Don’t Get Caught Off Guard During Wildfire Season: Tips For Your Winery

Weather conditions and natural disasters occasionally take a toll on vineyards and other agricultural production systems. Due to climate change and recurring droughts, some of which are severe, the frequency and severity of wildfires is expected to increase. These risks highlight the need for winegrowers and winery owners to be as prepared as possible to reduce risk.

Putting Your Plan Together

  Many wineries may have already revisited their evacuation plans and filed them with their respective state agencies. Staying current of wildfire season developments can help enhance your ongoing planning and preparedness. Technology can also support your wildland fire planning and response. Additional planning resources by the American Red Cross are available at: www.redcross.org/get-help/how-to-prepare-for-emergencies/types-of-emergencies/wildfire.html

Steps to Take Before a Wildland Fire Event

•   Take a close look at your winery’s communication protocol for evacuations. Everyone should have a clear understanding of any community alarms that signal when you need to evacuate. Assign specific accountabilities to staff so everyone works collectively to achieve a positive outcome of protecting lives and property.

•   Work with your regional Forest Service to better understand emergency evacuation procedures in your area.

•   Coordinate with the American Red Cross, FEMA, and other emergency agencies to give them the locations of your evacuation sites. Invite your local fire department out as part of a fire pre-incident plan. They should be provided a map of your property, highlighting planned evacuation routes. They can also offer technical assistance to support your plan.

•   Prepare and post route maps for each site, including alternate routes. With a large fire, you may need to use “Plan B.”

•   Consider forming a cooperative agreement with another site to share resources and serve as an evacuation site.

•   Identify key equipment to be evacuated, including computers and other vital records. As part of your business continuity planning, programs should already have information backed up and stored remotely. But, in case you don’t, practice removing this equipment as part of your practice response.

•   Stock an ample supply of water and easily-prepared foods until rescue arrives.

Controlling Wildland Fire Exposures

  Wildland fires are one of the most catastrophic threats to wineries.  Protecting your structures from ignition and fire damage is an important program objective second only to an evacuation plan. Taking precautions ahead of time can help reduce the exposure of a wildfire intrusion. There are a number of proactive measures a winery can take to mitigate the property damage a wildland fire can cause.

  To support a fire adaptive community philosophy, the local fire department or authority having jurisdiction for your winery should require you to develop a landscape plan for your property. It is wise to seek their advice and incorporate their recommendations as you develop a plan specific to your location. You can learn more about fire adaptive community planning at the Fire Adaptive Communities, www.fireadapted.org

According to the NFPA 1144 – Reducing Structure Ignition Hazards from Wildland Fires, fire protection plans should address four zones around a property.

What are the Primary Threats to Property During a Wildfire?

  Research around property destruction vs. property survival in wildfires point to embers and small flames as the main way that the majority of properties ignite in wildfires. Embers are burning pieces of airborne wood and/or vegetation that can be carried more than a mile through the wind, they can cause spot fires and ignite structures, debris and other objects.

  There are methods for property owners to prepare their structures to withstand ember attacks and minimize the likelihood of flames or surface fire touching the structure or any attachments. Experiments, models and post-fire studies have shown structures ignite due to the condition of the structure and everything around it, up to 200’ from the foundation.  This is called the Structure Ignition Zone.

What is the Structure Ignition Zone?

  The concept of the structure ignition zone was developed by retired USDA Forest Service fire scientist Jack Cohen in the late 1990’s, following some breakthrough experimental research into how structures ignite due to the effects of radiant heat. 

The structure ignition zone is divided into three zones; immediate, intermediate and extended.

Immediate Zone

  The structure and the area 0-5’ from the furthest attached exterior point of the structure; defined as a non-combustible area. Science tells us this is the most important zone to take immediate action on as it is the most vulnerable to embers.

  START WITH THE STRUCTURES then move into the landscaping section of the Immediate Zone.

•    Clean roofs and gutters of dead leaves, debris and pine needles that could catch embers.

•    Replace or repair any loose or missing shingles or roof tiles to prevent ember penetration.

•    Reduce embers that could pass through vents in the eaves by installing 1/8” metal mesh screening.

•    Clean debris from exterior attic vents and install 1/8” metal mesh screening to reduce embers.

•    Repair or replace damaged or loose window screens and any broken windows. Screen or box-in areas below patios and decks with wire mesh to prevent debris and combustible materials from accumulating.

•    Move any flammable material away from wall exteriors – wooden pallets, mulch, flammable plants, leaves and needles, firewood piles – anything that can burn. Remove anything stored underneath decks or porches.

Intermediate Zone

  5-30’ from the furthest exterior point of the structure.  Landscaping/hardscaping – employing careful landscaping or creating breaks that can help influence and decrease fire behavior

•    Clear vegetation from under large stationary propane tanks.

•    Create fuel breaks with driveways, walkways/paths, patios, and decks.

•    Keep lawns and native grasses mowed to a height of 4”.

•    Remove ladder fuels (vegetation under trees) so a surface fire cannot reach the crowns. Prune trees up to 6-10’ from the ground; for shorter trees do not exceed 1/3 of the overall tree height.

•    Space trees to have a minimum of 18’ between crowns with the distance increasing with the percentage of slope.

•    Tree placement should be planned to ensure the mature canopy is no closer than 10’ to the edge of the structure.

•    Tree and shrubs in this zone should be limited to small clusters of a few each to break up the continuity of the vegetation across the landscape.

Extended Zone

  30-100’, out to 200’. Landscaping – the goal here is not to eliminate fire but to interrupt fire’s path and keep flames smaller and on the ground.

•    Dispose of heavy accumulations of ground litter/debris.

•    Remove dead plant and tree material.

•    Remove small conifers growing between mature trees.

•    Remove vegetation adjacent to storage sheds or other outbuildings within this area.

•    Trees 30 to 60’ from the structure should have at least 12’ between canopy tops.

•    Trees 60 to 100’ from the structure should have at least 6’ between the canopy tops.

If an Evacuation Becomes evident

•    If possible, identify the location and direction of the fire event. Remain cognizant that this can quickly change direction and speed.

•    Clearly explain your evacuation procedures to all that may be involved.

•    Identify special medical needs and gather emergency equipment and necessities, including trauma supplies for ready access.

•    Designate enough vehicles to evacuate everyone safely. Reinforce safe driving practices with all drivers.

•    Equip staff with emergency communications equipment (cell phones, walkie-talkies, whistles, flares, colored smoke canisters, etc.). Ask your local jurisdiction authority for suggestions.

•    Load key equipment, vital records, food, and water.

•    Ask qualified associates to disconnect and move LP gas tanks to a safer location, such as a gravel lot, or follow the manufacturer’s instructions to empty the tanks.

•    Warn firefighters of underground fuel storage or LP gas tanks before you leave.

  Making your facility fire resistant can help reduce property loss. However, keep in mind that these steps should be done only by assigned staff in conjunction with an evacuation and never require or allow staff to remain behind. Close and secure all doors and windows once combustible materials have been moved away from these openings.

•    Wet down buildings and roofs. There are commercial grade fire retardant products available that can help support your efforts to protect your property. But do your research ahead of time; and don’t let the application of these products reduce the priority of evacuating.

•    Have qualified personnel cut down trees in the fire path, bulldoze a firebreak, and cut field grass as short as possible.

•    Remove brush and dry vegetation near buildings.

Fire Evacuation – What You Need to Know

  During wildfire season, you may be forced to evacuate in a hurry. People are your first priority; to include guests, staff and firefighters. Most fire evacuations provide at least a three-hour notice; but due to the scope of your operation, you may need to do it sooner. Take proactive steps before and during an evacuation to reduce anxiety and avoid injuries. Plan, prepare and practice.

Filing Claims

  In the event your area experiences a wildfire event, it is highly likely it will not only be monitored by your insurance agent, in addition to your insurance company. Pre-loss documentation, such as video recordings and pictures of buildings, business personal property inventories, should be up to date and included as part of your evacuation materials. Working with your agent is a great resource to understand what might be necessary to help with documentation, if you should need it.

Ref:

•    NFPA 1144 – Reducing Structure Ignition Hazards from Wildland Fires, 2018 Edition. National Fire Protection Association. Quincy, MA 02169, 2018

•    Fire Adaptive Communities. Fire Adapted Communities Learning Network. www.fireadaptednetwork.org

•    Wildfire Safety. www.redcross.org/get-help/how-to-prepare-for-emergencies/types-of-emergencies/wildfire.html. © 2019 The American National Red Cross

  This document is intended for general information purposes only, and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. This document can’t be assumed to contain every acceptable safety and compliance procedures or that additional procedures might not be appropriate under the circumstances.  Markel does not guarantee that this information is or can be relied on for compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability.  This publication is not intended to be legal, underwriting, or any other type of professional advice.  Persons requiring advice should consult an independent adviser.  Markel does not guarantee any particular outcome and makes no commitment to update any information herein, or remove any items that are no longer accurate or complete.   Furthermore, Markel does not assume any liability to any person or organization for loss of damage caused by or resulting from any reliance placed on that content.

Understanding the Domino Effect of the European Wine Tariffs

By: Tracey L. Kelley

At press time, the Office of the United States Trade Representative is deciding the revised outcome of a controversial decision from 2019: an increase in import tariffs for European wines by 25%. This action is part of a World Trade Organization judgment against the European Union to end subsidies granted to aerospace giant Airbus. The USTR issued the tariff hike in response to what it believed to be an unfair disadvantage to U.S.-based competitor Boeing.

  In February 2020, the USTR announced it wouldn’t raise European wine tariffs to 100%, but for the upcoming review, it’s unclear if last year’s decision will be upheld, or if those WTO tariffs will shift to other European products. 

  To provide a more tailored scope of the issue, The Grapevine Magazine talked with Benjamin Aneff, president of the U.S. Wine Trade Alliance and managing partner of Tribeca Wine Merchants in New York City; and Eric Faber, chief operating officer of Cutting Edge Solutions in Cincinnati, a wine import and distribution business.

Why the Tariffs Create Conflict

  The Grapevine Magazine (GV): Let’s break down the issue for the layperson: what does U.S. and European wine have to do with Airbus and Boeing?

  Benjamin Aneff (BA): Great question. Nothing. Unfortunately, the USTR has decided to put large tariffs on most wines from the EU because of the dispute involving Airbus and Boeing. It’s incredibly unfortunate, given that these tariffs do roughly four times the economic damage to U.S. businesses than they do their targets overseas. They’re back-firing and hurting mostly small, family-owned businesses in the U.S.

  Eric Faber (EF): I’ve heard the arguments that these tariffs protect American jobs, that people can just buy domestic wines instead of European. In some cases, this may be true, but to believe this about the wine industry shows a complete lack of understanding into how our industry uniquely works and how it’s connected. These connections exist based on an industry that is among the most regulated in the U.S. Companies shouldn’t be asked to change their business model because of an international trade dispute of an unrelated industry.

