Suttons Bay Law

As recently reported in the February 25 issue of the Oakland County
Legal News

By KATHY BARKS HOFFMAN

LANSING, Mich. The sauvignon blanc was from California, the pinot noir from Oregon.

But the wine served Sunday night with dessert as the nation’s governors dined at the White House with President Barack Obama and his wife was the most unusual - a Michigan ice wine from Black Star Farms in Suttons Bay.

The frozen grapes were picked in December 2007 and crushed outside so they wouldn’t thaw. The wine was released last July and sells for $80 or more for a half bottle.

The White House paired the sweet A Capella Riesling ice wine with huckleberry cobbler with caramel ice cream.

Black Star Farms managing partner Don Coe said Monday that former President George W. Bush and his wife served the winery’s 2000 A Capella ice wine to a governors’ dinner seven years ago.

The Bushes also served the winery’s Sirius Maple dessert wine during a May 2005 Rose Garden event celebrating Cinco de Mayo. A pinot gris was served once.

“It’s always exciting,” Coe said of his wine’s White House appearances. “We’re delighted.”

Tags: Agribusiness, Wine Industry by Dan Penning
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Michigan Governor Jennifer M. Granholm recently signed the last of two bills of a three-bill package paving the way for growth of a previous market for home-grown food products that was unexplainably subject to stricter state limitations than those limitations dictated by federal law. Previous state regulation on bidding to buy Michigan food products limited school districts to only $20,000 per year. Under the new law, that limit was increased to $100,000 per year which is the federal limit.

The aforementioned action exhibits that the legislature and governor can provide leadership in creating positive business opportunities. Unfortunately, our lawmakers and governor are inconsistent when it comes to enhancing and expanding the business environment for certain growing industries within the state. One such example was the passage of Bill 6644 in December, 2008 substantially restricting the shipment of wine by Michigan retailers directly to Michigan customers. The passage of that law will only stifle the expansion of the distribution and sale of Michigan wines and related businesses supporting the wine-making industry. The farm-to-school bill gives some hope for our state and its governmental leaders that the right decision to support business in Michigan can be made. We now need to work to make this behavior more consistent to grow Michigan’s economy.

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Dan A. Penning

Tags: Agribusiness, Wine Industry by Dan Penning
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PROPOSED LAW BANNING DIRECT SHIPMENTS BY IN AND OUT-OF-STATE WINE RETAILERS IS BAD LAW AND BAD FOR MICHIGAN
Prior to the holidays, the Michigan Legislature hustled a poorly crafted piece of legislation through the system to allegedly protect the public’s best interest by making it almost impossible for in and out-of-state wine retailers to ship directly to customers. The senate modified Bill 6644 previously passed by the House of Representatives by allowing wine deliveries by retailers to consumers but only if the product is delivered by employees of the retailer.

The Bill supporters will cite factors such as loss of state tax revenue from diminished sales by Michigan liquor distributors and without the new law, alcohol sales to minors would sky rocket out of control.

Basically, the Bill’s proponents argue that alcohol, unlike other products, needs to be strictly regulated based on the potential harm to the public because of abuse, addictions, and the products intoxicating effects. They argue that the current system with minor modifications has served its purpose well for 75 years so why change it. Maybe the Bill’s proponents fail to notice the internet, computer, and fax machine in their home or office which was not there 20 years ago, let alone 75 years ago when a substantial portion of the law that still governs alcohol distribution and sales was created by the legislature.

The rush to pass legislation directly resulted from a recent federal district court case Siesta Village Market, LLC vs. Granholm where the judge ruled that the State of Michigan was prohibited from banning out-of-state wine retailers from selling, delivering and shipping wine through commerce direct to Michigan customers. Michigan’s law and certain provisions of the state’s liquor code prevented that activity by out-of-state wine retailers and that law was challenged by the Plaintiff in the Siesta Village Market case. Various legislative analysis agencies such as House Fiscal Agency in summary reported the following as an argument in support of the bill:

“Passage and enactment of the bill, on the other hand, would give time for the case (Siesta Village Market, LLC vs. Granholm) to be litigated and for the commission and lawmakers to examine the issue and see if a regulatory structure could be developed and implemented that would be equal treatment to in-state and out-of-state retailers yet still protect the public from unscrupulous business owners, and that would create a mechanism by which to collect appropriate taxes. In the meantime, the bill would protect the three tier system, ensure that laws prohibiting sales to minors are adhered to . . . “

