Tariffs, Tariffs, and More Tariffs

By Dan Minutillo, Esq.

Toward the end of this week, take a minute to add up and total the amount of US tariffs imposed on Chinese goods imported into the US. You can glean this data from online aggregated digital news, television news, or from US Government pronouncements about Trump tariffs.

I would be very surprised if the number does not exceed hundreds of billions of US dollars encompassing about half of all Chinese manufactured goods entering the US. The public comment period for most US-China tariffs to be imposed to date ended this past Friday so that such tariffs can be imposed by the US Government and will either be at 25% or 10% depending on the Chinese manufactured product.

China and the US, up to this point, have enjoyed a robust trading partner experience. China is the most active trading partner with the US at about $500 billion of Chinese goods sold to the US last year. These US-China tariffs to be imposed on our most active trading partner are meant to hurt the Chinese economy for alleged unfair trade practices, misappropriating US intellectual property, and generally misbehaving in the world of international trade to the detriment of the US. China has threatened to match and retaliate against the US with equal trade sanctions on US products.

Options

US companies have four (4) primary options to avoid these Trump lead tariffs on imported Chinese goods:

  1. Find a supplier and manufacturer other than China for the goods;
  2. Pay the tariff as the importer of record;
  3. File for a US Customs classification arguing that these tariffs do not apply to its goods imported from China; or
  4. Apply for exclusion from these tariffs.

Context

For context, the exporter of record is the company or individual who is listed on export documentation as the person or entity moving product from country “A” to country “B”. The country of export is the place which the product moved from.

A product could be subject to a US-China tariff even though the product was not exported from China. Products manufactured in China (made in China) are subject to the Trump tariffs even if those products took a circuitous route to reach the shores of the US.

The importer of record is responsible for paying these Trump tariffs on Chinese goods. The importer of record is usually the buyer or distributor of the imported goods, so, 1 through 4 noted above are options for the importer of Chinese goods, that is for the US company importing Chinese goods into the US.

If the US importer decides on option 2, that is to pay the tariff as the importer of record; then it has two primary options:

  1. To absorb the cost of the tariff thereby cutting into profits; or
  2. To increase the price of the product subject to the tariff and pass this increase, either in full or in part, onto its customers thereby risking market share.

USHTS Codes

How do you determine if a product is subject to Trump’s US-China tariff?

This is where it gets a bit tricky. The “Lists” of products subject to US tariffs on China’s products are categorized by the United States Harmonized Tariff Schedule (USHTS) code system. This system categorizes products by product type and then provides multiple subcategories with further particular specified descriptions. The object is first to find the general product category on the USHTS code schedule and then continue to drill down to subcategories on this schedule until a full description of the subject product is found.

A clear, simple and definite example of a USHTS code is for laptop computers which fit into USHTS 8471.30.01.00 as automatic data processing machines that are portable, with certain weight restrictions. This USHTS code categorization is easy.

However many of the USHTS categories are confusing, to understate. For example, run a web search for “Clocks and Watches US HTS Code” and then compare the HTS data and codes that appear relating to a watch which you own then try to determine the exact US HTS code for that watch. This exercise will give you an idea about how difficult it could be to determine USHTS code and then to determine if a product is covered on one of the US-China tariff lists with high US tariff ramifications based on the USHTS code.

Requesting a Customs Classification

If a company is not sure where their product fits in the USHTS Code classification system, it can submit a description of the subject product with backup data requesting that US Customs provide an HTS classification for that product. US Customs will evaluate the information provided and assign a USHTS Code for that product. The company then merely looks at the USHTS Code table and the applicable US-China tariff lists to determine the applicable tariff amount, if any, for that product.

Requesting an Exclusion

If it appears that the product is subject to the Trump US-China tariff, the US Government has established certain procedures in the event a company believes that its product should be excluded from the US-China tariff. In order to qualify for such exclusion, in addition to following the procedures outlined in the Government’s pronouncements about exclusions, the company must prove that:

  1. The product is only available in China; or
  2. The duties imposed would cause “severe economic harm;” to the company; or
  3. The product is not strategically important to China or related to Chinese industrial programs including, in particular, the Chinese program “Made in China 2025.”

As noted, the US Government has instituted an avenue for clarification of the HTS code for a product and an avenue to request exclusion if a product appears on one of the US-China import tariff lists. Neither avenue might satisfy the company struggling to pay or “pass on” a high US-China tariff to its customers, but at least these avenues provide an opportunity for relief.

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Dan has practiced law in Silicon Valley since 1977. The Firm’s practice is limited to regulatory law, government contract law, and international trade law matters. Dan has received the prestigious “Silicon Valley Service Provider of the Year” award as voted by influential attorneys in Silicon Valley.He has represented many very large global companies and he has worked on the massive US Government SETI (Search for Extra Terrestrial Intelligence) project as well as FOEKE (worldwide nuclear plant design certification), the Olympic Games, the first Obama town hall worldwide webinar, among other leading worldwide projects.

Dan has lectured to the World Trade Association, has taught law for UCLA, Santa Clara University Law School and their MBA program, lectured to the NPMA at Stanford University, and for the University of Texas School of Law.

Dan has lectured to various National and regional attorney associations about Government contract and international trade law matters. He has provided input to the US Government regarding the structure of regulations relating to encryption (cybersecurity). He has been interviewed about international law by the Washington Post, Reuters and other newspapers.

He is the author of four books unrelated to law, one of which was a best seller for the publisher, and of dozens of legal articles published in periodicals, technical and university journals distributed throughout the world. He serves as an expert witness in United States Federal Court regarding his area of expertise.

MINUTILLO’s e-newsletter and all of its content is provided for information and very general purposes only. It is not intended to provide or offer any specific or general legal advice, or to create an attorney-client relationship. Before acting or relying on any information provided in this e-newsletter, consult an attorney who is an expert in the appropriate field of law.

Copyright © 2018 Minutillo, APLC, All rights reserved.

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Website: www.minutillolaw.com

A Step Inside the Wine Library

By April Ingram

The Wine Library and Vinotheque at the University of British Columbia (UBC) campus in Vancouver, Canada are probably unlike any library you’ve ever ventured. There isn’t a stern librarian asking you to “shhh” while glaring over her glasses at you – although, there are few glasses on hand. This is a Wine Library, where row after row of bottles of wine sit, quietly aging, all in the name of advancing wine science. Unlike the other University libraries on campus, it is not open to the public, and you won’t be able to check-out or borrow anything from it, but if you have some fine wine you’d like to lend, you can certainly check it in, and they will even give you a tax receipt for your contribution.

The UBC Wine Library has the capacity to hold upward of 22,000 bottles of wine, and the Vinotheque section houses up to 8000 bottles of the worlds most excellent wines.  The Library currently contains approximately 5000 bottles in its collection and is operating under the careful guidance of Murray B. Isman, Ph.D. FESA FRES, Dean Emeritus and Interim Director of the Wine Research Centre.

The Wine Library was initially established in 2002 by Founding Director Hennie van Vuuren as a research initiative to determine which grape varietals will do best in which micro-climatic areas in British Columbia (BC) and determine how wines produced in the region age. Initially housed in an old storage room in the basement of the Nutritional Science Building, the library now hides behind a beautiful oak door with carefully controlled temperature and humidity, secured by an elaborate security system. The facility is part of the Faculty of Land and Food Systems, Wine Research Centre (WRC) and is the second of its kind in Canada (the first at Brock University in Eastern Canada, also founded by van Vuuren). A donation from Mission Hill Family Vineyards, a Kelowna, BC winery, allowed for a tasting room to be built for the library. Perhaps more libraries should incorporate a wine tasting room.

