill seeks to restrict legal challenges to the interstate shipment of wine (and beer and spirits) and keep the legislation that affects wine shipping at the state level. The reason that’s scary is because the judiciary is the consumer’s best ally in the fight to liberalize wine shipments–with more options to purchase wines, many consumers will get lower prices and a better selection than what is available in their local markets. Legislators, desperate for (re)election, frequently accept donations from wholesalers who seek to prevent freeing up trade in wine. The Beer Wholesalers wrote the legislation last time and the text is virtually identical this time.

The Wine and Spirits Wholesalers Association recognizes the threat that the judiciary poses to their well-lubricated legislative machine. Craig Wolf, the WSWA head, said “We are supporting this legislation in an effort to ensure that policy disputes are resolved by local elected officials rather than unelected and unaccountable federal judges.” Yes, those pesky federal judges who don’t have expensive campaigns to fund! Needless to say, beer and wine producer groups object to the legislation (here’s a letter they co-signed last month).

We are bringing our threat-down level on this issue two notches closer to danger and disastrous ullage levels. Why? Well, not only did last year’s bill gain a high number of co-sponsors, it actually got hearings in the Judiciary subcommittee. With the party change in Congress, John Conyers (D-MI), recipient of beer wholesaler funds, is no longer chairman. So say hello to Lamar Smith (R-TX) the new committee chairman! His fifth largest corporate donor is the National beer Wholesalers Association.

How far will the legislation go in this 112th Congress? Nobody knows on this issue that does not cleave along party lines. But don’t bet against it going farther than the last bill.

Follow the Stop HR 1161 page on Facebook to keep up with the latest developments.

H.R. 1161: Comprehensive Alcohol Regulatory Effectiveness Act of 2011
Sponsor: Representative Jason Chaffetz (R-Utah)
Co-sponsors: Bruce Braley (D-Iowa), Howard Coble (R-N.C.), John Conyers (D-Mich.), Ted Deutch (D-Fla.), Jim Jordan (R-Ohio), Dennis Ross (R-Fla.) and Debbie Wasserman-Schultz (D-Fla.)

Will this stiff drink, now on the table in Harrisburg, lead to the end of the PLCB? The state-run system that bestows such snappy names on its wine stores as #5801 is in a rough patch. As seen in the picture at right (and the accompanying Times story details), the opening hours of this store are limited and the prices, selection and knowledge of the staff may not be all that great either at some state-owned stores. The new kiosks have bombed. Consumer dissatisfaction may be growing as is chatter about privatization. Even though previous governors have floated the idea only to meet with failure, the stars seem to be aligning for reform. While this is something most Pennsylvania wine consumer would likely raise a glass of hard-to-find wine to, the logic that will carry the day for public officials is about money.

The libertarian think-tank, Reason, published a 2007 white paper on PLCB privatization that brings up many good points. (Ah, the PLCB, it’s enough to turn liberal wine drinkers into libertarians.) The report suggest that over half of the PLCB revenues come from taxes, which would continue to flow regardless of state or private ownership of stores and distributorships. Further, the state’s costs would decline with the reduced workforce and pension obligations while the state’s revenues could increase from taxes on the new businesses, which include over 600 locations that are state-owned (thus not generating real estate tax for municipalities).

As we discussed last year, privatization can be botched. Indeed, Iowa and West Virginia got less than the early estimates in their privatizations. From a public policy perspective, it’s crucial to rein in the windfall estimates and not to give away decades of future profits. So state officials should temper their hopes for a one-time profit buy auctioning licenses for shorter terms rather than longer given the weak state of the economy now. (If Pennsylvania authorities do decide to auction off liquor licenses, they should consider doing so in Hong Kong to get four times the going rate stateside.) Also, they could consider scaling license fees as a percentage of revenue to make it more accessible for small business owners. And on a related note, adding a bottle deposit would add hundreds of millions to the state’s coffers, as I estimated a reform could add $200 million to New York’s treasury.

And, please, for the love of Epoisses, allow food to be sold in wine stores!

Distributors are likely to want access to the sixth largest state and use their clout. Since the governor-elect does not appear to have distributors as major donors, he should use this independence to simultaneously push for a liberalization of shipping wine directly to Pennsylvania residents while collecting taxes.

Consumers also need to recognize that while a slothful public monopolist can fail to deliver the goods, private sector isn’t always a panacea: even if a 7-Eleven offered better hours than #5801, would they offer better wine? And even in New York, I’ve encountered wine store clerks who don’t know Chardonnay from Chenin Blanc.

If you are a Pennsylvania resident, what’s your take?

