Oregon wine grapes

Pinot noir grapes hang in Oregon’s Dundee Hills. The Legislature is taking up a bill aimed at protecting the state’s wine industry, but some vineyard owners say they are worried it will scare off out-of-state grape buyers.

SALEM — A bill designed to protect Oregon wine from out-of-state imposters is fermenting discord within the industry.

Senate Bill 111 calls on the Oregon Liquor Control Commission to adopt new rules for enforcing wine labeling standards under state law, while also ensuring wineries pay a $25 per ton grape tax.

The issue arose last year during a highly publicized feud between Willamette Valley winemakers and Copper Cane Wines & Provisions, based in Rutherford, Calif. Copper Cane buys grapes from about 40 Oregon growers to make two brands of Pinot noir — Elouan and The Willametter Journal.

The Oregon Winegrowers Association, with help from state legislators, successfully argued those wines had deceptive labels that illegally referenced certain high-value growing regions known as American Viticultural Areas, or AVAs.

SB 111 authorizes the OLCC to develop regulations against importing and selling deceptively labeled wine. It allows the commission to enter into agreements with agencies from other states, and would increase the fines for violations from $5,000 to $25,000.

The Oregon Winegrowers Association supports SB 111, and points to the Copper Cane situation as evidence of the need for more regulatory supervision. But a coalition of Oregon winemakers and growers, led by former state Sen. Jason Atkinson, claims the bill will chase away potential buyers and devalue grapes.

“This bill has been sold as something that it’s not,” Atkinson said. “It’s been sold as truth in labeling. It’s not about truth in labeling at all.”

SB 111 passed the Senate Judiciary Committee on April 9, and was referred to the Joint Ways and Means Committee. According to an analysis of the bill, the OLCC estimates it would need $545,196 to hire five new positions over the 2019-21 biennium.

OLCC spokesman Matthew Van Sickle said the commission would refine its labeling laws through a public rule-making process, providing greater clarity from the industry and Legislature.

“Ultimately, it will give us more direction on where we want to go,” Van Sickle said.

A study published in the Journal of Wine Economics shows that AVA appellations can have a significant difference on price per bottle, ranging from $1.43 to $14.13.

Oregon currently has some of the most restrictive wine labeling laws in the country. To label a wine from an Oregon AVA, it must be made with at least 95% grapes from that area. Federal law requires 85%, and that the wine must be “fully finished,” or fermented, in the state of origin.

State and federal laws ban any language on labels that is “false or untrue,” or “tends to create a misleading impression.”

Copper Cane stirred controversy with its packaging and labels for Elouan and The Willametter Journal in 2018. The company voluntarily surrendered nine labels to the Alcohol and Tobacco Tax and Trade Bureau after critics raised concerns over specific references to the Willamette, Rogue and Umpqua Valley AVAs.

The OLCC also moved to revoke Copper Cane’s certificate of approval to do business in Oregon. Copper Cane has appealed the decision.

One of the most vocal figures in the debate was Jim Bernau, founder and CEO of Willamette Valley Vineyards, based in Turner, Ore. Bernau said he now supports SB 111 to make sure that all wineries, whether in-state or out-of-state, are playing by the same rules when it comes to labeling.

“We have to make sure the law is applied equally,” Bernau said. “This whole case really revealed we needed to create prudence in the law and strengthen enforcement.”

Jim Blumling, vice president of operations for Copper Cane, said its wine labels are now in compliance, and that the winery is in negotiations with the OLCC on a settlement. He estimated that the winery purchased 2,000 tons of Oregon grapes last year, and sales of Elouan continue to grow at a rate of 30-40% annually.

Depending on how SB 111 comes together, Blumling said it could put wineries like his at a competitive disadvantage with local producers, given they are using the same fruit.

“We’re bullishly optimistic that once the rules are firmly established and everybody understands them, we’ll figure out how to comply with the OLCC and Legislature’s guidance,” Blumling said.

Opposition to the bill is growing quickly, said Atkinson, who is heading the coalition against SB 111. He said members represent about 65% of all wine grapes grown in Oregon.

About 20% of all grapes grow in Oregon are shipped out of state, and Atkinson said smaller vineyards cannot afford to lose that business. In the case of Copper Cane, Atkinson said existing state and federal laws already worked the way they are supposed to, and there is no need for OLCC to hire additional people to regulate the industry.

Atkinson said SB 111 is about retribution against a single buyer, while causing a deep divide in the industry.

“If you take out Copper Cane, let’s say, and you scare off a couple other large buyers ... what you have done is cut the guts out of the ability to have a profitable vineyard,” Atkinson said. “All of this for one grudge match. It’s just not worth it.”

Reporter

I cover issues affecting Oregon agriculture. Have a news tip? Let me know!

Recommended for you