Wineries back in business with help of new law
By Shannon Sollinger
For the first time in nearly two years, Lew Parker delivered wine May 1 from his Willowcroft Farm Vineyard to the Leesburg Vintner about five miles away.
For one brief moment, he wasn't Lew Parker, wine maker, or Lew Parker, farm owner. He was Lew Parker, agent for the Virginia Winery Distribution Co. A 3-foot-by-3-foot shelf, surrounded by wire mesh and locked, in his warehouse is “leased” to the distributor.
The new company, which exists nowhere but in software somewhere in Richmond, is solving the problem created by the Virginia General Assembly when, in 2006, it took back what it had given in 1980 – the right of the state's farm wineries to bypass the three-tier system and to market and deliver their wines directly to local restaurants and stores.
A federal court ruled in 2005 that the state cannot treat in- and out-of-state wineries differently – either they all have the right to market and deliver directly, or none do. The lawmakers chose to protect the three-tier system, put in place at the repeal of Prohibition, that mandates that all “spirits” must pass through the hands of a middleman. Hence the three tiers – producer, distributor, retailer.
Keeping those who produce alcoholic beverages separate from those who buy them, the thinking went, would guard against underage drinking and protect the state's interest, guaranteed by the 21st Amendment, in regulating the production and sale of alcoholic beverages within its borders.
The forced return to the three-tier system for Parker and many of the other 130-plus wineries in Virginia -- there were only six when the farm wineries law was passed in 1980 – was economic catastrophe. He had to add $2 to $3 a bottle to the cost of his product to pay the middleman. He got less, the buyer paid more. Parker's retail business dropped 60 percent last year, he said.
Parker's Willowcroft, one of the oldest wineries in the state, was large enough to retain a distributor and keep some presence in the retail market. Wineries established more recently, which had not developed a presence in the market and label recognition, had a harder time.
By creating the new virtual distributorship, the General Assembly is trying to put the small wineries back in business while maintaining the integrity of the three-tier system, said Teri Cofer Beirne, counsel to the Virginia Wineries Association.
Critics charge the General Assembly is protecting a state-sponsored monopoly, but winery owners statewide are glad to be back in business. As of May 12, 69 have signed up to participate in the state-run distributorship.
The new company distributes only Virginia wines – allowable under another court decision that permits state-run liquor stores to carry only Virginia wines – and all out-of-state wineries, regardless of size, have to hire a distributor to reach Virginia customers.
“So far, it looks like it will work for us,” Parker said. “I haven't seen any cash yet.”
One of the three cases of Willowcroft wine on the Leesburg Vintner's shelves now is the Willowcroft claire vidal blanc. It's never before been sold outside the winery tasting room.
On May 1, Parker and Vintner owner Mike Carroll swapped some paperwork and Parker headed to Middleburg. He had three cases to deliver to the Red Fox Inn.