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Wine Law

Wine law is arcane and often counter-intuitive.
– Richard Mendelson, Wine in America: Law and Policy

Contents

  1. What is Wine?

Part One: European Wine Law for the Sommelier

  1. The AOC System in France
  2. Divergent Models in Italy and Germany
  3. The European Common Market for Wine
  4. CMO Reform in the 21st Century
  5. Modern EU Wine Classifications
  6. Administration of Appellations of Origin

Part Two: American Wine Law for the Sommelier

  1. Labels in the New World
  2. Post-Prohibition State and Federal Regulation of Alcoholic Beverages
  3. Tied-House Laws
  4. Law and the Three-Tier System
  5. Challenges to the Three-Tier System
  6. Granholm v. Heald
  7. Social and Legal Responsibilities of the Third Tier
  8. The Alcohol and Tobacco Tax and Trade Bureau
  9. United States Wine Labels

Part Three: Brief Summary of Canadian Wine Law for the Sommelier

  1. Canadian Wine Laws
In the sommelier world, we tend to take a narrow view of wine law and its implications. Those of us sitting for exams or certifications focus especially on the governance of appellations of origin systems and wine labeling. How much sugar is in brut Champagne? What percentage of what grape is required in a particular DOP? Why can’t I plant Pinot Noir and call it Chinon? Mastery of this type of material is critical in building a sommelier’s understanding of wine character, but the regulations responsible are small parts of the larger systems of laws that exist to regulate the production, sale, and marketing of wine—systems intended to promote public health and safety, to minimize consumer confusion, and to repress fraud in the wine trade. Part 1 of the following guide lays out the structure of European appellation and labeling laws while placing them within these larger systems—complex frameworks of legal, economic, health, and social policies. Parts 2 and 3 more closely examine laws governing the distribution, marketing, and sale of wine in the United States and Canada.

Essentially, wine laws provide answers to the following questions:
  • From the Consumer: What is in this bottle? How much is in this bottle? Is it safe to drink?
  • From the Producer: Can I plant what I want where I want? What can I put in this bottle? What do I need to put on my wine label in order to sell it? Who can I sell it to and how can I advertise it to them?
  • From the Government: How much tax revenues can we collect? What protections do we provide the public? How do we balance the legal sale of beverage alcohol with promotion of public health and safety?

What is Wine?

While the answer may seem obvious, wine must be legally defined before it can be effectively regulated. Such a definition provides clarity when determining whether or not a product complies with a governing authority’s beverage alcohol laws. For example, imagine a “Pinot Noir”—flavored popsicle, clocking in at 4% alcohol by volume (abv). Is it a “wine” product that should be governed by the same regulations that govern a bottle of 13.5% abv California Pinot Noir?   
The World’s Oldest
Wine Law?



In 92 CE, the Roman Emperor Domitian banned the planting of vineyards on the Italian peninsula and ordered half of the vineyards in Roman provinces uprooted. Foreshadowing the modern European grubbing-up scheme, Domitian undertook such draconian measures because the populace was growing wine grapes on arable land when bread was drastically needed. His wine law, like many drafted in its wake, was deeply unpopular and routinely ignored, yet it remained on the books for nearly two centuries. In 280 CE Emperor Probus was again encouraging his legionnaires to cultivate vineyards along the frontier. Soon thereafter, even amidst great political disorder, winemaking consolidated in far-flung areas, including the Loire Valley, modern-day Chablis, the banks of the Mosel and the Pannonian Plain of Austria and Hungary.

Or was it even earlier? A law regulating taverns’ commercial practices in Mesopotamia can be found in one of the world’s oldest legal texts, the Code of Hammurabi!


To answer that question, we need to turn to the legal definition of wine. The International Organization of Wine and Vine (OIV) defines wine as: “the beverage resulting exclusively from the partial or complete alcoholic fermentation of fresh grapes, whether crushed or not, or of grape must,” and stipulates a minimum actual alcohol content of 8.5%. This definition precludes the use of other fruits or concentrated grape musts in the production of wine, and it sets a basic minimum level of ripeness for fruit. US and EU definitions of “grape wine” are mostly congruent with the OIV’s parameters. The EU sets a general actual alcohol range of 8.5-15%, with exceptions for certain traditional styles at both ends. The current US definition of wine, as stated in the Code of Federal Regulations (27 CFR 24.10), includes products made from grapes and other fruits containing not more than 24% abv. In this sense, cider is technically wine! The US defines “grape wine” more narrowly, as the product resulting from normal alcoholic fermentation of ripe, sound grapes. 7-24% is the allowable range of alcohol for the category. In the US still wine is divided into two legal categories: “table wines” (7-14% abv) and “dessert wines” (over 14% to 24% abv). As dessert wines are taxed at a higher rate than table wines, these categories are essentially tax brackets, not declarations of style. In fact, most wines classed as “dessert wines” in the US—i.e., any still wines over 14% abv—are generally dry in style. And many of those wines are above 15%.

Thus, there is a bit of disconnect between US and EU definitions of wine: the US allows for products from 15-24% abv to be labeled as wine; the EU does not. In 2006, the EU and US entered into a bilateral agreement on wine trade, which allowed US producers to export wines of over 15% to Europe. For the first time, the EU recognized these beverages as “wine.”

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PART ONE: EUROPEAN WINE LAW FOR THE SOMMELIER

The AOC System in France
In 1863 phylloxera struck France, igniting a decades-long debate at the highest levels of academia and government over a response as vignerons watched livelihoods disappear. The economic impact of phylloxera on France and Europe cannot be understated, nor was its influence confined to those years in which French scientists raced for a cure. On the eve of phylloxera’s first recorded appearance, wine accounted for approximately one-sixth of the French agricultural economy, and it was the second-most important export, behind textiles. Phylloxera’s impact was catastrophic: the invasive species reduced France’s vineyard acreage by one-third from 1875 to 1889, and production declined by 73%. Consumption, however, remained constant. Phylloxera therefore caused France to become a wine-importing country, and the country first looked to Spain and Italy to fill the gap. France dramatically increased tariffs on imported wines in the late 1880s, relying increasingly on its African colony of Algeria in the years to follow.
Algeria’s Heyday

In the mid-18th century, French soldiers and early colonists attempted to produce wines in Algeria’s baking hot climate, with few successes. The pressure of phylloxera in France, coupled with the arrival of educated winemakers and agricultural investment in Algeria, remade the colony into the world’s fourth-largest producer of wine. In the late 1930s French Algeria claimed 400,000 hectares of vineyards and produced over 17 million hectoliters of wine annually. A number of VDQS zones were established by the end of the 1950s. On the eve of Algerian independence in the early 1960s, it was still producing over 13 million hectoliters of wine and providing almost 40% of the world’s wine exports. But independence in 1962 brought collapse; wine production dwindled in the ensuing decades and in the early 2000s Algeria’s share of world wine production had slid to less than 0.2%. Most remaining vineyards today produce table grapes.


As grafting became the accepted and endorsed solution to the phylloxera problem, French vignerons faced new economic challenges. Many replanted with high-yielding varieties—in Chablis growers often chose to plant Tressalier rather than Chardonnay, for example—and average yields in France more than tripled from 1880 to 1920. Despite aggressive taxation, inexpensive foreign wines brought competition against the resurgent French industry, and tariff-free Algerian imports continued to rise, further driving down French wine prices. Phylloxera devastated the vineyards of France, but in the early 20th century the country was suddenly grappling with a new problem: oversupply. 

Falling prices fed reliance on hybrids. Outside of the wealthier regions of Bordeaux and Burgundy, cash-strapped vignerons continued to plant these “direct producers”—hybrids of American vine species or American and vinifera vines—which provided a cheaper solution to phylloxera than grafting. Hybrid grapes (Noah, Othello, Clinton, Baco, Couderc Noir, and others) were easier to grow, often more prolific, and required fewer applications of pesticides than vinifera varieties. But the first hybrid vines produced markedly inferior wines, and a series of laws passed from 1919 to 1935 limited their use and prohibited replanting. Six varieties, including Noah and Othello, were banned outright due to fears that the wines they produced contained toxic levels of methyl alcohol. Despite such official restrictions hybrid grapevines still accounted for almost one-third of the entire French vineyard by the 1950s and produced almost half of France’s Vin de Table.

Fraud was also commonplace at the turn of the century. The shortages of the phylloxera period opened the door to fraudulent practices, but adulteration and outright misrepresentation blossomed amidst the overproduction and heightened competition that followed. Is that bottle of Burgundy from Burgundy or Algeria? Citing Gironde Archives, the authors of Wine and Culture: Vineyards to Glass state that “five and six times the number of bottles actually produced at particular (Bordeaux) châteaux were sold on the market under the name of the property.” Place and brand names were unreliable, and in any case thin wines were often corrected with the stronger vins médecins of the Midi, Spain, or Algeria. Buyers were increasingly uncertain that they were even buying wine! Unscrupulous producers expanded production by making “wine” from water, sugar, and grape pressings; others diluted wines to stretch their sales. Raisin wines were a common product of Languedoc and at one point accounted for over 10% of the total French production. Harmful additives like plaster and sulfuric acids were used to correct or color poor wines. The great number of adulterated wines tarnished the nation’s image and diminished wine sales abroad.

France had to take action. In 1889 France had passed the Griffe Law, defining wine as the product of the fermentation of fresh grapes and outlining acceptable winemaking practices and additives—sugar for chaptalization, fining agents, etc. A 1905 law targeted fraud in the sale of agricultural products by granting the government administrative authority to prosecute those who misrepresented origin. In 1907 the government strengthened the provisions of the 1905 law and applied them to wines and spirits—by requiring declarations of harvest quantities, for instance—while formalizing the process of regional demarcation. From 1908 to 1912, France thus began to geographically delimit its most distinctive regions: Bordeaux, Banyuls and Champagne for wine production, and Cognac and Armagnac for spirits. These were essentially indications of origin without limits on technique, but an idea—terroir—began to discover its voice through the law. The Law of 6 May 1919 further defined these geographical indications—known as appellations d’origine—as intellectual properties and gave French courts jurisdiction over their use. Ultimately, transferring control to the judicial branch was a failure, as cases came to court after the damage to the integrity of the appellations d’origine had already been done. From 1889 to 1919 France had succeeded in defining the contents of wine and the boundaries of an appellation, but despite some political will the country had failed to link the definition of product and the definition of place.