Once the facility was built, the challenge became how to fill the library’s stacks. The early research collection included young wines produced in BC from 1998-2006 from 18 different BC wineries. Each winery donated 24 bottles of wines selected for the study. The wines were aged under precise temperature and humidity-controlled conditions. Time and chemical reactions can augment imperfections in wine, so the original research planned to open each bottle eventually, taste the wine, and chemically analyze it by gas chromatography-mass spectrometry and liquid chromatography-mass spectrometry over decades. The analysis was intended to help BC vintners and growers improve their growing techniques and better compete in the international marketplace by providing details related to quality and aging of wines from different microclimatic regions.

At the time the Library was established, little was known about BC wine’s ability to age, as the vines and the wine industry in the region were relatively young. Van Vuuren hoped that the knowledge gained from the aging study would deliver science-based principles to the growers to help them find the right sites to plant specific grape varietals and maximize the Okanagan Valley’s potential to produce outstanding cool climate wines. Things have changed significantly over the past 20 years. The Okanagan wine region now includes hundreds of renowned wineries, is now established on an international level, and receiving awards and accolades from around the world.

All wines have been donated by vintners or private collectors, including some very special bottles of wine. The local wine industry responded exceptionally well to the call to contribute their vintages and provide financial contributions to establish and set-up the wine library. Contributing wineries in the area included Burrowing Owl Estate Winery, Calona Vineyards, Gray Monk Estate Winery, and Tinhorn Creek Winery.

Donations from private collectors have been incredibly valuable and are always welcomed.  Donating can be attractive to collectors for a variety of reasons. Some collectors have accumulated many special vintages over decades and are looking to pare down or trade out bottles from the collection and keep a select few for extra special occasions. In Canada, an individual would have to report any funds from selling wine as revenue, or capital gains and pay 20 percent tax on that money. Additionally, the provincial liquor control board requires a 10 percent cut on any alcohol sold, leaving the seller with 70 percent of their original value. By donating the wine, the donor is given a tax credit for the full appraised value of the wine, as if they had made a cash donation to the University. The winery and private donors tend to be wine connoisseurs with a keen interest in advancing a deeper understanding of the characteristics and composition of excellent wines.

As the region became more established and the vines and knowledge of the winemakers matured and evolved, so has the vision and focus of the Wine Library. The donated wine is now less likely to undergo chemical analysis or be tasted as part of training for winemaking because the small amount needed for any research study would waste an entire bottle of an already established, magnificent wine. These fine wines are a unique asset to the Wine Research Centre and can be leveraged into funding of new and ongoing research projects. The collection includes French, Californian and other fine wines, including Bordeaux first growths dating back to 1945.  The UBC Wine Library is becoming less of a hidden secret in the basement of a campus building. The library and tasting room have hosted dignitaries and special guests in the beautiful space. The full-service kitchen on the floor above has allowed for very special dinners, accompanied by extra special wine, hosted in the intimate and beautiful tasting room. Well-known guests to the Wine Library include Nobel Laureates, Drs. Sydney Brenner and John Sulston as well as Philippe Bascaules, Princess Chulabhorn of Thailand, and Drs. Irving K. Barber and Stewart Blusson, both major donors to UBC.

To learn more about the ongoing research at the UBC Wine Research Centre, visit…http://wine.landfood.ubc.ca/about/wine-research-centre/

The Wine Library invites potential donors to contribute great wines to this worthy cause, please contact the Wine Research Centre at…604-822-0005

Architectural & Construction Trends Of Successful Wineries

By Gerald Dlubala

From coast to coast, the winery business is booming. With the latest statistics showing upwards of 8,300 wineries in North America, the competition is stronger than ever, making it critical for winemakers to build brand loyalty early, ideally within the first visit or tasting experience. Although the construction of a winery is an industrial project, it’s also about creating an enjoyable, customer driven, retail environment. Success in the wine industry depends on the work of many individuals but always starts with a thorough plan of action.

Planning Is Critical

Burt Shell, Director of Group Sales for industry leader Nucor Buildings Group, has over 30 years of experience and product knowledge in the metal building industry, including significant experience in the construction of wineries.

“Planning is always essential, and we do it in a uniquely different way than most companies. We use visual selling through 3D technology. With virtual reality (Oculus), we can walk you through your entire building and operation process before starting any construction. From start to finish on a 3D level, you will see and experience the flow of product and people through your entire facility, allowing you to make necessary changes before breaking ground rather than during the construction process. This step alone will save money on building costs, automatically raising your return on investment,” Shell says.

Nucor prides themselves in their strengths in design function and material performance to create the perfect environment for the owner’s business within the available footprint.

“The winery business is a very complicated one,” says Shell. “You need various professionals at different times to not only make it work but also to make sure it is set up to make a profit. Once we begin, we have the ability to integrate design flexibility from the tasting rooms to barrel storage to manufacturing and production facilities, bringing economic savings to the owner. Once we know the specifications of what we’re dealing with, we plan upfront for things like large, open spaces to accommodate better flow and traffic; the installation of properly rated racking systems for barrel storage; and even specific underground rebar needs for proper foundation related issues. We make sure our structure fits the business needs so we can confidently pass the project on to the architects and design-build teams to finish what they need to do; knowing that any profile panel, exterior cladding, or special treatments chosen will fit our structural frames and supports. This is the way to build for long term performance.”

Tom O’Neil, principal architect at O’Neil Architects in Leesburg, Virginia, agrees. “Upfront planning is critical, and time spent on a detailed master plan will always save money up front. Everything takes space, and from our experience, your vision will likely take more space than originally thought, so situate the buildings in your plan to allow for design changes or future expansion. Be aware of location-specific demands. For example, here in Virginia, you have to look at things like wastewater systems because you need a well-based wastewater system before you even get started.”

Building Flexibility Is A Must

“Using straightforward buildings is best,” says O’Neil. “We begin with a simple approach, using either a post-frame style of construction, similar to a pole barn, or pre-engineered metal. These are the type of buildings that are the easiest to modify and change.”

“It’s important to be able to add as much character through add-ons and treatments as needed,” says Shell. “That initial flexibility with your framing and structure is what will ultimately make it possible to accommodate the treatments and add-ons that you need for your buildings.”

“And some of those add-on treatments may astonish your customers,” says Doug Yancy, advertising manager for Varco Pruden, a world leader in innovative pre-engineered steel building systems. “Tasting rooms, barrel storage and labs can all be steel framed buildings with your choice of exterior cladding. While the structure is metal, the look and feel can have the traditional appearance of a European winery. Buildings should naturally be tall enough to accommodate the huge tanks of a wine production plant, and while most beverage production facilities are spread out, featuring low pitch roofs (1:12 or 2:12), most of our designed wineries have a more architectural look and feel with higher pitched roofs, as much as 4:12 or 6:12.”

“The necessary basic setup for a winery includes the crush pad production area, the building for your tank/barrel storage and the caser area,” says O’Neil. “These can be done as simple or expensive as you want, with the preferred types of materials dependent on how much customer access you’re willing to allow. Do you want to show off the barrel storage room with barrels staged in racks? The fermentation tanks, or bottling/casing area? Of course, you need the tasting room because that’s the easiest and quickest way to make money and build a following.”

Shana Reiss is the principal architect for Reiss Design Studios, an architectural design firm based in San Luis Obispo, California. She has extensive experience in winery planning and building and has seen activity increase over the past three years for both new winery projects as well as those that were, for one reason or another, on hold.