If the legislature is serious that the law is in place to allow further work to be done in order to develop regulations to manage the alleged downside of the fall of the three tier system, then who should be expected to lead the charge? Presumably, the legislature has dealt with many of these issues with respect to the fact that out-of-state wineries have been allowed to ship to customers in the State of Michigan for the past several years and there already exists a regulatory system with respect to taxes on those sales by out-of-state wineries to Michigan residents.

In the meantime, small retailers who are located in tourists destinations with local wineries such as Leelanau County, Michigan will be negatively impacted in that it is economically impossible to dispatch employees all over the state to deliver wine to consumers who previously placed orders for more of various wines of the region they may have first noticed and purchased while visiting the area on vacation.

In conclusion, it is clear that the law passed by the legislature is an act of protectionism for the powerful Michigan Beer and Wine Wholesalers Association and their lobbyists who seek to anchor the wine industry and the sale of related alcohol products in an archaic system which ultimately will be bad for business and bad for Michigan residents.

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Dan A. Penning

We welcome your comments. Please post your comments and opinions about House Bill 6644.

Tags: Agribusiness, Wine Industry by Dan Penning
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A recent article about Michigan’s House Bill 6644 as it appeared in Crain’s Business News

Alcohol bill uncorks biz concern
By Amy Lane and Nathan Skid

LANSING - When Ronnie Jamil looks at House Bill 6644, he sees some of his business in jeopardy.

That’s because the bill, which would ban retailers from shipping wine and other types of alcohol directly to customers, extends to catered events.

“We are a unique wine shop in a nice neighborhood of people that like to be catered to,” said Jamil, co-owner of Bella Vino Fine Wine and Spirits in Farmington Hills. “This is a competitive edge we have over box chain stores, that we can offer delivery to residential homes and businesses. We cater food, and if someone is throwing a party and they want a few cases of beer and bottles of wine, we can do that.

“This bill is trying to eliminate or disallow us to distribute this to our customers.”

Jamil is emeritus director of the Associated Food & Petroleum Dealers, which along with the Michigan Retailers Association and the Michigan Restaurant Association and others have concerns about the legislation that swept through the state House last week in a 97-9 vote.

Focus is now on the state Senate where, with the brief session time remaining, the bill could go to a committee or directly to the Senate floor.

The Michigan Beer and Wine Wholesalers Association is backing House Bill 6644. In a statement e-mailed to Crain’s on Friday, President Michael Lashbrook said “we support regulations that will help protect our ability to stop dangerous products from reaching consumers and alcohol from falling into the hands of minors, both of which are the driving force behind HB 6644.”

The bill, sponsored by Reps. Barbara Farrah, D-Southgate, and Chris Ward, R-Brighton, would prohibit both in-state and out-of-state retailers from direct shipping and require all sales to go through the state’s existing three-tier distribution network in which alcohol products flow from producers to wholesalers and then to retailers.

The measure responds to an October federal court ruling that found unconstitutional a Michigan law that bans out-of-state retailer shipping of wine but permits in-state retailer shipping.

The state has appealed the ruling and sees it as undermining Michigan’s ability to control sales, but is seeking the legislation as a broader and more rapid remedy.

The legislation would prohibit in-state and out-of-state retailers from directly shipping to consumers any kind of alcoholic product — beer, wine and liquor — even if the delivery is only a few blocks away.

Andy Deloney, the restaurant association’s vice president of public affairs, said the House version “essentially makes it all but impossible” for restaurants that hold retail beer and wine licenses to do catering that includes alcoholic beverages.

He said the association is working with the Michigan Liquor Control Commission and other interests to address the catering concerns in the Senate, “while also being mindful that we’re running out of time in the legislative session.

“We’re hopeful that we can come up with some language to address that,” Deloney said.

Ken Wozniak, director of executive services at the Liquor Control Commission, said the commission is looking at ways to address some of the concerns raised about the bill. One possibility is a catering permit that would apply to in-state and out-of-state businesses.

