Matt Szechenyi

Szechenyi lives in Botetourt County.

In 1980, an enlightened General Assembly passed common-sense legislation that recognized that small, independent Virginia wine producers could not afford to market their products through wholesalers, waiving their requirement to comply with the long established three-tier distribution system. (Distributor profit is estimated at 40 percent of retail price).

Unfortunately, this legislation was overly aggressive in favor of Virginia's own and excluded producers from neighboring states. In 2005, a U.S. District Court invalidated the 1980 law citing its intrastate advantage. This prompted the General Assembly to revise its 1980 position, and it passed new legislation that revoked self-distribution. The result:

On July 1, a Virginia law went into effect prohibiting independent Virginia wine producers from self-distributing their products to restaurants and retailers, forcing them to comply with the three-tier distribution system, which mandates use of licensed wholesalers.

Given the cost models associated with their small production volume, if forced to use wholesale distributors, these wineries lose money on each bottle of wine sold. The only option available to them is to sell their product from their own tasting rooms or at fairs.

All of us who have gone to fairs and wineries realize that those outlets provide only limited opportunity to sell wine. It doesn't take an MBA to figure out that this business model is not sustainable. Under this scenario, independent Virginia wineries will fail.

There has been profuse legal argument back and forth, attempting to cite legal precedent, justifying established processes and offering misguided and complex alternatives. At the end of the day, and if isolated from heavily subsidized political agendas, the solution should be very simple:

Pass legislation that gives equal right for self-distribution to both Virginia and out-of-state wineries.

This should comply with the 2005 court decision, as that addressed interstate commerce, not self-distribution.

If absolutely necessary and to retain the spirit of the original three-tier mandate to regulate sales of alcoholic beverages, legislate a reasonable upper limit to the number of cases available for self-distribution, beyond which a wholesaler must be used.

By any reasonable definition, the current law smacks of serious restraint of trade, obviously favoring large corporations. Retention of the status quo has the potential to cause the ultimate demise of 450 independent Virginia wineries and vineyards.

These operations today are not only creating quality native Virginia products, they are preserving many thousands of pristine Virginia acres from residential development and adding a major tourist destination. Botetourt County alone takes pride in displaying more than 700 acres under stewardship by vineyards and wineries.

As a consumer of wines who appreciates variety and local flavor at wine retailers, and a resident of the commonwealth who treasures our state's premier agricultural resources, I'm appalled at the current situation and encourage our lawmakers to take positive action by restoring self-distribution rights to independent wineries.