- Associated Press - Sunday, November 2, 2014

LITTLE ROCK, Ark. (AP) - In the past 18 months or so, the state has taken two steps in an effort to help out the Arkansas wine industry. The first was a law passed by the state Legislature allowing direct shipping from Arkansas wineries to customers, and the second was the erection of highway signs publicizing the Arkansas Wine Country Trail and the location of state wineries that give tours of their operations.

Of the two initiatives, Arkansas vintners are much more pleased with the signs, Arkansas Business reported (http://bit.ly/1zdPEzz ).

While the direct shipping law was “a foot in the door,” according to more than one winery owner, the law’s restrictions make it, for now, almost counterproductive.

Arkansas’ wine producers said Act 483, which went into effect in August 2013, puts the state wineries at a competitive disadvantage to out-of-state shippers. The Alcoholic Beverage Control Administration said 114 permits have been issued to allow shipping to Arkansas consumers, but only two permits have been given to a state winery.

Audrey House of Chateau aux Arc in Altus said she had no plans to ship wine currently, but “I got the permit because I fought for it.”

Of the other 112 permits issued by the state, nearly 100 have been to California wine producers. The Wine Institute said California shipped out about 215 million cases of wine - a case is 12 bottles - in 2013, nearly 57 percent of the wine shipping market.

The disadvantage, Arkansas wineries say, is that the law allows wine to be shipped only if it was ordered on-site. The law also limits shipments to one case every quarter of a year; although four cases can be ordered at one time, they then must be shipped out one at a time.

Winery owners said the ABC would probably have a fairly easy time checking to make sure a case mailed by a winery in Altus was ordered by a customer actually in the store. It would be a much more involved, and costly, procedure to make sure the same was true for a shipment from a winery in Alameda, California.

“It won’t do any good for any wineries in Arkansas,” said Doug Hausler of Keels Creek Winery in Eureka Springs. “No one is going to send anyone to California to check. It does no good for Arkansas wineries. All the law did is put us at a disadvantage to all the California wineries.

“Why? Why? What people want is to be able to pick up the phone.”

ABC Director Michael Langley said the law, while clearly not all that the wine industry wanted, is an important first step. He said legislation that would have made wine shipments much less restrictive would not have passed.

Act 483, sponsored by Mary Broadaway of Paragould, passed the House in a 78-9 vote and the Senate 24-6.

“This was a baby step for wine shipping,” Langley said. “I expect people will try to expand it in future legislations. It was, in a sense, the most restrictive way to make everybody become accustomed to it.

“I’m all for free economy and free commerce. Getting there is not a simple stroke of a pen.”

Michael Post of Mount Bethel in Altus said it could have been, but the wineries were unsuccessful in removing the face-to-face provision from the legislation. He said Arkansas wine producers should have the same freedom to exercise their commercial enterprise as any other industry in the state.

He agreed with Hausler that California wineries would have a huge advantage because the chances of their sales being scrutinized as closely as Arkansas’ were low. Langley said the ABC would monitor out-of-state shipments into Arkansas and request documentation of on-site orders if there seemed to be abuse.

“That’s very limiting in our ability to market wine,” Post said. “It’s restricting people from picking up a phone or going to a website and ordering wine.

“It hasn’t made very much of an impact. You cannot set up a website with a shopping cart-type thing.”

Post said he hasn’t even applied for a permit, but he does plan to eventually. He said he doesn’t ever expect direct shipping to become a major portion of his business, but he gets a phone call a day from customers wondering if they can order some wine.

“We’re basically a tourism business,” said Post, who estimated he gets about 10,000 visitors a year. “Later on, that leads to shipping wine or another friend wanting our wine. If we can increase sales by 20 percent by shipping, it’s significant. It’s not the most important thing.”

For a smaller winery such as Chateau aux Arc, the lack of unrestricted direct shipping causes a crunch. Post said he produces about 100,000 gallons - about 500,000 bottles - annually, while House said Chateau does about 6,000 gallons. House said direct shipping accounted for 35 percent of her business before the state legislation banned all direct shipments when it passed the Small Farm Winery Law in 2007.

“To get my wine you literally have to come to my door and buy it,” House said. “At least we have got a foot in the door. Just trying to service my existing customers would be great revenue and a job creator. People don’t have the time to drive up. They would love to call or order on the Internet.

“If I was able to ship I would be planting more grapes. Every day I say ‘No’ to potential tax revenue to our state. We can’t keep to the old saying that the customer is always right. You can get prescription drugs and ammunition, just about anything, shipped to your house - other than Arkansas wine.”

Al Wiederkehr of Wiederkehr Wine Cellars, located in Wiederkehr Village, has a permit but he hasn’t shipped wine and doesn’t think direct shipments will take off until the face-to-face ordering provision is removed. One of the arguments that opponents of the provision used was the idea that wine shipped to a private residence could be received by someone under the legal drinking age.

Wiederkehr called that argument “bull corn.” So did other winery owners.

“It’s so ridiculous to say you have to be on the premises to ship it to yourself,” Wiederkehr said. “It’s an insult. We’ve got a foot in the door. This thing will be changed.”

House said the argument is specious because the direct shipments require a signature to accept delivery, and it’s not like liquor stores ever sell alcohol to minors, right?

“Who are you going to trust? A minimum-wage worker at a liquor store or a FedEx delivery man with a good salary and 401k benefits?” House said. “There was a bogus story about a family that got beer shipped to them.”

Post said the children-intercepting-wine-shipments angle was a ruse.

“Minors getting wine is just tools for a political means,” Post said. “I hope they can see there would be no problems shipping wine and later allow more of it and be less restrictive.”

Langley said he expects direct shipping to become less restrictive as the years pass. If the direct shipment market was opened without restriction, there could have been blowback that caused the progress to be reversed, he said.

“Willingly or kicking and screaming, progress will be made,” Langley said. “I think eventually that day will happen, but it may be 10 years down the road. It’s an important change. We need to take a reasoned step forward. If you just open the market, you’ve skipped all these reasoned steps.”

Winery owners appreciate direct shipping is now allowed but the restrictions dampen their enthusiasm.

“It’s a start,” Wiederkehr said. “At least we got that.”

___

Information from: Arkansas Business, http://www.arkansasbusiness.com

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