Also being looked at is retaining the ability for Michigan businesses to continue to direct ship. One way to do that might be to limit the means of delivery for all shippers, in-state and out-of-state.

“It’s not that we’ve shut off all dialogue on those issues,” said Wozniak. “Hopefully by the time this gets to a committee meeting in the Senate, we’ll have something worked out, if it can be worked out at all.”

Sen. Alan Sanborn, R-Richmond, would lead the bill on the Senate floor and chairs the committee that would discuss the bill. Andrew Doerr, his chief of staff, said Sanborn “is hoping that we can get something done with the legislation before the end of the year,” but with the caveat that the commission continues to work with those concerned about catering to ensure such events can continue, and not at a significantly increased cost.

He said Sanborn would also like to address gift-basket shipping, which also is affected by the proposed ban, although the commission’s Wozniak said that’s a more complicated issue.

Michigan business interests aren’t the only ones who have raised concerns with the bill.

Free the Grapes, a Napa, Calif.-based national grassroots coalition for wineries and consumers, has sent e-mails to its list of Michigan wine-loving individuals who in turn sent about 240 faxes to state lawmakers, as of early last week.

Executive director Jeremy Benson said direct shipping is “a way for people to sample products that may not be available in their market, in many cases, and be able to purchase them the way they want to purchase them. And that’s what this ultimately comes down to, and that’s choice.”

He said that instead of banning all direct shipping, Michigan could remedy its problem by adopting model legislation that is a basis for direct-shipping laws in other states, involving both wineries and retailers. Such a law would require shippers to obtain a state license, pay sales taxes, and abide by regulations that include package labeling and limits on amounts shipped.

Michigan enacted similar legislation in 2005, creating a direct shipper license available to both in-state and out-of-state wineries.

But Wozniak said the issue in Michigan goes beyond wine. Even though the current court case centered on wine shipments, it has implications for the shipping of beer and spirits, he said. The state is the wholesaler of spirits, and “if a lot of sales were being made through out-of-state retailers, that would have, we think, a very dramatic effect on state revenues,” he said.

The state made about $204 million in profit on the sale of spirits in 2007.

Wozniak said it’s not unlikely that a future lawsuit could be filed regarding Michigan liquor shipping, because Michigan allows in-state but not out-of-state delivery. Michigan’s liquor prices are significantly higher than those of other states.

“Our attorneys and the commission itself feels that we’ve got to deal with the issue for all alcohol products,” Wozniak said.

Joel Goldberg, editor and founder of MichWine, a Brighton-based consumer Web site on Michigan wines, said Wozniak’s argument is “a red herring.” He said he is not aware of any challenge to spirits laws on such a basis, and said Michigan could still require an out-of-state retailer to go through the state.

Amy Lane: (517) 371-5355, alane@crain.com

Nathan Skid: (313) 446-1654, nskid@crain.com

Tags: Agribusiness, Wine Industry by Dan Penning
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From a recent email from Lois Bahle of The Suttons Bay Area Chamber of Commerce concerning how House Bill 6644 could affect two Chamber members:

As we all know, doing business in today’s economic climate is difficult at best. That’s why I’m asking you to support two of our retail members by contacting your state representative, state senator and future state representative on behalf of two of our retail members.

As you may have read in Thursday’s Leelanau Enterprise, House Bill No. 6644, which is supported by the Michigan Beer and Wine Wholesalers, would effectively eliminate the ability of retailers like the Silvertree Deli and Hansen Foods from shipping wine directly to the customer. According to Bruce Vaughn at The Silvertree Deli, the bill is so restrictive that he wouldn’t even be able to deliver a case of local wine to a wedding, much less ship it anywhere else in the state.

While this bill focuses on retailers, it could also have a negative effect on new wineries who are struggling to find an audience for their wines. While direct sales at the winery are still possible and wineries will still be able to ship directly, local wine shops such as The Silvertree Deli and Hansen Foods have done a superior job of presenting local wines. Their support of the Michigan wine industry through their knowledge and personal promotion of local wines can be a big boost for a start up.

Unfortunately, if the ability to distribute is limited to wholesale distributors, small start up wineries would find their products lost in the long list of wines marketed through the distributor. Since distributors look for a certain volume of sales before they will pick up a winery’s line, many small wineries may never be able to build the volume they need to get a distributor to represent them.

