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Indiana wineries get a legislative reprieve
Indiana Correspondent

INDIANAPOLIS, Ind. — Thanks to a series of compromises, Indiana wineries had cause for celebration last week when the Senate adopted HB 1016 conference committee report by a 48-2 vote, sending it to Gov. Mitch Daniels for his signature.

The bill modifies language in HB 1190 that the Indiana Winegrowers Guild feared would threaten the state’s fledgling wine-producing business. Now that both chambers have adopted the report, nine wineries will drop a lawsuit they filed in Marion County Superior Court in November.

“We want to thank the legislators who helped us reach this compromise,” said Guild President Larry Satek, owner of Satek Winery in Fremont.

“Because of the help they and Indiana farm winery customers gave us, many of our farm wineries are no longer in danger of going out of business.”

That’s not to say the wineries are totally happy with the new wording, which requires wineries to sell wine to a first-time customer through a face-to-face transaction instead of by direct shipment.

“We aren’t even certain that is constitutional,” Satek said. “It means that if an Indiana resident wanted to buy wine from a California winery, he or she would first have to go to that winery, show proper identification and sign up for future shipments.”

The bill further provides that the person accepting the shipment must show proof of age, which makes the delivery or mail person responsible for carding recipients.

According to Myra Cocca, vice president of Borshoff Johnson Mathews, a public relations and marketing firm representing the wine industry, the bill doesn’t specify what happens if no one is home when a gift package of wine arrives.

Satek isn’t unhappy that all shipments must be clearly identified as containing alcohol products, but he feels the wine industry will have to work to remove the face-to-face provision of HB 1016.

As originally written, however, the bill would have devastated Indiana’s wine business and reduced customers’ choices by banning wineries from making direct shipments to their customers and retail outlets and jeopardized their ability to sell on the premises via tasting rooms.

They would have been required to sell only through distributors, a move the winemakers did not like because the distributors grew nothing in Indiana, produced nothing in Indiana and manufactured nothing in Indiana, adding virtually no value to Indiana goods.

“All but one winery would have been forced out,” Satek said.

He explained that all wineries’ current customers will not have to revisit their favorite tasting room, but they will be required to sign forms stating that they already receive direct shipments prior to April 1.

Cocca said a core issue at stake nationally is whether the three-tier distribution system should be mandated. While wholesalers, part of the three-tier liquor distribution system, will always serve an important role in the distribution of alcohol, Indiana’s wine business was not built on the three-tier system, she said.

“The ability to sell directly to consumers and retailers is the foundation of Indiana wineries’ business model,” Cocca said.

“This was the very thing in jeopardy under the original language in HB 1016 and in other legislation considered during this session of the Indiana Legislature.”

Hoosier wineries have become tourist destinations for more than 1 million people annually since they first appeared on the Hoosier agriculture scene more than 30 years ago.

State incentives provided a pro-business model for development, namely the ability to sell directly to consumers in tasting rooms, sell directly to retailers and, although not expressly granted, to ship wine to Hoosiers’ homes and businesses.

Several new commercial wineries are being developed in southern, central and northeast Indiana.

This farm news was published in the March 22, 2006 issue of Farm World.