  The truth is that these tariffs may cause job losses and business closures in Europe, but they will cause job losses for the American small businesses who rely on these wines for their livelihood. Ambassador Robert E. Lighthizer, the USTR, can try to tell us it will simply lead to new American jobs, but that only shows his lack of knowledge about our industry.

  It’s an industry that—unlike Boeing and Airbus—has always paid its fair share of taxes. In fact, the regulation of alcohol means we pay more than most businesses. We don’t get the tax breaks that massive companies like Boeing, Amazon, Apple and others enjoy. Taxes on the alcohol industry help provide billions of dollars to state and local governments. And we’re more than happy to do so, but we shouldn’t be burdened as a result of the poor practices of two of the largest companies on the planet.

  Airbus has recently offered a solution to this entire dispute, and it’s equivalent to the changes made in regard to Boeing. If the goal is to punish Airbus for its misgivings, then punish that industry. But leave the lives of millions of hard-working Americans who aren’t affiliated out of it.

  GV: What would be the direct impact of the 25% tariff increase on small- to medium-sized producers/vintners, and what tangible change happens for them if it’s defeated?

  (BA): Well, ending these tariffs would certainly help small- to medium-sized producers in the U.S., particularly producers looking for distributors that rely on this access to market. These are the companies that actually make sure those small producers in, say, Oregon or California, can make it to the shelf of a wine store or get poured in a restaurant in Chicago, Dallas or New York.

  When distributors are having trouble financially—which they are now due to the tariffs—it’s much harder for them to take the risk of bringing on a new U.S. producer, which generally are unknown and require time and capital investments from distributors. It’s less clear how it helps producers in, say, France.

  There’s pre-pandemic data from the Global Trade Atlas that showed, despite a huge drop in wine exports from France to the U.S. after the enactment of the tariffs, the overall wine exports from France actually grew. In a nutshell, they sold their wine elsewhere. This is just one of the reasons why these tariffs are such a bad idea. They do significantly more damage to the U.S., and they’re incredibly unlikely to influence the EU to change behavior.

  (EF): Should the tariff be justifiably rolled back, things will mostly go back to normal. I say “mostly” because the pandemic has its own role to play in our industry, which adds to the need for the tariffs to be lifted.

  The European wineries we work with love the American wine market and experiencing the amazing wine and restaurant culture so many Americans have worked hard to create. Right now, they’re facing difficult choices about where to sell their products and how to maintain their businesses in the face of tariffs. I think it’s important for Americans to know that the effect on European wineries isn’t money lost from paying the tariffs—because American businesses pay them. It’s from lost sales due to price increases and importers downsizing or going out of business.

  From a larger view, you don’t have to look farther back into our history than the Smoot-Hawley Act of 1930 to see the negative effects tariffs can have on our own economy and the global economy we’re part of. It turned a difficult recession into the Great Depression. It set people back 20 years and created a “lost generation” across the world. These tariffs will harm people across the globe, so by lifting them, we give small businesses—specifically here at home—the opportunity to be successful, experience growth and create jobs.  

The Domino Effect

  GV: As an example, how does an import/distribution company balance its portfolio to include both international and U.S. wine products?

  (EF): We strive to have a portfolio that represents top producers from around the world, specifically boutique producers that fit our model in terms of quality and price point. Domestic wines are the backbone of our portfolio. 

  Like most small distributors, it’s important to have a good mix of products from around the world so we can provide our accounts with a wide variety of options. Domestic wines are certainly a large part of this, and the balance is largely driven by the demands of our customers and the wine-buying public. For us to be successful, we work with producers that we believe in and that our customers have a desire to purchase. While we have very strict standards for the producers we add to our portfolio, we’re ultimately driven by the market.

  The other part of this is profitability. We typically work on lower margins on domestic wines than we do on imported wines, specifically the wines we import ourselves. The slightly-higher margins we make on European wines allow us to keep our prices on our domestic portfolio lower. This is commonplace for most companies in our industry.

  GV: What type of trickle-down effect does the tariff issue have?

  EF: The tariff has an enormous impact on importers and distributors. Many people who argue the tariffs are a penalty on the producers, or the countries on which they have been levied, are simply wrong. We pay the tariffs—not the producers and not the EU.

  A 25% tariff means prices on those products have to go up for importers and distributors to maintain their ability to function. In a state like Ohio, for example, we’re legally required to have a certain margin to our accounts to maintain state tax revenue. We legally can’t make less on the wines, so we have to charge more. This means our retailers and restaurants must raise their prices to the consumer.

  While this may not be the case in every state, no industry could suddenly take a loss of 25% or even 15% of its margin and still be successful. How do people pay employees if they don’t make any money on the products they sell?

  In terms of how this affects domestic producers, the biggest issue outside of distribution is money. Our industry works on “terms”—meaning, we pay for our products typically 30 days after receiving them. This model has been set for decades. But with tariffs, they’re paid as the product clears customs. This creates a significant problem in terms of cash flow.

  So if we’re typically paying a few thousand dollars to clear product into the country, and suddenly have to pay upwards of $25,000, that depletes our bank account in a way our long-standing model wasn’t prepared for and makes it more difficult to pay our domestic suppliers on time.

  We also have to pay our employees, our bills and our taxes. If it takes longer for our domestic partners to get paid, this cash flow problem moves on to them, then to their vendors.

  GV: If certain import relationships fail, do fewer distributors mean fewer channels of retail and restaurant opportunities for U.S. products? Why?

  EF: That’s an excellent question and raises one of the most important points of this debate. If our company relies on a mix of producers from the U.S., Europe and other countries to be successful, then eliminating sales from one of these avenues would force us to close. If companies like Cutting Edge go out of business or contract significantly less, who will sell domestic wines to restaurants or independent retailers that the wineries rely on as the largest part of their sales network? For most domestic wineries, they can’t sustain their business through direct-to-consumer sales alone.

  This leaves wineries without a home. It’s not as simple as just finding another distributor if you’re a domestic winery. Boutique American wineries need to be in a portfolio that gives their products appropriate attention to attract sales and create valuable placements in restaurants and independent retail. They have to find someone who cares about their wines and their stories, someone who can pay for the products, and who can actively promote their products to accounts and consumers.

  Larger, multi-state distributors typically don’t work with smaller domestic producers because it isn’t a part of their business model. They have obligations to their own, typically larger and more corporate, partners. This means that smaller wineries have no focus in their portfolio.

  To sum it up from the point of view of our domestic producers: if 20 Oregon producers suddenly lose their distribution in a state like Ohio, maybe 10 will eventually find a new home and those that do will likely lose significant sales because the new distributor has to essentially re-build the brand in its own portfolio. This is especially daunting when you look at the current climate in our industry as a result of COVID-19. If a producer loses representation in just a small number of states, especially now, it would likely lead to bankruptcy.

  GV: Please explain why a zero-tariff policy on wine imports benefits U.S. producers/vintners in our wine industry.

  BA: Wine from the EU is a keystone species for the health of the U.S. wine market. It represents critical profit margins for tens of thousands of U.S. wine businesses–the same businesses that sell wines from the United States. If those businesses are weak, it’s going to be harder for them to adequately support particularly small- and medium-sized U.S. producers.

  Those wines are often handsels from distributors, retailers and restaurants. That means you need more staff, more time for training, more samples. Further, there may come a point where U.S. distributors are so weakened by tariffs that they’re forced to ask for lower prices from everyone. That’s what happens when companies industry-wide are faced with such hardship. U.S. domestic producers could be one of the first impacted by this need.

  Bottom line, the entire wine industry, from producers to distributors, to restaurants and retailers, are significantly better off when there aren’t tariffs on wine.

Make Connections in Congress

  GV: At press time, the U.S. will have experienced more than 5 million COVID cases, and many wineries continue to be shuttered or downsized in production and tourism. How do you encourage them to take an active stance on this issue when so many other factors have them at a disadvantage? What immediate results will they see from their activism?

  EF: We’ve worked with dozens of domestic wineries to raise awareness of the tariff situation and how it will negatively affect them. I’ve spoken to many of them personally to get them involved, as have countless other distributors. No independent domestic winery thinks the tariffs will benefit them in the short- or long-term.

  We’ve helped provide information on how to contact their elected officials and make their case to members of Congress, the administration, and the USTR. Many have spoken out publicly to condemn the tariffs. People like Jason Lett of Eyrie Vineyards in Oregon have led the charge to raise awareness amongst their peers. They need a strong economy here at home to promote their brands and continue to operate their businesses, and strong partnerships with successful distributors to weather the current storm.

  It’s tough to say what results any of us will see from our activism on this issue because we don’t get to make the final decision. As a community, we have been able to gain support from elected officials from both sides of the aisle and raise public awareness of the negative effects the tariffs will have. Hopefully, awareness will lead to a better understanding of why it’s so important to remove the tariffs currently in place.

  Truly, if there’s anything positive from the battle against tariffs, it’s been the coming together of so many in our industry from all facets: importers, distributors, domestic producers, European producers, restaurants and retailers. I’ve even had wineries we work with in Australia and Chile ask how they can help. All see the incredibly negative outcome of these tariffs on the American wine industry and are united in standing against them. Hopefully, this will help to sway the decision-makers.

  BA: There are so many hardships right now, in every corner of our country. I would say the voices of U.S. wineries can be incredibly impactful with their representatives. We are so interconnected; I think many see how clearly that we rise and fall together. 

  We don’t begrudge the job of the U.S. government to protect our trade interests abroad, but there are better, less damaging ways to do so. We’re all trying to get back up off the mat right now. It’s the wrong time to try to pull the rug out from underneath us.

  Though the public can no longer submit comments to USTR, Congress can! Tell your elected officials, both in the House and Senate, to reach out to the USTR and voice their opposition to these tariffs. There are better ways to influence the EU than a tariff policy that does disproportionate damage to mom and pop businesses in the U.S.—particularly during a pandemic that just saw the U.S. economy contract by 33%. [Editor’s note: The carousel date for the expected USTR announcement regarding its decision, was August 12. Look for an update on thegrapevinemagazine.net]

  When the wine industry is healthy, everyone benefits. When we’re suffering, we all see the impact. Bottom line, we’re in this together.

UPDATE: August 31, 2020; Update from the U.S. Wine Trade Alliance: “The USTR published their decision regarding the August 2020 carousel for the WTO / Airbus award. The tariffs on wine remain the same, with no changes to either tariff percent or category.” Read the full statement here

Chevrolets and Chardonnays: 7 Things You Can Do To Better Manage Your Winery’s Auto Exposure

There was a television commercial a number of years ago where the owner of a famous donut shop was so frazzled  going back and forth getting the donuts made that he ran into a clone of himself coming in the door as he was leaving out the door to go to work. With all of the growing, harvesting, grape crushing, fermenting, ageing and packaging – how many of you have felt the same way? There certainly is a lot to do and manage in the winemaking business, isn’t there?