The wine industry in Michigan is one of a few bright spots our business economy. This bill could have a chilling effect on that business – and that’s something Michigan doesn’t need right now. In fact, the Michigan House Fiscal Agency analysis of the bill pointed out that the bill could “seriously affect a business’ ability to stay afloat in a troubled economy.” Despite that, the House moved to push this legislation through before an economic analysis was completed.

A main argument made in promoting this legislation was a fear the state would not collect taxes it’s due on retailer and caterer delivered sales. We could debate the merits of that argument for days, but the reality is that this bill will reduce tax revenues in the immediate future. That’s not something Michigan needs right now

You should also know that the state is appealing the federal judge’s ruling that struck down Michigan’s law permitting in-state retailers to ship wine directly to private residences. Supporters of this bill are claiming its passage buys time for the litigation to progress, but in reality this preempts the court appeal.

The Senate plans to try to move this bill before recessing for the holiday. I’m concerned that while we are all busy with the Christmas season, this bill will be pushed through the senate and across the Governor’s desk – effectively getting through the end-of-the-year session while no one is watching.

Action is urgent. The House of Representatives passed this bill 97-9. We need you to act now. I urge you to contact Senator Michelle McManus and the other members of the Michigan Senate and encourage a no vote on this bill. One simple way to do this is to go to www.winecam.org. There you can automatically send a fax or get email or surface mail addresses to send your message to the State Senators. The last scheduled session of the Senate is December 18 – just 10 days away. Your voice in support of small business in Michigan needs to be heard. Please fax, call, email or write your senator today!

Sincerely,
Lois Bahle

Tags: Agribusiness, Wine Industry by Dan Penning
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Congratulations to Leelanau Peninsula Winery LMawby Vineyards and Old Mission Peninsula Winery Peninsula Cellars on winning the Jefferson Cup!
“winners represent some of the most compelling wines made in America”
From an article which recently appeared in The Detroit News:

Thursday, December 4, 2008
Sandra Silfven
Michigan wineries win two Jefferson Cups

The ninth annual Jefferson Cup Invitational, held last week in Kansas City, brings to a close the year’s big wine competitions, and Michigan drove away with two Jefferson Cups, a high honor that’s like a great big Christmas present for all the wineries in the state.

L. Mawby Vineyard’s Mille 2002 and Peninsula Cellars’ Riesling Select 2006 bested their categories at this unique competition. Larry Mawby makes Mille, his only vintage-dated bubbly, about twice a decade, and Peninsula Cellars has a solid track record for Riesling.

The event celebrates American winemaking in the spirit of one of the country’s most passionate wine lovers, Thomas Jefferson, by inviting wineries across the U.S. to enter select wines, which already have been cited for excellence, to compete in what amounts to the championship game.

In the spirit of democracy, it’s not just another dance where 90 percent of the winners are from the West Coast — though many are. And that’s to the credit of Doug Frost, who chairs the event and ranks as one of three people in the world to hold Master Sommelier and Master of Wine credentials, and knows not only the wines from the most famous regions of the world, but also the wines of America’s West, Midwest, East Coast and the South.

“The 700 wines in this invitational are chosen by me, based upon my own tasting notes, other reviews and probably most importantly, an effort to create a fair list of wines from around the country,” Frost said this week.

The Jefferson Cup is the highest award at the event, and this year, 17 were handed out for both European grape varietals (Chardonnay, Cabernet Sauvignon, etc.) and non-European species (such as Vidal and Norton), which flourish in the more extreme climates in the U.S.

“The 17 cup winners represent some of the most compelling wines made in America,” Frost said.

Of course, California showed well, and Napa Valley’s Cosentino Winery, which swept up medals at events all year long, had five Cup nominations and went on to win a record three cups.

California wines nabbed eight of the 17 cups, followed by Michigan and New York with two each, and the rest went to wines in Washington, Kansas, Georgia, Virginia and Rhode Island.

Of the 700 entries, a total of 51 wines were nominated for the Jefferson Cup. This in itself is a huge honor, and Michigan’s St. Julian racked up three nominations — for Braganini Reserve Sauvignon Blanc 2007, Braganini Reserve Traminette 2007, and Solera Cream Sherry.