“Winery facilities need to be easy to clean and maintain. Buildings here are more pre-engineered now since no one wants wood involved in the production facilities due to the chances of TCA contamination. We use a lot of insulated metal panels for quick construction and easy sanitation. Flooring is usually concrete with an epoxy coating to prevent the staining and damaging effects of wine. Food grade trench drains are perfect for cleanup, and the fermentation tanks are generally stainless steel.”

Trending Now

“The hottest way to go currently is the boutique winery route,” says Reiss. “These small-batch wineries produce less than 20,000 cases annually and have more flexibility to try new things within a smaller footprint. They can react to trends faster and get those products in the hands of consumers for tasting.”

“Within the design of a winery and production facility, new trends have started and continued to develop,” says Reiss. “One of these, especially in California, is the focus on water conservation. Wastewater removal is one of the biggest costs in winery production because of general cleaning, sanitation of equipment and vineyard irrigation.  The amount of water used can be tremendous, as is then the cost for the wastewater removal. So a conscientious effort to use less water is considered a win across all areas, saving money throughout the production process to final wastewater removal.”

There are other cost-saving and sustainable measures that can be implemented during construction.

Shell says “It starts with using recycled steel, and Nucor is the largest, recycling 1200 pounds of steel every second of every day, 365 days a year. Additionally, we’ve seen thermal performance taking shape as an energy saver, introducing solar panel installation where possible. You might not see them as a consumer, but they can be used on the production facilities out back, installed on roofs or out of sight on ground mounted assemblies. Insulated pre-engineered panels can help with temperature stability in the storage rooms and with summer cooling — customers like feeling like they’re outdoors, even when not, so natural daylight lighting systems are big. Another thing we do is barcode our trailers of materials so that when they are delivered, we can scan the trailer and place the materials specifically at the location that they will be used. We move our product one time only to put it up, speeding the erection process by the subcontractors having all of their needed materials within reach.”

Yancy says, “There has been an increase In the use of skylights for ambient lighting. Although we haven’t seen a great deal of requests for rainwater collection, green and LEED strategies are being implemented, just not necessarily in widely recognizable ways, such as recycled steel content or efficient water run-off designs. We have seen a good mix of wood and stone interiors as well as modern designs on the exteriors.”

“Wineries are trying to be greener, but it’s not considered a driving factor,” says Reiss.” Many factors in going green depend on your production site and surrounding environmental landscape. Some areas just can’t execute every green method or idea, so they have to work with what they have control over. These include low-cost lighting, more efficient night cooling techniques, using pre-engineered, insulated metals in their construction, recycling of wastewater and more efficient layouts (less movement of wine equals less labor involved). Wineries can use automated systems such as dedicated pump over systems, lessening the need for someone to physically be on hand around the clock to perform these duties. There are also solar panels for electrical assistance and very productive and clean automated picking machines, allowing the produce to go directly into the tanks without the need for extensive manual labor. Future efficiency and savings may be in the actual grape farming because it is becoming so much more efficient.”

“We’ve done the LEED certified, but that’s strictly up to the owner,” says O’Neil. “The buildings can be sustainable by using recycled barn wood, glass or old metal roofing for building components and décor, but it’s still mostly wood and metal, usually of local origin.”

The Importance of Tasting Rooms

From an architectural design point-of-view, tasting rooms demand special treatment because of the maturing wine market and massive competition. At a minimum, tasting rooms should be covered spaces, made out of materials that complement the winemaker’s story. Wineries that are successful tend to have and promote a storyline. Consumers want to know about the winemaker, their path, and the origins of their process from the vine through the bottle. The space should be tailored to the crowd, which can be one larger room or several smaller rooms, opening up and connecting when the business is scheduled or expected to be larger. As day trips bring more consumers in, the tasting room is where the experiences will happen, so the quality level of that room and décor rises. It’s integral to the customer experience.

“The tasting room is where image comes in,” says O’Neil. “You’re letting your customers know your identity and the story of your wine. Scenery counts, so the wineries here that have that great mountain view and more natural appeal can use more glass in their design and get away with less décor. Others that don’t have that view have to work harder with décor and design.”

“Tasting rooms should tell your story while providing exceptional customer service and flow,” says Reiss. “They’re more numerous now, but you don’t want a large tasting room that can appear empty. Tasting rooms should be intimate, so they provide a lively experience to share with friends, yet still be a value-oriented space, because it is the first point of sales, and direct sales are always best.”

Return Visits Are The Goal

Wineries are looking for more than one-time visits, and the architecture should help achieve that goal by designing attractive and welcoming tasting rooms and event spaces for live music, private parties and weddings. Architects can create distinct atmospheres with natural elements, such as lounge areas that mimic living rooms. As more and younger consumers are enjoying wine, they bring expectations of not only great wine in a great atmosphere but also great food served from chefs in residence. Architecturally designed spaces allowing the winery to partner with trending restaurants or local cheesemakers for ticketed pairings events or classroom opportunities can deepen customer experiences and translate into return trips, extended stays and brand loyalty. Many now offer residential villas, condos or a bed-and-breakfast experience for an extended wine lifestyle vacation. Wineries must formulate an experience that coincides with their story, and like any great story, the beginning and end are critical.

Seeking Wine Education? WSET levels are the way to go

By Jessica Spengler

Wine education is a constant throughout the wine industry. From continuing education to specialized training for Sommeliers and wine professionals, quality wine education is essential. Even wine journalists, seeking to understand the industry and increase their wine appreciation continue their education through classes offered by organizations like the Wine and Spirit Education Trust (WSET).

WSET is a globally recognized, not-for-profit educational organization that specializes in quality wine education throughout the world. From their flagship school in London, they offer qualifications in wines, spirits and sake to professionals and enthusiasts both in-person and online. These classes include first, second and third level qualifications in wines, spirits and sake, and a fourth level diploma in wines and spirits. WSET does not provide a path to Sommelier, but their classes are award-winning and highly rated. Their goal is to provide knowledge for anyone looking to further their career in wine, whether that be future Sommeliers, industry professionals, journalists or wine enthusiasts.

  The Grapevine Magazine was invited to participate in the online WSET Level 2 Wine and Spirits qualification through the American Wine School, and I was chosen to take the course. It’s an in-depth look at wine regions throughout the world focusing on grape varietals, production of wine, and how those wines will ideally look and taste. The course also focuses on labels, teaching students the terms and references relevant to determining the quality and details of a wine. It ends with a short lesson on spirits, going through production and labeling.

American Wine School was founded in 2001 by Marianne Frantz, who holds a Diploma in Wine & Spirits from the WSET and has also earned the Advanced Sommelier qualification from the Court of Master Sommeliers. American Wine School is an Approved Program Provider for WSET with a presence in seven states. They also offer wine tastings and events throughout Chicago, Cleveland,  Cincinnati, Columbus and Pittsburgh.

The Course

The value of the class is evident immediately. Class materials are presented as a packet and include a textbook, workbook and a guide for describing wines, called “WSET Level 2 Systematic Approach to Tasting Wine” or SAT. These materials are invaluable during the class and have personally come in handy for me since. I took the course online, so the remaining resources were accessible through the WSET classroom website, including a forum to post assignments, tastings and questions, as well as the weekly course breakdown and lessons.

Students must purchase any wine and food for tasting during the class. I recommend budgeting accordingly because, to get a good sense of a wine style, you should be tasting mid to high-end wines, which run a little more expensive. Not that you need to spend hundreds of dollars, but a $5-10 wine generally isn’t the best example of a style, and quality is important for the course.