  With all you have to think about, how many of you have given much attention to managing your driver safety exposures? You’re not alone. Driver risks are a significant loss exposure for wineries – one that is often overlooked. Vehicle crashes unfortunately are on the rise – and jury verdicts for those found at fault are reaching amounts never before considered. Are you doing anything to manage these often unnoticed risks for your winery? Or are you merely telling your employees to “Be safe out there!” as you hand them keys to your vehicles?

  There are a number of things you can do and best practices you can use to lessen your exposure to this potentially serious risk. How many of these strategies are you using?

1.  Do you demonstrate management support for safe driving?

2.  Do you have a driver selection process?

3.  Do you evaluate your drivers?

4.  Do you have written driver safety policies and procedures?

5.  Do you have driver orientation and training programs?

6.  Do your drivers know what to do if they are in an accident?

7.  Do you have inspection and maintenance procedures defined?

  Yes, there can be quite a few things to help manage your driver exposures, but in the long run they can help you avoid needless injuries and losses.

Management Support

  As an old saying goes – “if it’s not important to you, it won’t be important to your employees”. There are a number of ways that you can demonstrate the importance of driver safety to you and your winery:

•    Do you have a clearly written driver safety policy with standard driver operating procedure?

Has it been reviewed by legal counsel for conformance to accepted legal procedures?

      a.  Is it consistently enforced?

            oIs it distributed to all employees?

      b.  Do all employees sign an acknowledgement

           that they will follow all these rules?

      c.  Do you hold all drivers accountable for their

           driving and any accidents sustained?

•    Is someone assigned to oversee driver safety?

•    Do you routinely include driver safety topics at employee meetings?

Selecting Your Drivers

  Having a meaningful driver selection process is an important part of managing your winery’s driving exposure. By having a good process in place, you can help avoid future losses from accidents and vehicle abuse. Have you included these practices in your selection process?

•    Use of defined criteria (in writing) to select your drivers?

•    Do these criteria include:

      a.  Background checks

      b.  Drug screening

      c.  A review of past work records

      d.  A 3-year review of each person’s MVR (Motor Vehicle Record) to rule out any disqualifying offenses

•    Do you stipulate that failure to participate in MVR screening could result in denial of employment, loss of employment or loss of driving privileges?

Driver Evaluation

  Even though most of your employees can probably drive, determining which candidates are acceptable is important in managing your driving risks. Do you:

•    Verify their drivers’ license is valid and current in their state of residence.

•    Hire only experienced drivers with a minimum of 2 years driving experience

•    Check references provided

•    Know if candidates have the ability to understand both oral and written instructions?

•    Disqualify drivers with three (3) or more violations in 3 years

•    Disqualify drivers with two (2) or more preventable accidents* in 3 years.

•    Require compliance with a drug & alcohol testing program.

•    Disqualify any driver convicted of any alcohol or drug related offences.

•    Maintain an up to date list of authorized drivers

•    Have a procedure to assure your drivers maintain an acceptable MVR during their employment.

Written Policies and Procedures

  In today’s business environment, you can serve your winery well by documenting how you expect your business to be run and how you expect your drivers to operate. Does your documentation include?

•    A written driver safety program with:

      a.  Requirements for 100% seat belt use?

      b.  Rules prohibiting distracted driving?

      c.  Reporting rules for any moving violations?

      d.  Rules on permitted use of winery vehicles?

•    Is your program written in a clear and concise manner?

•    Are these rules readily available and easy to obtain in an organized, neat and easy to use format?

•    Do you assure that all drivers are thoroughly familiar with the rules and is their knowledge tested? Do drivers sign an acknowledgement confirming they will follow all these rules?

•    Are your rules vigorously enforced?

Orientation and Training

Driver training presents some great opportunities for your winery to better manage your driving exposures.

•    In order to be effective, training should:

      a.  Be recurring.

      b.  Use a variety of methods to communicate your information.

•    Daily 5-minute safety talks.

•    Posters

•    Paycheck stuffers

•    Safety meetings

•    Training videos

      a.  Routinely reinforce safe driving practices.

      b.  Be both informal (short talks at the beginning of a shift) and more formal (classroom) in nature.

      c.  Select topics and organize content ahead of time.

      d.  Test employees on what was covered. Results should be documented and in each drivers file.

      e.   Follow a checklist to assure all topics are consistently covered.

      f.  Include defensive driving..

      g.  Include what is considered distracted driving.

      h.  Require mandatory attendance and  document each driver’s file.

      i.  Utilize driver trainers along with monitored probationary periods for all new hires.

Incident Reporting

  Do your drivers know what to do (and what not to do) in the event of an accident? An improper statement immediately following an accident could make your winery liable. It is important that you establish procedures that inform your drivers how to properly respond in the event of an accident. You may want to consider obtaining legal advice to document how your drivers are expected to respond immediately after an accident. Drivers should know: 

•    How to respond to  any immediate concerns

•    When they should  notify someone

•    Who they should  call

•    Who they should talk with

•    What they should  say (or not say)

•    What information they should  gather

•    Are there any additional steps they should take

  Consider having a checklist for your drivers to guide them through the proper steps expected of them in the event of an incident. By having all the proper procedures (and training) in place before an accident, your winery and your drivers are more apt to respond properly to an accident and not react in a way that could have a detrimental impact on your winery.

Inspections and Maintenance

  “What gets inspected gets dealt with” is a management saying often stated and one that may serve your winery well. Properly inspected and maintained vehicles have a much greater chance of operating correctly than vehicles that are neglected. It is important for you to have confidence in your equipment. Steps your winery can take in this regard include:

•    Training drivers how to do a thorough inspection.

•    Making sure all vehicles are Inspected (in writing) prior to use.

•    Having repairs and maintenance issues remedied as promptly as needed.

•    Having all physical damage reported to supervisory management.

•   In the event of a breakdown or weather related condition, assuring your drivers know who to notify for assistance.

•   Having all repairs completed by licensed shop/mechanic.

•   Having a licensed mechanic/shop inspect each vehicle on an annual basis.

•   Having all vehicles receive periodic scheduled maintenance; document this in each vehicle file

•   Keeping maintenance files for each vehicle for a minimum of two years.

•   Completing preventative maintenance within vehicle guidelines and the manufacturer’s recommendations.

  Having well-maintained vehicles will give your winery the confidence that your vehicles are as they should be and not the cause of an incident due to a mechanical failure.

Conclusion

  Implementing these kind of strategies effectively for your winery will get you off to a great start in managing your driving exposures. As a manager, you have a responsibility to your employees, your customers, and the general public to know who is driving and that they meet the driver guidelines you’ve established. You have a responsibility to implement sound business procedures.   train your drivers so they know and can follow  your procedures safely, and assure that the vehicles you have on the road are safe and well maintained.

  There may be other components that will also help in managing your winery’s driving exposures. You should also consider talking to your insurance agent to discuss your specific circumstances and what else you might do to lessen your driving risks.

* A preventable accident is any traffic accident which results in property damage and/or personal injury, regardless of who is injured, what property was damaged, to what extent, or where it occurred, in which the driver in question failed to exercise every reasonable precaution or action to avoid the accident. Driving to avoid preventable accidents is defensive driving. The fact that the driver was not charged with a traffic violation by law enforcement is not part of this definition. (Derived from the National Safety Council DDC-4 Guide)

** The National Safety Council defines defensive driving as “driving to save lives, money and time, in spite of the conditions around you and the actions of others.”

Disclaimer

  The information provided in this article is intended for general informational purposes only and should not be considered as all encompassing, or suitable for all situations, conditions, and environments. Please contact your attorney if you have any questions.

Email Segmentation: A Critical Tool in the Digital Marketing Toolbox

By: Nathan Chambers, Gaynor Strachan Chun and Susan DeMatei

Research shows that your email success can be significantly improved if you enact a campaign list segmentation strategy – MailChimp reports that segmented emails can increase open rates by +15% and click through rates by up to 100%.

  Segmenting your email list allows you to deliver more personalized and relevant content to specific groups of customers. Not segmenting your list results in higher customer attrition. On average, over half of those who subscribe to email lists end up throwing the email in the trash when it hits their inbox. 

  For your customer, there are many reasons why they will be more likely to open an email from a brand that delivers content that is more relevant to them in a timely manner. One of the most important reasons is it shows them you understand their needs and wants. In other words, it delivers a more personalized experience.

  For you and your brand, the value of email list segmentation is quite simple – increased ROI. Segmenting your email list drives increases in loyalty and lifetime value (LTV).

  Let’s look at it from your customer’s perspective. They were at the winery, they filled out a customer information card, or made a purchase and shipped bottles home; they either asked or were aware they’d be added to the mailing list and are hoping for special offers, events, or other news. This is a transaction of trust. As a payback for their trust in you, customers expect to get something of value back, on a reliable basis, and not so often that it adds to their in-box clutter. If the only thing you offer them is random, or generic, you violate that trust.

  But where do you start? Here are 7 effective ways to segment your email list and leverage other data to increase your email ROI.

#1: Demographics:  The simplest way to segment your list is by demographics. Age, gender, job title, native language, etc. These traits, individually or combined, can help you understand what products or offers they are more likely to be interested in.

#2: Survey Results:  People like being asked what they want and need. Rather than overloading your opt-in function, use your list to conduct surveys. This way you can create a more complete picture of your target audience. Ask about interests, needs, why they chose your brand.

  You can then use your survey results to segment by interest, sending content that is relevant to the different interest groups. Maybe you have a group of customers who love recipes and like to cook. Target them with an email about a new wine and include a food and wine pairing recipe element. This will greatly increase your rate of engagement with this customer segment. The more they engage, the more likely they are to keep an eye out for further emails. Repeating that engagement until it becomes a regular habit.

#3: Sending Frequency:  Nobody likes their email box to be overloaded, even if the emails they are receiving might be relevant to them. Understanding the optimal cadence for your emails can be difficult. Use your email engagement data to understand the best frequency. The ideal frequency may also vary by segment.

#4: Geolocation Segmentation:  The easiest and quickest way to segment your database is through geography. For instance, target people in a certain area for events, or shipping offers based on weather. When they joined the mailing list, they felt a connection. Your customers expect accountability, integrity, and accuracy. Geolocation segmentation offers many benefits beyond email campaigns. “Taking the winery on the road” brings the winery and the wines to those who may not make it back to your tasting room. Your winery can develop relationships with retailers or have Wine Club members host a tasting at their home in a key market.

#5: Page Views:  Where do your website visitors spend most of their time? By analyzing your page views, you can better understand what your visitors are looking for and even segment content to them. Are they looking for the hours your tasting room is open? The send them tasting room information. Are they looking at the gift set page? Send them a vertical package offer. One of the easiest segmented communications in this group is to target a resend to people who opened an email and went to the landing page of the product for sale but didn’t buy. These retargeted communications might be just the reminder they needed to complete the purchase. Whatever messaging you choose to play with, when you tie your email segmentation to website visits, these insights to create more relevant content for your emails.