In descending order, the awards were Jefferson Cup, Jefferson Cup Nominee, Great Wine and Certificate of Merit. But clearly, every wine invited to this event was a winner.

Here are the Jefferson Cup winners.

2008 JEFFERSON CUP WINNERS
Sparkling Wine

L Mawby Mille 2002 Leelanau Peninsula (Michigan)
White Vinifera Wine

Peninsula Cellars Riesling Select 2006 Old Mission Peninsula (Michigan)

For a complete listing of all the 2008 Jefferson Cup Winners and Jefferson Cup Nominees please visit the Detroit News article here.

Tags: Agribusiness, Wine Industry by Dan Penning
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Congratulations to Larry Mawby and LMawby Vineyards on 30th anniversary!

The following is an excerpt from an article which appeared in The Detroit News about LMawby Vineyards -

Thursday, December 4, 2008
Sandra Silfven
L. Mawby Vineyards marks 30th anniversary

With the holiday season upon us, we can be grateful for many things, including Larry Mawby’s special niche in Michigan winemaking history: He is the only local vintner who only makes sparkling wines.

Mawby, 58, the founder and winemaker of L. Mawby Vineyards in Leelanau County, is respected as a premium sparkling wine producer by the upper crust of California winemakers — and France, too. His wines are sold not only around Michigan, but in a half-dozen states, as well as in Denmark.

This year marks the 30th anniversary of the winery for the poet, humorist and village president of Suttons Bay, whom I’ve written about for just about as long. I used to think I knew a lot about Larry and his wines. And, of course, I quickly found out in a recent chat that I’ve been asking the wrong questions for years.

Here’s the obvious one: Why just sparkling? It’s not only the hardest wine to make, and packed with guesswork, but takes expensive equipment and years to see any return on the investment, as better wines age three to five years.

Larry’s response: “The real reason is that I do so many things here. I make the wine, run the business. I needed to focus on a narrow subset of the best wine I could make. All I think about is how to grow grapes for sparkling wine.”

In 1996, when he narrowed the focus, he was making 500 cases of sparkling wine by hand. Today, he is making 8,000 cases, plus another 1,500 for other wineries, using French equipment, barrels and bottles.

Read the entire article here including a listing of LMawby Wines.

Tags: Agribusiness, Wine Industry by Dan Penning
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The below-referenced article from wikipedia.org projects that the Michigan Grape and Wine Industry Council set a goal of 10,000 acres of wine grape production and 3 million cases of Michigan-produced wines annually by 2024, which is about 10 times the current production. There will be several aspects of the service industry in the state that will be vital in supporting this growth, one of which is legal services.

In order to sustain proposed growth as reported above, wineries and wine growers will face issues similar to other businesses. Those issues include business formation, state and federal beverage licensing and permitting, financing, land acquisition, construction and design of facilities, environmental and natural resource issues, water rights, employment/worker’s compensation/OHSA issues, trademark protection, license agreements, income taxation, business succession and estate planning, and possible litigation matters.

The attorneys at Wright Penning & Beamer are experienced in all aspects of areas of business law cited above and how those laws are to be adapted to an agribusiness operation. If you have any questions or would like to inquire about our services, please do not hesitate to contact us at 231-271-4500.
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Information about the Michigan Wine Industry from wikipedia.org - please visit their site for additional information, reference notes and maps of Michigan’s Wine Regions.

Michigan Wine

Michigan wine refers to any wine that is made in the U.S. state of Michigan. As of 2007, there were 1,500 acres (610 ha) under wine-grape cultivation and 56 commercial wineries in Michigan, producing 425,000 cases of wine. According to another count there were 112 operating wineries in Michigan in 2007.[3] Wine and wine tourism were estimated in 2007 to be a $100 million industry.[1] Most of the quality bottled wine of Michigan is produced in the four listed American Viticultural Areas (AVAs) of Fennville AVA, Lake Michigan Shore AVA, Leelanau Peninsula AVA, and the Old Mission Peninsula AVA. Besides grape wine, Michigan is a leader in the production of fruit wines such as cherry wine.

