Years after court ruling, wineries still in a box

updated 4:09 p.m. ET Dec. 9, 2007

RINGOES, N.J. - Unionville Vineyards plans to expand by planting more pinot noir and adding Rhone varietals next year, but winemaker Cameron Stark knows he’s fighting an uphill battle.

He recognizes New Jersey’s reputation as a wine producer isn’t exactly that of California or even Oregon. But vineyards here and in a dozen other states face another hurdle because of their states’ stringent wine shipping laws, which wineries say are stymieing their growth and consumers say are limiting their choices.

“If laws changed, I think it would dramatically affect our business,” said Stark, who came to Unionville from Napa Valley.

Many regions across the country are trying to become another Napa Valley or Sonoma, with wine industries that attract tourists.

But laws in some states still prohibit wineries from shipping directly to consumers, two years after a landmark U.S. Supreme Court ruling led many to believe that all states would allow vineyards to ship wine directly to consumers across the country.

The Supreme Court ruling overturned laws in New York and Michigan that prohibited consumers from buying wine directly from out-of-state wineries. Wineries and consumers had sued, alleging those states violated the Constitution because they allowed in-state wineries to ship directly to consumers but prevented shipments from out-of-state.

The court said either all wineries should be allowed to ship directly to consumers or none, but each state still decides whether to allow shipments.

In the states where direct shipping is still banned, it often amounts to battle between wineries that want new customers and wholesalers who want to keep the system intact where intermediaries are a required step between wineries and customers. Wineries can also keep more profit if they don’t rely on a wholesaler or retail store.

Allowing direct shipping would add another benefit for less prominent regions whose wines haven’t been reviewed by influential wine publications, which don’t want to write about wines that aren’t accessible to everyone, said Jim Trezise, president of the New York Wine & Grape Foundation.

“In order to get broad-based respect, you need national distribution,” he said. “You can get respect, but it’s narrowly focused with the few people who can get your wines.”

The ruling and a subsequent new state law allowed New Yorkers to receive wine from California and other states.

At the same time, it also opened channels of commerce to allow consumers in other states to directly receive New York wines, Trezise said. He noted that last year, the Finger Lakes region of New York State and the North Fork of Long Island landed on the cover of Wine Spectator.

That’s attention emerging regions can only dream about.

Curtis Wallin, owner of Holly Ridge Winery in Livingston, Tenn., said the Internet has spurred interest from potential customers around the country, and he would like to be able to ship to whoever wants to buy his 35 varieties of wine. He said legislators in Tennessee aren’t pushing for changing the shipping laws.

“We’d see between 30 and 40 percent increase of sales,” said Wallin, who produces about 1,500 cases annually. “We’re just a small winery and that’s why shipping would mean a lot to us.”

Bill Nelson, president of WineAmerica, the national trade association of American wineries, said bills died in Arkansas and Oklahoma this year, but there is legislative interest in a few states for next year.

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