Wine Institute 2020 Year in Review

A message from the President & CEO

A Year of Unprecedented Challenges & Accomplishments

2020 was an unprecedented year for the world, for our members and for the entire wine community. Every winery in California has been impacted by the pandemic. And far too many were also deeply affected by record wildfires. It’s been challenge upon challenge, and I have been so impressed with how our members have responded with resilience, innovation and commitment to their communities, employees and customers.

Since the Governor’s March 15 stay-at-home announcement, Wine Institute staff has also risen to the occasion, with every department working to advocate, communicate and provide guidance daily to members. We know that conditions will continue to be challenging in the months ahead. And we’re taking action on multiple fronts to provide immediate relief and long-term solutions.

Passage of the Craft Beverage Bill in the final days of 2020 is a good start to the new year. Since 2015, Wine Institute has worked tirelessly on this bill, which has already saved California wineries a collective quarter of a billion dollars in excise taxes over the last three years. The new legislation continues annual savings of $75 million plus with small-to-medium sized wineries saving between 55-75% on annual excise taxes. We are also pleased that through our work with state legislatures throughout the country, not a single state passed an excise tax increase last year.

We also secured positive outcomes on important initiatives in which we invested significant time and resources, all of which will make it easier for wineries to conduct business and sell wine. Release of the 2020 U.S. Dietary Guidelines, which importantly, maintained its long-standing guidance on moderate consumption for men and women, followed an important TTB ruling that will significantly reduce the burden on wineries that choose to provide nutrition information. The International Marketing brand refresh of California Wines comes at the right time because we have more funding to invest in export promotion than ever before.

Throughout 2020, with each challenge that faced our wineries, it is clear that the role of Wine Institute has never been more essential. Please review and share our timeline with highlights of work in 2020. I hope that 2021 is a healthy, peaceful and prosperous year for you and your families.

Robert P. Koch
President and CEO

2020

We kicked off the year with a fresh look and newly designed website highlighting policy work and member resources.

In January, Wine Institute and its European Union counterpart, Comité Européen des Entreprises Vins (CEEV), announced a landmark statement of principle on wine tariffs calling for the complete elimination of all tariffs on wine.

On Feb. 18, Industry leaders from around the world convened at Wine Institute’s “Export 2020: California Wine Global Export Conference” to hear from influential voices in the global wine trade. Keynote speakers opened the program with insights and perspectives on opportunities for California wine in the global marketplace, and afternoon sessions led by Wine Institute’s international team provided in-depth discussion on how to grow export sales around the world.

The California Sustainable Winegrowing Alliance (CSWA) released its third annual Certified Sustainable Report, featuring the growing number of California wineries and vineyards that are Certified California Sustainable. California remains the global leader in sustainable winegrowing practices, with one of the most widely adopted sustainable winegrowing programs in the world in terms of both winegrape acreage and case production.

2,247 Certified Vineyards

204K Acres
32% of Statewide Acres

171 Certified Wineries

255M Cases
80% of Statewide Production

Wine Bearing Certified Logo/Claims

6.2M Cases
74.4M Bottles

On March 15, California Governor Newsom called for the closure of bars, pubs and wineries throughout the state to help curtail the spread of COVID-19.

From that moment, Wine Institute took the lead, ensuring that wineries could continue operations as “essential businesses” and serving as a go-to resource for our industry to interpret and clarify ever-changing state and local rules for businesses during the pandemic, while advocating for regulatory relief and financial support for wineries at both the state and federal levels.

We worked with state and local officials to ensure winery production continues uninterrupted, and tasting rooms are able to safely open when appropriate.

We hosted a Tasting Room Reopening webinar and provided resources for our members including state guidance, social distancing signage and template documents for winery use during reopening.

We hosted webinars on occupational health and safety and business insurance and employment law as they relate to the COVID-19 crisis, and provided resources for “essential” employees traveling to and from work.

The Environmental Committee formed a COVID-19 Working Group that led the creation of recommended protocols for reopening tasting rooms, managing harvest, and transporting grapes. Our COVID-19 Harvest Protocols Workbook was also translated into Spanish.

We continued our work advocating for the inclusion of wine in restaurant take-out, curbside and delivery. Executive Orders in Iowa, Ohio and the District of Columbia have now been made permanent while other states are extending the practice through 2021.

Our State Relations team is continually maintaining matrices with state-by-state guidance documents and restaurant and bar reopening information.

Along with other employer-based organizations, we are strategizing on next steps to challenge the now final Cal/OSHA emergency regulations for workplace COVID-19 prevention.

We worked closely with wineries to promote virtual tasting experiences and develop creative programming, including hosting a webinar on Creating Engaging Virtual Wine Experiences That Boost Sales.

To support virtual tastings, we requested that TTB and California ABC approve small containers of wine be shipped to winery customers. Thirty-eight states subsequently approved such deliveries at our request.