Preserving authenticity solely by validating geographical origin might be satisfactory for a natural product like mineral water but not for a processed product like wine. While France debated controls on a national scale, vignerons in one locality took action. From 1923 to 1926 a syndicate of Châteauneuf-du-Pape producers led by Château Fortia’s Baron le Roy drafted a set of self-imposed, wide-ranging rules for their appellation, encompassing geographic origin and production parameters. The new Châteauneuf-du-Pape requirements limited growers to ten varieties, set a minimum alcohol content, prohibited chaptalization, and banned rosé production. Local négociants and growers displeased with the strict controls—and likely selling their wines in bulk to northern French merchants for blending—immediately brought a lawsuit. The court in Nîmes decided in le Roy’s favor, legally recognizing the new regulations as integral to the wine’s expression of origin. Following the example of Châteauneuf-du-Pape, a French senator named Joseph Capus pushed new wine legislation through parliament in 1927, stipulating the use of specific non-hybrid varieties for appellations nationwide and defining some basic means of production. For example, the 1927 law mandated both the traditional method of sparkling winemaking and the use of Chardonnay, Pinot Noir and (Pinot) Meunier in Champagne. But the 1927 law kept oversight in the hands of local civil judges. Powerful economic interests—for whom stricter practices were frequently a hindrance—exerted influence over the courts, and the development of quality controls in many cases reflected aspirational goals rather than actual historical practice. What Capus and others desired was a self-regulating national system guided by a single agency—one that could establish ambitious controls to protect both the place of origin and preserve the highest possible quality. The stage was set for the AOC system.

In 1935 France established a national regulatory agency: the Comité National des Appellations d’Origine, a governmental branch charged with the creation and administration of appellations d’origine contrôlées (AOCs) for wine and spirits. In a controlled appellation of origin, wines are produced in a defined geographic area and in a manner consistent with “local, loyal, and constant” practices. Clearly defined vineyard and winery practices are required to obtain the right to an AOC. In the vineyard a grower must plant only permitted varieties (the encépagement), and he or she must observe set training and pruning techniques, a minimum density of vines, limits on irrigation, methods of harvest, maximum yields, and minimum must weight and potential alcohol for harvested grapes. Available styles of wine—red, white, sparkling, still, nouveau, fortified—are clearly defined, and an assemblage requirement sets the permitted varietal composition for the final wine blend. The winemaker faces set methods of pressing, maximum alcohol levels for enriched wines, minimum and maximum residual sugar levels, a minimum period of élevage, and other restrictions. AOC wines may not be marketed until a set date, and label text must conform to standards on font size and placement. With Châteauneuf-du-Pape acting as a prototype and the 1927 law as a springboard, the first AOCs appeared in 1936 and 1937. This was a radical shift in policy: the right to an appellation would now be awarded by a national agency prior to a product’s release rather than defended afterward in a court of law. Individual AOC regulations—each assembled in a document called a cahier des charges—served as a bulwark against fraud and attempted to guarantee a consistency of product. Did the system become the hoped-for quality guarantor as the percentage of French wine released under an AOC has grown from less than 10% in the 1940s to over 50% in the 2000s? No—but in a country of disparate winemaking traditions the AOC provided the most coherent national model linking product and place to date. As such, it became a model for other national systems in Europe and eventually for the entire EU. Its single regulatory agency, the Comité National des Appellations d’Origine, became an institut in 1947, giving the organization its modern acronym: INAO.

Encépagement
vs. Assemblage



In AOC/P documents, there are separate requirements for encépagement and assemblage. Take note: encépagement refers to grape varieties in the vineyard, while assemblage refers to the composition of the final wine. Often prescribed percentages for varieties in vineyard and winery align exactly; however, there are many instances in which they do not. In our compendium entries, we have listed both requirements only in cases in which they do not match up.
The AOCs of France eventually became one tier among several in the country’s hierarchy of protected wines. In 1949 the INAO introduced the Vin Délimité de Qualité Supérieure (VDQS) category. Considered a steppingstone to AOC status, VDQS appellations also limited yields, varieties, and methods of viticulture and vinification. Most were located in Loire Valley or Southwest France. By the mid-2000s, the category only comprised about 1% of all French wines, and it was phased out entirely in 2011. In 1979 France formally created a less restrictive category for table wines with geographic origin: Vin de Pays, the “country wines.” These range greatly in size; regional Vin de Pays areas cover broad expanses and multiple départements, departmental areas corresponded to single départements, and zonal areas can be similar to mid-sized AOCs, covering a single winegrowing zone. By the mid-2000s Vin de Pays appellations accounted for one-third of French production. VINIFLHOR, a government agricultural office, used to oversee Vin de Pays regulations but control of the category was transferred to the INAO in 2009, after the European reforms were finalized. At one point, there were over 150 Vin de Pays regions in France; modern consolidation in the post-CMO reform era reduced the number of these to 74 by 2014. (Click here to see them all).

While the politicians in Paris were drafting the AOC laws, they simultaneously produced a series of acts—the Statut de la Viticulture—designed to address the problem of oversupply and stabilize the flooded wine market. This body of decrees, issued from 1931-1935, prohibited new plantings throughout France’s major wine-growing départements and levied new taxes on excess production and high-yielding vineyards. Such taxes took aim at Algerian producers, who controlled vast tracts of land yielding greater quantities of grapes than those in continental France. The Statut gave the government recourse to force distillation in times of great excess and to withhold wines from the marketplace (blocage). And to keep growers happy—or at least on their land—France fixed minimum prices on wine (the prix social). These measures slowed the bleeding even as France plunged into the Great Depression, but in 1942, amid massive vineyard destruction resulting from the war, the Vichy Regime ended the policy. Nonetheless, many of the measures France adopted before the war would reappear afterward, both in France and as European Common Market policy.

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Divergent models in Italy and Germany
With the end of World War II and the Fascist regime, Italy moved its economy forward with surprising speed, and its products—cars, fashion, cinema—became emblems of refinement. However, the country needed to improve the image of its wines abroad. In 1963 Italy passed Law 930 and debuted its Denominazione di Origine Controllata (DOC) system, modeled closely on the French AOC. But the Italians added a second, theoretically stricter tier of appellations: the Denominazione di Origine Controllata e Garantita (DOCG). DOCs must be established for a minimum of five years before their producers could petition for DOCG status, and the first DOCGs (Brunello di Montalcino, Vino Nobile di Montepulciano, Barolo, Barbaresco) did not appear until 1980. An Italian DOC or DOCG is governed by a document called the disciplinare di produzione, which regulates many of the same things as the French cahier des charges: geographic origin, accepted grape varieties and styles of wine, maximum yields, minimum planting density, minimum alcohol levels, and so on. However, while equivocating in some respects—often, required vine training is that “generally used” in an area, or accepted exposures must be “suitable”—the Italians add requirements in others. In many DOCGs, the range of elevation for vineyards is strictly defined. Minimum levels of dry extract are set. Maximum yields are defined in tons per hectare of fruit and in hectoliters per hectare of wine. For serious red DOCG wines, minimum aging requirements far surpass the basic 4-8 month periods usually required by French AOCs. Three, four, or five years of aging—in wood and bottle—may be required to attain DOCG status for some wines. There are riserva versions for many DOCs and DOCGs, requiring additional minimum aging, heightened levels of minimum alcohol, reduced maximum yields, or some combination of all three—the term does not have a standard definition; rather, it is defined by each appellation’s disciplinare di produzione. Finally, a typical taste profile, aroma and color are stated. An amaro (“bitterness”) finish and granato (“garnet”) color are often required. In order to receive DOCG status a wine must show “typical” qualities in front of a tasting panel, which is usually composed of fellow winemakers and administered by the local consorzio. If accepted, the wine is wrapped with a neck band, colored pink for red wines and yellow-green for whites, and released for sale under the DOCG. 

The Italian DOC/DOCG system has been roundly mocked for its inability to guarantee much of anything, especially quality. There are three main areas of complaint: overly generous geographic delimitation, overly broad ranges of accepted styles, and an overly large number of appellations, period. Many of the original DOCs and DOCGs of Italy have expanded their borders far beyond the original growing zones; Chianti and Soave are obvious examples. In response, some appellations have created classico zones, whose borders are restricted (in theory, if not always in practice) to the region’s historic heartland of production. Secondly, Italian appellations are frequently criticized for permitting too many styles of wine, and rightly so. For instance, a DOC may allow the production of basic rosso, bianco, and rosato wines; ten or fifteen varietal wines; spumante, frizzante, and tranquillo styles; normale and riserva; and a few passito and late harvest renditions—all under the same DOC banner! Finally, the numbers: at the end of 2014 there are a combined 406 DOCs and DOCGs. Many of them are of arguable worth; some only serve a small handful of producers. Can quality really be controlled with so many different appellations permitting so many styles of wine?  

While outsiders today see sheer numbers, bloated borders, and commercial irrelevance as the most significant failings of the DOC system, many Italian producers from the late 1960s on found the system too inflexible and strict. Some of Italy’s greatest wines in the 1960s, ‘70s and ‘80s were released as simple table wines—the so-called “Super-Tuscans.” And after the first wave of DOCGs arrived, others emerged—some less than worthy of the designation. The Italian government attempted to restore integrity to a failing system with the passage of Law 164 (Goria’s Law) in 1992. This overhauled existing regulations and added a new tier to the Italian quality hierarchy: Indicazione Geografica Tipica (IGT). Much like the French Vin de Pays, the IGT offered winemakers greater freedoms than DOCs or DOCGs, and the areas encompassed by IGTs were often much larger than those defined by appellations. The first IGTs appeared in 1994; some, like Bolgheri (now a DOC) limited production to specific provinces while others (Toscano, Puglia, etc.) covered an entire region. From the 1990s forward the traditional Italian quality hierarchy thus includes four tiers rather than three: Vino (formerly Vino da Tavola), IGT, DOC, and DOCG.

