From one-man operations to venerated boutique operations, some 550 wineries depend on Family Winemakers of California (FWC) to speak for their concerns in Sacramento.
Wine Country is full of people with the same dream: buy a few acres of pristine vineyards, design a dream house to go alongside and take up the job of resident winemaker. While the reality is rarely so glamorous, plenty of California’s 2,400 licensed wineries began on a smaller scale, often started by winemakers eager to branch out on their own after working for other wineries. But in such a powerful industry, where large wineries routinely swallow up littler ones, how do these small growers and vintners make sure their voices are heard in the public policy arena? From one-man operations to venerated boutique operations, some 500 wineries depend on Family Winemakers of California (FWC) to speak for their concerns in Sacramento.
FWC’s history
FWC’s history can be traced back to a turning point in the California wine industry. In 1985, state legislation allowed creation of the California Wine Commission, which was charged with levying an assessment on wine producers to pay for industry marketing and advertising. A sizeable amount of the collected money was then given to The Wine Institute, the largest California wine industry advocacy group, based in San Francisco. Some smaller winemakers, feeling they were being overburdened by the tax and underrepresented by the marketing push, started a grassroots movement to prevent the commission’s five-year mandate (and with it, the assessment) from being renewed.
After the campaign was successful and the commission disbanded in 1990, several of the winemakers, including Jess Jackson (Kendall-Jackson Wine Estates), Brice Cutrer Jones (Sonoma-Cutrer Vineyards) and Pat Campbell (Laurel Glen Vineyard), joined forces to create a single organization that represented the specific interests of smaller winemakers in public policy issues. In 1990, they christened it Family Winemakers of California, named for the mom-and-pop nature of the growers and vintners they hoped to attract.
Today, more than 90 percent of FWC’s membership produces less than 10,000 cases per year, with many producing less than 5,000 cases. To put that into perspective, by industry standards, a “small-scale” winery makes less than 50,000 cases per year. By and large, these aren’t the wineries with elaborate caves, private chefs or tour buses queuing up in their driveways. Most are located in Napa and Sonoma counties, but wineries from as far north as Humboldt and as far south as San Diego are also represented.
Paul Kronenberg has been the president of FWC since 1998. With his background in trade association management and political and government relations, Kronenberg sees his work as an opportunity to affect change in one of California’s biggest and most historic industries by improving market access. Along with Kathy Spallas, FWC’s membership and program manager, he’s responsible for making sure the organization keeps to its founding principles.
“We focus on the issues that let small winemakers fairly market and produce their wines,” says Kronenberg. “Every few years, the board revisits its core mission to see if we’re interested in changing it, but we’ve always chosen to remain an advocacy voice for small producers in California.” The organization also retains a lobbying firm, Political Solutions, Inc., of Sacramento, to keep its message in front of legislators.
One winery, one vote
FWC is governed by a 40-member board of directors, which is elected every two years from within the membership. The members elect a chairperson, vice chairperson, secretary and treasurer, with other members either representing particular regions or presiding at large.
David Ramey of Ramey Wine Cellars in Healdsburg is the current chairperson, after holding a succession of leadership roles for the organization. Ramey has been making wine since 1978, starting his career as a cellar rat during harvest at Lambert Bridge and moving on to such notable wineries as Chateau Petrus in Bordeaux, Simi Winery in Healdsburg, Matanzas Creek Winery in Santa Rosa, Chalk Hill Estate, Dominus Estate in Yountville and Rudd Estate in Oakville. Along with his wife, Carla, he founded his own winery in 1996, which produces around 30,000 cases of premium Cabernet Sauvignon, Chardonnay and Syrah annually.
Ramey says that, while he belongs to the Wine Institute as well, and appreciates some of the services it provides and its lobbying power in Washington, D.C., he feels FWC better represents the small, family wineries of California. “Also, I’d be lost in The Wine Institute, as far as participation goes,” he says. “FWC gives small producers like me the opportunity to have a voice in Sacramento.”
