Will new law harvest change or sour grapes?

By Jennifer Mock

Published: September 10, 2007

When a bill allowing Oklahoma wineries to ship to out-of-state customers goes into effect Nov. 1, it won't lead to a drastic change.

Wineries already are allowed to ship to the 38 states that legally allow it.

Oklahoma isn't one of them, meaning wineries will continue to ship to other states. But wineries won't be able to send a bottle within Oklahoma's borders.

The new law will allow the selling of wine to customers in "direct shipment” states. Though nothing forbids a winery from shipping to other states, some feared the vagueness of the law and didn't risk it, said Gary Butler, president of the Oklahoma Grape Growers and Wine Makers Association. The new law will allow wineries to be able to ship to states that allow it without fear they are breaking the law.

But that is just a small victory, Butler said. The real fight is still fermenting.

Oklahoma wineries want to make Oklahoma a "direct shipment” state, allowing them to send wine to the homes of in-state customers. The change also would open the state up to other wineries, which could then ship into Oklahoma. Currently, all Oklahomans must buy wine in person, either at a winery or in a liquor store.

Allowing wineries to ship into Oklahoma would bypass the wholesalers who are responsible for selling wine to the liquor stores. It is a move most wholesalers have fought for years.

"Oklahoma wineries are really handicapped by not being able to tap into the shipping market,” said Butler, who is the owner of Summerside Vineyards, Winery & Inn. "In the world of the Internet, people are used to buying products from all over the world, but unfortunately wine is tightly controlled and industry rules can get in the way of the industry growing.”

Wine only can be sold through wholesalers in Oklahoma, but there is no law requiring them to carry any certain wine. If a wholesaler won't buy an Oklahoma wine, the winery has no way to sell it outside of direct sales on its premises.

Wholesalers argue there is no way to ensure minors won't be buying wine over the Internet and say the demand is not there for Oklahoma wine.

"This is a demand problem, not a supply problem,” said Chad Alexander, a spokesman for several Oklahoma wholesalers. "If the demand is there, the supply will be, too.”

Rep. Trebor Worthen, author of House Bill 1753 allowing wineries to ship out of state, said the measure helps the wine industry, but admits it doesn't solve the overall problem of direct shipment into Oklahoma. A compromise could come in the next legislative session, but it will take lawmakers from both political parties to realize they won't get all they want in a deal, he said.

One direction a compromise may go is allowing direct shipment from wineries with only a limited volume, which would include most of the small Oklahoma wineries. But even that solution has some kinks because some of the most exclusive and expensive wine comes from wineries that make only 500 cases a year, Worthen said.

Winery owner Butler acknowledges Oklahoma wineries are not the true threat in the fight — they are too small to make a huge sales impact with wholesalers — but if Oklahoma wines are allowed to ship in-state, out-of-state wineries must be allowed to ship in as well.

Before June 15, Oklahoma law allowed in-state wineries to sell directly to liquor stores, bypassing the wholesalers. But that law was thrown out, with a federal district court saying it violated the U.S. Constitution's commerce clause by giving an unfair advantage to in-state wineries not afforded to those outside Oklahoma. So any compromise would have to encompass both in-state and out-of-state wineries.

Butler said he is polling his members and hopes to talk with wholesalers before next session to see if there are areas of agreement. He said Oklahoma wineries are not opposed to the wholesaler system in general, but for smaller wineries, it isn't cost effective for wholesalers or owners.

"We want to find some middle ground that gives them the protection they are looking for and gives the small winery the ability to grow until we need the wholesalers to help sell our product,” he said. "Once volume reaches a certain point, the wholesaler system will be a useful tool we will need to tap into.”

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