Grape varieties
Most of the grapes grown in Michigan are grown for “table” uses, not wine. Of 100,000 short tons of grapes produced in 2005, only 4,600 tons were used for wine-making. However, the proportion of vinifera grapes used in winemaking is increasing. In 2005, the wine industry pressed 2,640 tons of European vinifera grapes, 1,660 tons of hybrid varieties, and 300 tons of American varieties. European grapes grown include Cabernet Franc, Chardonnay, Gewürztraminer, Pinot Noir, Merlot, Syrah, Pinot Gris, and Riesling.

History
The traditional wines of Michigan were sweet wines, often made from grape varieties native to North America, such as the Catawba, Concord, and Niagara, or from hybrid grapes partly descended from these varieties. North American native grapes bore (and continue to bear) the advantage of being adapted to local growing conditions, with consequent high fruit yield. In addition, local growers could switch back and forth between the production of sweet wine and grape juice. Of Michigan’s 14,600 acres (5,900 ha) under grape cultivation, only 12%, 1,800 acres (730 ha), were devoted to wine grapes as of 2007.

Michigan’s wine industry dates from after the repeal of Prohibition. With large plantings of Concord in the southwest, mostly for the Welch Grape Juice Company, the state was well positioned to enter wine production. Four large wineries (out of eleven wineries established by 1946) came to produce almost all Michigan wine: La Salle Wine and Champagne Company which was established in Windsor, Ontario and moved to Farmington, Michigan, the Bronte Champagne and Wine Company of Hartford, Michigan Wineries (now Tabor Hill Winery) of Buchanan, and St. Julian Winery, which was also established in Windsor, Ontario on the Canadian shore across from Detroit during Prohibition and moved to Paw Paw after repeal.
Vineyard on the Leelanau peninsula

Michigan law in the mid-20th century placed a tax of 4 cents per U.S. gallon on Michigan wine while other wine was taxed at 50 cents per U.S. gallon to promote the local industry. Michigan wine of that era was, primarily, fermented to dryness, giving about 9% alcohol, and then fortified with California brandy to 16% alcohol. State laws considered this natural wine and allowed it to be sold in grocery and drug stores while fortified wines from out-of-state at 18-20% could only be sold from state liquor stores.

The wineries of Michigan specialized in sweet wine and fruit wine well into the 1970s. With the growth in demand, starting in the latter half of the 20th century, for locally-grown and locally-labeled U.S. fine wines, several existing Michigan makers of sweet wine experimented with upgrading their production, and new vintners entered the scene. Tabor Hill Winery in southwest Michigan, opened in 1971 as the first Michigan winery specializing in vinifera wines. Only a few years later in 1974, Chateau Grand Traverse opened in the Traverse Bay region of Northern Michigan. A slow growth in the number of wineries and continued trial of different vinifera varieties continued well into the 2000s.

Regions
The four AVAs of Michigan.

Michigan contains four American Viticultural Areas (AVAs), regions whose wines share similar and distinct characteristics: Fennville, Lake Michigan Shore, Leelanau Peninsula, and Old Mission Peninsula. All four regions are located in proximity to Lake Michigan, and almost all of Michigan’s wine grapes are grown within 25 miles (40 km) of the lake. The lake effect provides a favorable microclimate compared to interior regions of the state. The northern wine regions have a 145-day growing season while the southern ones have a 160-day season.

The Greater Traverse City area, which includes the peninsulas of Leelanau and Old Mission, is one of the primary wine regions of Michigan. The soil is sandy, with good drainage, and a lake-dominated climate allows a longer growing season than in most of the U.S. Midwest. 51% of Michigan’s wine grapes, including much of the state’s vinifera grapes, are grown in this area.

The same advantages exist, to a slightly lesser degree, on the eastern shore of Lake Michigan south of Grand Rapids in the Fennville and Lake Michigan Shore regions. 45% of Michigan’s wine grapes are grown in this area.

Speciality wines

Ice wine
The climate of Greater Traverse City allows for the production of ice wine, which requires an early hard freeze so the fruit still on the vine can be harvested while frozen. A small number of wineries produce this style; although it is not possible every year. In 2002, for example, 6 Michigan wineries produced over 13,000 half-bottles of ice wine, a record at that time.