While members are able to take advantage of a variety of benefits through FWC, from winery or health insurance to special rates on shipping compliance services, Ramey feels he profits most from its role as a legislative watchdog in Sacramento. “Paul [Kronenberg], Kathy [Spallas] and the folks at Political Solutions are really good at keeping an eye on legislation while we run our businesses,” he says. “They present a united voice in Sacramento to lobby for our interests as small wineries.”
Ramey recalls that, in 2006, State Senator Carole Migden sponsored a bill that would have designated Zinfandel as California’s “state grape,” and the FWC was trying to determine its position on the issue. Zinfandel growers, of course, loved the idea. “I didn’t think the state should choose one commercial product over another to represent the state, when it had never taken a stand in commercial issues before,” says Ramey. FWC’s members voted and decided not to support Migden’s proposal. After being passed by both houses of the state legislature, the bill was vetoed by Governor Schwarzenegger. “I went away from the experience feeling empowered that the government was listening to us,” says Ramey.
A multi-faceted industry
Every year, when the California legislative calendar is released, FWC staff reviews each proposed piece of legislation for its potential impact on members. Laws surrounding alcohol production, marketing and sales, water and environmental issues, tourism, labor, Americans with Disabilities Act (ADA) compliance or tax policy may all have an impact. They also monitor key issues on a regional, state and federal level that may have consequences for wine producers.
For instance, when the state’s budget crisis put the fate of 70 state parks into question recently, the FWC urged lawmakers to explain how the particular parks had been chosen by the Department of Parks and Recreation and questioned whether economic impact to wineries had been considered, as many rural wineries depend on park tourism to draw visitors.
The organization has also spoken out against repealing California’s agricultural overtime exemption, which allows agricultural workers to work up to 10 hours per day without overtime pay, citing the need for staffing flexibility in busy planting or harvest seasons.
Board and committee members meet quarterly to set legislation and litigation priorities and goals, and they have an opportunity during the year to meet directly with legislators to talk about member concerns. While the range of issues affecting winemakers is wide, no single issue seems to be higher on members’ priority lists than that of direct shipping to out-of-state consumers.
Direct shipping challenge
Scott and Jana Harvey of St. Helena produce about 10,000 cases of wine annually under four different brand names in their Creative Wine Concepts portfolio: Scott Harvey Wines, Jana Winery, InZINerator and One Last Kiss. After starting his winemaking career close to home in Amador County, Scott apprenticed at K. Fitz-Ritter Winery in Germany. This experience led him to Santino Winery in Amador County, then to a partnership in Folie a Deux Winery in Oakville, which was sold to Trinchero Winery in 2004. Jana has worked in the wine industry for more than 25 years, including time at Raymond Vineyards in St. Helena and Cuvaison in Calistoga. At Jana’s urging, Scott is currently a board member and regional representative for FWC.
“The biggest challenge for small winemakers today is getting our product to the consumer,” explains Scott. “It’s easier to ship wine from Germany to England in the European market than it is to ship from California to Nevada.”
After the 21st Amendment was repealed in 1933, the power to regulate alcohol sales was returned to the state governments and a three-tier system of distribution was put in place. Under the three-tier system, producers wishing to sell their wines to customers in other states must first sell their wines to out-of-state wholesalers, who sell it to restaurateurs and retail outlets, who then sell it to consumers. This method not only takes a big bite out the winemaker’s profit, but also requires lots of time and energy.
“For every state where we sell wine, we have to fill out a separate tax form every single month,” says Scott. “That’s really not fair commerce when we’re competing against someone who’s selling Coca-Cola and doesn’t have to do that.” Finding representation can also be a challenge, as wholesalers aren’t always interested in representing smaller brands.
As challenges to the direct shipping restrictions began to multiply in the late 1990s, FWC and its members were eager to jump into the fray. The organization offered legal and monetary support to fights throughout the country, in the hopes that the state-by-state cases would lead to a definitive ruling by the U.S. Supreme Court on the matter.