Germany, whose wine markets were also replete with fraud, took a different approach than France or Italy. Five major laws concerning the production and labeling of wine were passed, in 1892, 1909, 1930, 1969, and 1971. In Germany’s northern climate, the most worrying concern—and greatest potential entry point for adulteration—was in achieving natural ripeness. Artificially sweetening wine, whether through the addition of Süssreserve or some less desirable substance, therefore became a serious point of contention. Chaptalization itself, known as Anreicherung here, was the mark of a lower-quality wine in the early 20th century; before the passage of the 1971 law German wines could be divided into two categories: Naturweine (“natural” wines) and Verbesserte (“improved,” or chaptalized wines). In fact, the VDP was originally founded in 1910 as an association dedicated to the production of Naturwein, and the term appeared on labels before it was prohibited in 1971.  

With the introduction of the 1970 European wine reforms (see section below), Germany needed to update its own wine laws, demarcate clearer vineyard and regional boundaries, and define consistent label terminology. The result was the now-reviled—but much simplified—1971 Wine Law, or Deutscher Weingesetz. The law defined four levels of geographic origin for use on labels: Einzellagen (vineyards), Grosslagen (collective sites), Bereiche (districts), and Anbaugebiete (winegrowing regions). Germany reduced the number of pre-existing, named Einzellagen by 90%—from almost 30,000 to 2,600! It introduced the Grosslagen category, collective sites composed of many individual vineyards, yet it left no distinction on the label between Einzellagen and Grosslagen. Piesporter Goldtröpfchen and Piesporter Michelsberg could suddenly appear synonymous in quality to the consumer, at least from the label alone. The Bereiche were larger still, and the Anbaugebiete were whole winegrowing regions, such as Rheingau or Rheinhessen. With the passage of the 1971 Wine Law, Germany had 11 Anbaugebiete; two more (Sachsen and Saale-Unstrut) would be added with the reunification of East and West Germany in 1990.

The 1971 Wine Law also created the modern quality pyramid for Germany, modeling it on European standards established the previous year. At the bottom, there was Tafelwein, the German table wine. Above it were two tiers of “quality” wines, Qualitätswein bestimmter Anbaugebiet (quality wine from a single winegrowing region) and Qualitätswein mit Prädikat (quality wine with a designation of ripeness), known simply as Qualitätswein and Prädikatswein today. Prädikatswein is defined as a subset of Qualitätswein and is labeled by traditional Prädikat: Kabinett, Spätlese, Auslese, Beerenauslese, Trockenbeerenauslese, and Eiswein. (Eiswein was added as a separate category in 1982.) Other old label terms in common usage, like Edelbeerenauslese, Naturwein or Feine, were eliminated with the 1971 law. In recognition of Germany’s longstanding promotion of natural ripeness as a signal of quality, the authorities outlawed chaptalization for Prädikatswein. With its new law, Germany effectively diminished site as a precursor for quality. To break into the top tier of Prädikatswein, it didn’t matter where you grew the grapes—only that you got them ripe.  

Two additional tiers followed. Landwein, a “country wine” tier similar to IGT or Vin de Pays, was added in 1982, and Qualitätswein garantierten Ursprungs (QgU) was added in 1994. The latter, a little-used category for “quality wines of guaranteed origin” was discontinued with 2007 legislation. Germany therefore has four categories today: Deutscher Wine (formerly Tafelwein), Landwein, Qualitätswein, and Prädikatswein. Unlike most European systems, Germany's quality ladder is an inverse pyramid in terms of quantity: 96% of German production in 2013 was at the Qualitätswein level, with 20% at the Prädikatswein tier. Landwein (now IGP) and Deutscher Wein are rarely if ever exported.

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The European Common Market for Wine
In 1957 the European Economic Community (EEC) was established by six European states, including the continent’s two largest producers of wine, France and Italy. The EEC was created to integrate the economies of its member states and—in the aftermath of two world wars—to reduce the potential for future conflicts in Europe. Economic integration included the development of Common Agricultural Policy (CAP). The EEC took its first steps to Common Market Organization (CMO) for wine in 1962, by directing its wine-producing members (France, Italy, West Germany, and Luxembourg) to establish viticultural land registries and annual logs of production and stocks. In 1970, the EEC introduced its first comprehensive, if watered-down through compromise, CMO for wine. The CMO removed barriers to trade amongst member states, created protectionist tariffs on wine imported from non-member states, set minimum prices for wine, and established a distillation scheme for excess production. It regulated enological practices and divided production into two classes—Quality Wines Produced in a Specific Region (QWPSR) and Table Wine—with different rules and regulations for each. QWPSR wines included the AOC and DOC wines of France and Italy, and were subject to stricter quality controls than table wines. Ultimately, however, the CMO did not address the underlying oversupply that plagued the wine industries in France and Italy. If anything, its interventionist pricing controls and subsidies for distillation made the problem worse.

To combat this structural oversupply the EEC reformed its wine CAP in 1976 with the addition of a complete ban on planting rights and a grubbing-up scheme. The basic principle behind planting rights was that a grower could not plant—or even replant—a vineyard without acquiring a legal right to do so. In reality, planting rights affected producers of table wine more than producers of QWPSR, and the system functioned like cap and trade: one could buy and sell planting rights from private individuals, and from 1999 onward member state governments held a reserve of planting rights for sale. Either way growers faced an expensive proposition, particularly if the goal was to produce cheap, low-quality wines. Alongside the ban on planting rights, the grubbing-up scheme also reduced supply by giving growers subsidies to abandon or replace vineyards with other cash crops. On the other hand, mandatory “emergency” distillation subsidies for surplus table wines continued, actively encouraging overproduction. Despite efforts aimed at reduction Europe’s surplus problem continued as the 20th century wore on, exacerbated by the greater societal trends of declining consumption and an aging public.

In 1993 the European Economic Community evolved into a broader political union, the European Union (EU). By this time other prominent winemaking countries had joined France, Italy and Germany in the community, including Greece in 1981 and Spain and Portugal in 1986. Austria acceded to the EU Treaty in 1995 and many former Eastern Bloc countries entered the EU in the 2000s. All new member countries had to bring their national systems in line with the CMO on wine. The Portuguese replaced their existing Região Demarcada system of appellations with the Denominação de Origem Controlada (DOC) system following entry, and Spain retooled its existing Denominación de Origen (DO) system in 1996, bringing it in line with EU standards. By the 21st century, all systems in EU member nations were therefore broadly divided into two categories: QWPSR and Table Wine. Each country’s highest tier of appellation (France’s AOC, Italy’s DOC and DOCG, etc.) belonged to the QWPSR category, while lower tiers (France’s Vin de Pays and Vin de Table, Italy’s IGT and Vino da Tavola, etc.) were classified as Table Wines with or without geographical indication. Looking forward, QWPSR wines are today considered PDO, Table Wines with Geographical Indications are PGI, and Table Wines without Geographical Indications are just… wine.         

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CMO Reform in the 21st Century
In 2014 the EU comprised 28 countries, and its members accounted for 45% of the world’s vineyards, 65% of world production, 57% of total consumption, and 70% of global wine exports. Europe has always been the world’s leading producer of wines, but its sheer volume of production has for decades been an economic liability. Consumption rates have been steadily falling, a decline advanced by anti-alcohol awareness campaigns, health concerns, increasingly severe drunk-driving penalties and lowered blood-alcohol limits, and general interest by younger generations in drinking anything other than their parents’ booze of choice—i.e., wine. Today the average Frenchman drinks about 46 liters of wine annually, down from a mid-20th century high of 117 liters per person! In Italy annual per-person consumption slipped from 120 liters in the 1970s to 40 liters in 2013—the lowest figure since the country’s unification in 1861. At the turn of the century the EU was spending almost 400 million euros per annum distilling surplus wine, and by the 21st century the wine-producing member nations were facing more serious competition from the New World than ever before. Wine imports into the EU increased by almost 10% in the years 1997-2007, while overall exports out of Europe increased at a lower rate. On the bargain shelf at foreign supermarkets, European wines from unknown appellations (or variety- and vintage-less table wines) stayed on the shelf while consumers snapped up the simpler varietal labels of Australia, New Zealand, the United States, Chile and elsewhere. The CMO system for wine was ready for dramatic reforms.

As sommeliers amid the noise of AOP, PDO, DOP, etc., it is worth remembering that the impetus for change was not to inflict remorseless pain on our kind. Instead, EU bureaucrats wanted to resolve the underlying economic problems that have plagued the larger European wine industry for nearly a century. The CMO reforms finalized in 2008 brought an end to some of the interventionist policies enacted in the 1970s and sought to restore Europe’s ability to compete in the global wine market. To do this, the EU needed to finally end its ongoing, structural oversupply, the “wine lake.” The main CMO reforms include:

