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Friday, July 21, 2006

Vineyard opens despite new law

New regulations allow Virginia wineries to sell their products only at festivals or on site.

The Virginia Mountain Vineyard opened on July 1, the same day that a new Virginia regulation limiting sales of Virginia wines took effect.

The law prevents Alcoholic Beverage Control stores from selling Virginia wines and Virginia wineries from selling their products directly to retailers.

"They handed the distributor a monopoly," said David Gibbs, who owns Virginia Mountain Vineyard with his wife, Marie.

The law affects the three-tier system of getting wine from the winery to the consumer. The winery is tier one. In tier two, wineries sell it to distributors, who take it to tier three -- the stores and other retailers.

Until this month, Virginia wineries had been allowed to skip the second tier by taking their wines to Virginia retailers. Out-of-state wineries, however, weren't allowed to do the same.

The U.S. District Court for the Eastern District of Virginia ruled in the 2005 Brooks v. Danielson case that it is unconstitutional for the state to show preference to their own products while placing out-of-state wines at a disadvantage.

Now, the Gibbses and other small winery owners are concerned about their disadvantage -- their businesses usually do not produce enough wine to be profitable to distributors.

"I'm not saying there is anything wrong with distributors ... if you're large," Marie Gibbs said. "If you're small, like us, they don't want you."

The courts ruled in the same case that Virginia also showed preference to their own wines by only selling Virginia wines in ABC stores.

So now, small wineries can either sell wine from their tasting rooms or at festivals, although the Gibbses said there has been talk of the festival option being taken away.

"Your average person doesn't know about this [the regulations], but, if they start attacking festivals, it'll definitely affect them," Marie said.

Del. Robert Bell (R-Charlottesville) said the General Assembly is "hopeful that ABC can come up with regulations that allow them to sell wines from small wineries, but not just Virginia wines."

Sen. Brandon Bell (R-Roanoke) recently visited the Virginia Mountain Vineyard and found "the entire operation very impressive."

"My thoughts are to set up an informal meeting with local wineries to come up with something that would work," he said. "Unfortunately, anything that we come up with wouldn't be voted on until January."

In an effort to survive the current restraints, Virginia Mountain Vineyard and other wineries are uniting and forming wine trails. The businesses operate separately, but promote area wineries on their Web sites and on-site and will occasionally host events together.

The Bedford Wine Trail was formed in May, combining five small wineries.

"All the wineries are trying to do all they can to bring business in," said Danny Johnson, 67, who owns Peaks of Otter Winery, which is on the Bedford trail. "It's not going to take the place of the ability to self-distribute, but it is helping a little."

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