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Saturday, June 10, 2006

Gone with the wine

ABC stores are running low on Virginia wine as they clear their stock in response to a 2005 federal district court ruling.

Virginia wines will soon run dry at Alcoholic Beverage Control stores as the state awaits a legal appeal that could allow ABC to replenish its stock.

"There is hardly any wine in the warehouse now," said Rebecca Gettings, spokeswoman for the ABC board. "After the ruling, ABC encouraged the manufacturers to retrieve their wine" for possible sale to other distributors.

Some ABC stores, such as the one on Williamson Road in Roanoke, were out of wine earlier this week when a reporter checked. At stores that still have wine, prices have been reduced 25 percent to help with the clearance.

ABC stores have sold only Virginia wines since a 1985 compromise with private retailers and Virginia farm wineries. In the 2005 Brooks vs. Danielson case, the United States District Court for the Eastern District of Virginia ruled that the state of Virginia showed preference to their own products while placing out-of-state wines at a disadvantage.

The U.S. 4th Circuit Court of Appeals is supposed to hear ABC's appeal in late summer, possibly in the fall. Curtis Coleburn, chief operating officer of the Virginia Department of Alcoholic Beverage Control, said the ABC would begin selling Virginia wines again if the ruling is reversed.

"We're hoping that the attorney general will prevail and we'll be able to sell Virginia wine [to ABC], or that the ABC will find a way to sell out-of-state wines," said Ann Heidig, president of the Virginia Wineries Association.

The courts did present the ultimatum to either stop selling Virginia wines or sell it along with out-of-state wines. Heidig said maybe the ABC could come up with an application for out-of-state wineries, mirroring the requirements that Virginia wineries have to complete -- including a presentation of wine samples.

A bill that would have allowed out-of-state wines to be sold in ABC stores was tabled in February by the General Assembly General Laws Committee. Proponents say they will try to revive the measure in 2007 if ABC has not found another way to help small wineries sell their wines.

Gettings said a decision on whether to pursue out-of-state wines will be made after the ruling on the appeal.

Without the option of selling to ABC stores, Virginia wineries will have to look for shelves elsewhere. However, another part of the Brooks vs. Danielson ruling requires the wineries to have wholesalers buy their wines and sell them to retailers.

That sharply limits the options for the likes of Judy Furrow, co-owner of Hickory Vineyard in Fredericksburg, who plans to focus more on selling wine at festivals. Another promising venue: Some wineries are planning to expand their own retail shops, located near the vineyards.

Still, the loss of the ABC market may cost Hickory up to 25 percent of its sales, and the alternatives might not offset that. "We're going to go to as many festivals as possible to try to make up the difference," Furrow said. "They [The retail shop and festivals] won't cover the losses."

Yet the status of Virginia wines in ABC stores has been fragile for some time. Sales of wine temporarily ceased April 25, 2005, while ABC decided how to comply with the federal district court ruling.

Sales resumed May 2, 2005, but the stock was not to be replenished. A year later, the stores are down to their last few bottles of wine, as they await an appeal on the ruling.

"ABC viewed that as meaning they could not restock, but that they could finish selling what they had," Heidig said.

Eighteen Virginia wineries sold 20,000 cases of wine to ABC stores before the 2005 ruling. Last year, ABC stores made $2.1 million in Virginia wine sales, less than 1 percent of their overall total.

The sales of wine had risen almost constantly over the past five years. Over the past year, wine sales decreased, reflecting the reduction in inventory at ABC stores, however, storewide sales have grown.

But customers are finding plenty of other drinkables on the shelves without Virginia wine. Gettings is projecting sales growth of 6 percent during the current fiscal year.

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