 
  • Liberalization of Planting Rights: After 2015, the ban on planting rights will be lifted, giving market forces greater control over supply. However, this will not lead to complete freedom: further legislation introduced in 2013 (EU Regulation 1308/2013) creates a Scheme of Authorizations, limiting planting and replanting from 2016-2030. In this period, member states may annually authorize acreage equal to only 1% of their total planted areas for new vineyards.
  • Grubbing-Up Scheme: The EU originally sought a further reduction in the European vineyard by 400,000 ha but settled on a goal of removing 175,000 ha. To accomplish this, the EU authorized a Single Payment Scheme to compensate growers for pulling out vines and planting other crops. The grubbing-up scheme achieved its target goal in three years and concluded with the close of 2011; however, while production has fallen it is as of yet clear if the program—with its massive cost—was a success.
  • End of Distillation Subsidies: In 2012, the EU ended all subsidies for distillation of surplus wines.
  • National Envelopes: The EU grants annual funding to each member nation for the promotion of wine in third-party countries and for modernization and research at home. Some of this money trickles down to individual producers, for winery facility investments, or even to offset the costs of green harvesting. Today, European promotional campaigns are arriving on US shores in greater numbers as a direct result of national envelope funding.
  • Liberalization of Winemaking Practices: With the CMO reforms, the EU Council agreed to investigate all practices permitted in the OIV’s International Code of Oenological Practices and fast-track approval for any additions that appear there in its own list of accepted practices. In general, the EU added more flexibility to its rules concerning production, leveling the playing field between its producers and those of the New World. For instance, European producers of Wines without Geographical Indication may now use oak chips, and rectified concentrated grape must—dehydrated must used in lieu of sugar for enrichment—may now be used in a crystalline form.
  • Lower Limits on Chaptalization: Although the EU sought an outright ban on the “outdated” practice of chaptalization, a compromise yielded reduced maximums for added sugar (sucrose) and alcohol increases. The addition of sucrose to enrich wines was totally banned in Italy, Greece, Spain, Portugal, Cyprus, and some départements of Southern France. However, other forms of must enrichment (like the addition of concentrated grape must) may still be legal. Current limits on chaptalization are:
    • Climate zone A: maximum 3% adjustment (e.g. Germany, Czech Republic, UK)
    • Climate zone B: maximum 2% adjustment (e.g. Alsace, Champagne, Loire, Austria)
    • Climate zone C: maximum 1.5% adjustment (e.g. Bordeaux, Burgundy)

     

  • New Labeling Requirements: Some label terms, like sweetness designations, were standardized throughout EU member nations. Varietal and vintage labeling is now approved for all wines. More importantly, the EU replaced its former quality categories—QWPSR and Table Wine—with a new system, dividing all wines into Wines with or without Geographical Designation. (See below.)

 

 

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Modern EU Wine Classifications
On August 1, 2009, the EU implemented its new system of wine classification. At the broadest level are two overarching categories: Wines without Geographical Indication and Wines with Geographical Indication. Wine without Geographical Indication replaces the Table Wine category and, unlike their predecessors, such wines can now display a vintage date and variety on the label—key competitive advances aside New World varietal wines on supermarket shelves across the world. Wines in this category are known simply as “wine” in the native tongue of each member country—Vino, Wein, etc. (Both France and Germany prefer a national brand: Vin de France and Deutscher Wein.) These wines may not carry any indication of geographic origin save for the name of the country in which it was produced, which must appear on the label. Varietal labeling is not completely free from restrictions, as each member country dictates which varieties may be produced as a varietal wine in this category. For example, Austria prohibits varietal labeling for cases in which a consumer may confuse the grape with geographic origin, such as Blaufränkisch or Weissburgunder. For still wines Italy approves only a handful of grapes: Cabernet Franc, Cabernet Sauvignon, Chardonnay, Merlot, Sauvignon Blanc, and Syrah. None are of Italian origin.

In theory Wines without Geographical Indication are lower in quality than Wines with Geographical Indication, but there are many exceptions. Italy’s 20th-century Vin de Table revolt—in which pioneering Tuscan producers like Tenuta San Guido (“Sassicaia”) and Montevertine (“Le Pergole Torte”) outpaced DOC constraints, originally releasing their benchmark wines as simple table wines—and Château Palmer’s 21st-century homage to a 19th-century wine (“Historical XIXth Century Wine”) provide examples of high-end wines in the category. Today, Vin de France is an increasingly interesting end of the spectrum: some producers use it for experimentation, while others—particularly natural winemakers—may expect rejection by AOP tasting panels and prefer the freedom associated with Vin de France.
The 85% Rule

In order to label with vintage or variety in the EU, the wine must contain at least 85% of the stated vintage or variety. This includes wines imported into the EU, save for American wines. A bilateral agreement between the US and EU allows American wines to satisfy only the minimum US requirement on variety—75%.


The category of Wines with Geographical Indication includes two sub-categories: Protected Designation of Origin (PDO) and Protected Geographical Indication (PGI). PDO is a stricter category with tighter controls on winemaking and typically denotes a smaller geographic area than a PGI. According to European Council Regulation 491/2009, a designation of origin is the name of a region or specific place that complies with the following regulations:
  • Its quality and characteristics are essentially or exclusively due to a particular geographic environment with its inherent natural and human factors.
  • The grapes from which it is produced come exclusively (100%) from this geographical area.
  • Its production takes place in this geographical area.
  • It is obtained from vine varieties belonging to Vitis vinifera.
A geographical indication must show:
  • It possesses a specific quality, reputation, or other characteristic attributable to that geographical origin.
  • At least 85% of the grapes used for its production come exclusively from this geographical area. (The remainder of grapes must be grown in the same country.)
  • Its production takes place in this geographical area.
  • It is obtained from vine varieties belonging to Vitis vinifera or a cross between the Vitis vinifera species and another species of the genus Vitis. (Noah, Othello, Isabelle, Jacquez, Clinton and Herbemont are never allowed.)

Like basic wines, PDO and PGI wines may now include the variety on a label. Therefore, any PDO wine—from Chassagne-Montrachet to Rioja—may be additionally labeled by variety. For example, labeling wines as Bourgogne Chardonnay, Rioja Tempranillo, and Chianti Sangiovese is becoming commonplace.

PDO and PGI wines must include the following “compulsory particulars” on the front label of the packaging:
  • The terms “Protected Designation of Origin” or “Protected Geographic Indication” (or traditional equivalent terms—see below) must be spelled out or abbreviated alongside the PDO or PGI in question. Note that a handful of PDOs—Champagne, Cava, Madeira, Port, Sherry, Asti, Franciacorta, Marsala, Samos and Cyprus’ Commandaria—may omit the term “Protected Designation of Origin” (or its equivalent) from the label.
  • Actual alcoholic strength by volume. (In Europe, there is a tolerance of +/- 0.5%.)
  • Country of origin.
  • Name of bottler/producer.
  • Indication of importer (if applicable)
  • Indication of sugar content in the case of sparkling wines.
  • Indication of allergens: The EU requires food products to be labeled with a statement of potential allergens. If milk or egg products are used in fining they must be listed on the label.

The EU certifies its own member nations’ wine products under these categories, but it also recognizes third-country products in accordance with international agreements on wine trade. For instance, the EU recognizes Napa Valley AVA and Brazil’s Vale dos Vinhedos as PDOs. A bilateral agreement between the EU and Australia conferred legal protection on Australia’s GI names within European countries from its entry into force in 2010, although it does not actually grant PGI status to the GIs of Australia. The EU has signed similar bilateral agreements with other wine-producing countries, including the USA in 2006, Canada in 2003, Chile in 2002, and South Africa in 1999.

Both categories encompass existing appellation systems throughout Europe. For example, in France Bordeaux AOC and Médoc AOC become PDOs—designations of origin—whereas Vin de Pays de l’Atlantique becomes Atlantique PGI, a geographical indication. Each country has equivalent terms in its own language: Bordeaux and Médoc are Appellations d’Origine Protégée (AOPs) and Atlantique is an Indication Géographique Protégée (IGP). Of course, whether or not you actually see these terms on labels is up for discussion. With entrenched systems already in place throughout Europe (AOC, DOC/DOCG, DO/DOCa, etc.), few countries were ready to give up their own hierarchies of appellations, terminologies, and nomenclature in wholehearted embrace of the EU scheme. Therefore, in compromise the concept of “traditional terms” was codified in Council Regulation 479/2008. Traditional terms are defined as terms used, well, traditionally in member countries to designate aspects of aging, quality, type and color of wines produced under a protected designation of origin or a geographic indication. In practice this includes everything from label aging terms, such as crianza in Spain or riserva in Italy, to the names of preexisting appellation categories—AOC, DOC, DOCG, and so on. In the latter case, producers may choose whether to use PDO (or local language equivalent, such as AOP) or the appropriate traditional term, such as AOC. In France, most producers of AOC/P wine continue to use AOC on labels, but many producers of Vin de Pays have embraced IGP labeling.

France’s modern three-tier appellation system (AOC, Vin de Pays, Vin de France) integrates seamlessly with the new three-tier EU model, but complications arise in countries wherein national hierarchies have four or more tiers. For instance, in Italy both DOC and DOCG levels are considered PDO (DOP) under the EU model. When the CAP reform was rolled out, there were fears that it would result in the merging of DOC/DOCG and the end of the world as we know it for Italian wines! Traditional terms assuaged immediate fears, but new questions arose—would new DOCGs be granted after 2011? After the close of that year final consent for new appellations would come from Brussels, not Rome. The answer seemed to be no, evidenced by the slew of forgettable DOCGs approved in the eleventh hour, a 2008-2011 grace period following CAP reform adoption. But Italians regularly thumb their noses at their own wine regulations; why not thwart the EU’s intentions as well? In 2014, after three years of relative quiet and an overall decrease in the number of DOC appellations, Barbera producers proposed a new Piemonte DOCG, Nizza. Rome approved it at the end of 2014; EU approval, and more new DOCGs, will likely follow.

You can search for traditional terms here.

