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AVA Angst

by Courtney Cochran

Thumbnail image for homepage-feature1.jpgI feel sorry for those of you who – like me – have been attempting to follow the US Alcohol and Tobacco Trade and Tax Bureau’s controversial proposed amendments to American Viticultural Area (AVA) regulations.  I feel sorry for anyone, for that matter, who is sorting through the piles of legalese and angry banter being circulated about the matter in newspapers and online, not only because it's all terrifically confusing, but also because the proposals at the center of the controversy shouldn't even be up for debate at all. 

Proposed amendments hinge on a fundamental shift in regulations that would prohibit wines hailing from smaller appellations located or “nested” within larger appellations (e.g. Oakville within Napa Valley) from listing both the sub- and macro-appellations on their labels. Besides this, there are other issues at play in the current mess, most importantly a proposed "grandfather” clause that would allow wineries founded between 1986 and 2005 to continue to use place names that are also appellations in their brand names (e.g. the soon-to-be-approved Calistoga AVA, as in the case of Calistoga Cellars) even though their wines may not satisfy the standard requirement that a minimum of 85% of the grapes used to make a wine be grown in the wine’s stated AVA. 

If all this sounds confusing – and WRONG – that’s because it is.

When a Spade Isn’t a Spade
When it comes down to it, listing both a sub appellation and a macro appellation – especially when the sub AVA is a new and/or little known region – is a key marketing tool wineries use to communicate what’s inside the bottle.  For example, a consumer might hesitate to order a Cabernet Sauvignon from “Wild Horse Valley” (popularly held to be Napa’s least-known AVA) but he or she might decide to give the wine a try if the bottle listed both “Wild Horse Valley” and “Napa Valley” on its label.  

As recognition of the Wild Horse Valley AVA and its wines grows, that indication on a bottle may very well become a source of differentiation that helps vintners from the area to sell their wines.   And while we're on the subject, differentiation is also the key economic driver that allows producers to charge more for their products than others charge for similar, undifferentiated products.  So, the most effectively differentiated products are not only more likely to sell, they’re more likely to sell at a higher price.

And don’t even get me started on what’s wrong with a wine’s inferring it comes from a certain place when, in fact, the legal threshold for grapes coming from that region hasn’t been met.

At What Cost Costs?
Rumor has it that the Alcohol and Tobacco Trade and Tax Bureau (TTB) proposed these amendments as a result of the growing number of sub AVA petitions the bureau is receiving and the its members’ desire to manage costs associated with processing the petitions and regulating wine labels that list an increasingly large number of regions.  The problem is, we need to look beyond these superficial costs.  Restricting geographic labeling can only hurt wineries and therefore – on a much larger scale – hobble the wine industry itself, one of California’s most vibrant and economically viable agricultural entities.  Moreover, I seriously doubt that the costs “saved” by TTB could equal the long-term fiscal impact of these changes on the industry.

As a sommelier I will always be in support of providing consumers with the most information possible about a wine – and in this case that means both sub and macro AVA identification.  And I will always press for veracity in wine labeling. 

For these reasons, I find the changes proposed by the TTB unacceptable and in need of review. At the end of the day, refuting TTB’s proposals and maintaining or more fairly altering the current AVA regulation policies will only help winemakers - folks who for the most part make wine with integrity and would also like to market their wines with integrity – not to mention sell a good amount of the stuff while they’re at it.  

To voice your own opinion on the subject, visit Docket No. TTB-2007-0068 at www.regulations.gov .

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Comments

Hello Courtney,

Thank you for the great breakdown about the AVA issue. I actually wasn't aware of the TTB macro AVA proposal and am highly critical of such a move, as well, for the same reasons that you give above.
I am having a tough time deciding where I sit in regards to the grandfather clause, however. I think that it is a more complex issue that is going to be very difficult to fairly hand down. Don't get me wrong, falsely labeling the region of a wine is a very serious issue, indeed, it destroys the whole basis of the AVA system. On the other hand, what can a winery do when it has built a following using a particular name that suddenly becomes illegal due to a new legal ruling? I don't know the back story of Calistoga Cellars and I've never had their wines, but if they were not proponents of the new Calistoga AVA, how can it be fair to force them to either change their name or their sources of fruit due to this ruling that they might not of supported (this is assuming that they can't use the Napa Valley AVA on their labels post-ruling, the macro-AVA of Calistoga)?
Like I said, I do not know if Calistoga Cellars supported or did not support this AVA application, but it is a good example for the type of thoughts that I've had on this issue. I'd like to be fair to both sides, but it certainly could be unfair to either wineries like Calistoga Cellars, or to the consumer who believes that they are drinking a wine from a particular AVA, when in fact, they are not.
Thank you for the stimulating article!

This whole thing is a bother, is not Calistoga in the Napa Valley? What is new about AVA having Wineries in them with the same name? As far as I am concerned Calistoga has been an AVA for a long time.

I am tired of some bureaucratic changes in rules that effect business peoples long term plans. You get a piece of property and try and develop it under a certain set of rules and all of a sudden some guy that has not a penny invested in some government position ruins your life dream because they get some idea that things should be different. I paid taxes on a property for twenty years only to have people I did not know decide to change the zoning and prohibit me from developing my dream!

On the other hand, these rulings are often motivated by those that already have there property developed and are just trying to stop others as they see them as competition. A case in point is the hillside vineyard development laws which were born out of the low land vineyard owners paranoia about hillside fruit upstaging their lowland fruit. Yet almost everyone of those guys has a hillside or bench land wine that is usually their highest priced wine!

If you own land you should be able to farm it under the rules in operation that existed when you purchased it! Government should not be able to stop a landowner from reaching their dreams by changing the laws to prevent them from doing what was legal when they purchased their land!

Courtney - As both President of the Napa Valley Vintners Association and owner of Ladera Vineyards on Howell Mountain I applaud both your comments and your thinking. I would encourage you to post it on the comment page at TTB if you have not already done so as we need all the support in oppostition that can be mustered. The next follow-on comment after yours warrants some response though. The opposition to grandfathering needs some background to understand. The current regulations were passed in 1986 and since then, anyone starting a new brand was on notice that if they chose a name that already had "viticultural significance" and an AVA was subsequently formed using that viticulturally significant name, then the winery using that name would be obligated to change, because from 1986 on these names of viticultural significance trumped post 1986 new brand names. And as was pointed out here, Calistoga was most certainly a name with viticultural significance on and well before 1986. Certainly TTB was also errant in ever allowing the Calistoga Cellars label, but that does not change the fact that anyone in the wine business knew about the 1986 law. Again, please send you comments along to TTB.

Ward, thank you for your insightful comments about the grandfather clause, and Pat, thanks for your clarification on the subject. I think folks who read my original post along with your comments will have a pretty good understanding of all the issues at play.

At the end of the day, the grandfathering issue is a really sticky topic and one that's just unfortunate for everyone involved. Mark, I thought your remarks about the frustrations businesses experience when new rules are put into place that cause them to have to change their way of doing business were spot-on. As someone not unfamiliar to business (I own my own small business and have an MBA from UCLA), I feel badly for any entity that's forced to alter course as a result of the TTB's rulings.

But, I think it's critical that TTB think macro and long term in this instance and enact rules that are best for the industry as a whole and that protect the good name of the AVA system. Thanks again for the comments.

The original post has been submitted as a comment to the TTB site.

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