WSET qualifications are for anyone who takes wine seriously and is willing to put in the work. The class is broken down week by week into lessons and assignments focusing on a particular subject. Tasks include analyzing labels, food tastings designed to train the palate, and of course, tasting wine. The work isn’t necessarily time-consuming; however, there’s enough of a workload that if you don’t follow the week to week plan, you will fall behind. There’s too many tastings, too much reading, and a lot of serious prep that goes into it.

In addition to assignments and tastings are comprehensive weekly tests that cover everything you’ve learned over the week. If there’s one thing I learned while doing this course, it’s that everything you read and learn is important – from how the sun affects hillside vines to the crazy amount of AVAs in California – it all matters in the course, and in the industry, and you can’t learn it all in a week.

To guide you through your courses, WSET provides a tutor who will evaluate your work and be there to answer any questions. They are the unofficial teacher of the course, attempting to keep people on task and offering suggestions if they notice problems or patterns in assignments or tastings. Having someone available in this regard allows students to find out what they’re doing wrong and improve it. I wish I’d taken better advantage of this resource. They would have been particularly useful for me during tastings, something that I felt I didn’t have the sort of grasp other students did.

Tastings

Each week, students were given a list of wine styles to choose a minimum of three for tastings. These wines reflected those covered in the weekly lessons. Tastings were to be conducted using the SAT guidelines from the card and posted on the forums for the tutor to access. The SAT provides specific language for students on describing appearance, nose, palate, aroma and flavor, and conclusions. By providing a standardized language guide, all students stay on the same page and don’t get overly particular. This guide was invaluable for someone like me with an unsophisticated pallet. It helped to describe what I was tasting without me knowing the specific flavor. I may not know when there are subtle hints of lychee, but I do taste a bit of citrus.

I did find some fault with the comments on student tastings. Once or twice I was flat out told that my evaluation was wrong, and that was it. The critiques weren’t cruel or even inaccurate; as I said, my palate isn’t the most top-notch; but they also didn’t offer any tips or solutions as to how or why I may have gotten it wrong. Moreover, while reaching out for an explanation was a possibility that I’ll admit I did not take, it seems flawed that suggestions weren’t offered unless I sought them out.

Organization

While the class was excellent, the behind-the-scenes stuff was less so. I did not receive my classroom resources until about three days before the course was meant to begin, despite having signed up two months prior, and the recommendation that you read the first weeks lesson before the start of class.

The day of my test also changed twice, as did the location. Unfortunately, I was not aware that the site had moved, and when I showed up the day of, myself and another woman were quite confused as to what was happening. It turns out we were across the city from where the test was meant to take place. To the credit of American Wine School, they sent an Uber, and we were still able to sit for the examination.

The Test

Online students must take the test in-person at one of the American Wine School testing sites. I took my test in Chicago at Binny’s Beverage Depot, along with about six other people. Despite having studied and feeling well prepared, I walked out of that test sure I would not be receiving any certificate. It was hard. I don’t say that with any sense of annoyance; I just did not prepare as well as I’d hoped. I studied, took practice tests and reread the text, so I thought I knew what to expect, but when it came down to it, I was shocked at how little I knew. I was legitimately surprised when I received word that I passed and would be getting a certificate and pin. I still can’t quite believe it.

Conclusion

Despite some organizational issues, I found the class comprehensive, challenging, informative and rewarding. It was not for the faint-of-heart or for anyone with only a passing interest in wine or unwillingness to study. For those willing to take it seriously, the WSET level 2 award provides a stellar, satisfying, and thorough education. If you are looking to forward your wine education, whether you are an industry professional or just starting out on your wine journey, then the WSET classes are right for you.

For more information on WSET levels and class schedules, go to wsetglobal.com

Designer Yeasts

By Nan McCreary

The primary role of yeast in winemaking is to convert the sugars in grape-must into alcohol and carbon dioxide. Selecting a yeast is one of the most critical decisions in the winemaking process. The yeast strain you choose will affect how quickly fermentation begins and how rapidly it progresses, as well as impact the aromas, color and character of the final product. While all winemakers use a yeast called Saccharomyces Cerevisiae, within this species are hundreds of strains designed to produce a myriad of characteristics.

To guide winemakers through the yeast selection process, The Grapevine Magazine talked with legendary Napa Valley winemaker Tom Eddy, who has been making wines since the 1970s. Eddy started his brand, Tom Eddy Winery, in 1991, and is well-known for his elegant, long-lived Napa Valley Cabernets. He also parlayed his training, experience and education at the University of California, Davis into a successful consulting business with a broad client base.

The Grapevine Magazine (GV): Next to the actual fruit, yeast selection is one of the most important elements in determining the quality and style of wine. What changes have you seen in options available to winemakers today?

 Tom Eddy (TE): The technology in the microbiological aspects of winemaking has changed drastically in the last 30 to 40 years, and there have been clear and exciting transformations in the use of different yeasts. When I began my winemaking career in the 70s, there were just two types of yeasts, a Montrachet for white wine and Pasteur Red for red wine. It frustrated me that the Montrachet was sluggish, and you never knew when it was going to finish fermenting. On the other hand, the Pasteur finished really fast and often left behind residual hydrogen sulfide, which smelled like rotten eggs. We never challenged this because we’d always done it that way.  We just had to adjust the temperatures and keep a close eye on fermentation. We didn’t challenge the importance of nutrients inherent in grape juice either. In other words, yeasts perform at different levels based on the availability of amino acids and other compounds, and this varies from vineyard to vineyard and season to season. We realized we needed a certain amount of fertilizer in the yeast, but we didn’t think about it to the point where we analyzed it ahead of time.

  GV:  In the 70s and the 80s, California entered the modern era of winemaking, and began to create wines that could compete on an international scale. Did advancements occur in the quality and availability of yeasts?

TE: Yes, in the early 80s, the industry really started to change. Microbiologists began to get creative, and suddenly, for the first time, a new yeast came out. It was called Prise de Mousse (PDM) and it was touted as a yeast that would do everything you wanted it to do: it didn’t need a lot of nitrogen, it didn’t ferment so quickly that it would foam over and create a mess, nor did it necessarily produce a lot of stinky wine. Fermentation was also very efficient, so you could turn a tank over in five to six days instead of nine or 10, which was very important in the logistics of the winery. PDM was a hot ticket for four or five years. I can remember converting everything I did to PDM in those days, but then I began to question the quality of the wines because they seemed to taste somewhat muted and had lost some of their varietal characteristics. Microbiologists that I respected came to the same conclusion. We determined that the problem was in the very efficiency that made this yeast so popular. In fact, the fermentation was so efficient that it created less heat but modified the chemical reactions in the juice that give us the wonderful fruity aromas, particularly in white wine. So suddenly the hunt is on for another yeast.  Now, because of developments in global communication, technology is spreading, and European suppliers are coming to the U.S. to present products that are totally unique to the wine business.  This begins the era of designer yeasts.

  GV:  What exactly is a designer yeast?

Microbiologists are looking at the DNA of yeasts and figuring out how they can manipulate it to produce desirable characteristics. For instance, they may like yeast “B3,” but that yeast produces hydrogen sulfide on occasion, so they manipulate the DNA to reject elemental sulfur. This guarantees that your wine will never have that stinky, rotten egg smell. Another yeast, “B4” for example, does well with Chardonnay and produces the buttery characteristics that many winemakers like. Now, this all sounds good, but once you’ve manipulated that portion of the helix, you may have changed the DNA so that it has undesirable attributes, like slow fermentation. For the first time, scientists are looking at all the issues that concern winemakers—elimination of hydrogen sulfide, control of fermentation, production of desirable aromas, even the ability to use juice that is low in nitrogen because it’s been a difficult year—to make what we call designer yeast.