Member Country Equivalent Term - PDO Equivalent Term - PGI

France

Appellation d’Origine Protégée (AOP)

Indication Géographique Protégée (IGP)

Italy

Denominazione di Origine Protetta (DOP)

Indicazione Geografica Protetta (IGP)

Spain

Denominación de Origen Protegida (DOP)

Indicación Geográfica Protegida (IGP)

Portugal

Denominação de Origem Protegida (DOP)

Indicação Geográfica Protegida (IGP)

Germany

geschützte Ursprungsbezeichnung (gU)

geschützte geographische Angabe (ggA)

Austria

geschützte Ursprungsbezeichnung (gU)

geschützte geographische Angabe (ggA)

Hungary

Oltalom Alatt álló Eredetmegjelölések (OEM)

Oltalom Alatt álló Földrajzi Jelzések (OFJ)

 

Member Country PDO traditional terms PGI traditional terms

France

Appellation d’Origine Contrôlée

Vin de Pays

Italy

Denominazione di Origine Controllata e Garantita
Denominazione di Origine Controllata

Indicazione Geografica Tipica

Spain

Denominación de Origen Calificada
Denominación de Origen
Vinos de Pago
Vinos de Calidad con Indicación Geográfica

Vino de la Tierra

Portugal

Denominação de Origem Controlada

Vinho Regional

Germany

Qualitätswein
Prädikatswein

Landwein

Austria

Qualitätswein
Prädikatswein
Districtus Austriae Controllatus

Landwein

Greece

OPAP
OPE

Vin de Pays/TO

Hungary

Minőségi bor
Védett eredetű bor

Tájbor

Romania

Denumire de Origine Controlată

Vin cu Indicatie Geografica

UK

Quality Sparkling Wine

Regional Sparkling Wine

Source

 

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Administration of Appellations of Origin
Prior to CAP reforms, European countries handled the monitoring and control of appellations of origin in different ways. In France, one national body (the INAO) approved and administered AOC regulations while another, the government agricultural office of VINIFLOR, administered the Vin de Pays and Vin de Table categories. In Italy and Spain, DOC and DO regulations were governed by individual consorzio and consejo regulador bodies in the relevant regions and subject to approval by national agricultural ministries. With the final set of reforms coming on line in August 2009, the EU now requires an independent public body or authorized third party to hold responsibility for regulating and monitoring appellations. The INAO fit the bill in France, but the consorzi in Italy and consejos reguladores in Spain did not—producers paid dues to the organizations that administered the rules. In Spain regional control shifted to local government (autonomías), and in Italy a mix of public and private third-party organizations assumed the regulatory roles of the consorzi. Valoritalia is the largest such private organization in Italy. A full list of European agencies responsible for administering designations of origin in each member country may be found here. 

European countries may continue to approve their own appellations, with proponents often facing ratification at both the regional and national level. In order to be recognized throughout the EU, however, any new appellations must also be approved as PDO or PGI by the European Commission for Agriculture and Rural Development.

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PART TWO: AMERICAN WINE LAW FOR THE SOMMELIER

Labels in the New World
Controlled appellations, by and large, do not exist in the New World. In their place, many New World wine-producing countries have created appellations of origin that are purely geographic in scope. However, laws exist everywhere to protect the integrity of terms that appear on wine labels. US labeling law is covered in detail at the end of Part 2; for other New World countries, refer to the appropriate study guide for further information.

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Post-Prohibition State and Federal Regulation of Alcoholic Beverages
In the United States, beverage alcohol holds a special place in our Constitution: it is the only category of commercial goods specifically mentioned by name, and it is the subject of two constitutional amendments: the 18th—which launched Prohibition and took effect in January 1920—and the 21st, which brought it to an end in December 1933. Following the repeal of the 18th Amendment, government officials had to determine how to regulate the production, sale, and marketing of alcoholic beverages in order to minimize the numerous social ills that gave rise to the “drys” and their noble experiment in the first place. Chief among those concerns were the anti-competitive, and perhaps even predatory, behaviors of large breweries and distilleries, and the undue influence they wielded over taverns and saloons. The language of the 21st Amendment left regulatory control over the sale and consumption of alcohol within each state’s borders largely in that state’s hands. It reads:
The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited. (emphasis added)


This abdication to state government has resulted in the balkanized system of state-by-state regulation we see today. In essence, each state was free to determine if and how alcoholic beverages could be produced, sold, and distributed within its borders. Some state prohibitions enacted prior to the passage of the 18th Amendment (and its regulatory teeth, the Volstead Act) survived. For example, Mississippi, the first state to ratify the 18th Amendment, remained completely dry until 1966, and Kansas prohibited sales of all alcoholic beverages for on-premises consumption until 1987! Confusing matters further, lawmakers in many states authorized “local option,” in which individual municipalities or counties could elect to go dry in the absence of statewide prohibition. This resulted in a checkerboard map of dry and wet counties in many parts of the US. Today, all states allow alcoholic beverage sales, but there are localities that remain dry through local option. In 2014 over 100 American counties were totally dry, mostly clustered in Mississippi, Kentucky, Oklahoma, Arkansas, Kansas and Texas.

The FAA Act

Despite the language of the 21st Amendment, the federal government adopted its own set of regulations. In 1935 Congress passed the Federal Alcohol Administration (FAA) Act to set federal definitions and guidelines for the production, taxation, and sale of alcoholic beverages. Today, federal laws are primarily enforced by the Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau—the “TTB.”
Once Prohibition was repealed, states that wanted to allow for the sale of beverage alcohol had to choose a regulatory pathway to provide for such sales within their borders. States chose either to create state-run monopolies controlling the sale of alcohol (control states) or to issue licenses to private companies and individuals (license, or open, states).

Currently, 17 states and a few smaller jurisdictions, like Montgomery and Worcester Counties, MD, operate as control states—they directly participate in the sales of spirits and/or wine and beer, either exerting monopolistic control or operating side-by-side with private businesses. The form of participation differs from state to state; for instance, in Pennsylvania the PA Liquor Control Board is the sole wholesaler and retailer of all spirits and wine, while in Iowa the IA Alcoholic Beverages Division acts as sole wholesaler for spirits but leaves wholesale distribution of wine and beer—and all retail sales—to the private sector. One of the strictest control states is Utah, which totally controls the distribution and retail sales of alcoholic beverages. State law requires Utah citizens to visit state-run stores for purchases of all alcoholic beverages for off-premises consumption, save beer under 4% abv (3.2% beer by weight), and Utah restaurants may not sell alcohol without the purchase of food. In most cases, however, control states have relaxed monopolies in the years since Repeal. The Washington State Liquor Control Board lost its state monopoly on the distribution of spirits in 2012, and Vermont shifted from a system of state-run retail alcohol outlets to private “agency” stores in 1996. The current list of control states includes Oregon, Idaho, Montana, Wyoming, Utah, Iowa, Michigan, Ohio, Mississippi, Alabama, North Carolina, West Virginia, Virginia, Pennsylvania, New Hampshire, Vermont, and Maine. 

License states theoretically create a freer, private market for the sale of alcohol. Each of the 33 license states maintains an alcoholic beverage control agency—such as the Department of Alcoholic Beverage Control in California (“ABC”) or the State Liquor Authority (“SLA”) in New York—whose chief activity is not to participate in commerce but to issue licenses to private entities engaged in the production, wholesale, and retail sale of alcohol. Through licenses, states could create, tax, and regulate an orderly marketplace. Retail licenses are broadly divided into on- and off-premises categories—namely, will the beverage be consumed where it was sold? Each category is further divided based on the characteristics of the retailer, and the cost for such licenses may vary. For example, a restaurant that serves food typically applies for an on-premises license that is distinct from the on-premises license required for an establishment that does not. On- and off-premises retail licenses are also divided into sub-categories based on the types of beverage sold—licenses for wine and beer only are generally cheaper and easier to obtain than full licenses that allow for the sale of wine, beer, and spirits. Every state has its own guidelines for eligibility and a great many iterations of licenses, but they all share two basic requirements: don’t be a convicted felon and don’t operate a “tied house.”


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Tied-House Laws
Tied-house laws are a central component of post-Prohibition alcohol regulation. In a tied house, a producer of alcohol offers a retailer (on- or off-premises) of alcohol some inducement to sell his or her product. In the days before Prohibition, this inducement often occurred as a result of vertical integration: a producer (a brewery) owned a retailer (a bar or saloon), and consequently this relationship provided obvious incentive to sell that as much of that producer’s products as possible, stifling competition and promoting intemperance. Temperance activists argued that tied houses were therefore morally bankrupt institutions—profit was their only motive—and that they were indifferent toward the public drunkenness, domestic violence, poverty, and other ill-effects their businesses fostered on the surrounding community. In order to prevent the reemergence of this “saloon culture” after the repeal of the 18th Amendment, both state and federal governments adopted their own tied-house laws, which by in large prohibit beverage suppliers (manufacturers, wholesalers, importers) from exerting undue control over retailers (restaurants, bars, liquor stores) and limit vertical integration.

Pay to Play: Nevada Tied Houses?


In 2011, the TTB alleged that some of the nation’s largest wine and spirits wholesalers—Diageo, Gallo, Pernod Ricard, Moet Hennessy, Bacardi, and Future Brands—were in violation of federal tied-house law restrictions on slotting fees. A slotting fee, essentially a pay-to-play scheme in which a retailer charges a supplier to stock their brands, is considered an unlawful inducement under the FAA act. A TTB press release states:
The allegations of tied house violations stem from the companies’ participation in the 2008-2009 Harrah’s Nationwide Beverage Program. The TTB investigation, which focused on activities in the Las Vegas area, alleges that the companies collectively furnished nearly $2 million in inducements through a third party to Harrah’s Entertainment’s hotel and casino subsidiary corporations during the two year period of the program. TTB alleges that the purpose of these inducements was to obtain preferential product display and shelf space… at Harrah’s Hotels and Casinos. Payment of slotting fees by an alcohol beverage supplier to an alcohol beverage retailer is an unlawful marketing inducement which creates an artificial barrier to open and fair competition, especially for small to medium-sized companies that cannot pay such fees.

Each company denied wrongdoing, and collectively they reached a $1.9 million settlement with the government. Note that the TTB did not file a complaint against the retailer that charged the slotting fee; it faulted the suppliers who paid it. (The TTB is not responsible for enforcing laws regulating the retail tier.) Since this affair, wholesale suppliers have been very careful to avoid overt pay-to-play arrangements.


At the federal level, the FAA Act deemed it unlawful for a beverage alcohol manufacturer or supplier to “induce,” directly or indirectly, any retailer to purchase any products from that supplier to the “exclusion,” in whole or in part, of other suppliers’ products. Inducements include, but are not limited to: furnishing, giving, renting, lending, or selling anything of value to the retailer. There are a number of exceptions: offering promotional items, displays, and other support items and services is usually acceptable, provided such items do not contribute to discrimination against a competitor’s product. Violations of federal law only occur when a supplier places retailer independence at risk—and where such supplier practices result in the retailer purchasing a smaller amount of a competitor’s product. In contrast, in state tied-house laws the inducement alone is typically a violation, with or without proof an activity led to the exclusion of one’s competitors. State tied-house laws also govern the interactions of suppliers and retailers, and they generally prohibit suppliers from providing anything of value to retailers for free. Free advertisements or tickets to the big game, for example, are forbidden because they are viewed as inducements to favor their products. In such situations, both the supplier and retailer—and in many cases, the retailer’s employees (e.g., sommeliers!) may be violating state law by accepting such free goods.   