#6: Purchase Cycle:  Understanding the purchase and repurchase cycle of different groups of customers is invaluable. It allows you to build customer behavior profiles and each profile type will respond to different email approaches. If a customer has just signed up for your mailing list, they will want an introduction to who you are and what you offer. A case or library magnum offer is not for this group who are just getting to know you. What you want to do with customers early in their life cycle with you is reduce barrier to trial, so give them single or double bottle offers with your best-selling wines. Save the big purchases for when they become loyal members (and then segment on their past purchases – see below). With the purchase cycle in mind, you can tailor email content and timing based on customer behavior, increasing your likelihood of conversion. 

#7 Past Purchases:  By analyzing what your different groups of customers are buying, you build an understanding of what products interest them and what products don’t. This allows you to create target segments for each product type and only send information or offers about products you know will interest them, increasingly your likelihood of securing a sale. Additionally, it signals to the customer that you care about their preferences and are not sending them emails about products they would never buy.

  For instance, imagine you decide to send a special offer email on a new vintage of a particular wine. If a group of your loyal repeat customers have never purchased that varietal, why would they care? New members will appreciate the email and may make a purchase because they’re trying new things, but most consumers show you through purchase action what they’re interested in. Send them too many emails that don’t apply and they’ll ignore it or, worse yet, mark it as spam or unsubscribe.

Implementing These Strategies

  Don’t try to tackle all these segmentation strategies at once. It’s more valuable to master one of these strategies before developing the next one than it is to fumble with implementing all of them at once. Baby-steps count. Start with one idea with a goal to try out a new segmentation each month. Then you’ll see what your database responds positively to, and you can play more in the areas that resonate. The single most important thing is to at least try segmentation in all your campaigns. Doing so will undoubtedly increase your success rates and metrics for your ongoing email marketing.

   Susan DeMatei, Nathan Chambers and Gaynor Strachan Chun work for WineGlass Marketing, a full-service direct marketing firm operating within the wine industry in Napa, California.

www.wineglassmarketing.com

Sustainable Wineries Attract More Consumers

By: Briana Tomkinson

  Concern about threats related to climate change is inspiring more consumers to make lifestyle changes like going vegan, upgrading to electric cars, reducing plastic waste and seeking more environmentally sustainable products. It’s also starting to affect how consumers select their wine.  

  Surveys of wine consumers in Canada, the U.S., Sweden and the UK are indicating a growing interest in purchasing sustainably produced wine, favorable perceptions of sustainable certifi-cation programs and certification logos, and a willingness to pay more for sustainably pro-duced wine—particularly by Millennials and Gen Z.

  For many Canadian winemakers, however, their interest in sustainable winemaking began well before consumers started paying attention.

  According to veteran British Columbia winemaker Gordon Fitzpatrick, adopting environmentally sustainable practices isn’t just the right thing to do—it also makes good business sense. “Often, sustainable choices have economic benefits. It’s not mutually exclusive,” Fitzpatrick said. “Every little bit helps.”

  Fitzpatrick has been in the wine business since 1986 when he founded Cedar Creek Estate Winery. He sold the majority of his vineyards to Mission Hill five years ago, but kept one be-tween Peachland and Summerland. In 2017, he launched a new label, Fitzpatrick Family Win-ery, using those grapes.

  The boutique winery focuses on sparkling wine and has approximately one-fifth of the produc-tion capacity of Cedar Creek, topping out at about 10,000 cases at full production. The shift into sparkling wine was a strategic choice to take advantage of the vineyard’s unique microcli-mate.

  “We lose the sun about two and a half hours earlier than most other vineyards,” Fitzpatrick said. “That’s why we specialize in sparkling wine. It creates that natural crisp acidity. I call it shade’s gift.”

  Fitzpatrick Family Winery is located in the Thompson Okanagan region, British Columbia’s pri-mary wine-growing region. The area boasts 84% of the province’s vineyards by acreage and has over 200 wineries. Wine tours are a big draw for visitors to the region. With the local tour-ism association increasingly spotlighting sustainable tourism, wineries like Fitzpatrick’s are get-ting more recognition for their environmentally friendly choices.

  The Thompson Okanagan Tourism Association recently developed a sustainability pledge to identify and feature responsible tourism providers in the region, including Fitzpatrick Family Winery. Other wineries who have signed on to the program include Poplar Grove (https://www.poplargrove.ca/), Grizzli Winery (www.grizzliwinery.com) and Meadowvista (www.meadowvista.ca).

  The region was also officially certified as the first destination in the Americas to achieve the Sustainable Tourism Accreditation from Biosphere International and the Responsible Tourism Institute. The certification criteria includes commitments to environmentally sustainable practices, including ensuring access to sustainable energy and adopting measures to mitigate cli-mate change.

  Fitzpatrick Family Winery was a pilot winery for the program last fall, Fitzpatrick said, which included a thorough audit on water, energy and waste management practices.

  “We think of ourselves as good stewards of the land, but you always want to look at how you’re doing things. They came up with some recommendations on how we can do things even better than we currently are [doing them]. It was a very worthwhile process to go through,” he said.

  Recommendations ranged from replacing big-ticket items like a 25-year-old water pump with a newer, more energy-efficient model, to less costly initiatives like installing flow meters to better monitor water usage, and expanding the winery’s compost program to incorporate food waste from the on-site, seasonal restaurant.

  The winery is also now pursuing organic certification, following a recent $40,000 investment in mechanical weeding equipment that will allow Fitzpatrick to stop using herbicides in the spring.

  In the last five years, Fitzpatrick said consumer awareness of sustainable practices has changed significantly. “People are much more aware and want to know what your practices are, and are you being a good steward of the land,” he said. “it’s nice to be able to stand be-hind what we do.”

Do Wine Consumers Care? Researchers Say Yes

  According to market research by Wine Intelligence, it’s not just hippies who are choosing more socially and environmentally conscious purchases. Interest in organic, fair trade and sustaina-bly produced wine is growing and is now considered mainstream, particularly among consum-ers under the age of 45.

  In the U.S., almost three-quarters of consumers surveyed said they would consider buying sus-tainably produced wine in the future. Seventy percent of Canadians agreed.

  Nine out of ten millennial consumers surveyed said they would be willing to pay an average of $3 more for sustainably produced wine. The research found that sustainability certifications for wine improved consumers’ willingness to buy.

  The research was presented at the first U.S. Sustainable Winegrowing Summit in Sonoma last June. In a speech at the event, Wine Intelligence CEO Lulie Halstead outlined five key concepts  to “sell” sustainability to consumers, highlighting how it’s good for people as well as for the environment:

1.   Focus on the small steps producers and consumers can take today.

2.   Frame sustainability as a positive choice: talk about positive benefits.

3.   Use groupthink for good: invite customers to be part of a larger movement to make greener choices.

4.   Appeal to feelings, not facts: logic is not as persuasive as emotion.

5.   Be brief: keep messaging succinct.

  The second edition of the U.S. Sustainable Winegrowing Summit will be held this year on May 5-6 in Long Island, New York. The event will feature tours of sustainable wineries in the area, as well as a full conference program. Tickets are $50. More details are online at https://www.sustainablewinegrowing.org/summit/.

British Columbia to Host Global Sustainable Tourism Conference

  The Thompson-Okanagan region is also hosting the 2020 Global Sustainable Tourism Confer-ence November 19-22—the first time the annual event will be held in Canada—at the Delta Ho-tels by Marriott Grand Okanagan Resort in Kelowna.

  The event will feature expert speakers and panelists from around the world. Over 500 local, national and international delegates are expected to attend, including destination marketing professionals, airlines, travel agents, international media and tourism-oriented business lead-ers.

  According to President and CEO of Tourism Kelowna, Lisanne Ballantyne, industry research indicates that interest in sustainable tourism destinations is growing. She said recent reports have found 87% of consumers want to travel sustainably, and 67% are willing to pay more for travel that has a less negative impact on the environment.

  In 2019, for the second year in a row, TOTA was named the World Responsible Tourism Award Winner at the Annual World Travel Awards.

  According to British Columbia’s Minister of Tourism, Arts and Culture, Lisa Beare, the prov-ince’s stunning scenery and unspoiled wilderness is a key draw for visitors from around the globe, and the region’s tourism strategy reflects that.

  “Our strategic framework for tourism seeks to responsibly grow the visitor economy by re-specting nature and the environment, and making sure that everyone sees the benefits of this important industry,” Beare said in a press release about TOTA’s award win.

Are More Audits Coming For the Direct-to-Consumer Market?

By Alex Koral, J.D., Senior Regulatory Counsel with Sovos ShipCompliant

Last fall, the state of Texas began the process of auditing all of their direct-to-consumer (DtC) wine shipping licensees, the biggest such audit in the history of this market.

While all states reserve the right to audit their licensees, the scope of this mass audit surprised many. More than 1,600 wineries possess permits to ship directly to Texas customers. Many have already received a notice from the Texas Alcoholic Beverage Commission (TABC) requesting to review their records. This time-consuming process began in September 2019, when the first round of notices were sent, and will continue as the TABC reviews all permit holders to ensure they are in compliance with the state’s laws.

At the heart of this heightened regulatory scrutiny by Texas is the dramatic rise in popularity of the DtC channel in recent years. Many wine drinkers have come to appreciate the DtC wine shipping market for bringing a direct connection to their favorite brands and greater access to wine clubs and highly-allocated labels, creating a $3 billion national market. 

The beverage alcohol industry has long been one of the most regulated enterprises in the country, so it is little surprise that this increased scrutiny has come to the DtC wine shipping channel. States have a vested interest in making sure they collect the full balance of tax money they are due and that their laws are followed to the letter. As Texas’s audits proceed, they could well represent a harbinger of what’s to come for DtC wine shippers, making it important to understand how and why regulators are examining this market. 

Even the Audits Are Bigger in Texas

In May 2005, Texas Governor Rick Perry signed into law Senate Bill 877, a transformative reform of the state’s Alcoholic Beverage Code that smashed open the door for wineries to ship directly to consumers in the state. Since then, wine enthusiasts in Texas have been able to purchase wine directly from out-of-state wineries, provided those wineries obtain the necessary sales tax and Winery Direct Shipper’s permits.

The state’s timing was no coincidence. Just one week after Gov. Perry signed the new bill into law, the Supreme Court held in Granholm v. Heald that the states’ ability to control their internal alcohol markets under the 21st Amendment did not supersede the general prohibition on discriminating against out-of-state interests under the Commerce Clause. 

Under the decision, states could no longer prohibit direct-to-consumer wine shipping if they allowed in-state shipping. In the years following Granholm, a wave of reforms flowed across the country. But Texas was one of the first to update its wine shipping laws. And today, the state lives up to its outsized reputation by being the second-biggest recipient state for direct-to-consumer wine shipping, according to Sovos ShipCompliant data. 

So what are Texas regulators seeking to achieve with this wave of audits? The goal appears to be ensuring wine shippers are properly licensed, paying excise taxes, reporting shipments, and not exceeding limits on how much they can send to individual Texans. The TABC has asked licensees for the sales data used to produce their Texas Excise Tax returns, including requests for copies of certain invoices

In addition to order data and invoice copies, the TABC has requested information regarding licensees’ business structures, including copies of their state and federal permits, and lists of corporate officers and directors. Contracts or other agreements that licensees have made with fulfillment houses and similar service providers have also been sought.