Fruit wine
Michigan may be the foremost U.S. state in the production of diverse varieties of bottled, fermented fruit wine. Fruit wine has a long and honorable history in Europe, especially in regions such as Poland and the Baltic states where grapes do not easily grow. In Michigan, apple wine and cherry wine are produced in the highest volume, but almost any fruit juice can be fermented with novel results. Michigan is a North American leader in the production of fortified fruit wines and eau-de-vie (fruit brandy).

Ongoing issues

Tourism synergy
As with other states, the Michigan wine industry is seen as an attractive example of regional cuisine and is supported by tourists. More than 800,000 tourists visited Michigan wineries in 2005.

State support
The wine industry in Michigan is supported by an agricultural research program at Michigan State University which began experimental vineyards around the state in 1970 and established a winery on campus in 1972. The Michigan Grape and Wine Industry Council is a state agency established in 1985 to promote and support Michigan wineries.

Future prospects
A warming trend in the climate of the Great Lakes region could increase Michigan vinifera productivity and lead to a higher profile for Michigan wines. However, Michigan vineyards, particularly vinifera vineyards, remain vulnerable to late spring and early fall cold snaps, such as the killing frost of March, 2003, insufficient growing season heat to fully ripen the grapes, and rot or mildew originating from rainfall while the grapes are maturing. The Michigan Grape and Wine Industry Council has set a goal of 10,000 acres (4,000 ha) of wine grape production and 3 million cases of Michigan-produced wines annually by 2024, about 10 times current production. Consumption of Michigan wine has risen from 1.5% of all wine consumed in Michigan in 1997 to 5.2% in 2006 with the number of wineries rising from about 16 to 50 in the same period. Michigan liquor law revisions in 2005 affirmed the right of wineries to sell from their tasting rooms, ship wine directly to consumers, and sell directly to licensed retailers and restaurants, bypassing wholesale distributors.

Tags: Agribusiness, Wine Industry by Dan Penning
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You’ve heard of Bud Bowl, right? Well, panels of wine tasters in Ann Arbor and Columbus recently gathered to judge over 60 selected consumer-selected wines from Michigan and Ohio. It was the first purely consumer-selected judging of wines in either state and also unique by being limited to wines from grapes exclusively from Ohio & Michigan wines.

Ohio and Michigan share a centuries-old tradition of viticulture which was wrecked by Prohibition but has re-emerged in recent times. From the Ohio River Valley to the upper shores of Lake Michigan, growers and winemakers are once again crafting unique and quality wines. In light of the growing concerns about the carbon footprint of transported products, Slow Food Columbus created this event to showcase regional efforts in the context our storied gridiron rivalry. The top wines were:

• White Wine: Black Star Farms “Arcturos” Chardonnay Sur Lie 2006 (MI)
• Sparkling Wine: Shady Lane Cellars Blanc de Blancs 2000 (MI)
• Aromatic White: Ferrante “Golden Bunches” Riesling 2007 (OH)
• Pinot Noir: Black Star Farms “Arcturos” Pinot Noir 2006 (MI)
• Red Wine: Kinkead Ridge Revelation 2006 (OH

The real winners are the consumers of Michigan and Ohio who have an array of quality local wines to enjoy, these wines emerged as the MVPs for their respective teams. “I would consider any of these winning wines to be on a par in quality to their peers from California and elsewhere,” said organizer Andrew Hall, “and at very consumer-friendly prices.”

“There were a lot of good wines from both states,” echoed one of the judges, “and I hope that people will give them a chance. Restaurants and consumers are starting to care a lot about local produce and wines should follow.”

Amen to that - think about putting a bottle or two of Black Star Farm’s excellent Michigan wine on your table this Thanksgiving and all year long!

The original article as it appeared on Black Star Farm’s website.

Tags: Agribusiness, Wine Industry by Dan Penning
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How long will Michigan residents allow special interest groups and lobbyists to continue to glutton themselves while the state’s economy spirals downward with high jobless rates and businesses closing to move to better markets? Apparently, too long.