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Law and the Three-Tier System
Although often confused, tied-house laws and the three-tier system are distinct and separate concepts. Tied-house laws govern how suppliers interact with retailers in order to prevent undue influence; the three-tier system is a licensing regime that dictates who can sell to (and who can purchase from) whom, in order to create an orderly market and to allow for efficient state tax collection. Under a strict three-tier system, producers can sell only to licensed wholesalers; wholesalers can only sell to licensed retailers; and retailers, the only licensees permitted to sell to consumers, can only purchase from licensed wholesalers. In practice, however, there are numerous exceptions. California, for example, allows licensed winegrowers to sell products they make to consumers and retailers without going through the wholesale tier.  

Federal law does not require use of the three-tier system. States, however, adopted the system after Prohibition to create an organized market and to simplify the tax collection process. They created different types of licenses, granting different privileges, for issuance to players in the different tiers. License states thus provide the most obvious example of the three-tier system, but control states can also be considered three-tier states in which the state government operates one or more tiers. Vertical integration—ownership in more than one tier—is prevented by limiting those qualified to hold a license through means like tied-house laws, and a bevy of additional state laws further regulates how beverage alcohol flows into a state and through its three tiers. Most license states have drafted at-rest laws, which require that alcoholic beverages produced outside of the state “rest” at an in-state warehouse for a minimum period of time prior to transfer to a retailer. And 21 states have some form of wine franchise laws, which typically give wholesalers in-state exclusivity over the beverage brands they represent, while limiting suppliers’ ability to terminate relationships with their state wholesalers. Both types of law arguably benefit larger distributors and reduce the ability of smaller distributors and smaller producers to compete, even as their drafters often intended the opposite.

State and federal laws that prohibit unfair competition, including antitrust laws, also impact interactions between the three tiers. Such laws generally prohibit collusive actions or other anticompetitive behaviors that can restrict trade. Many common distributor practices that sommeliers encounter may fall within this area of law. Allocations of wines by distributors to retailers based on account prestige or past purchases, for instance, must be handled carefully. Distributor discounts, samples, and free goods provided with purchases may also cause tied-house issues. Promotional tie-ins, in which a retailer must buy a certain number of cases of (oftentimes undesirable) product “x” to get a few bottles of (desirable) product “y,” may be violations of antitrust law or other state laws governing beverage alcohol or unfair competition.

It is important to note that what is legal in one state may be completely illegal in another. For instance, in Nevada it is legal for wholesalers to engage in price discounting by channel; in New York it is not. Therefore, Nevada distributors may offer different volume discount structures to on- or off-premises accounts, or even separate categories of on-premises accounts, like casinos and restaurants. In New York, wholesalers must offer the same price and the same discount structure to all types of retail accounts. Research your state’s laws!

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Challenges to the Three-Tier System
Sales privileges provided by state licensing established the three-tier system, but a complex web of federal and state tied-house laws, antitrust laws, and state franchise and at-rest laws further anchor the system in place. Federal and state laws can overlap and even conflict, and a rich history of case law has appeared in the wake of the 21st Amendment’s ratification. When challenging beverage alcohol laws in court, plaintiffs have principally relied on two legal theories: first, that a law in question is anticompetitive and therefore violates antitrust law; secondly, that it violates the “Dormant” Commerce Clause of the US Constitution and is therefore unconstitutional. The Commerce Clause, which gives Congress the authority to regulate commerce between the states, has an inferred ("dormant") converse: states may not pass legislation that unfairly burdens or discriminates against the products of another state. For decades, courts have wrestled with the underlying question: does the language of the 21st Amendment inoculate state alcohol beverage law from constitutional or antitrust scrutiny?   

In the mid-20th century, courts were generally reluctant to admonish states for drafting seemingly anticompetitive laws in light of the 21st Amendment. However, this trend began to reverse with a 1980 US Supreme Court case, California Retail Liquor Dealers Assoc. v. Midcal Aluminum, Inc. The case reviewed a 1970s California state law requiring wineries and wholesalers to post minimum prices for their products and punishing them whenever they sold below published prices. A wholesaler filed suit, arguing the requirement violated antitrust law. Defendants countered that the 21st Amendment barred application of federal antitrust law to California's wine pricing regulations. In its decision, the Supreme Court rejected the defendants' arguments and held that the state’s pricing practices violated the 1890 Sherman Antitrust Act. Four years later, a federal appeals court reviewed New York's similar "post and hold" law, which requires wholesalers to post prices and honor them for a period of one month (Battipaglia v. State Liquor Authority). Plaintiffs argued that such laws were anticompetitive and could not stand in light of the Midcal holding. The federal appeals court, however, upheld the New York law, and it remains on the books today. In many such cases, judicial decisions on beverage alcohol law have been interpreted narrowly; activity similar to that ruled anticompetitive in one state remains perfectly legal in another.

In another lengthy legal battle, a different federal appeals court concluded in 2008 that a Washington State "post and hold" regulation violated federal antitrust laws. In 2004 the Washington-based Costco Wholesale Corp. launched antitrust actions against the state with nine complaints levied against restrictions on every tier of distribution, including mandatory wholesale price-posting and uniform pricing, required minimum markups, and a ban on retailer-to-retailer sales. Among its aims, the retailer chain wanted to buy wine directly from manufacturers, to receive discounts based on volume purchases, and to undercut its competition’s pricing—all of which state beverage law prevented. In Costco Wholesale Corp. v. Maleng, the Ninth Circuit Court of Appeals eventually decided in the state’s favor on most complaints, striking only the “post and hold” requirement as a violation of federal antitrust law. In this case, Costco elected not to appeal further. It lost the battle but won the war—the company was the chief contributing donor behind two statewide ballot initiatives to end state control over liquor distribution and retail sales, 1100 (which failed) and 1183, which succeeded. The latter, approved by voters in 2011, ended Washington’s run as a liquor control state and allowed retailers to purchase alcohol directly from producers. In 2012 Washington thus became the first US license state to completely eliminate any legal requirement for beverage alcohol to flow through the three-tier system, even though the licensing regime remains in place.

Dormant Commerce Clause claims have recently provided even more fertile ground on which to challenge state authority provided by the 21st Amendment and reduce the rigidity of the three-tier system. In 1984, the Supreme Court considered Bacchus Imports, Ltd. v. Dias, a case involving local exemptions to a Hawaii excise tax on alcoholic beverages (pineapple wine producers did not have to pay the tax). The Court ruled that such discrimination was in violation of federal law. In the late 1980s the Supreme Court invalidated New York and Connecticut price affirmation laws—in which wholesalers could not sell a product in one state for more than the lowest price it offered in any other state—in two cases, Brown-Forman Distillers Corp. v. New York State Liquor Authority and Healy v. Beer Institute. The Court found the laws in conflict with the Commerce Clause: one state was essentially projecting its laws into another, usurping the authority of Congress to govern interstate commerce. In the first decade of the 21st century, the Dormant Commerce Clause fell at the center of an important debate within the American wine industry and legal system: can producers circumvent the wholesale and retail tiers by selling and shipping wine directly to consumers?

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Granholm v. Heald
The consolidation of the wholesale tier over the past decade has created an issue for wine producers in the US, and smaller wineries in particular. In 1995 there were approximately 3000 distributors, but by 2013 that number had been reduced to about 700. At the same time, the number of wineries has increased—from about 1,800 in 1995 to over 7,000 in 2015. In short, it is much harder today for wineries to gain entry into any given state’s three-tier system because there are fewer distributors available and, at the same time, there are many more producers trying to squeeze water out of the same stone.
“OutClick to enlarge and zoom in
As the three-tier system proved increasingly difficult for producers to penetrate, many started looking for ways to get their products directly to consumers. The rise of e-commerce made direct-to-consumer (“DTC”) wine sales a possibility, but a huge impediment remained: many states prohibited out-of-state wineries from shipping wine to in-state consumers—even as they provided in-state wineries with DTC privileges! In a 2002 study, the Federal Trade Commission concluded that “state bans on interstate direct shipping represented the single largest regulatory barrier to expanded e-commerce in wine”; there were significant potential benefits to consumers of being able to buying wine online; and such state regulations insulated in-state producers and were anticompetitive.

The FTC report served as the backbone to the greatest challenge yet to arise to the three-tier system: the 2005 Supreme Court case Granholm v. Heald. The case involved a challenge to Michigan and New York laws that prohibited direct-to-consumer sales by out-of-state wineries, but granted in-state wineries DTC privileges. The plaintiffs argued that these laws discriminated against out-of-state producers and were thus unconstitutional under the Dormant Commerce Clause; defendants argued that the 21st Amendment trumped the Dormant Commerce Clause. Wholesaler lobbying organizations, including the Wine and Spirits Wholesalers of America and the National Beer Wholesalers Association, filed briefs supporting the defendants’ position. In a 5-4 decision the Court sided with the plaintiffs and deemed the states’ shipping laws as discriminatory and unconstitutional. States could either give all wineries the right to ship to consumers (i.e., “level up”) or decide that no wineries (whether in- or out-of-state) could ship to consumers (“level down”). In the aftermath of the Granholm decision, most states chose to “level up”—today, wineries can ship to approximately 85% of adult Americans. As of January 1, 2015, 35 states and Washington DC permit wineries (in- or out-of-state) to sell and ship wines directly to residents. Five other states offer limited direct shipping, placing capacity caps on wineries (e.g., New Jersey allows DTC shipping only for wineries that produce less than 250,000 gallons of wine per year) or prohibiting shipping by wineries with state wholesaler representation—laws that may be the subject of future legal challenges. The final 10 states either prohibit direct shipping entirely or require a purchase in person prior to shipment. From 2002, no state may prevent wineries from shipping purchases in the case of on-site sales—provided the amount of wine purchased is no more than the buyer could have actually carried home.

