SALEM — The Oregon Legislature has passed a bill to increase the monthly limit on direct-to-consumer wine shipments, aiming to keep small wineries competitive during the coronavirus pandemic.
Up to five cases of wine per customer can be shipped a month under Senate Bill 406, which was approved 39-13 by the House on May 12 after unanimously passing the Senate in March.
Total economic activity associated with Oregon’s wine industry fell about 20% last year and wine industry jobs plunged 28% due to coronavirus restrictions, said Rep. Gary Leif, R-Roseburg.
“This is a way to support wineries that are struggling right now,” he said.
Though the bill didn’t face many obstacles during the legislative session, some lawmakers opposed it on the House floor, citing the potential for alcohol abuse.
“I don’t think it’s appropriate for us to provide more opportunity for people who are struggling to fall deeper into addiction,” said Rep. Tawna Sanchez, D-Portland.
Sanchez said lawmakers should “take our blinders off” and recognize that easier access to alcohol is a detriment to Oregon’s child welfare, judicial and educational systems.
Meanwhile, the economic effects of the coronavirus outbreak will wane over time, she said. “At some point, the pandemic will be over and these industries will be able to do better.”
Proponents of SB 406 said that alcohol is already accessible in Oregon and that raising the shipping limit isn’t likely to increase abuse because price is the main impediment to consumption.
“There are no limits when you go down to the store,” said Rep. Marty Wilde, D-Eugene.
It’s unlikely that people struggling with alcoholism will spend $40 or more per bottle of wine when there are cheaper alternatives, said Leif. “I think they will go down to the grocery story and pick up whatever they can.”
The current monthly two-case cap has hindered sales at a time that coronavirus restrictions have already reduced tasting room revenues by as much as 80%, said Dyson Demara, owner of HillCrest Vineyard in Roseburg.
“During the pandemic it’s been absolutely golden, it’s been a lifeline, but we have found ourselves cutting orders short or losing orders because of this limit,” Demara said during a recent legislative hearing.
The median Oregon winery sells only about 750 cases per year, so they must rely on some form of direct-to-consumer sales rather than the wholesale market, said Mike McNally, owner of Fairsing Vineyards near Yamhill, Ore.
“Most of these wineries can’t attract the large national distributors to sell our wine,” he said.
About half of the revenues at Fairsing Vineyards come from wine club members, many of whom want to order additional cases for holidays or weddings, McNally said. “Under the current rules, they’re not able to do that.”
The average price of direct-to-consumer wines is more than $40 per bottle, compared to $16.50 for those sold at retail stores, said Dionne Irvine, co-founder of Irvine & Roberts Vineyards in Ashland, Ore.
Wineries have invested in direct shipping to survive because restaurant sales have dried up along with tasting room visits, she said. “These typical direct-to-consumer wine shipments are some of our most premium products sought out by our loyal wine customers.”
Oregon’s two-case limit has been the law since 1989 while California and Washington — neighboring states with even larger wine industries — don’t currently have any caps on such shipments.
However, stakeholders in the Oregon wine industry negotiated increasing the cap to five cases and didn’t seek limitless direct-to-consumer shipping.
Under an “emergency” provision of SB 406, the bill will become effective as soon as it’s signed by Gov. Kate Brown.
In 2019, Oregon had nearly 1,300 vineyards that produced about $238 million worth of grapes on 37,400 acres, while its 900 wineries sold more than 4.6 million cases valued at about $674 million.