California's wine is subject to both state and federal laws. The organization with a powerful regulatory role is the Bureau of Alcohol, Tobacco and Firearms (BATF). American viticultural areas (AVAs) are awarded by BATF and are based on geography and history. AVAs were established in 1978 and now number 137, with 81 in California. As expected, Napa Valley was one of the first AVAs. Alcohol distribution is subject to a complex patchwork of laws based upon a three-tiered system of producer/importer, wholesaler and retailer.
In contrast to France's controled appellation system, there are no proscribed vineyard or winemaking techniques tied to an AVA. Neither are there limitations placed upon varieties grown. Certain AVA designations, such as "Napa Valley" are associated with quality by the consumer. Grapes and wines from such AVAs fetch higher prices in the marketplace.
BATF is a law enforcement organization within the USA Department of Treasury having three missions: revenue collection, enforcement and regulation. BATF is responsible for collecting federal taxes on tobacco and alcohol. BATF is also charged with fighting smuggling, investigating arson and the regulation and control of guns and explosives. This is a tough, serious-minded organization whose forerunners were prominent during Prohibition.
Varietal and place of origin fall under state and federal laws, with the more stringent standard being that to which the industry is held. Wine labeled as California must be entirely made from grapes grown within the state.
The content standard for county of origin or for varietal designation is 75 percent. From 1936 the varietal figure was 51 percent, in 1983 the 75 percent standard was adopted. A wine containing 75 percent cabernet sauvignon and 25 percent merlot may simply be labeled as varietal cabernet sauvignon. One with 70 percent cabernet sauvignon and 30 percent merlot may not carry a single varietal designation. Such a wine may be labeled with no varietal description or be labeled with the aforementioned percentages. An AVA origin labeled wine carries an 85 percent or more content requirement. A designated vineyard (such as Martha's Vineyard) is more stringent still, with a requirement that 95 percent of the grapes originate from the designated vineyard.
The term "meritage" stems from a movement begun in 1988 by the Meritage Association in response to changing definitions of varietal wine. It applies to blended, bordeaux-style wines. Such wines must meet standards of production figures and price.
There is no classification system of vineyards or producers based upon quality. No legal definition of the term "reserve" currently exists, though there is a move to define this usage. Although "reserve" usually refers to selected, higher quality grapes and special handling techniques such as barrique aging, there is no such law on the books.
Wineries are not obliged to state what varieties, by percentage, went into making any wine, as long as at least 75 percent comes from the varietal stated on the label. Increasingly, either on the front or back label, wineries detail the varietal breakdown.
The laws governing the distribution of wine are currently being hotly contended at state and federal levels. Those who seek to diminish regulation and open up markets are battling those trying to protect their interests in terms of tax revenue or distribution.
The three-tiered system consists of producer/importer, wholesaler and retailer, and was formulated to increase competition and to minimize the role of organized crime. Control of alcoholic beverage distribution is done at federal, state and local levels. This patchwork of laws represents a throwback to the repeal of Prohibition in 1933. Political necessity helped to create an unholy system of competing and confusing laws. During Prohibition organized crime had a monopoly on alcohol distribution; today, the "legitimate" involvement of organized crime in the distribution of alcohol is a topic discussed in hushed tones within the industry.
Under the three-tiered system, a producer or importer may only sell to a wholesale distributor (except for cellar door sales by a producer) who then sells to a retailer who finally sells to the consumer. Protagonists in different levels of the system actively lobby government to protect their turf--they may contribute to political parties and political campaigns. Those successful at the process may gain exceptions to the system. Some states, such as Pennsylvania or Vermont among others, directly control retailing via a government enforced monopoly. A confusing system it is!
Direct wine shipment is the contentious issue, particularly in relation to the growing popularity of sales via the internet. Both state and federal law apply to direct shipment. Twelve of the 50 states, so called "reciprocity" states, allow for the shipment of wine by producers or retailers directly to the consumer. Such purchases may be made via telephone, mail order or the internet.
Such a free market threatens the three-tiered system and the economic interests of wholesale distributors and many retailers. It is also a threat to government monopolies and state tax revenues. Twelve additional states currently have limited direct shipping and may require permits on the part of the shipper and/or the consumer. Five states feel so strongly about this issue as to make the direct shipment of wine a felony. Two other states will only slap a felony charge on a shipper if they do so without a permit. Twenty-three remaining states prohibit direct shipments by a common carrier such as the postal service, or any one of several parcel delivery services.
Direct shippers continue to test the waters and illegal shipments are not uncommon. Direct shippers are also testing the limits via legal action. Neo-prohibitionists--bound by religious and cultural beliefs--have taken to this issue like bees to honey. Senator Strom Thurmond, Republican from South Carolina, and others would like to ban the sale of wine on the internet. Southern Baptists are the predominant religious group in the south and believe the consumption of alcohol to be sinful. Money, markets, politics, religion and alcohol do not mix well in the Unites States of America.
From "Encyclopedia of Wine"
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