Arizona wineries make their case - East Valley Tribune: Business

Arizona wineries make their case

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Posted: Tuesday, February 21, 2006 5:35 am | Updated: 3:02 pm, Fri Oct 7, 2011.

Arizona wineries are engaged in what may be a lifeor-death battle at the Capitol over their ability to ship wine directly to consumers.

“If we are not able to sell our wine online, we’ll go out of business,’’ Sam Pillsbury, owner of Dos Cabezas Winery, told members of the House Committee on Natural Resources and Agriculture on Monday. The committee was considering a revision in state law that would allow Arizona wineries to continue to ship directly to customers without going through wholesalers and retailers.

State law usually requires manufacturers of alcoholic beverages to sell only to wholesalers, who then market to retailers to sell to individuals. But a 1982 statute, designed to help the state’s nascent wine industry, created an exception: Small domestic Arizona wineries could ship directly to consumers in Arizona.

All that changed last year when the U.S. Supreme Court struck down similar laws in New York and Michigan. The justices said it is unconstitutional for states to allow their consumers to purchase wine directly from in-state vintners but refuse to let them make similar purchases from other states.

“If a state chooses to allow direct shipment of wine, it must do so on evenhanded terms,’’ wrote Justice Anthony Kennedy.

The bill considered by the House committee Monday, HB2500, fixes the problem by allowing Arizonans to buy directly from any small winery — defined as producing no more than 50,000 gallons annually — no matter where the facility is located. That measure was approved by the committee on an 8-2 vote.

But another measure pushed by wholesalers who don’t want to be bypassed would repeal existing laws — and the ability of the Arizona wineries to sell directly to consumers. HB2697 is scheduled for a hearing Wednesday before the House Commerce Committee. Rod Keeling, a Tempe resident who owns a winery south of the Chiricahua National Monument in Cochise County, said he and his wife located their 8 1 /2-acre farm there because they knew, based on the 1982 law, they did not have to depend on drive-by trade.

“We’re 43 miles from Willcox, 46 miles from the nearest grocery store, 27 miles from the post office,’’ he said. Keeling, president of the Arizona Wine Growers Association who supported the bill heard Monday, said the law has helped nourish a new and high-value industry for the state.

Susie Stevens, lobbyist for Alliance Beverage Distributing, a licensed wholesaler, said her company is not trying to put the wineries out of business. She said, though, they should be required to distribute their product through the same system that applies to virtually all other alcoholic beverages.

But Eric Glomski who owns Page Springs Vineyards and Cellars near Cornville said having to work through wholesalers is not the answer. “Wholesalers can’t do as good a job as me in representing my product,’’ he told lawmakers. Glomski also said his winery would not survive if wholesalers had to take a bite of the profits.

Mark Osborn, who lobbies for the Protect 21 Coalition, financed largely by wholesalers, said there is no way to ensure that wine ordered by phone or the Internet is actually going to someone of legal drinking age.

HB2500 does require the person receiving the wine to sign for the shipment and show proof of age. But Osborn said he doubts busy drivers working for package delivery services will enforce the provision.

Glomski responded that there have been no documented instances of teens ordering wine online.

Rep. Russ Jones, R-Yuma, said he would prefer to leave the law as it was, with only Arizona wineries able to ship to Arizona consumers. But he said the U.S. Supreme Court ruling made that impossible.

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