“FWC paid to retain Judge Ken Starr in 2003 to help coordinate the strategy to get to the Supreme Court, half of the fee for Kathleen Sullivan (a prominent constitutional law attorney) to argue the case, and for lot of organizational work with attorney Tracy Genesen over a decade,” says Kronenberg. “You’ll find us all over the workload.”
The issue did make it to the Supreme Court in 2005, when Granholm v. Heald declared that states couldn’t allow in-state wineries to ship to consumers if they didn’t also allow out-of-state wineries to do so. Today, 39 states, plus Washington, D.C., allow direct shipping, and challenges against hold-out states continue. (For more on the issue of direct shipping, see “Special Delivery,” Aug. 2012.)
Tasting California’s wines
In addition to the direct shipping fight, FWC membership is driven by another benefit: access to the annual wine tastings the group holds for industry members and the public. The first tasting event was held at the Sheraton Palace Hotel in San Francisco in 1991, meant as a sort of thank-you gift to the wine trade for supporting FWC during its first year. Guests immediately began asking about making it an annual event, not just as a social gathering, but as a practical way to taste many California wines in one spot.
The 22nd annual San Francisco tasting was held at Fort Mason Festival Pavilion on September 9 and 10, with more than 250 California winemakers pouring their latest wines. The San Francisco event, which is only open to the public for part of one day, generally draws 2,000 trade visitors and 700 consumers annually.
FWC has also held an annual tasting in San Diego (for trade and consumers) since 2009 and one in the Los Angeles basin (for trade only) since 2000. Next year, due to a scheduling conflict, there will be no event in Pasadena and a two-day event in San Diego. The Pasadena event generally draws 1,000 trade visitors, with the busy San Diego tasting welcomes 1,200 trade and 1,200 consumer visitors.
One of this year’s presenters at the San Francisco tasting, Jon Phillips of Santa Rosa, first started making wine with his wife, Barbara, in 1999. In 2002, the Phillips’ founded Inspiration Vineyards & Winery and began producing wine at their property on Olivet Road; in 2010, they moved their winemaking and opened a tasting room site at 3360 Coffey Lane in Santa Rosa. Today, Inspiration produces between 1,500 and 2,000 cases per year of seven different varietals, including Chardonnay, Cabernet Sauvignon and Zinfandel. Phillips now serves on FWC’s board as a director at large.
Phillips’ first introduction to FWC was through a winemaker friend, who suggested he join to take advantage of the tastings. “At that point, I didn’t know much about what the organization did, but I thought it was important to get my brand-new brand out in front of the decision makers and the public,” he remembers.
At his first tasting, Phillips was able to make connections with small restaurant owners who he could follow up with later, but notes the challenges he faced at first by not having a distributor in place to corral people to his table. “Distributors still have a lot of pull in moving restaurateurs and small wine shops to their clients,” he explains. “After years of being involved and experimenting with a few brokers, I can see what a difference it makes.” As his label has become more well-known and his contacts have grown, this has become less of an issue.
Jana Harvey has been impressed with the connections and sales she’s made at the tastings, particularly since visitors are now able to buy wine directly from vendors at the event, though she notes that the cost to participate in the tastings can be too high for some small wineries. “For us, the tastings are a wonderful way to get feedback,” she says. “It’s like a giant focus group where you get comments about what people like and which are their favorite wines.”
Kronenberg describes the tasting events as a powerful tool for those who use them regularly and well. “With the economic downturn and the increased competition in the industry, times have changed from a decade ago,” he says. “At the tastings, we try to get the right audience there, so members can meet distributors, retailers, brokers, restaurant owners and consumers interested in wine.”
Doing what they do best
FWC hopes to continue to speak for its members through these tough times—and beyond—by getting their wines, and most important, their concerns, out in the public eye. “The tastings are a good way to show camaraderie and to demonstrate our products, but FWC’s advocacy work in Sacramento and throughout the United States is definitely what benefits its members most,” confirms Phillips. Ramey believes that supporting FWC has given him more freedom to do what he does best. “Smaller, owner-operated wineries need support to make the wines they think should be made,” he says. “This support lets them swing for the fences and not just play it safe.”