  GV:  With so many options, what are your challenges as a winemaker?

TE: I have to decide what I want to be, what I want to achieve, and what problems I have coming into this harvest. I now have 152 yeasts to choose from, so I set up an Excel spreadsheet with 15 different characteristics that I want or don’t want. I look at the wine variety, and the growing conditions and I check boxes to decide what yeast to use with this wine, this year. Every harvest is different, and the yeasts will perform only if they have sufficient nutrients. So, a few weeks before harvest, when we’re doing normal sugar sampling and acid testing, we also run analyses on nutrients to determine levels of nitrogen, ammonia levels and amino acids. If we’re low, we could add fertilizer, but then that may cause other problems. The yeasts may get so excited that fermentation stops at a certain level, leaving me with wines that taste hot and flat with muted floral flavors. In this case, I go back to my spreadsheet and find a yeast that ferments easily with low nitrogen, and I choose that yeast.

 GV: Are these wines expensive?

 TE: Yes, they are expensive. Just like new drugs, it takes years and years of research to make changes in DNA, and the yeast companies need to recapture their costs. You can buy a 10-pound drum of the early yeasts —Montrachet and Pasteur— for $10 a pound. Ten pounds will take care of your entire harvest. Designer yeasts run between $40 and $60 a pound. In selecting a yeast, you have to look at your bottom line. If you’re producing 100,000 bottles of five-dollar-a-bottle wine in a 100,000-gallon tank, you have a very price-sensitive program, where two or three cents a bottle cost could make or break you. In this case, you could go back to the original Montrachet or Pasteur, or even the PDM, and it would probably be okay. On the other hand, if you’re producing a $100 bottle of wine, using a designer yeast that may add 25 cents to the bottle cost is not that significant, and could improve the quality of your wine and give you an advantage over your peers.

  GV: Do you use designer yeast at your winery?

  TE: We’re small —we only make 4,000 cases a year— and no, we don’t use a designer yeast for every single batch of wine. If we make 20 batches in a year and find that a certain batch will produce a certain kind of wine, a certain kind of fermentation and a certain quality level, we might use the same designer yeast for five different lots, or 30 percent of our production. By producing that much wine, we can buy yeast in 10-pound boxes instead of one-pound boxes, which is much less expensive. It’s pretty easy to calculate how much yeast you need. The industry standard is to add two pounds of yeast per one thousand gallons of juice. One pound isn’t enough to kick off fermentation, and three pounds is overkill, and the wine will ferment too fast.  Because we know our vineyards and what they need, we can usually budget ahead of time for yeast, additives and some level of nitrogen.

  GV:  As a consultant, what types of yeast-related problems do you typically see among winemakers?

TE: A lot of winemakers believe that if you buy a yeast in a specific category, that yeast will be just what you need because all yeast today is first-rate.  However, these winemakers often don’t know what’s in their juice, so they throw the kitchen sink into the mix—every fertilizer, every chemical, every additive— and cross their fingers, not knowing what the impact will be.  In fact, what you’ve added can cause other problems. You can over fertilize, for example, and cause the yeast to explode to the extent that they start to die off because of high alcohol, and then some other organism takes off because of the high nitrogen and basically spoils your wine. I see this all the time. Often, I can identify the problem by interviewing the winemaker, looking at the timeline or testing for spoilage organisms. There is usually a reason for spoilage and ruined wine.

GV: Are resources available to help winemakers understand oenology so they can avoid these types of problems?

 TE: Yes, many young people coming out of schools like UC Davis, Cal Poly or Fresno State are learning about the more sophisticated aspects of wine technology. They are reading more, they’re studying, and they’re listening to podcasts or participating in webinars that can answer questions related to common problems. Because of the internet, information is available quickly. It’s not like in the old days when you had to wait a week to meet your peers at a local coffee shop and exchange ideas.

GV: Tom, with all your years of experience and training, you are a virtual walking encyclopedia of the wine industry.  Thank you for sharing your knowledge with The Grapevine Magazine.

TE:  You’re very welcome. Anytime.

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.”

Protect Events Hosted at Your Winery with Event Insurance

By Markel 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.

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 cli¬ent 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?  We suggest having a conversation as early as possible before the event to determine coverage limits bassed on the total overall event budget.

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.

To Learn More Visit www.markeleventinsurance.com/grapevine

Winery Retail Marketing Will Finally Come of Age in 2019

By Susan DeMatei

Spoiler alert: nothing I talk about in these predictions is groundbreaking, or new technology or techniques for marketing. These are tactics that the digital eCommerce world has been using and perfecting for quite some time. We hear about these strategies at conferences, and experience them with other brands we interact with…but we don’t take those practices to work with us when we market our wine. We are a slow industry to adopt new trends. Why is that?

Margins are Low

Margins are low across the board for wine – albeit better in Direct To Consumer (DTC) channels versus wholesale – but the hospitality cost that is carried on the DTC side balances the scales. Management, at any company, is going to focus resources and innovation in the areas with the greatest impact to the bottom line. Although the last ten years have seen a tremendous focus and growth in DTC marketing, it is still not matching the infrastructure and technology behind wholesale tracking, reporting and sales.

Those With the Means Don’t Have a Motive for Change

Companies with large case production report only 5-20% of their total revenue coming from the DTC channel. This percentage increases as the case production decreases, leaving only the smaller production wineries reporting more than 50% of their total revenue coming from DTC sales. Couple this lopsided payout with the fact that most technological adoptions and paradigm shifts happen from the top – or big guys – down, DTC channels often do not receive the marketing budget and technological innovations as wholesale. The result? We have an industry where the large corporate wine conglomerates have the cash and clout to change the way we market, but there are few innovators.

Our Innovators are the Outliers

Our industry innovators are typically small wineries run by a geek winemaker or owner who was a computer engineer, or used to work in the corporate sector with technology and tools at their disposal. Out of frustration, these people have cobbled together different systems with jerry-rigged features and fields to get what they want for their winery. Since it’s the occasional oddball that is doing this, they may be interesting, and asked to speak at the occasional conference, but they don’t gain much traction in creating widespread change.

Our Focus is Diverted

Wine is an agricultural business and of the wineries in North America, the majority is very-small to small production. This has a couple of implications. First, winery decision makers don’t spend their days behind a desk. They are typically not glued to their website or social media platforms and are more versed in pH chemistry than megabytes. This also means means they are distracted and wear many hats. Winery owners typically are part farmer, part chemist, part handyman, part botanist, part guest services, part salesperson, and part janitor. Sadly, marketing and its execution take a back seat in attention. It is one thing to be able to hand-sell your wine at a pouring, but quite another to think through online marketing channels, social media advertising and Google Analytics funnels.

Our Vendors Hold Us Back

Should you choose to sell online (compliantly) and offer a wine club, there are a handful of technology platforms to choose from. These systems are handy all-in-one solutions that offer website hosting, eCommerce, compliance, fulfillment, wine club, CRM, emails, POS, and reporting. What could be better, right? In actuality, wineries get locked into these vendors with all their eggs in one basket. Vendors typically hold features and development close to their vest, not wanting to open up and share or integrate for fear of losing market share. Wineries witness a daily battle between the vendors for marketshare, and it’s the wineries that lose.

