On Tuesday, noted wine lover Antonin Scalia--and his colleagues on the nation's highest court--heard arguments in a seemingly arcane case that splits Oregon's wine business into opposing factions.
Small vintners, including makers of Oregon's pinots, merlots and chardonnays, are on one side. Distributors, the companies that get booze to grocers' shelves, are on the other. Both sides on the combined New York-Michigan case agree it's the biggest the industry has faced in years. At issue: where and how wineries can ship their wine.
Right now, Oregon wineries can ship wine directly to customers in a dozen states (like California, Washington and New Mexico). Some other states allow shipment only to certain areas, only of small quantities, or only with special licenses, but 25 won't let blood of the grape across their borders. This forbidden zone includes such potential mega-markets as New York, Pennsylvania and Florida. In fact, in Florida, as in six other states, it's actually a felony under most circumstances to UPS pinot noir to a customer's house.
In states with direct-shipment bans, retail channels--supermarkets, wine shops and restaurants--are often the only way to get wine to drinkers. That's a big problem for small Oregon wineries that score glowing reviews in the wine press but aren't big enough to interest retail distributors. They currently have no easy, legal way to get a couple of bottles (or cases) of Oregon pinot gris to a fan in Ft. Lauderdale.
Grape-crushers say shipment bans violate the U.S. Constitution's commerce clause, which essentially forbids states from practicing protectionism against each other. A number of state attorneys general, including Oregon's Hardy Myers, agree, and filed friend-of-the-court briefs in the federal case now in the Supremes' hands.
"It's in the consumer's interest, and it's a necessity for a lot of people in our business," says Gary Conkling, a lobbyist for Oregon winegrowers. "It's a market reality--for a lot of wineries, it's impossible to get distribution."
On the other hand, distributors and other states say the 21st Amendment, which repealed Prohibition, also gave states ironclad rights to regulate the booze trade. Alcohol, in other words, is exempt from the commerce clause.
"That was the quid pro quo for Prohibition repeal," says Paul Romain, the powerful lobbyist for Oregon's liquor distributors. "You can control what's in your borders, and what comes across your borders."
Romain, a Portland lawyer who also wrote a brief in the Supreme Court case, says Attorney General Myers bowed to the pressure from winegrowers, rather than sound legal thinking. "I think Hardy's brief was done for political reasons," Romain says. "In fact, I'm sure of it."
Mary Williams, the state's solicitor general, disagrees, saying her office believes states have the right to make regulations aimed at keeping booze out of minors' hands but not laws designed to protect homegrown wine.
For winegrowers, the verdict, expected in a couple of months, will be anything but an intellectual puzzler. Recently, a number of Oregon wineries received rave reviews from The Wine Advocate, which is to oenophiles as the Racing Form is to horse bettors. Vintners Brick House and St. Innocent, for example, both earned lofty scores of 94 for 2002 pinot noir.
Reviews like that can rocket a winery into the business's boutique stratosphere--but only if wine lovers can actually get the stuff.
"We're not into volume," says Brick House winemaker Doug Tunnell, who depends on loyal customers who don't necessarily live in Oregon. "Being able to have those direct relationships allows us to be small and to handcraft our wine."
States that allow out-of-state wine shipments:
California, Colorado, Hawaii, Idaho, Illinois, Iowa, Minnesota, Missouri, New Mexico, Oregon, Washington, West Virginia, Wisconsin
States that ban or functionally prohibit all direct wine shipments:
Alabama, Arizona, Arkansas, Connecticut, Delaware, Kansas, Maine, Massachusetts, Michigan, Mississippi, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Vermont
States that also make it a felony to ship out-of-state wine to consumers except in special circumstances:
Florida, Georgia (except in special circumstances), Indiana, Kentucky, Maryland, Tennessee, Utah
Several states that ban direct shipment do allow residents to ship wine to themselves when they visit out-of-state wineries. Twelve states and the District of Columbia also allow shipments under other limited circumstances.