The words “billionaire” and “Koch” are familiar to ardent wine enthusiasts; the book The Billionaire’s Vinegar depicts William Koch, industrialist and disgruntled wine collector, as a lawsuit-wielding sheriff bent on ridding the fine wine world of counterfeits. However, the brothers in the New Yorker story are actually Charles and David who still control Koch Industries; after acrimony came to a head in the family company, they bought out William (and his brother Freddie) in 1983. Litigation simmered among the brothers for the following seventeen years.

Taking a page from his brothers’ playbook, what if Bill were to fund a Wine Party, bent on liberalizing the country’s wine shipping laws? He has already burnished (or tarnished, depending on your perspective) his reputation with high-end collectors. But restrictive interstate shipping laws plague wine enthusiasts in many states. Although there has been a greater liberalization of shipping laws from wineries to consumers in the past five years, laws governing wine retailers-to-consumers remain much more restrictive with only about a dozen allowing the practice. This stifles innovation in wine retail and reduces selections to broad swathes of consumers, while keeping prices high in many markets. Judicial challenges remain the key weapon in this fight and Bill Koch has much experience in litigation.

Further, wholesalers of beer, wine and spirits have initiated a legislative campaign to freeze wine shipping laws as they are. While this effort seems be going nowhere, they will doubtlessly return in the next legislative session and probably be better prepared. Thus having financial largesse on the pro-shipping side would make this a more formidable fight in the legislative arena, where, all too often, money counts for more than votes. But citizen unrest can be fomented with some Champagne bottles sabered as effigies of unblocking the system. Above all, the wine party would not just have to be against interstate shipping laws but could be for many things, such as discussion, eating (come on, who is anti-eating), and, of course, truth!

Bill Koch has already written himself into the story of fine and rare wine in America. By diverting a portion of his wine funds to this more populist approach, he could earn the adoration of Joe Wine Sixpack.

I gave the keynote talk to 250 attendees at the annual dinner of the Boston Patent Lawyers Association. The organizers wanted to tie it into my book, Wine Politics: How Governments, Environmentalists, Mobsters and Critics Influence the Wines We Drink. So for dinner I selected wines that tied in with the first three items in the subtitle and then used those wines to tell stories about the material in the book. (They were the William Fevre, Montmains, Premier Cru Chablis 2007; Domaine Huet, Le Mont, Vouvray (sec) 2007; and Ridge Geyserville 2007.) In the talking about the politics of American wine, I discussed many of the legal tussles, particularly around the issue of direct shipping.

It turns out that the patent lawyers were honoring Judge Rya Zobel of the U.S. District Court that evening. Born in 1931 in Germany, Judge Zobel was vibrant and lively and delivered funny remarks from the podium. Only at the dinner table did I learn that it was Judge Zobel who decided the case Family Winemakers of California v. Jenkins. In that case, she ruled that a Massachusetts law that essentially prohibited “large” wineries (over 30,000 gallons production) from selling directly to consumers was unconstitutional since it effectively barred 98% of out-of-state wine while allowing 100% of in-state wine from being sold directly. In January, that decision was upheld on appeal at the Circuit court; the decision will not be appealed to the Supreme Court.

I opened my remarks by raising my glass on behalf of wine lovers to Judge Zobel!

Of course, bills get introduced all the time as fobs to political contributors and then they don’t make it very far down the arduous path to becoming law.

We have devised a threat-meter for this particular bill. Normally a bill like this would have zero chance in becoming law before the 111th Congress adjourns. But right now we are one notch above zero (neck level) with a “high shoulder” rating. Why? A few reasons that all boil down to the deep pockets and skill of those behind the legislation.

One worrisome aspect is that in order for the bill to become law, it must get voted out of committee. The bill has been assigned to the House Judiciary committee, chaired by John Conyers from Michigan. Tom Wark has described Michigan as one state whose elected officials are “completely controlled” by wholesalers through their campaign contributions. (Michigan was the losing plaintiff in Granholm v. Heald, the 2005 case that liberalized wine shipments.) Indeed, the National Beer Wholesalers Association was one of the top 5 donors to John Conyers for the past two election cycles.

Hopefully, legislators will see this as the gross overreach that it is on the part of distributors. It would be great if reaction from wine enthusiasts turned the initiative in to the wholesalers’ last stand, legislatively. But that is unlikely.

We will keep you posted here if the threat level changes. You can also join the Facebook group Stop HR5034 (over 1,500 members already) for updates. And in case this bill does go anywhere, hit the comments with your thoughts about who we can send a huge amount of corks to–or other possible steps to effectively make our voices heard.

RH.R.5034 – Comprehensive Alcohol Regulatory Effectiveness (CARE) Act of 2010. Sponsors are Rep. Bill Delehunt (D) MA; Rep. Howard Coble (R) NC; Rep. Mike Quigley (D) IL; Rep. Jason Chaffetz (R) UT

Related: Wine Politics: How Governments, Environmentalists, Mobsters, and Critics Influence the Wines We Drink