While liberalization of winery direct-to-consumer shipping has occurred in its wake, the Granholm decision has not had much effect on laws governing retail direct-to-consumer wine shipments. Only 14 states today permit out-of-state retailers to ship wine to their residents—down from 18 in 2005. In 2010, a federal appeals court concluded that a Texas law allowing in-state retailers to deliver directly to consumers, but prevented out-of-state retailers from doing the same, did not violate the Dormant Commerce Clause. Local distributors clearly have more to lose when states permit direct shipping by out-of-state retailers and have lobbied accordingly, and the wholesale lobby has adamantly opposed retailer direct-to-consumer shipping.

There is an ongoing debate as to whether the three-tier system is a post-Prohibition construct that does not meet the needs of today’s wine marketplace. Wholesalers have staunchly opposed the liberalization of DTC laws for producers and retailers. They argue that such actions erode the three-tier system, a regime they claim has been essential to states’ effectiveness in “protecting the public from the dangers related to an unregulated and unrestricted market.” Of course, the wholesale tier is also keenly concerned that sales to consumers that bypass the “middleman” will diminish their revenues. Opponents of the three-tier system characterize the wholesale tier as a built-in inefficiency designed only to raise prices, protect a powerful in-state interest (the wholesalers), and make alcohol more difficult to procure. A more balanced approached recognizes that wholesalers play an important part in the wine distribution system, but also advocate that consumer choice, competition, and the overall market are better served by allowing DTC sales to coexist alongside the three-tier system. Many producers lack the resources to distribute directly nationwide, and wholesalers serve as proxies to do it for them. At the same time, there are mechanisms in place to allow states to collect taxes, monitor sales, and ensure that only adults over age 21 purchase wine direct from producers. Moreover, DTC sales help smaller wineries that are not be represented by an in-state wholesaler reach consumers in that state. Despite some recent erosion of the legal framework underpinning relationships between the three tiers in courts of law, the three-tier system will likely remain the de facto method of alcohol sales in the United States for the foreseeable future.

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Social and Legal Responsibilities of the Third Tier
In the three-tier system, the third tier—retailers—is the final threshold before consumption and therefore accepts additional social responsibilities. For instance, it is the obligation of the third tier to prevent sales to minors. In the United States, all 50 states have established 21 as the minimum legal drinking age. This is a recent development: prior to passage of the National Minimum Drinking Age Act in 1984, many states mandated 18 or 19 as the minimum age for consumption. The act did not actually outlaw drinking under 21; rather, it reduced federal highway funding for states that did not raise the minimum drinking age to 21. Under the threat of lost funding all 50 states were in compliance by 1988, and today there are only two territories of the United States wherein the minimum drinking age remains at 18: Puerto Rico and the US Virgin Islands. There are of course exceptions: various states allow restricted consumption by minors for medical, religious, and educational purposes, while consumption on private premises with parental consent is often legal. In any case, when selling alcoholic beverages it is the responsibility of the retailer—whether a bar, restaurant, or shop—to confirm the buyer’s age or risk the legal consequences for selling to a minor. Methods of age verification and accepted forms of ID vary from state to state. In some states retailers commit a criminal offense by selling to a minor who misrepresents his or her age; in others they do not. Check your local laws!

The minimum drinking age is only one of many means of enforcing control over the act of consumption. States apply a number of laws to limit consumer access, from blue laws—Puritanical relics that keep you from buying beer on Sundays—to restricted operating hours (“last call”). States may curb licensing, by refusing to grant additional sales licenses in areas where a set number has already been awarded, or they may require the sale of food to grant an on-premise license. States restrict other activities that can occur in establishments that serve alcohol (think gambling, and whether or not the ladies on stage have to keep their shirts on). And all states save Nevada and Florida have banned sales to intoxicated persons (“SIP” laws). Such sales may expose the retailer to “dram shop” legal claims.

The term “dram shop” refers to on-premises alcohol sellers in the US and is borrowed from the UK, wherein 18th-century taverns served gin and whisky by the dram. By 2014, 43 states have enacted some form of dram shop liability laws, which in general leave establishments serving alcohol in an improper manner (i.e., to an intoxicated person) open to civil and/or criminal liability if a patron causes personal injury or property damage as a result of intoxication. In other words, if a bar recklessly serves someone a large number of cocktails—or serves a minor a single beer—and that person immediately gets behind the wheel and into an accident, the bar could be sued for significant monetary damages. Dram shop liability laws vary from state to state. For instance, some states may allow a patron to sue if personal or property damage is only inflicted upon himself; others do not. Some states only hold sellers accountable if the intoxicated person was a minor, and some states have expanded dram shop liability to laws to include social hosts—significantly, social hosts may be both civilly and criminally liable, facing fines and imprisonment for serving beverages to guests at a private residence. The only states that do not currently have any form of dram shop liability laws on the books are Delaware, Kansas, Maryland, Nebraska, Nevada, South Dakota, and Virginia.

The above laws shape the third tier’s social responsibilities in the eyes of the law. Following are a few other areas of beverage alcohol law sommeliers should consider:
  • Can a guest take an open bottle of wine home? Yes… in most states. Despite the fact that 40 states prohibit open containers of alcoholic beverages in public, most have passed “cork and carry” laws to the rejoicing of restaurateurs and the relief of diners everywhere. But restrictions vary! Some states simply ask the restaurant to recork the bottle; others require a restaurant to seal the unfinished bottle in a tamper-proof, single-use plastic bag. Some require the dated receipt of sale to accompany the bottle, while others demand the unfinished wine must be placed in a locked trunk or compartment during any transit. Here’s a handy chart with each state’s laws in detail.
  • Is Corkage legal? Currently, just over half of US states allow patrons to bring their own bottles of wine to restaurants without restriction. Several more states have complex corkage laws, wherein corkage law is determined by local jurisdictions or limited, either in volume per person or to restaurants without licenses to sell beverage alcohol. A dozen or so states still prohibit the practice outright.
  • Consignment and Auction Wine Sales: While common for sommeliers and buyers to build cellars through consignment deals with collectors or owners of their establishments, this is an illegal arrangement under both federal and certain state laws. The FAA Act specifically prohibits consignment of beverage alcohol—taking possession of inventory without paying for it—and the transaction may break state law as well. Moreover, collectors are not licensed by states to participate in the sale of beverage alcohol. Some states, however, do permit individuals to sell “library wine” under certain circumstances.

    States treat wine auctions differently. In some it is illegal to purchase at auction for resale; others  allow it but require that the purchase be “cleared” through a distributor. The government has to get paid, and the wholesale tier bears the burden of excise taxes; buying directly from private individuals through consignment or at auction may be viewed as an attempt to circumvent tax obligations. Be aware of your state’s laws and your establishment’s licensing privileges, which will outline who you can buy from and how to do so in compliance with the law.
South Carolina’s
“Airplane Bottle” Law



Until 2006, it was illegal in the State of South Carolina to serve liquor out of a bottle larger than 2 oz!
  • Distributor Payment Terms and Delinquent Lists: Be aware of the payment terms offered by your wholesalers as the state typically sets the terms—and the penalties for non-payment, up to and including suspension of licenses. Most control states (and others, like Georgia) require payment on delivery for all retail license deliveries, while many license states offer payment periods of 10-30 days following receipt of goods. New York and New Jersey both offer 30-day payment terms, but maintain delinquent lists when accounts don’t pay their bills by the stated due date. In New York’s case, reporting accounts to the list occurs automatically upon lack of payment, and wholesalers may only accept C.O.D. (cash on delivery) payments from any account considered delinquent. New Jersey operates in the same fashion, although the state does grant a six-day grace period prior to placing an account in delinquency and restricting the license to C.O.D. terms. In Florida, which has a 10-day payment period, delinquent accounts are reported to the state and may not receive any alcoholic beverages—and any discounts on the invoice in question are revoked!
  • Tied-House Distributor Relations: Research the tied-house laws in your state! Wholesale reps are often legally prevented from arranging your shelf or back-bar space, or even touching other competitors’ products in your establishment. Depending on state law, wholesalers may not restock their products, maintain keg wine lines, or perform other actions that may be construed as inducement. Exceptions may be granted for product education.
  • Pour Measurements: Unlike the UK, which has formalized measurements for beverage alcohol pours, US states do not typically restrict the amount of liquor poured per drink. Utah, however, has a maximum amount of “spirituous liquor” that may be poured in a mixed drink—2.5 oz., reduced from 2.75 oz. in 2008.

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The Alcohol and Tobacco Tax and Trade Bureau
The Alcohol and Tobacco Tax and Trade Bureau (the TTB), a bureau of the US Department of the Treasury, exists to collect federal excise taxes on alcohol, tobacco, firearms, and ammunition. The TTB is also charged with oversight of beverage alcohol permitting and labeling. According to FAA Act provisions, the TTB requires and issues permits for the production, importation, and wholesale distribution of alcoholic beverages, and it ensures labeling is accurate. It is responsible for enforcing laws regulating beverage alcohol advertising and unfair business practices, such as the tied-house, commercial bribery, exclusive outlet, and consignment provisions of the FAA Act. It is not responsible for enforcing any laws that regulate the retail tier.  

The TTB was established by the Homeland Security Act of 2002. Its functions were carried out previously by the Bureau of Alcohol, Tobacco, and Firearms (ATF).

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United States Wine Labels
The TTB must grant a Certification of Label/Bottle Approval (COLA) to any wine before it may enter the marketplace, and it requires all wines sold in the US—domestic and imported—to include some very basic information on the label: the class or type of wine, brand name, bottler’s name and address, alcohol content by volume, the net contents of the container, the Surgeon General’s health warning, and a declaration that it contains sulfites (for wines containing more than 10 ppm). Other label indications, such as appellation of origin, variety and vintage are not mandatory, and there are restrictions on their use. Some of the above information (brand name, class of wine, alcohol content) is required to be listed on the “brand label.” Common sense would suggest the brand label belongs on the front, but legally the brand label is defined by the information it includes rather than its placement on the bottle.