This is in stark contrast to other markets where open APIs encourage integration, allowing customers to choose and pay for add-ons, apps, and features that work best for their business. Can you imagine if Apple didn’t encourage the App Store, or WordPress didn’t have plugins? Integration and cooperation is the widespread standard in other industries, but sadly, our platforms haven’t adopted this practice. This is not in their customers’ best interests, but in their own.

Despite these hurdles, change is coming. We have finally reached critical mass in mainstream interest, generating a number of topics that will be the talk of conferences this spring.

Subscription-Model Clubs with More Flexibility are Coming

We are a subscription economy. Amazon to Zappos has encouraged repeat business by making it easy to choose what we want, and reorder often. Our wine club model is based on technology from 15 years ago which doesn’t allow members this flexibility, yet many wineries still cling to it. Can you imaging signing up for Blue Apron, or Stitch Fix, or Netflix if you had no input or control over what they sent and charged you for? You’d never do it, yet incredibly we persist in this model. This is the most obvious winery sales channel that clashes with the modern world, and for that reason it is quickly eroding. If you haven’t moved to a more flexible model by the end of 2019 – you’re not only going to lose sales, but you’re doing your customers a disservice.

  Smarter email marketing will finally emerge.

90% of wineries are now emailing frequently. (If you’re still concerned you might “bother” your customers, I urge you to rethink the value of your communications.) Wineries are also acknowledging the influence of the mobile phone on email design and changing the way they write and link emails to be succinct and visual. We’ve been talking about segmentation for a decade, and it is now standard practice for our clients to create different emails for club versus non-club, geo target a list, or target emails to buyers of a certain product. All of these things were slow to happen but moves in the right direction.

The next step we will witness is wineries actively using marketing automation. We see it every day when we get an abandoned cart email, or Amazon suggests items, or Facebook puts that item we were looking at on another site into our Facebook stream. Mailchimp and other affordable platforms exist to empower novice marketers to put together thoughtful campaigns with the right message to the right target at the right time. This type of thoughtful segmentation  is critical to future eCommerce conversions and we should see better responses across the board in 2019 as a result.

Integrated Campaigns and Social Media Ads will Appear

After decades of seminars and blog posts about how to and what to post, wineries are finally getting the hang of social media content. They are also seeing the value of connecting with their customers, being authentic, and sharing themselves online. We’ve gotten over the “pay for it” hurdle – realizing that these channels are a business and it makes sense to pay for increased viewership – and have gotten the hang of targeting. We can comfortably check this box off our learning list.

The next step is scheduling ad campaigns on a regular basis. We’ll see wineries plan for, and put aside social media advertising budgets. And, hopefully, we’ll begin to see more integration across platforms. For instance, the marketing email that was just sent out is also made into a Facebook ad with the segmented list uploaded as a target. This type of multiple exposure can greatly improve responses to campaigns and we’ll see more of it in practice in 2019.

Integrations will Drive Change

In 2019 we’ll start to see big wine technology vendors crack under pressure to integrate. For years they’ve been holding back the tidal wave of feature requests from disappointed customers. Technology costs are now affordable and the need has never been more focused and apparent. We will see an onslaught of new players enter the market, not to provide “all in one” solutions, but to build onto the existing platforms and help them meet these new customer needs. The vendors that embrace this will win, and the ones that don’t, clinging to their closed feature set and market share, will lose.

Outsourcing will Become the Norm Versus the Exception

There is a perfect storm brewing when you combine everything above – low margins, less reliance on the old guard technology, the need for fresh thinking – that tells wineries they must innovate to compete. However, finding technology savvy staff in often rural environments can be challenging – especially after the fires of recent years have driven housing costs out of the reasonable range for most people. The salary that wineries can afford is hopelessly out of whack with what employees need to live in “wine country”. Additionally, the competitive market is allowing employees to choose higher paying jobs with better benefits. The result is that many of these entry to mid-level DTC jobs (the Wine Club Coordinator, the DTC Manager, the Tasting Room Assistant Manager) remain unfilled, posted for a quarter to half-a-year before a new hire is made. This has resulted in an openness to outsource these DTC jobs to a consultant or agency. An outsourced agency typically has staff with specialized skills, are flexible and reliable, and cost less than an employee – and they don’t quit or take sick days. This allows the wineries to focus on what they do best – making wine. This is proving vital to small to medium sized wineries that are really feeling the economic crunch, yet still have to get work done.

So while none of the above is new, it’s new to the wine industry. 2019 will be an interesting year. We should see the establishment shaken up with new players, smarter marketing, and better responses to campaigns. This shift will certainly help the wineries, but ultimately is their customers that are the real winners.

  Susan DeMatei is the President of WineGlass Marketing, a full-service direct marketing firm working within the wine industry in Napa, California. www.wineglassmarketing.com

TTB Proposes New Rules for Wine Labeling & Advertising

By Brian D. Kaider, Esq.

On November 26, 2018, the TTB published in the Federal Register a notice of proposed rulemaking, titled, Modernization of the Labeling and Advertising Regulations for Wine, Distilled Spirits, and Malt Beverages (83 Fed. Reg. 60,609).  The purpose of these proposed rules is to “simplify and clarify regulatory standards, incorporate guidance documents and current policy into the regulations, and reduce the regulatory burden on industry members where possible.”

When the federal government wants to change rules Americans are subject to, they must first publish the proposed rules and provide a period of time for the public to comment and make suggestions.  The government agency is required to review and consider all suggestions before implementing a final rule.

This process is not a formality.  TTB wants the rules to adequately protect the public while being as fair and unobtrusive as possible to industry members.  It is actively seeking comment on many issues in this notice.  As members of the industry affected by these rules, winery owners would be well-advised to review TTB’s proposals and provide feedback before the March 26, 2019 deadline.

This article is meant to introduce some of the key issues with which TTB is grappling.  For more detail, please see the full proposal (linked at the end of the article).

Organization

One of the most fundamental proposed changes is a reorganization of parts.  Currently 27 CFR parts 4, 5, and 7 relate to wine, distilled spirits, and malt beverages, respectively.  TTB is proposing to keep those parts, but to consolidate all advertising issues to a new part 14.  They will also make the organization of parts 4, 5, and 7 more uniform.  Subjects will be in the same order and the same section numbers will be used within each part.  For example, regulations identifying the mandatory information for wine, spirits, and beer labels will be in sections 4.63, 5.63, and 7.63, respectively.

COLAs

In section 4.14.1, TTB is proposing to change the definition of “COLA.”  Currently, only changes specifically authorized on the COLA form itself may be made to an approved label without filing for a new COLA.  The new definition would allow TTB to authorize additional changes in other ways, such as through issuance of a guidance document on the TTB website.

Certificates of Exemption

Current TTB practice enables an applicant to obtain a certificate of exemption from label approval conditioned on the applicant’s agreement to add the statement, “For sale in [name of State] only” to the label.  Proposed rule 4.23 will require the applicant to include the statement on the label submitted with the application.

Personalized Labels

Proposed rule 4.29 clarifies TTB policy on “personalized labels,” labels on which certain changes may be made without having to resubmit the label for TTB approval.  The personalized label may contain a personal message, picture, or other artwork specific to the consumer, such as for a wedding or anniversary.   The COLA applicant must submit a template for the personalized label with a note as to the specific information that may change. Changes that discuss the wine itself, the alcohol content, or that include information inconsistent with the provisions of TTB regulations or other applicable law are not permitted.