We continue to advocate for key relief policies including extending the Paycheck Protection Program (PPP), Employee Retention Tax Credit and the Restaurants Act.

In previous years, California wineries have celebrated Down to Earth Month, now in its ninth year, by offering sustainability focused events across the state. However, with all California wineries having suspended public tastings and events last April, many of California’s sustainable wineries offered special discounts on wine and shipping fees.

The Sixth Annual California Green Medal winners were announced to recognize the leadership of wineries and vineyards committed to sustainability. Congratulations to J. Lohr Vineyards & Wines (Leader), Bonterra Organic Vineyards (Environment), Clif Family Winery (Community), and Pisoni Family Vineyards (Business).

Wine Institute's Export Program kicked off the inaugural season of “Behind the Wines” which included 30 episodes with more than 50 guests. The series was hosted by Elaine Chukan Brown who led dynamic conversations with California winemakers and winegrowers, as well as thought leaders in wine from across the globe.

COVID-19 and wildfires dominated Wine Institute's California advocacy this year, but the Sacramento team also had successes on issues including Cannabis Appellations. Required by Proposition 64, Cannabis Appellations are now only allowed for cannabis grown outdoors (SB 64, McGuire) and regulations being developed by CDFA are robust and provide protections against unjustified use of American Viticultural Areas. Other key work included stopping or amending burdensome labor bills, halting the passage of significant tax increases, and preventing the passage of unimplementable single-use packaging legislation.

In early June, we organized a virtual International Wine Technical Summit to bring together wine regulators in important export markets to inform and discuss best practices in wine regulation. Representatives from 24 countries attended webinars on trade issues such as unnecessary certifications, risk evaluations, controls for illicit wine, and wine laboratory training in export markets.

The U.S. Alcohol and Tobacco, Tax and Trade Bureau (TTB) announced the availability of the Asia-Pacific Economic Cooperation (APEC) Model Wine Certificate which streamlines the process for wine exports in 10 of APEC’s 21 economies. The new certificate is the culmination of more than a decade of work by both Wine Institute and the U.S. government to remove a non-tariff trade barrier by consolidating three certificate requirements into a single certificate.

Wine Institute’s 86th Annual Meeting of Members, held on June 9, was also its first virtual board meeting and was attended by more than 140 members. New Officers and Board Members were elected, including John Sutton, Chief Financial Officer of The Wine Group headquartered in Livermore, who has been serving as Board Chairman for the 2020-2021 fiscal year.

On June 5, CSWA along with co-hosts from California, New York, Oregon and Washington attracted over 500 participants via webinar to hear the latest trade and consumer research on perceptions of sustainable winegrowing. Presented by Wine Intelligence and Full Glass Research, the survey findings found growing demand for sustainably produced wines by both trade and consumer groups.

The Importance of Sustainable Practices to the Trade in Choosing Wines—2019 vs. 2016

Kentucky became the 46th state to authorize DTC shipping. The new law became effective on July 15 and, while it took until Dec. 14 for the Kentucky legislature to approve the final regulation allowing the Kentucky ABC to issue the licenses required, DTC is now “live” in Kentucky. Keeping the DTC channel open for wineries was essential during the shutdowns and expanding the scope of shipping and simplifying the processes in all states remained priorities this year.

CSWA implemented three 2.5-year Specialty Crop Block Grant projects totaling nearly $755,000, to provide targeted education, tools to assist wineries and vineyards with regulatory compliance, and to jointly promote sustainable winegrowing with the New York, Oregon and Washington wine industries.

A new searchable CSWA Resource Library provides a home for all educational resources, including a new DIY energy audit to help wineries evaluate their energy efficiency.

In response to the wildfires that burned a record number of acres in California this year, we created resources and guidance to support the industry.

It included workplace health and safety guidelines during wildfires, insurance coverage, regulatory issues, relief resources and organizations raising funds to support displaced winery and vineyard workers and local winegrowing communities.

Wine Institute also advocated for Congress to reauthorize a critical U.S. Department of Agriculture program to provide direct emergency funds to wineries and grape growers during this unprecedented wildfire season. The Wildfire and Hurricane Indemnity Program Plus (WHIP+) would provide critical financial support to help cover winegrape losses due to the wildfires.

California Wine Month 2020, held virtually for the first time, generated more than 400 million media impressions, including 12 television and radio segments. The annual September celebration also achieved record trade partner participation with more than 30 retail, restaurant and association partners. To support our virtual California Wine Month 2020 program, we hosted weekly livestreams on our Facebook and Instagram channels in collaboration with California Grown and Visit California.

Wine Institute’s International Marketing Department coordinated a comprehensive six-day virtual tour of California’s wine regions for the Liquor Control Board of Ontario (LCBO), one of the largest buyers of California wine in the world. The milestone event included virtual visits with over 40 wineries and tasting of 90+ wines. Other virtual tours included one for buyers with the Nordic monopolies and two for leading sommeliers in Japan.

