Diageo import bill withdrawn

Wines & Vines, August, 2002

* A measure that small wine importers feared would wipe out their businesses and monopolize California's wine market has been shelved.

The bill, pushed by Diageo, a British beverage conglomerate, and the Wine Institute (W.I.) was pulled from the Assembly Appropriations Committee in June.

The bill, which under Assembly regulations could be put back in play, would have allowed only an importer designated by the winemaker to bring its brands of wine into California. Called a "primary source" law, the proposal would benefit consumers by allowing greater quality control for wine, according to W.I. Marketing experts and small winery owners disagreed, saying that Diageo and its allies just sought to lock up a greater share of California's huge wine market.

The recently created California Fine Wine Alliance (CFWA), a coalition of small wine importers that formed against the bill, said AB 1922 would cost more than $100 million in retail wine sales each year, and California would lose $10 million in sales taxes.

Two giant wholesalers, Young's Market and Southern Wine and Spirits, are supporters of the bill, and Rick Lehman, a spokesman for the CFWA, said because there are only two distributors, the bill would allow a complete consolidation of the industry. "It's a pretty alarming situation," Lehman said. "There would be no competition."