Finally, the TABC is looking into the specific wines that licensees have shipped to Texas consumers. Texas’s DtC statutes prohibit licensees from selling wines that the licensee does not personally produce or bottle. As such, the TABC has requested licensees provide Certificates of Label Approval (COLAs) and production records for wines shipped to Texas consumers.

These past requests, though, are subject to change at any time and any DtC wine shipper that does receive an audit notice should ensure they comply with the specific requests on their notice.

This heightened review by the state of Texas comes at a time when many states are working to ensure that direct-to-consumer shippers are complying with local regulations. For example, the Michigan Liquor Control Commission is stepping up in response to reports by the Michigan Beer and Wine Wholesalers Association alleging widespread violation of its DtC shipping laws, and the Mississippi Supreme Court recently heard a case regarding stings conducted by the state Alcohol Control Board to catch illegal DtC shippers. 

While Texas is currently the only state to have announced a review of this size, it almost certainly won’t be the last. 

As the Market Grows, So Will Regulator Scrutiny

The Supreme Court’s decision 15 years ago in Granholm v. Heald triggered a wave of wine shipping reforms across the country. Today, 45 states plus the District of Columbia permit DtC shipping, enabling over 90% of Americans to connect directly with their favorite wineries. 

As a result, direct-to-consumer wine shipping has grown from a small, niche market in 2005 into a hugely important channel worth more than $3.2 billion in 2019. According to Sovos ShipCompliant’s annual Direct-to-Consumer Wine Shipping Report, the channel grew by  7.4% percent in value and 4.7% in volume last year as more wineries invested in e-commerce, the average price-per-bottle increased, and Oregon and Washington again outpaced the overall channel in shipment growth, among other trends. 

In many cases, DtC shipping succeeds because it allows smaller wineries access to markets they would struggle to enter if they relied solely on the traditional three-tier system due to their relative size. According to the 2020 Direct-to-Consumer Shipping Report, wineries in the small winery category (5,000 to 49,999 annual case production) again dominated the winery shipping channel in 2019, accounting for 42% of the volume of shipments and 45% of the value of the DtC channel. DTC shipping has emerged as one of the best ways for these smaller producers to reach a national audience. 

This growth also reflects consumer demand across the economy for goods delivered directly to their doorsteps. Apps like Instacart and UberEats have democratized delivery, and consumer expectations for quick and convenient delivery have never been higher. This presents a tremendous opportunity for wine sellers to expand their reach, develop their customer base and increase their sales online. 

The marketplace is also likely to get more competitive in the new decade. In 2019, the Supreme Court paved a path for expanded DtC shipping of wine by retailers in its ruling in Tennessee Wine & Spirits Retailers Association v. Thomas. While only 15 states currently allow some DtC wine shipping by out-of-state retailers, many see this decision as an opportunity to challenge old laws to expand this market. Litigation is ongoing in several states that seemingly discriminate against out-of-state retailers in regards to their ability to ship wine DtC – notably Illinois, Michigan, and Missouri. Much in the same way that Granholm prompted a wave of statutory reform, observers expect consumers and advocates to push legislative changes across the country. While it may take a number of years for these changes to take effect, expanded retail shipping is something everyone should be watching closely. 

In the meantime, regulators have a vested interest in making sure all sellers—whether package stores, direct wine shippers or otherwise—are in compliance with the law. That means ensuring they are properly licensed, collecting all applicable taxes, not overselling to individuals and preventing sales to minors. So if other states see the Texas audits bring positive results, they are likely to follow suit to uncover gaps in their own systems.

Overall, the DtC wine shipping market is still young and regulators are still figuring out how to manage it. As the market grows, we can expect this trend of closer attention being paid to DtC shipping to continue at the state levels, making now the best time for wine producers to firm up their direct-to-consumer compliance processes and overall channel strategy.

Now Is the Time to Ensure Compliance

The risk of audits like those in Texas underscores the importance of closely adhering to the various laws and reporting requirements imposed by states. That the regulations can vary among states only adds to the complexity, whereas failure to comply may result in fines, loss of home state or federal licenses, and even possible criminal charges.

Wineries have a number of ways to handle this. Some are able to build in-house teams that can manage compliance, though this can be expensive. Others rely on outside consultants to manage their compliance needs. But of course, automating compliance processes is the easiest way to ensure audit success, limit compliance risk and reduce the overall administrative burden on shippers as state-by-state tax rules, rates and forms change. 

Shipping wine can be complicated, and compliance will never be a task that anyone relishes. However, as the direct-to-consumer channel grows in its importance to the industry, it’s vital that producers shore up their compliance strategy now before the next round of state audit notices goes out. 

About the Author: Alex Koral, Senior Regulatory Counsel with Sovos

Alex Koral is senior regulatory counsel for Sovos ShipCompliant. He actively researches beverage alcohol regulations and market developments in order to inform development of Sovos’ ShipCompliant product and help educate the industry on compliance issues. Alex has worked with the company since 2015, after receiving his J.D. from the University of Colorado Law School.

Protect Events Hosted at Your Winery with Event Insurance

By now, most winery owners have heard the buzz regarding event insurance.  Sure, you know it exists, but do you really know exactly what event insurance covers and how it can benefit your clients (and you)? Event insurance is a necessity for winery owners looking to keep themselves, and their clients, protected.  We recently talked with Lauren Hernandez, Senior Event Insurance Specialist at Markel Specialty insurance to learn more.

  “It is probably important to first point out that there are two different types of event insurance– event liability and event cancellation,” states Hernandez. 

EVENT LIABILITY INSURANCE

  “Event liability protects the person hosting an event at your facility,” Hernandez explained.  If during their event someone causes property damage to your winery or someone is injured and the host is liable, an event policy will step in to provide coverage.  The coverage is typically primary over any other insurance protection.  That means the event policy will pay first before any other insurance policy.

  Primary liability coverage by event hosts, such as your clients, is preferred by most venues because it helps minimize the associated risks and exposures of owning a winery. “More and more wineries are requiring their clients to purchase one-day event insurance policies for events hosted at their facility because it reduces the possibility of having to pay for an accident that is out of the wineries’ control,” said Markel Specialty’s Lauren Hernandez. 

Wineries must also remember to require the host to name the winery as an Additional Insured on the host’s event policy.  That way, if there is a claim made against your winery due to the actions of the host, the event policy will defend and indemnify you against that claim.  It is also a good idea to require the host’s insurance carrier to be A.M. Best rated “A-” or better.  That way the carrier is financially strong and likely to be around to pay the claim should one occur.

  Examples of claims that would be covered under an event liability policy can range from damage to a furnishings such as couches, mirrors, coffee tables –   even toilets and landscaping from wedding or other event guests.  Event hosts would also be protected if someone slips, falls and gets injured at the facility if the host was negligent.  There are even worse claims that the event host needs protection from when an over-served wedding guest is involved in an auto accident on the way home.  These situations would be covered only if the damage or injury was the fault of your client.  Your business should have your own risk management plan which includes liability coverage to protect you from the hosts wrongdoing.

ADDITIONAL EVENT LIABILITY COVERAGE BENEFITS:

•   Limits vary by insurance carrier, but bodily injury and property damage liability limits typically are up to $1 million per occurrence and $2 million total per policy period.

•   The venue can be named as “additional insured” on the certificate of insurance for no extra cost.

•   Host liquor liability is included for free.

•   Set-up and tear-down is covered (within 24 hours of the event).

•   If the event being held at your facility is a wedding, an event liability policy covers the ceremony, reception and rehearsal dinner (if the rehearsal dinner is within 48 hours of the event).

•   Many policies are primary over any other insurance policy.  This means, if a claim were to occur, the event liability policy would pay out before any other insurance policy and there would be no need to worry about a potential increase in rates with a commercial business policy (as an winery owner) or homeowners policy (as a bride).

•   Protection and peace of mind for a low cost— there are policies available that start as low as $75.

WHY SHOULD YOU REQUIRE EVENT LIABILITY INSURANCE?

  It protects you. One day event insurance policies are typically primary coverage over your commercial business policy for property damage to your facility caused by your client’s negligence. Your facility can be named as an “additional insured” on the certificate of insurance often for no extra cost.

  It protects your customers.  Event insurance is an easy and affordable solution that helps protect your guests from the unexpected – because when your clients are properly protected, so is your reputation.

  It’s an easy solution.  More and more commercial winery insurance policies are requiring one day event insurance for all events hosted at the insured winery.  An event liability policy fulfills this requirement and are easy to purchase and you can direct your client to purchase them online or over the phone in minutes.

EVENT CANCELLATION INSURANCE

  Another popular event insurance option is cancellation coverage.  Being in the event industry, you’ve seen it all. Photographers go missing the day of the event, gifts get stolen, and hurricanes can ruin a perfectly planned event. Event cancellation insurance is becoming increasingly popular because it reimburses the event host for lost deposits and non-refundable amounts if they need to cancel or postpone their special event due to unforeseen circumstances.

  Examples of unforeseen circumstances include:

•   Vendor bankruptcy.

•   Accident or illness of the bride or groom or an immediate family member.

•   Extreme weather (hurricane, named tropical storm, etc.).

•   Military deployment.

•   Event cancellation insurance also covers additional expenses your client may incur to avoid cancelling their event, and pays for other losses or damages such as:

•   Lost wedding rings.

•   Damage to special attire.

•   Vendor no-shows.

•   Lost or damaged photography.

•   Lost or damaged videography.

•   Lost or damaged gifts.

  The pricing for an event cancellation policy is a little more involved as it is based on where the wedding is set to occur and the overall wedding budget. Policies start as low as $130.

Exactly how much event cancellation coverage does each event need?  Look a look at the chart below that outlines coverage limits based on the total overall event budget.

Total Event Budget

$7,500 $15,000 $25,000 $50,000 $100,000
Loss Of Deposits$1,000$1,500$2,000$3,000 $5,500
Photography & Videography$1,000$1,500$2,000 $3,000 $5,500
Special Attire & Jewelry$1,000$1,500$2,000 $3,000 $5,500
Wedding Gifts$1,000$1,500$2,000 $3,000$5,500
Extra Expenses$1,875$3,750$6,250$12,500$25,000
Professional Counseling$500$650$1,000$1,000 $1,250

WHAT ISN’T COVERED UNDER EVENT INSURANCE

  With event insurance, some claims would be hard to disprove.  Because of this, many insurance carriers will exclude covering certain circumstances because of the potential increased risk of insurance fraud.

  Examples of circumstances typically not covered:

•   Change of heart –Typically if either the bride or groom get cold feet and change their mind during the wedding planning process or are at the altar and decide not to go through with the wedding, this would not be covered.

•   Known Circumstances – Previously known issues that could affect the event (Example: planned medical procedure delays or cancels the event).

•   Lack of Funds – if the event host is unable to pay for the planned event.