Alteration of Labels

Proposed rules 4.42 and 4.43 describe, in detail, the circumstances when proprietors of bonded wine premises, importers, and certain others may relabel a wine product without obtaining separate permission from TTB for the relabeling activity.  In all cases, the new label must be covered by a valid COLA.  Industry members who would be affected by these rules are encouraged to thoroughly review the relevant areas of the proposed rules.  TTB seeks comments on whether they will protect the integrity of labels in the marketplace without imposing undue burdens on the industry.

Mandatory Label Information – Packaging

Proposed rule 4.62 clarifies the requirements for open or closed packaging.  Packaging such as a covering, carton, case, or carrier used for sale at retail (not shipping cartons) that require a consumer to open, rip, untie, unzip, or otherwise manipulate the package in order to view any mandatory information on the bottle is considered “closed packaging” and must include all mandatory information required to appear on the label.  If a consumer could view all mandatory information on the container by merely lifting the container up, or if the packaging is transparent or designed such that all mandatory information can easily be read by the consumer, the packaging is considered “open” and may display any information not in conflict with the label on the container inside the packaging.

TTB seeks comment on the following three points:  1) whether it should require mandatory information to appear on open packaging when part of the label is obscured; 2) whether the proposed rules will require significant change to labels, containers, or packaging materials, and 3) whether the proposed revisions will provide better information to the consumer and make it easier to find mandatory information on labels, containers, and packages.

Prohibited Practices

TTB proposes to break this section into three parts:

  1. Restricted Labeling Statements

Proposed rule 4.87 loosens the restriction on using vineyard, orchard, farm, or ranch names.  Current practice allows these names in the brand only if at least 95 percent of the wine was produced from fruit grown on the named property. If used as a trade name in the bottling address, the proposed rule will allow the name as the brand even if no grapes are grown on the property or even if there is no such property with that name.

Proposed rule 4.90 makes five changes to the current law relating to “multistate” appellations:  1) removes the requirement that the states be contiguous; 2) reduces the minimum percentage of grapes from the states named in the appellation from 100% to 85%; 3) removes the requirement that the percentage of the wine derived from grapes of each state be shown on the label 4) adds the requirement that the percentage of wine derived from grapes of a named origin be greater than the percentage from an unnamed origin; and 5) adds the requirement that the states be listed in descending order according to the percentage of wine derived from grapes grown in those states.

While proposed rule 4.90 appears to allow “multistate” appellations for noncontiguous states, proposed rule 4.135, prohibiting misleading references to the origin of wine, appears to contradict this rule. It explains, a wine made from grapes 50% from New York and 50% from Virginia would be ineligible for a multistate appellation because the states are not contiguous.  TTB was unable to be reached for clarification in time for publication of this article.

  1. Prohibited Labeling Practices

In The Grapevine Magazine’s September 2017 issue, the article “Where Never Is Heard A Disparaging Word… Until Now” described the U.S. Supreme Court case, Matal v. Tam, wherein the Court ruled the Trademark Office could not refuse registration of a trademark considered disparaging to a group of people. The Court reasoned that registration of a trademark was not “government speech.”  Further, it was concerned if it were to hold otherwise, “other systems of government registration could easily be characterized in the same way.”  Thus, the article suggested TTB restrictions on COLA registrations containing “disparaging” content were likely unconstitutional under Tam.

TTB seems to agree.  The language of former rule 4.38(f), incorporated into proposed rule 4.56, omits reference to disparaging content.  Further, the proposed rules indicate Industry Circular 1963-23, “Use of Disparaging Themes or References in Alcoholic Beverage Advertising is Prohibited” was not incorporated into the proposed rules.

However, proposed rule 4.103 says, “[w]ine labels… may not contain any statement or representation that is obscene or indecent.”  On December 15, 2017, the U.S. Court of Appeals for the Federal Circuit decided the case In re Brunetti, finding that in light of Matal v. Tam, the Lanham Act’s bar on registration of “immoral or scandalous” marks was unconstitutional, as well.  Whether TTB has not yet determined the applicability of the In re Brunetti decision or will continue to deny COLA registrations containing “obscene or indecent” material until challenged in court remains to be seen.

  1. Labeling Practices Prohibited if Misleading

This subpart generally prohibits any statement or representation, irrespective of falsity, that is misleading to consumers as to the age, origin, identity, or other characteristics of the wine (see proposed rule 4.122, for example).

Proposed rule 4.124 prohibits false or misleading statements that disparage a competitor’s product. The rule does not preclude expressions of opinion, such as “We think our wine tastes better than any other.”  By contrast, a statement like “We do not add arsenic to our wine,” although truthful, would be considered disparaging because it falsely implies other producers do.

Proposed rule 4.126 eliminates the blanket prohibition against the use of the American flag or symbols of the U.S. armed forces, provided the usage does not create the impression of an endorsement by, or affiliation with, the governmental entity represented.

Proposed rule 4.127 retains prohibitions against simulated government stamps, but only if the usage is misleading.  TTB seeks comments on whether there is still a need for regulations on this issue.

Proposed rule 4.128 prohibits wine labels or packaging from containing a statement, design, or representation tending to create a false or misleading impression the wine is or contains a distilled spirit or malt beverage.  While statements about aging wine in barrels previously used in the production of distilled spirits are acceptable, statements implying the product contains distilled spirits (such as ‘‘bourbon flavored wine’’) are prohibited as misleading.  TTB solicits comments on whether the proposed rules adequately protect consumers and whether they will require changes to existing labels.

Proposed rule 4.211 allows bottlers and importers to provide  TTB or customs officers with COLAs in photocopies, electronic copies, or records showing the TTB identification number of the approved COLA, rather than an original paper copy.

Dessert Wine

Without proposing a new rule, TTB requests comments about the designation “dessert wine.”  Current rule 4.21 requires a dessert wine to be 14-24% alcohol.  While rejecting applications for dessert wines below 14%, TTB has approved COLAs for such wines stating “may be served as dessert wine.”  Because many consumers associate dessert wine more with the level of sweetness than with alcohol content, TTB requests comments from the public as to: 1) the use of “dessert wine” as a designation of alcohol content; 2) whether there is a more appropriate term for wines containing 14-24% ABV; 3) whether “light” wine to indicate alcohol content is consistent with industry and consumer understanding, and 4) whether the term “natural” wine is understood by the industry and consumers as being a wine with no added brandy and, if not, how the term “natural” is understood in relation to wine.

Citrus Wine

Proposed rule 4.145 incorporates all citrus wines into the category of fruit wines, eliminating citrus wine as a separate class.  TTB requests comment as to whether this change would require the change to any existing labels.

Providing Feedback to TTB

TTB’s proposed rules involve many issues and details not summarized above.  If you would like to provide feedback to TTB on one or more issues, the entire 132-page document can be found here: https://www.gpo.gov/fdsys/pkg/FR-2018-11-26/pdf/2018-24446.pdf.  To submit your feedback, you may use the online comment form here: https://www.regulations.gov/comment?D=TTB-2018-0007-0001 or via U.S. Mail to the Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW, Box 12, Washington, DC 20005.

Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry.  He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation. bkaider@kaiderlaw.com (240) 308-8032

What is a Winemaker? (Part 1)

By Thomas J. Payette, Winemaking Consultant

A winemaker is a person that is engaged in the selection and growing of a perishable raw material that is made into a perishable fermented product containing alcohol.  This simplistic statement just begins to state one’s duty as a winemaker.  In reality a winemaker is so much more.