A new ruling was issued by TTB expanding the tolerances for voluntary calorie statements on labels and in advertisements for wine, distilled spirits and malt beverages.

The new ruling makes requirements consistent with food labeling regulations which will enable wineries who wish to provide nutrition information on labels and in advertising to do so using databases and “typical values” or ranges to determine nutrition information.

Wine Institute Technical Advisory Committee (WITAC) and staff met with and briefed TTB staff and senior leadership on multiple occasions to make the case for this change. To support members in generating TTB-compliant nutrition serving facts information for voluntary use on labels and advertising, we introduced a new Nutrition Data Calculator for labeling and advertising.

State Legislatures across the country passed fewer traditional policy bills than normal due to interruptions by COVID-19 and their required responses. No states passed an excise tax increase in 2020, despite the massive crisis-related budget shortfalls which haven’t been offset with Federal stimulus.

New legislative challenges that arose related to both EPR (expanded producer responsibility) programs, and redefining state laws related to Ready-to-Drink alcohol beverages (RTDs), led to the creation of new working groups within the State Relations Subcommittee.

While California’s 2020 harvest season was marked by the dual challenges of COVID-19 and wildfires, vintners across the state expressed excitement about the quality of the vintage. “The Winemaker Sessions” featured a panel of internationally recognized vintners and winegrowers from across California discussing trends, challenges and opportunities throughout the 2020 harvest.

On Nov. 5, Wine Institute’s Communications Committee held the sixth annual Wine MarCom Workshop via webinar. This informative half-day session included insights from wine journalists and social media experts followed by a lively panel on sustainable, organic, natural and traditional wine.

Wine Institute’s International Public Policy team, continuing its work to protect wine exports against major tariff and non-tariff barriers, worked with the U.S. Trade Representative to secure a new wine agreement with the United Kingdom which ensures continuity of the wine trade in this important market as the UK exits from the EU.

After more than five years of work building support in Congress, on Dec. 21 we welcomed the final vote to make permanent the lower wine excise tax rates after three years of temporary provisions.

The Craft Beverage Modernization and Tax Reform Act (S. 362/ H.R. 1175) will provide significant tax relief for all wineries for years to come. These excise tax provisions were set to expire at the end of 2020 had Congress not acted. The Craft Beverage bill reduces excise tax payments for all the 4,000 plus wineries in California, which contribute more than $114 billion annually to the national economy.

Craft Beverage Modernization & Tax Reform Act: Annual Winery Excise Tax Savings

Winery Size	Annual Savings*
5,000 wine gallons (2,000 cases)	$2,139 (86%)
20,000 wine gallons (8,400 cases)	$8,440 (86%)
50,000 wine gallons (21,000 cases)	$16,141 (75%)
100,000 wine gallons (42,000 cases)	$23,250 (62%)
250,000 wine gallons (105,000 cases)	$225,270 (73%)
500,000 wine gallons (210,000 cases)	$387,541 (64%)
750,000 wine gallons (315,000 cases)	$482,807 (60%)
2 million wine gallons (840,000 cases)	$572,743 (29%)

Source: bw166 LLC *Estimated annual tax savings from expanded FET credit and 14-16% ABV change based on BOE data for California wineries. Individual winery savings vary and may be significantly higher depending on level of production between 14-16% ABV.

The U.S. Departments of Agriculture and Health and Human Services released the 2020 U.S. Dietary Guidelines for Americans, maintaining the long-standing guidance on alcohol consumption.

Since 1990, the DGA has advised adults who choose to drink, to do so in moderation and has defined moderation as no more than one drink a day for women and two drinks a day for men. We strongly advocated in support of the science to maintain the moderation guideline and against a proposed change.

Wine Institute successfully advocated for maintaining federal regulation of wine container size and advocated for approval of a 250-milliliter container size. TTB amended their regulations to include new standards of fill for wine for container sizes of 200, 250 and 355 milliliters. Uniform federal regulation of container sizes prevent consumer confusion, disruption of business, difficulty with assuring compliance across state lines, and unnecessary expenditure of state resources to create standards in lieu of the federal standards of fill.

The State Water Resource Control Board pushed forward with the proposed Winery General Order to regulate effluent water discharges from winery properties. With support from the Environmental Committee and industry members, we have had significant success in reducing the economic burden of the proposed Order while maintaining water quality standards.

As a result of Wine Institute’s efforts with EU industry partners to oppose all wine tariffs, the EU announced in December that it will not target U.S. wines with tariffs in the WTO civil aircraft dispute.

The entire team at Wine Institute wishes you a happy and healthy new year!

Stay tuned for the California Wines Global Brand Refresh

...and join us in 2021 for our new programs and events.