•   Non Appearance – if certain individuals (such as parents, the bride, etc.) don’t show up for the event, the show must still go on as this would not be covered.  Polies do not cover cold feet if either the bride or groom change their mind during the wedding planning process or at the altar and decide not to go through with the wedding.

START PROTECTING YOUR CLIENTS

  It’s easy to start protecting your clients (and yourself).  Request free brochures from Markel Event Insurance and provide your clients with an easy & affordable option to protect their special event.  Event liability policies start as low as $75 and can be purchased online or over the phone in minutes.  Visit www.markeleventinsurance.com/grapevine to learn more!

Profiling Software Used by the Wine Industry

Photo Courtesy of: VinNOW

By: Becky Garrison

While one can still find wine producers who rely on paper ledgers, Excel spreadsheets and other pen and paper methods to manage their business, wine producers are increasingly turning to technology to help them perform these tasks. The proliferation of software explicitly geared to the wine industry has streamlined how many wineries operate. This software can help winemakers better manage a range of functions starting with regulating environmental conditions in their vineyards to performing a variety of eCommerce functions, as well as helping to enhance the consumers’ experience in their tasting rooms.

Microworks Wine Software

  Microworks Wine Software was formed in 1991 to address the lack of technology servicing the wine industry. Currently, this software includes a suite of tools that help wineries manage their direct-to-consumer sales. The software takes complex tasks and simplifies them for efficiency and accuracy. With Microworks Wine Software, all details of sales, customers and inventory are tracked and reported to management so they can execute informed decisions.

  These tools include visitor center tracking, wine club and eCommerce sales, customers and in-ventory, as well as helping with accounting, fulfillment and alcohol compliance. This software suite allows wineries to manage their retail operations by tracking sales data and then issuing re-ports. Tasting room managers can track visitors and staff, and wine club managers can oversee the wine club and its members. Inventory staff can track products across multiple warehouses while managing wine shipments and pickups, and accounting can track and reconcile all sales and inventory activity with complete audit trails. Additionally, marketing managers can track all customer activity, including which wines consumers buy, when they buy their products, how fre-quently they purchase wines and the channels through which they make these purchases.

  When a wine producer purchases the software, Microworks performs an initial onboarding pro-cess. Then apps can be downloaded by the user on devices through the Microworks website, Ap-ple’s App Store or Google Play. Users can take advantage of Microworks certified training ser-vice—a one-on-one instruction for winery employees that ensures they’ll get the most out of what the software has to offer. Online documentation and tutorials are also available.

  The latest release of Microworks Wine Software’s iPad mobile POS offers an offline mode, so users can now access this software without having to connect online. When the software gets used offline, transaction data is stored and then uploaded to the server when the device is back online. Currently, they are working on an automated email system to simplify and tailor custom-er communications to drive more sales.

Sensaphone

  Sensaphone software complements the hardware that measures temperatures, humidity and other environmental conditions in the vineyard. Since its founding over thirty years ago, Sensaphone has transitioned from having its software utilize traditional alarm auto dialers hooked to phone lines to a cloud-based platform. 

Using this software allows producers to know the exact temperature in the fields, and to be alarmed if the temperatures sink too low. In the case of ice wine producers, it allows them to pro-tect the grapes during cold temperatures.

  This software allows wine producers to see the temperature values of their vineyards in real-time, set high and low alarms, and datalog those values. These features monitor environmentally sensitive assets and can be programmed to send emails or text messages to users when those as-sets are in danger. Also, it offers real-time visibility and the ability to datalog values for a com-parison over time.  

  Sensaphone products are easy to install and program. It is a one time purchase with upgrades in-cluded with the purchase price. Also, they feature an app that allows producers to view data from any mobile device.

VineSpring

  For the past eight years, VineSpring has offered winery eCommerce, allocations and wine club management software designed for wine producers who sell directly to consumers. Through this software, wineries can easily manage their club and allocation offerings, saving administrators time, and providing wine club members with tools that are easy to access. Online tutorials allow wineries to maintain the software on their own.

  VineSpring can connect to many third party programs, and natively supports integrations with MailChimp, ShipCompliant and Square POS. Also, they have partners like WineGlass Marketing that have built powerful integrations, including automatic sync with Quickbooks desktop. Mov-ing forward, they look to expand the options for wine clubs, especially surrounding automatic recurring billing.

VinNOW

  Created in 1999, VinNOW software was specifically designed for wineries to manage customer data and purchase histories, tasting room sales, wine clubs, multiple location inventory tracking and wine production. Wineries can use this software on a single stand-alone computer, a tablet, or on a network multi-point of sale operation. Also, as this software does not require a good in-ternet connection, it works well for those wineries located in regions that do not have reliable internet access.

  The software includes a customer management system, point of sale, wine club automation, eCommerce, inventory management, reporting and order processing with QuickBooks, compli-ance, email and shipping integrations and EMV credit card processing. Also, bulk wine tracking and custom crush billing module are available. When necessary, features are added that respond to industry changes, such as the new California District Tax.

  For those wineries offering wine clubs, the software’s one-step wine club processing includes shipping labels for UPS and FedEx. Also, GSO shipments can be tracked through VinNOW. In addition, the software has options for easy email and postcard marketing campaigns. It also inte-grates with QuickBooks desktop or online versions, web shopping providers, and ShipCompli-ant.

  VinNOW can be self-installed and maintained and includes a comprehensive help database. New customers are encouraged to go through the free training program, so they understand the full capabilities of the software. Customer service is available seven days a week.

Winetracker.co

  Winetracker.co is a wine tasting app launched in 2017 that’s available for iOS and Android, as well as the web browser.

  Users snap photos of the wine they are drinking and then use the app’s four sliders to give their personal opinion on the aroma, taste, finish and overall impression of the wine. The app then auto-generates a wine expert score (50 to 100 points) based on these four sliders. Optionally, the user can use “TouchTags” to describe the unique elements they detect in the wine. As they continue using the app, they end up with a visual history of the wines they drink, similar to a “Pinterest for wine.”

  The second primary feature of this app is a multi-person, real-time experience called Group Tasting. Anyone hosting a tasting event, whether a winery, event planner or party host, can create a tasting list ahead of time. At the event, attendees can collaboratively taste the wines together through the app. They can see each other’s wine scores and comments popping up on the screen in real-time. Also, there’s an optional Blind Tasting mode for the Group Tasting feature.

  According to Tony Jacobson, Founder of Winetracker.co, wineries who use the Group Tasting feature increase their wine sales. He ascribes this to the fact that when people taste wines with Winetracker.co, it causes a fuller engagement with each wine they sample. “When they are pondering the aroma, taste and finish of a wine, they get a much better sense of how much they like or don’t like it. This creates a deeper connection with the wine they’re drinking.” Winetracker.co is willing to schedule one-on-one consultations with wineries and event planners to help guide them through the process of creating Group Tasting events.

  In the future, the company plans to launch tasting groups similar to Facebook groups, where us-ers can join and automatically be notified whenever someone adds new wine scores. These groups can be public or private. Also, they plan on adding the ability for users to follow individ-ual people on Winetracker.co. Along those lines, users can automatically receive notifications whenever people they follow taste a new wine. Winetracker.co is also looking to enable wineries to have conversation threads or email conversations with the people who participate in their tast-ing events.

  As technology continues to evolve, expect to see these software companies continue evolving to meet the needs of 21st-century wine producers.

Tariffs and the Industry: Impacts of the Trade War on Wine, Beer & Spirits

By: Jessica Spengler

Throughout 2018, the Trump administration’s implementation of tariffs on several foreign goods, and the retaliatory tariffs that followed suit have confused markets and worried many businesses. The alcohol industry—wine, beer, spirits and those who support them—have all been affected in some way by these tariffs, or expect to be in 2019 if they continue. With the news on tariffs changing almost monthly, it can be hard to keep up, which causes further insecurity for the industry.

Timeline of Events

  Trade tensions began in January 2018 when the Trump administration imposed tariffs on solar cells and washing machines after a report stating that imports were hurting the domestic U.S. market in those businesses.

  On March 8, 2018, President Trump announced a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum to take effect on March 23. At this time, Canada and Mexico were granted an exemption pending talks to renegotiate NAFTA. After threats from the EU to impose retaliatory tariffs, the administration allowed exemptions for the EU, South Korea, Brazil, Argentina, and Australia through May 1, which would eventually extend to June 1.

  On April 2, China imposed tariffs ranging from 15-25 percent on various U.S. products, including fruit, wine, whiskey, and other products totaling approximately 3 billion U.S. dollars.

  On June 1, exemptions from the steel and aluminum tariffs ended for the EU, Canada and Mexico. Argentina and Brazil struck deals with the Trump administration limiting the quantities of steel and aluminum they ship to the U.S., while Australia negotiated for no trade restrictions.

  In retaliation, on June 22, the EU imposed tariffs on $3.2 billion of U.S. products, including a 25 percent tariff on Bourbon and whiskey. Then, on July 1, Canada also imposed retaliatory tariffs on $12.8 billion in U.S. products including 25 percent on steel, and 10 percent on aluminum and whiskey. In addition, Mexico implemented a 25 percent tariff on Tennessee whiskey.

  After talks with China failed in May, the first phase of the trade war occurs in mid-June, with the Trump administration announcing it will enact a 25 percent tariff on $50 billion more in Chinese goods. Beijing retaliated, placing more tariffs on $50 billion in U.S. products.

  In September, President Trump announced another 10 percent tariff on $200 billion more in Chinese products, that he planned to increase to 25 percent at the beginning of 2019. These tariffs impacted manufacturers of fermentation tanks outside of the U.S.

  On September 30, a compromised was made between the U.S. and Canada for an updated NAFTA. Mexico and the U.S. had already come to an agreement by this point, and so the new agreement, called by the Trump administration the United States-Mexico-Canada Agreement, or USMCA, would be signed by the three leaders at the end of November. Mexican and Canadian governments were both hopeful that tariffs would end before signing.

  In November, President Trump and President Xi Jinping of China both showed interest in coming to a compromise, ending a tense few months of escalation.

  On November 30, 2018, President Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto signed the USMCA in Buenos Aires on the first day of the G-20 summit in Buenos Aires without any agreement to end the tariffs. At the time of publication, talks to alleviate tariffs with Mexico and Canada but implement quotas are in progress, but no deal has been reached.

  On December 2, 2018, at a dinner between President Trump and President Xi, they agreed to a truce, putting a stop to any further tariffs for 90 days to give the two countries time to come to an agreement. At the time of publication, Robert Lighthizer is leading negotiations, but no deal has yet been made.

Effects to the U.S. Wine, Beer, and Spirits Industries

Wine

  China has been a growing market for American wine for nearly 20 years. The market has increased almost 1200 percent since 2001 despite an already steep tax of 54 percent on imported wine. China’s retaliatory tariffs threatened to stop that growth in its tracks if the tariffs continue. After two rounds of tariffs on wine, the first in April at 15 percent and the second in September at 10 percent, the current taxes and tariffs for U.S. wine going into China is 79 percent. That percentage is quite unsettling for winemakers who have a market stake in China, particularly if no agreement is reached and the current truce ends.