The descriptions provided below are not fitting for all winemakers but perhaps the majority.  As corporations have become prominent in the wine industry, some of these duties are eliminated or minimized; yet, most of the people holding corporate winemaking titles have come up through the ranks of hard knocks.  Few excel in this profession without dragging hoses first and planting vines with their bare hands before sitting at the cushy, but very demanding, blending table.

In most cases, the winemaker is the general manager of sorts for many operations.  Successful winemakers often need to be well-rounded to rise to the top of their game.  This includes knowledge as an apprentice, farmer, chef, wine chemist, orchestrator, cellar logistics coordinator, master blender, investigator, people person and marketing guru.

Many winemakers are rugged, yet, refined.  Sensorially “in touch” not only through their palate and nostrils but also through their other senses.  They are also spatially cognizant and proficient in material handling either gently, as done more today, or otherwise.  At crush and bottling many winemakers become logistic coordinators.  Many know how they want something done and that one must roll their sleeves up to get that job done properly.  Harvest happens once a year so winemakers often only get near forty chances in their lifetime at making wine each year.  Winemakers must work exhaustingly hard and make the absolute most out of each vintage.

Apprentice

The winemaking industry still requires much from an individual.  Aspiring winemakers often find themselves in need of hands-on training even after their academic degree (or degrees) are completed.  Many will find this out from other winemakers who have worked under other seasoned individuals.  Many will have to work hard to prove to the mentoring individual, they care to learn from, that they are indeed worthy of being taught.  A friendship and professional teacher/student relationship will be built and at the appropriate time key (“missing information”) will be passed forward to the next generation.  Few professions are still built on this principal and future winemakers are encouraged to press forward through this often-frustrating process.  Work hard, ask questions and prove worthiness to any winemakers you seek to emulate.

Farmer

Winemakers are best suited when they understand the product they are making from the fruit forward.  It takes a great raw material, in all cases, to make a great product.  With farming knowledge, one knows to study items such as the depth and make-up of the soils they are growing their plants on and in.  Knowledge of soil moisture, water holding capacity and any potential need for drain tile, irrigation or both should come into play when trying to produce a premium product.  Few growing sites are perfect, on their own, but they do exist.  One needs to know the physical and chemical make-up of the soils and how to adjust or condition those soils to provide the best of what is needed for those plants to produce the fruit desired.  Some identify ions in the soils and how those interact in the soil while breaking down and allowing the plant to absorb them.  If the farmer applies lime to change the pH – how does that affect the chemical make-up of the overall soil and the plant’s ability to absorb what is needed?  Will the minerals become out of balance directly or indirectly affecting the plant and its fruit?

With the soils one should match those soils and potential above ground climates with the proper rootstock and scion plant wood if dealing with a vinifera plant.  With these considerations, the winemaker is also affecting what style of wine he/she may want to make.  If one has a certain desired flavor or style – this is the time to target that flavor profile and make selections that support that goal.  Taking the climate above ground and looking at frost issues in the spring and fall will become important in selecting the plants.  Areas with late spring frost will most likely guide one toward plants that bud out later in the spring.  This decision will be coupled with winter low temperatures if in an area that may experience lows in the range to damage the plant.  This can be a fine line as some insect pressures and diseases are minimized with appropriate low temperatures over the winter months.

Once the plants and soils are chosen, one will need to look, again, at the desired wine style and then decide on a training system for the plants.  These decisions, as well as all decisions, will be in conjunction with the complete team to adapt the plants growing with the climate, the physiological predicted growth of the plants, vigor estimates, equipment, spacing, harvest mechanisms, orientation, prevailing winds, and micro-climate issues.  After looking at these broad range items one may need to decide if leaf pulling will be used.  Shoot positioning and canopy management will be questions to address.

Much of the above will be decided and handled in the field with handsful of soil while “kicking rocks in the field”.  So much determines what the end product will be from the raw material, growing conditions and ability to affect the maturation of the fruit that will ultimately be the foundation for the finished wine(s).

Chef / Artistic Talent

Being a chef takes a lot of talent on many levels.  Smell, aroma, mouth-feel consistency, finesse and timing all come into consideration.  As I remind many wineries “never forget the wine glass”.    Winemakers must take the complete set of chemical data and taste the wine to make decisions for that wine.  The future of that wine must be known as a direction for the winemaker.  One can not just make wine on chemistry alone.  A wine that has the textbook perfect alcohol, pH, sulfur dioxide, titratable acidity and color is nothing if it tastes bad.  The same is true if the wine develops a nasty protein haze while in the bottle.  A winemaker must balance the flavors of the wine using knowledge from the wineglass combined with the knowledge of the laboratory.  This balance takes experience many will only gain from their protégé as an apprentice.  No, we exercise our artistic craft!

Wine Chemist

Along with our artistic craft great winemakers once again find themselves back in the vineyard all through the year, but now more than ever, looking at the condition of the fruit hanging in the field waiting for the anticipated call to “pick”.  So much goes into this part of the process because one will not be able to go back in time after the grapes are harvested.  Samples will be taken to judge the chemical aspects of the fruit and the winemaking and vineyard team will sample grapes.  Much data is collected from this time as the group will taste and record flavors and profiles for given blocks of vines to determine what, when and where grape maturity matches the wine hoped to be made.  The decision is critical; yet, more easily made if all persons are in touch with previous years, that particular block and the wines made from that block in past years.  This is experience and sharing it, as a team, will be of most benefit from here forward.  Great winemakers are often able to select the fruit and target a wine style from taste and chemistry.  They are able to ascertain what will happen from harvest forward and to make reasonably predictable assessments on each production step forward and how that may be slightly altered to give desired goals in the resulting wine.

During these sampling times we will look at the chemistry of the fruit, the skins of the fruit, taste the flesh of the fruit, look at the seeds, taste the seeds, physical components of the seeds, the plant canopy and the plant condition itself, the fruit condition, tank space in the cellar, other harvests, fruit handling at the crush pad and weather.  Questions for reds become:  Will it be best to let these hang, gather intensity, allow the pH to rise, flavors to mature and possibly add a touch of acid at crush or go for a leaner style and harvest now with reduced skin contact time?  Whites may go: Should we harvest sooner, place the grapes in the refrigerated box over night, chill, and whole cluster press first thing in the morning or wait and try some skin soaking in bins and the press after 5 hours cold soaking?

What yeast will we use?  What characters of this fruit do we care to enhance?  Will a malo-lactic fermentation balance the product and achieve a microbiological stability we want?  Will we barrel ferment this product?  How long and where will we age this product?  Will we need to protein and cold stabilize this product?

Orchestrator

There are few winemakers that can get through a crush or bottling without becoming slightly rattled at the chaos whirling around from time to time.  Most have enough knowledge of their operations to be able to shift one thing to cover another.  Often these shifts afford a “win – win” situation that can be particularly gratifying.  It becomes quite a balance when one grower needs to pick and is able, the fruit supports it and the field that should have been picked is having troubles with their harvester or crew.  One may shift within seconds to give another the nod of approval to harvest.  Predictions are always made, well in advance, with the knowledge certain stopgap measures might have to be implemented.  Much communication, confidence and patience are needed at this time.  The crush pad staff needs to know what quality and type of fruit is arriving in order to designate tanks and to “control” chaos.  How many tons are expected?  Historically how close has this grower and the team been able to estimate this vineyard?  A ten- percent overage could completely shift the dynamics of the cellar.  Can we still bring in the tonnage needed and still have the night crew get their jobs done?  Our stainless steel and liquid vessel holding capacity limits us.

(Part 2 will run in The Grapevine Magazine March/April 2019 Issue)