Note that while many states rely on federal COLAs, a few states (like Texas and New Jersey) require additional state label approval as well.   

For the alcohol by volume statement, there is a tolerance of 1.5% for all wines of 14% or less abv; for wines above 14% there is a tolerance of 1%. Ranges are also acceptable: wines of 14% or below may state a range of up to 3% (e.g., 11-14%) and wines above 14% may state a range of up to 2%. Finally, wines with 14% or less alcohol by volume may omit a percentage on the label and use the phrase “table wine” (or “light wine”) instead. 

According to federal law a wine sold with an appellation of origin, variety and/or vintage in the US must observe the following minimum standards:
  • If labeled with an AVA: 85% of the grapes must have come from the stated AVA (or foreign equivalent). Additionally, the wine must be fermented and “fully finished” (but not necessarily bottled) in the same state in which the AVA is located.

 

  • If labeled with a county, state, or country of origin: 75% of the grapes must have come from the stated county, state, or country of origin. If multiple counties or contiguous states are listed, the label must indicate the exact percentage of grapes sourced from each county or contiguous state. If grapes from State A are transported into State B to make wine in State B, then the wine can only use State A as an appellation of origin if States A and B share a border.
  • If labeled with a vintage: Wines using an appellation of origin on their label may use a vintage year so long as 85% of the wine was produced in the stated vintage. Wines using an AVA or foreign equivalent are held to a higher standard: 95% of the wine must have been produced in the stated vintage. As in the EU, wines labeled only by country were for many years unable to carry a vintage date. The TTB dropped this restriction in 2012 in response to a petition from the EU, which had revised its own laws only a few years earlier. See here.
  • If labeled with a variety: 75% of the wine must have been produced from the stated variety. An appellation of origin (state, county, country, AVA) must appear in conjunction with the grape name. The TTB maintains a list of approved grape variety names.
Estate Bottling

A winery has the right to use the term “estate bottled” when the following conditions are satisfied: the wine is labeled with an AVA; the winery is located in that same AVA; the winery owns or “controls” the vineyard; and the winery crushed, fermented, finished, and bottled the wine on the same property. By “control,” the winery must have total viticultural control under a leasing agreement or similar arrangement for at least three years’ duration. 
Note that certain state laws, particularly in regard to state of origin and variety, may supersede federal requirements. For instance, wines labeled with California or Oregon as an appellation of origin may only include grapes from the listed state. California has also adopted “conjunctive labeling” requirements for certain AVAs and counties within the state. Under these laws, any AVA contained within the larger AVA must be labeled with both the nested AVA as well as the larger AVA name. As of 2020, Napa Valley, Paso Robles, Sonoma County, Monterey County, Mendocino County, and Lodi are governed by conjunctive labeling laws.

Imported wines must observe these guidelines in addition to any standards required by their own appellations of origin. All imported wines must also include the name and address of the importer.  

The TTB, in conjunction with the US Department of Agriculture, also regulates organic claims on alcoholic beverages by applying USDA standards:

  • 100% Organic: Contains only organically grown grapes and has no added sulfites.
  • Organic: Contains at least 95% organically grown grapes and has no added sulfites. Any added yeasts must be certified organic.
  • Made with Organically Grown Grapes: Contains at least 70% organically grown grapes and may contain up to 100 ppm of sulfites (from sulfur dioxide). Added yeasts need not be organic.
  • European wines labeled as “organic” must also meet these USDA standards to retain that language on bottles exported to the US.

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Part Three: Brief Summary of Canadian Wine Law for the Sommelier

As in many countries, different laws and regulations concerning the governance of wine and other alcoholic beverages exist in each of the 10 provinces and three territories. Just as much regulatory power over beverage alcohol in the US is held by the states, most regulatory powers in Canada fall under provincial as opposed to federal jurisdiction. The Importation of Intoxicating Liquors Act, enacted in 1928, creates restrictions on liquor imported from outside a province, both within and outside of Canada. Each province and territory has its own liquor board through which all beverage alcohol products from outside Canada are imported. The boards apply mark-ups before sale and collect federal and provincial duties and taxes. With the exception of Alberta, which has a privatized liquor industry, beverage alcohol is distributed and sold primarily through provincial liquor board outlets. In Ontario and British Columbia, wineries within the province are permitted to sell their wines outside the provincial liquor board outlets under certain delineated conditions, such as at the wineries or at limited licensed stand-alone stores or—due to recent changes—at farmers’ markets. In Quebec, provincially bottled wine is allowed in grocery and convenience stores. Currently changes are in place to allow the sale of alcohol in grocery stores in British Columbia, and Ontario is considering the use of liquor board kiosks.

Depending on the province or territory, the regulatory responsibilities regarding beverage alcohol may be administered by a separate provincial agency. For example, the Liquor Control Board of Ontario is responsible for the retail sale of alcohol at government stores, but the Alcohol and Gaming Commission of Ontario (AGCO) is responsible for administering the Ontario Liquor License Act and its regulations. Each jurisdiction has its own provincial legislation and regulations which address areas of control, distribution, and sale of alcohol, such as legal drinking age, hours of service, and liquor licensing. The legal drinking age in most jurisdictions is 19 years of age, save for Alberta, Manitoba and Quebec, where 18-year-olds may legally imbibe. As in the US, the minimum legal drinking age is not necessarily the same as the minimum age required to serve alcohol. (For example, servers may be as young as 18 years old in Ontario.) Hours of service vary by province; first permitted service can be as early 8 am in Quebec, and last call ranges generally from 2 am to 3 am across the country. Liquor licensing requirements vary by province, and different provinces have different classifications of licenses depending on the nature of the establishment or event.

The legislation may also regulate the establishment’s responsibilities concerning such areas as handling drunken, violent, or disorderly conduct, ensuring capacity of the premises is not exceeded, selling liquor to visibly intoxicated persons or underage persons, clearing signs of service outside hours of service, making food available, handling outside liquor on premises, and allowing removal of liquor from premises. Recent trends in amendments to provincial liquor policies have led to various forms of “Bring Your Own Wine” practices being permitted in all provinces, with the exceptions of Prince Edward Island, Newfoundland and Labrador. Similarly, many provinces now allow for unfinished wine to be resealed and taken home. Beverage alcohol server training programs are available in all the provinces and territories, but depending on the jurisdiction such training may not be legally required.

Provincial legislation, such as the VQA Act (1999), also affects wine labeling, appellation control and wine standards. The Vintner’s Quality Alliance was first formed in Ontario in 1988 and implemented an industry-operated appellation system, which was then adopted by British Columbia in 1990. The system was eventually given legislative force in Ontario by the VQA Act and its regulations, and set quality standards regarding grape varieties and ripeness, winemaking techniques, labeling requirements, as well as sensory and chemical criteria for the finished wine, which requires approval by a tasting panel to carry the VQA logo. VQA Ontario is the regulatory wine authority for Ontario. The Ontario Wine Content and Labeling Act, which replaced the former Ontario Wine Content Act in 2000, also sets out various content and labeling standards for the manufacture of wine in the province.

Six Things You Can’t
Advertise in Ontario

Canadians are careful about their liquor advertising. According to the Ontario Liquor License Act, license holders cannot advertise booze if such ads show that consumption of said beverage is “required in obtaining or enhancing”:
  • Social, professional, or personal success
  • Athletic prowess
  • Sexual prowess, opportunity, or appeal
  • Enjoyment of any activity
  • Fulfillment of any goal
  • Resolution of… problems
In 2005, British Columbia introduced the Wines of Marked Quality Regulation under the provincial Agri-Food Choice and Quality Act, and created the British Columbia Wine Authority, an independent regulatory authority, to which the provincial government delegated responsibility for enforcing the new regulation, which sets terms for use of BC VQA appellations. While BC and Ontario both use VQA appellation and quality standard systems that share the same historical origin, the systems currently have no technical affiliation with one another and are governed by different legislation and controlled by different regulatory entities.

Also in 2005, the Winery Association of Nova Scotia adopted the Nova Scotia Wine Standards which permits use of “Nova Scotia” on the label only if the standards are met and 85% of the grapes are grown within the province. 100% of the wine must be grown in Canada.

On a federal level, labeling requirements are provided under the Food and Drugs Act and the Consumer Packaging and Labeling Act, as well as criteria for net quantity and standardized container size. In early 2014, Icewine Regulations were introduced under the Canada Agricultural Products Act, which requires icewine to be made exclusively from grapes naturally frozen on the vine. Additionally, the provincial liquor boards work in conjunction with the Canadian Food Inspection Agency to ensure that beverage products conform to certain standards under the Food and Drugs Act.

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Attributions and Bibliography

We would like to thank John Trinidad, an attorney with the Wine Law practice group of Dickenson Peatman & Fogarty (DP&F), for his input on Part 2 (American Wine Law). DP&F is a law firm with offices in Napa and Sonoma Counties, and represents a number of domestic and foreign wine industry clients. For more information regarding wine law, please visit DP&F’s Wine Law Blog, Lex Vini.

We would also like to thank Lisa Wong for her input and review of Part 3 (Canadian Wine Law). She is a sommelier and writer with credentials as a former researcher and lawyer, practicing primarily in the area of intellectual property law, with several major corporate clients in both the alcoholic beverage and restaurant industries.

Black, Rachel and Robert Ulin. Wine and Culture: Vineyard to Glass. New York, NY: Bloomsbury Academic, 2009.

Mendelson, Richard. Wine in America: Law and Policy. New York, NY: Wolters Kluwer Law & Business, 2011.

Meloni, Giulia and Johan Swinnen, "The Political Economy of European Wine Regulations." Paper presented as part of LICOS Discussion Paper Series, Leuven, Belgium, October 2012.

Meloni, Giulia and Johan Swinnen, "The Rise and Fall of the World's Largest Wine Exporter—and its Institutional Legacy." Journal of Wine Economics Vol 9, No. 1 (2014): 3-33.
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