  Igor Sill, owner of Sill Family Vineyards, told The Grapevine Magazine in an email: “Yes, I’ve been very concerned over the latest exchanges between U.S. and China trade given that we are already being penalized with a 15 percent tariff. The newest retaliation from China to our steel and aluminum trade policies will add 25 percent to that existing tariff, essentially pricing me out of the China marketplace. It’s a real shame, frustration, and disappointment as we have nothing to do with manufacturing and construction materials, but yet are hit with this inability to compete in China’s luxury wine sector against other imported wines. I really pray that the trade dispute with China is resolved equitably and quickly. At $185 per bottle, my Chinese customer would need to pay some $275 per bottle to enjoy our wines. That would greatly reduce China sales for us.”

This reduction is particularly disappointing for Sill Family Vineyards, winners of the China Spirits and Wine Associations’ 2018 Wine of the Year for their 2015 Napa Atlas Peak Cabernet Sauvignon, as well as the coveted Double Gold Medal for excellence.

  “We’ve been focused on sales and distribution to the China marketplace since 2014.  It’s a huge market that appreciates the quality of exceptional fine wines and, specifically, they have grown their appreciation for Napa Cabernet Sauvignon by some 10-12 percent each year.  When you have some 1.5 billion people in China, those consumption numbers are more than substantial to someone like us—a small, family producer of limited production, high-end wines, crafting a mere 800 cases of wine per year.”

  Sill planned to increase the percentage of his business in China from four percent to eight in 2018 and with a 15-20 percent increase annually through 2023.

  “These plans have since changed,” said Sill. They now plan to refocus on the U.S. market, concentrating on high-volume wine consuming states such as Texas, New York, New Jersey, California, Illinois and Florida.

  If the tariffs continue, pushing Sill and other California wineries out of the Chinese market and back into the U.S., it could cause problems for lesser known wines.

  “If these California wineries decide to curb sending that wine into China, the wine needs to be sold somewhere, and it could come back here to the United States, which could lead to more competition for shelf space and storage with other state wine industries,” said Michael Kaiser, Vice President of trade group, Wine America.

  However, Kaiser said, despite the high tariffs that threaten to increase, even more, it doesn’t appear other California wineries are following Sill out of China.

 “The exports to China from the U.S. are up 18 percent this year so far. It’s still increasing. I think it was the number fifth-highest market last year for U.S. wine. About $80 million worth of U.S. wine was sent into China last year. So, it doesn’t appear that the tariffs are compelling people not to export their wine to China. I think that it shows how valuable a market it is that people are willing to pay these new tariffs on their wine going into that market,” said Kaiser.

  That doesn’t mean that there hasn’t been an effect, said Kaiser. The impact will be more apparent after the new year. “It’s hard to really quantify because [the tariffs] haven’t really been around that long, but we’ll have to look and see what it’s like in January and February when we have the numbers for the year,” he said.

Beer

  For many in the brewing industry, what should have been a banner year of expansion and growth ended up as something much different. In December 2017, Congress lowered the federal excise tax from $7/barrel on the first 60,000 barrels for domestic brewers producing less than two million barrels annually, to $3.50/barrel. For imports and domestic brewers producing over two million barrels annually, barrel costs were reduced from $18/barrel to $16/barrel on the first six million barrels. The tax cut opened up staffing and expansion opportunities that excited many brewers.

  “Then a few months later, unfortunately, the Trump administration imposed a 10 percent tariff on aluminum, which raised costs for brewers,” said Jim McGreevy, President and CEO of The Beer Institute, the oldest beer trade organization in the U.S.

  “We’re seeing an impact to the industry and brewers big and small. We estimate that the tariffs are a $347 million tax on beer. I told you about that tax relief we received in December—that was roughly $130 million of tax relief for beer. So, we received $130 million tax relief in December, and in March we received a $347 million tax increase. This is definitely affecting the industry as a whole.”

  The tariff on imported aluminum contributed to the rising prices of cans – in a time when more breweries than ever are embracing use of 12 and 20 ounces cans, as well as the to-go style “crowler.” The extra cost can severely affect the bottom line.

  “Aluminum is the single biggest input cost for beer brewers. Of the 6,000 or more breweries in this country, you see more and more distributing their beer, and you see more and more putting their beer in aluminum cans and aluminum bottles. So this is a major input cost for beer brewers, big and small. That 10 percent tariff affected beer brewers because a large portion of aluminum used to put beer in comes from outside the country,” said McGreevy.

  It doesn’t seem to matter where or how a brewer buys their aluminum either.

  “One large brewer announced a few months ago that this was a $40 million cost to them every year. We’ve had small brewers who are members of ours—even small brewers who are not members of the Beer Institute—tell us that their aluminum costs are going up, even if they get their aluminum from a broker. This is affecting the price of aluminum up and down the chain, no matter how you get the aluminum, whether you have long-standing contracts with aluminum providers, or you’re a smaller brewer, and you’re getting your aluminum from a broker,” said McGreevy.

Bourbon and Other Spirits

  The U.S. Bourbon industry is hit hardest in the EU where retaliatory tariffs of 25 percent threaten to stifle what has been, over the last few years, a booming industry. Eric Gregory, President of the Kentucky Distillers’ Association, a non-profit trade association founded in 1880, told The Grapevine Magazine that Kentucky Bourbon is an $8.5 billion industry with the state, employing 17,500 Kentuckians with a payroll of over $800 million. Bourbon distillers contribute $815 million each year in local, state, and federal taxes, with much of their local and state taxes going to fund education.

  According to Gregory, Bourbon has remained relatively safe thanks to the foresight of larger distillers. “So far, and I say that with a word of caution, we have not had that much of a dramatic impact. The reason is mainly two-fold: a lot of the smaller craft distilleries really haven’t gotten into the export market yet—they’re barely able to produce enough product just for the regional market at best. The bigger distilleries that have the global distribution network and who are expanding at rapid rates, mainly to meet that global demand, most of them had the ability to stockpile product overseas before the tariffs hit. From every indication I’ve been told, that is carrying them through until about the first of the year,” said Gregory.

  However, after the stockpile dwindles, prices will likely go up, and Gregory said that will likely keep Bourbon from continuing its uptick as a serious contender on the world stage.

  “I don’t think you can find a better example of free and fair trade than Kentucky Bourbon in the last 20 years. We have grown exponentially. In 1999, just a couple years after the tariffs, NAFTA and the free trade pact with the EU took effect, as a state we only produced 455,000 barrels of bourbon. Last year we produced 1.7 million barrels of bourbon. Much of that is going to the global exports. [We’ve been able to] put ourselves on a level playing field with our friends in the Scotch industry and other great whiskey markets. We’ve been able to convert drinkers to Kentucky Bourbon, and if we have a problem with competing on the shelves and prices, then we can lose some of those converts who might look at what they used to drink, and it’s less expensive, and they’ll start drinking that again. At that point, if we’ve lost them, we might have lost them for a generation,” Gregory said.

  Bourbon distillers can choose to absorb the cost of the tariffs, which hurts the local economy as a whole. “That’s less money and profits coming back to your companies, which means less investment in Kentucky, fewer jobs, and we don’t like that either,” said Gregory. “In Kentucky, with Bourbon being such an economic driver, both from jobs to tourism, we are just now starting to ratchet up production and tourism opportunities, and it’s really like throwing a wet blanket on a booming industry.”

  What worries Gregory the most, is the long-term effects that the tariffs may have within the Bourbon industry and on Kentucky. “Worst case scenario, you get to a price war, where there’s an abundance of Bourbon on the market, and that drops down prices, and that significantly harms our smaller craft distillers. They’re just now trying to survive in this market,” he said. “Even worse, worst-case scenario, if distillers start to produce less Kentucky Bourbon, which has a dramatic ripple effect across the Kentucky economy, and not only means fewer jobs and less investment, but we are the only place in the world that taxes aging barrels of spirits. So if you’re enjoying an 18-year-old bottle of Kentucky Bourbon, it’s been taxed 18 times, and the great majority of that tax revenue goes back to fund local schools. If for whatever reason we get to the point where we’re producing less, then, it can ultimately hurt education and other public health and safety programs here in Kentucky.”

  Other spirit producers have lost contracts, been forced to lower price points in other countries, and had to adjust future growth projections due to the tariffs, American Craft Spirits Association Executive Director Margie Lehrman told The Grapevine Magazine.

  “I’ve had distillers tell me that they had contracts on their desk ready to be signed for export to China, for instance, and those contracts got ripped up. It’s just simply off the table,” she said. “I’ve had other distillers tell me that they had actual product on freight going over to Great Britain, where they were told by the importer, ‘If you want us to off-load your freight, your price point has to drop down to this.’ I had one distiller tell me they had estimated over 30 percent of their business [would go to] export sales and because of the tariffs, they needed to knock that down to 15 percent, which is really significant for these small businesses.”

Suppliers

  Some industry suppliers who manufacture their equipment anywhere other than the U.S. were hit by the second round of tariffs in September. This tariff affects manufacturers of stainless steel fermentation tanks, such as William Cover’s company, Fermenters Choice Stainless Ltd. They import stainless steel fermentation and storage tanks for wineries, brewing and industrial purposes;  manufacturing their tanks in China, and then shipping them to the U.S. and Canada. Because of this, their fermentation tanks were hit with a 10 percent tariff in September, and, if the talks between the U.S. and China fall through, could increase to 25 percent in early March 2019. Cover only recently expanded into the U.S. in 2017. Previously he’d serviced only Canada.

  Cover told The Grapevine Magazine that right now he cannot compete with American made tanks, but he believes that once stocks of pre-tariff steel deplete and manufacturers begin buying more expensive U.S. steel, he may see a swing back in his direction, though, at a higher price.

  “There are also tariffs on imported stainless steel–the raw stock used by U.S. based tank manufacturers to make tanks. So once their current inventory of stock and their costs and final product cost is likely to increase as well. That should make my price competitive again, although at a higher final cost to the winery and brewery than before,” said Cover.

  For now, Cover looks to markets other than the U.S., a move he believes many other manufacturers will make. “The products produced in countries like China now need to find another market. There will likely be a reduction in their export price. I am now expanding my business to South America – there are large wine producing regions in Chile and Argentina. This is an example of the consequences of tariffs– other countries will buy less expensive products, decrease their costs and increase their market share.  These new tariffs will contribute to lower cost, foreign growth in the wine industry,” he said.

  Imported brewing equipment such as bright tanks have remained mostly unaffected by the tariffs but already carried a four percent tax before the trade war.

Restaurants and Retailers

  For restaurants and retailers, the tariffs affect the bottom line when their alcohol suppliers—breweries, wineries and distilleries—increase prices due to rising production costs. Justin Shedelbower,  Communications Director at the American Beverage Institute, a trade organization that represents restaurant chains that sell alcohol, told The Grapevine Magazine what happens when these price hikes flow downward.

