N.Y. Governor backs direct shipments of wine

Modern Brewery Age, Feb 2, 2004

AP--That intriguing Riesling from far above Cayuga's waters could soon be arriving in the mailbox of wine lovers in Oregon if New York Gov. George Pataki has his way.

In return, New Yorkers may soon be able to get a William Selyem pinot noir shipped directly to them from California's Sonoma Coast.

Nine years after vetoing legislation to allow the direct shipment of wine to consumers in New York and by New York wineries to buyers in other states that allow it, the Republican governor on Tuesday said he would propose legislation allowing direct shipment.

As part of his $99.8 billion budget proposal, the governor estimated the move would eventually be worth $3 million annually in tax revenue for the state.

New York is the biggest wine-producing state--ranked second overall--that does not allow direct shipment to consumers. California, which produces more than 90 percent of the nation's wine, already allows direct shipping as do Washington and Oregon, ranked third and fourth in wine production.

New York vineyard owners were bubbly about the news.

"We're ecstatic," said King Ferry Winery owner Peter Saltonstall on Wednesday.

Saltonstall said about one-third of the visitors to his 10,000-cases-a-year winery come from out of state and often want him to ship them wines they have enjoyed in his tasting room.

"Sadly, for years I have had to say no," said Saltonstall, who has 27 acres of grapes overlooking Cayuga Lake in the Finger Lakes region of upstate New York.

King Ferry is one of more than 160 wineries in New York, most located in the Finger Lakes, on Long Island or in the Hudson River Valley north of New York City.

"From a winery perspective, this is the big kahuna. This is a very, very large wine market," said Jeremy Benson, executive director of Free the Grapes, a Napa, Calif. wine industry group that wants to overturn direct-shipping bans.

The Pataki proposal got a sour reception from liquor store owners.

"It's a bad bill," said Michael Long, the owner of Long's Wines and Liquors in Brooklyn.

Long, a Pataki friend who is also chairman of New York's Conservative Party, said the legislation could eventually cut into income for retailers and distributors and that "the state will ultimately lose money."

"Before you know it, there will be stuff flying to everyone's house," Long predicted.

While Pataki's need for new money was obvious--he said the budget had to deal with a potential $5.1 billion revenue shortfall--the state is also facing recent federal court rulings that have come down hard on restricting the direct interstate shipment of wine.

Asked about the governor's change of heart, budget spokesman Kevin Quinn said: "It's been almost nine years (since the veto) and we've reevaluated the issue. The wine market is definitely much more expanded than it was in 1995 and we think it would benefit consumers in the long run to have this option."

Pataki, who enjoys the occasional glass of wine, issued the veto during his first year as governor, saying it could cost the state tax revenue and encourage underage drinking. The measure had easily passed both the Republican-led Senate and the Democratic-controlled Assembly.

Under Pataki's new proposal, out-of-state wineries located in states that allow reciprocal direct shipping to their consumers would he able to ship into New York if they purchase an annual license fee of $125. They could then ship up to two cases of wine a month to any private customer in New York who is over age 21. The wineries would have to pay New York excise and sales taxes and report shipments quantities to New York.

Quion said states that engage in reciprocal agreements for direct shipping include California, Colorado, Idaho, Illinois, Iowa, Minnesota, Missouri, New Mexico, Oregon, Washington, West Virginia and Wisconsin.