April 24, 2008

New distribution company to help small wineries

CROZET—In 2007 the Virginia General Assembly passed legislation that permitted the Virginia Department of Agriculture and Consumer Services to serve as a distributor for smaller wineries. A year later, small wineries are finally getting some relief.

The Virginia Wine Distribution Co., which began operation last week, will help small wineries distribute as much as 3,000 cases a year. The venture will act as an alternative to using independent wine wholesalers, which can be costly for many small operations.

The distribution company is in response to the federal court ruling that prohibited wineries from selling directly to retailers. In April 2005, the U.S. District Court invalidated Virginia laws allowing self-distribution by small wineries, citing a violation of the U.S. Constitution’s prohibition of one state giving preference to its own businesses over those of other states.

The 2006 General Assembly eliminated self-distribution laws under which wineries had operated since 1980. Starting July 1, 2006, wineries could only sell wine directly to consumers or to distributors. Before the ruling, 90 percent of Virginia’s farm wineries had self-distributed to local markets.

The Virginia Farm Bureau Federation has advocated a system under which smaller wineries could self-distribute their wines rather than sell them through a distributor.

“Right now, this gives small wineries an access and allows them to maintain a larger stream of revenue,” said Ann Heidig, president of the Virginia Wineries Association and a member of the VFBF Wine Grape Advisory Committee.

Through VWDC, wineries can market their products to shops and restaurants. However, they will act as agents of the company when taking orders and making wholesale deliveries of wine. By contract, VWDC and the wineries share delivery workers, bonded warehouse space and delivery vehicles. The cost to Virginia wineries using the services of VWDC will be $5 per transaction initially.

As of last week, more than half of Virginia’s wineries and farm wineries had signed on to use VWDC; 52 are licensed.

Contact Heidig at 540-895-5667.