  “For an industry such as the beer industry, that uses a lot of aluminum, [the aluminum tariff] increases the production cost significantly, which forces them to raise the price of their products. That price increase rolls downhill to the consumer and restaurant level,” said Shedelbower. “Once you get to the restaurant, it’s higher priced beer. The restaurant has two choices. They can either keep their prices the same and eat that extra cost, reducing their profit margins, or they can increase the price they sell to their customers with, and that just ends up reducing sales. If something costs more, people buy less of it.”

 Reduced sales lead to reduced profits, which may lead to canceling plans for future expansion or cutting staff.

  “Many of these restaurants already have slim profit margins as it is. When profit margins are eaten away further by either taking on the costs of these tariffs or just not selling as much because the prices are higher, it just eats away at it further. So now they don’t have this extra cash on hand, whether maybe they were planning on expanding, so maybe now they can’t expand or hire the additional employees that they needed. Or it can induce layoffs,” said Shedelbower.

A Possible Solution in the Works

  With the signing of the USMCA and the 90-day truce with China, it’s possible that the worst is over, and the world will soon see a return to normal trade routines. Reactions to these events are encouraging to both trade organizations and producers; however, there is still plenty of work to do.

  “We were pleased to see there will be a pause in any tariffs for at least 90 days. We will continue to let Congress know about our feelings on the tariffs. What it means, in the long run, is anyone’s guess,” said WineAmerica’s Kaiser.

  “The signing of the USMCA is definitely a step in the right direction and will help alleviate tensions between the three countries. However, the tariffs on imported steel and aluminum still remain—an elephant in the room that needs to be addressed. The U.S. imposed tariffs, and the subsequent retaliatory trade penalties continue to threaten the hospitality and alcohol industries with higher operation and production costs, as well as induce growing challenges for accessing foreign markets,” ABI’s Shedelbower told us.

  “We hope lawmakers require the administration to end tariffs as a condition of support for the United States-Mexico-Canada Agreement. In our eyes, the deal is incomplete until the administration eliminates all steel and aluminum tariffs,” The Beer Institute’s McGreevy said.

  Cover of Fermenter’s Choice is happy about the truce, but he thinks a deal will take into account the changes the tariffs made to the market. “It remains to be seen how long it will take to remove them altogether. I don’t expect that to happen quickly as the American companies that ramped up production of steel and other commodities—reopening old plants, hiring new workers, etc., will lobby hard for some time to recoup their investment. It’s not fair to them to remove the tariffs so quickly—and a bad political move for Trump. I would expect the second tariff to come off after a few months, but the first tariff could be a year or longer.”

  Igor Sill is relieved, not only for himself but for the positive impact a deal could have on both the Chinese and U.S. financial markets. “China’s financial market has been severely depressed since Trump announced his policy’s intention, and of course, we’ve seen Wall Street’s, and the global stock markets drop as well. With today’s “truce” announcement I sense that wiser minds will prevail and an equitable resolution, i.e., no tariff, or considerably lower tariffs will salvage the global economic markets and my ability to sell our wines into China. Overall, I’m much more optimistic now.”

WINERIES and the HOLIDAYS: Inseparable Partners in Making the Season Merry

By: Cheryl Gray

With the holiday season comes infinite ways to celebrate the fruit of vineyards from coast-to-coast. Wineries and tasting rooms across the U.S. count the time between Thanksgiving and New Year’s to be amongst their busiest and, in some cases, amongst their most profitable. Moreover, ancillary businesses, including hotels, inns, restaurants and special events venues, benefit from creative partnerships with local wineries during the holidays.

Walter Clore Wine & Culinary Center

  The Walter Clore Wine & Culinary Center stays open year-round and features Washington wines in its tasting room and during special events. The space was named for the man whose years of scientific research established Washington state as the second-largest premium wine producer in the country. According to the Center, Washington’s wine industry contributes approximately $14.9 billion to the U.S. economy and supports an estimated 27,000 jobs. Those numbers underscore why the holidays are an important component of marketing the state’s wine producers and grape growers.

  The Clore Center showcases Washington’s wine industry, as well as the science of enology, through a combination of educational, experiential and entertainment activities. Its holiday events kick off just before Thanksgiving, featuring established and up-and-coming Yakima Valley wineries. On Saturdays throughout November and December, several Yakima Valley winemakers will be pouring at the Center’s “Meet the Makers” event with the pertinent theme, “Thanksgiving in Wine Country.” In December, the Center will feature sparkling wines from Washington’s Columbia Gorge. 

  The Center’s holiday events will also include classes every Saturday in November and the first two Saturdays in December, according to Deb Carter, the Clore Center’s Wine and Culinary Program Director. That might, for example, include a cooking class from a local master chef on how to pair local wines with farm-to-table meals using local produce.

  In addition to educational classes, the venue rents out space during the holidays for corporate gatherings, parties and other holiday-centered outings, many of which choose to feature local wines.

  Wineries, tasting rooms, restaurants and others vested in promoting Yakima Valley wine during the holidays are, at the same time, raising money for a charitable cause—fighting hunger. “Thanksgiving in Wine Country,” will benefit Northwest Harvest and kicks off during Thanksgiving weekend. The event also allows visitors to take advantage of deals on wines and related products.

Milbrandt Vineyards

  Other Yakima Valley December events include Prosser, Washington-based Milbrandt Vineyards’ “Holiday Flights and Bites,” featuring holiday wines and food pairings with live entertainment.

  “The holidays are key for us because customers tend to purchase more of our higher tier wines like our Reserves, especially if they are buying wine as gifts,” says Milbrandt Vineyard’s Tasting Room Manager, Karen Ballew. “This holiday season is particularly special because we will be releasing our ‘Bottle Your Charity’ Sparkling Rosé with the winning charity’s mission featured on the back of the bottle. Direct donations from wine sales go to the charity.”

  One of Millbrandt’s holiday marketing strategies, says Ballew, is a play on words derived from a holiday favorite, Twelve Days of Christmas. “We will be bringing back our 12 Days of Deals, an online campaign we ran during the holidays that was incredibly successful the last couple of years. We will also be launching our Cyber Monday campaign where customers can get up to 40% off certain cases of wine.”

  As for partnering with local businesses, Ballew says Millbrandt favors specialty food shops, whose treats pair well with Milbrandt wines. “We partner with a few local business, most notably Jade’s British Girl Treats,” she says. “Jade’s is a local bakery/chocolate/sandwich shop in Prosser. They just opened a few months ago in downtown. They handle catering for our events and also cater our small plate menu that we offer in the tasting room daily.

  We also feature for sale a small selection of Chukar Cherries that are specifically paired with some of our wines. Another partnership is with Wine Country RV Park. We pour at their evening tastings about once a month during their peak season. They promote our events on their emails and on the TV in their retail shop.”

Tourism on the 45th Parallel

  Hotels and inns tied to wineries have a unique focus on the holidays. In Northern Michigan, wineries and tasting rooms dot the landscape along the same 45th parallel as Washington’s wine region. Among them is the internationally renowned Black Star Farms, a family-owned enterprise known for, among other products, its signature ‘Pear in a Bottle’ wine. 

  Black Star Farms provides a backdrop for holiday-inspired events, such as snowshoeing on its vast grounds and cooking classes that teach guests how to pair wines with various cuisines. Its most notable event, however, is the annual New Year’s Eve Wine Dinner, a formal occasion featuring a multi-course meal paired with wines produced by Black Star Farms. The event is popular enough that tickets go on sale beginning in early fall. Sherri Campbell Fenton, whose parents, Kerm and Sallie Campbell, established Black Star Farms in 1998, is managing proprietor. She told The Grapevine Magazine that the holidays are, indeed, big business. 

  “The holidays are a key time for Black Star Farms, for both holiday wine sales and the hospitality side of our business,” says Campbell Fenton. “Obviously, wine sales are strong for gifting and parties. We have a luxurious 10 room inn on our 160-acre property, which is a favorite for guests as a quiet, romantic escape, especially during the winter when blanketed in snow. We also host holiday corporate wine paired dinners as well as private or family gatherings. Holidays are a strong time for these. Many times, gift certificates are purchased for wine sales or inn stays during the holidays, as a gift of Black Star Farms is a very special one for anybody.”  

  At Washington’s end of the 45th parallel, there’s the Hotel Maison, a landmark in downtown Yakima, listed on the National Register of Historic Places. The hotel’s holiday offerings include a package featuring Yakima’s annual “Sip, Stroll & Stay.” This promotional event features a downtown stroll with food, entertainment, and, at the end of the evening, an opportunity to overnight at the historic Maison, built in 1911 by Yakima Freemasons. Guests receive their choice of a bottle of wine, cider or beer delivered to their room. In addition to hosting wine tastings with local sommeliers, Hotel Maison does its part to promote wineries during Yakima Valley’s ‘Thanksgiving in Wine Country.’ They feature an overnight package that includes a bottle of Yakima Valley wine and a gourmet cheese board delivered to guests.   

  A quieter holiday respite can be found at Washington’s Cozy Rose Inn, an acclaimed bed and breakfast owned by husband and wife Mark and Jennie Jackson in Yakima Valley’s Grandview area. The Jacksons have relied upon friendships with local wineries over the past 27 years, which keeps guest referrals coming in both directions. Having a great location, Mark Jackson says, goes a long way. “Guests come to the Valley for the sunshine and wine. We’re just in a prime location, being in the middle of Yakima Valley. They taste on their way down the Valley, stay here, eat dinner, and the next morning, they’re off to Red Mountain and Prosser Wineries.”

  In addition to its chef-inspired gourmet breakfast, during the holidays the Cozy Rose Inn offers guests staying at least two nights a candlelit dinner for two, which includes a bottle from one of the region’s wineries.

Holiday Food Pairing

  Foodies looking for a Southwestern flavor to pair with Washington wines during the holidays turn to Los Hernandez Tamales, another family-owned business in Yakima Valley. They tout an authentic family recipe, combining it with local, Washington state ingredients, including the state’s bountiful asparagus crop. Rachel Wilburn, whose father, Felipe Hernandez, started the business in 1990, says the holidays are tremendously hectic for the Hernandez clan.  

  “Tamales are traditionally a holiday season food. Christmas, in particular, is the busiest time for them. We open early, and everyone gets tamales with or without an order. We usually have 400 to 600 dozen in pre-orders, but we sell 1,000 dozens (12,000 single tamales) by the end of the day, all made by hand.” Wilburn says that Los Hernandez Tamales is also called upon all over Washington to participate in events that pair their famous tamales with regional wines.

  Gingerbread co-stars with wines at Desert Wind Winery, which supports a local charity through its annual “Gingerbread Build Off.” This holiday-themed event, held in November, draws professional bakers from throughout the Yakima Valley region.  Wine barrels serve as the background for gingerbread creations large and small in a winery whose Southwestern style architecture belies its Washington state location. 

  It’s not difficult to see how the holidays bring out the best in wineries and related industries across the United States. From charitable giving to savvy marketing, synergy builds between businesses that understand the value of partnerships during the holiday season.