How Would Privatization Effect Small Washington Wineries?

In a new TV ad, a Woodinville winemaker says I-1100 and I-1105 hurt the small grape guys. Some of his colleagues disagree.

September 13, 2010

Here’s a TV ad urging voters to vote no on initiatives 1100 and and 1105 this November. The spokesperson is Darby English of Darby Winery based in Woodinville; the sponsor is the Protect Our Communities Coalition, a privatization opposition group whose members include state firefighters, King County Executive Dow Constantine, the Washington Association of Churches, and the Washington Beer and Wine Wholesalers Association.

As the burly young English strolls through the vineyards, he tells us that the privatization initiatives make it "more difficult for small wineries like mine to compete" and that they "allow big retail to push our products off the shelf."

Some colleagues beg to differ. The Family Wineries of Washington is a group of independent state wineries that has come out in support of I-1100. "Small wineries and retailers have never competed toe to toe with the big wine companies" argues the awesomely named Paul Beveridge, winemaker at Wildridge Winery and president of Family Wineries of Washington. "We are in a different market. We provide quality, rarity, convenience and selection–that’s how small wineries and retailers compete. We sell our story and our uniqueness. The freedom of commerce established by 1100 will provide a truly level playing field for small Washington wineries to innovate and market their products in new ways."

Should I-1100 pass, the state will lift the ban on volume discounts, which has many small winemakers, craft distillers, and microbrewers scared that they will feel pressure to lower prices below profitability to stay competitive. John Morgan is the winemaker/owner at Lost River Winery in Mazama (and secretary of Family Wineries). He calls this argument a red herring.

"People suggest to me frequently that if my Merlot, which is priced at $22, (and should be priced at $28), were priced at $19.99 it would sell great. Yes, it would. And I would never make a dime. This is what I tell such vendors and guess what? They get it and they keep selling my wine. If someone suggested I discount my wine by volume, the answer (and the situation) would be no different."

As far as shelf space is concerned, Darby English is very likely correct when he says that beer and wine retailers will have less room for beer and wine once they start stocking liquor as well. It’s up to craft beer and winemakers to weigh this likelihood against greater control over their own sales, marketing, and distribution. The Washington Wine Institute, the main lobbying group for the state wine industry, has published a number of documents detailing how privatization might effect state wineries. You can find those here.

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