The latest example of our elected officials lunacy and lack of understanding of basic principles that create economic growth is a proposed law to ban all direct wine shipments by in- or out-of-state retailers to consumers. Making it more difficult for Michigan businesses engaged in retail wine sales is clearly contrary to Economics 101. What’s wrong with responding to a market and demand of a product and making it competitive with an interstate commerce just like the thousands of other products that are directly shipped to consumers in and out of the state of Michigan every day? The simple answer - the Michigan Beer and Wine Wholesalers Association would be forced to release its vice grip on revenues generated for its members under the protectionism principles that are the lynch pins of their lobbying and strong-arming tactics to obtain elected officials’ votes.

In his blog, www.michwine.com, Joel Goldberg states as follows:

“Michigan’s Beer and Wine Wholesalers have already reported political donations that exceed $700,000 during the current election cycle, according to the Detroit News. This figure doesn’t include contributions made close to Election Day.

Numbers supplied to MichWine by Rich Robinson of the Michigan Campaign Finance Network show that members of the House Regulatory Reform Committee – which just passed the Wholesaler-supported delivery ban – took over $37,000 from the MBWWA. Rep. Barbara Farrah, the bill’s sponsor and Committee chair, also got more than $3,000 in “travel expenses” to attend the last two MBWWA winter meetings.”

The impact of the legislature’s capitulance to the MBWWA’s desire is that Michigan loses valuable businesses and jobs. Goldberg further states in his November 18, 2008 blog posting:

“Given our state’s economic track record in recent years, which direction do you guess they’re taking up in Lansing? Hint: while Governor Granholm is in on an Israeli road trip, trying to import a few 21st century businesses and jobs to Michigan, her party colleagues back home in the state legislature are busy propping up Prohibition-era beverage laws guaranteed to further damage our precarious economy.

How? The prime example is Winebuys.com, an online seller of wine. It’s a high-tech internet startup – something we talk a good game about wanting to promote in Michigan. Started last year by two Detroit-area businessmen who anted up $1 million of their own money, it’s one small step along the road that might someday wean Michigan off our auto-dependence. They project $10 million in sales next year, and plan to hire a few more employees soon.

It’s a gusty move to start a new Michigan-based business in this economy. Most of their online competitors are located in places like California, a state that’s long encouraged retail wine shipping and, as a result, already houses a profusion of young, growing businesses in the sector.

But if the level-down law before Michigan’s state legislature passes, the entire legal basis for their business – selling and shipping wine to retail consumers nationwide – will be banned in Michigan. Like too many other businesses before them, the folks behind Winebuys will have two choices: go out of business or move to another state.

By the way, you may wonder where Winebuys gets all this wine it sells online. You guessed it: from the same Michigan wholesalers whose well-paid lobbyists are diligently working Lansing’s backrooms at the moment, to pass the law that will put their customer out of business.

You’d swear these guys have been taking business development lessons from the automakers.”

The MBWWA attempts to mask its gluttony by citing two arguments in support of the proposed law. The first argument is that if the law is not passed, the state would lose tax revenue. False! Michigan would tax shipments by out-of-state wineries to Michigan residents. The second argument is that the law would prevent alcohol from winding up in the hands of minors. Again, False! There is no evidence based on the past practice of wineries that direct shipments to Michigan residents that any direct shipment of wine or alcoholic beverages increases incidences of alcohol in the possession of minors.

In an economic environment where our state is highlighted in the nation bailout hearings in front of U.S. senators and congressmen, why are we allowing a powerful lobby group such as MBWWA to dictate economic policy and drive jobs from our state? The only hope is that the old adage that “pigs get fat, hogs get slaughtered” will ring true.

-Dan Penning
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Wine lovers’ win sours as Michigan tries again to ban direct shipping

BY DAWSON BELL • FREE PRESS STAFF WRITER • November 29, 2008

LANSING — Joe Chess, an orthopedic surgeon from Kalamazoo, said his passion for fine wine is deep.
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Deep enough that he regularly seeks hard-to-find varieties in remote places, and deep enough to get him into a lawsuit fighting Michigan regulations stopping him from buying wine from out-of-state retailers. Two months ago, Chess won the suit when a federal judge in Detroit ruled that the state couldn’t ban out-of-state retailers from shipping wine directly to customers while allowing Michigan firms to do it.

So why doesn’t Chess feel like a winner?

On Nov. 11, Lansing lawmakers introduced a bill to solve the problem by banning all direct wine shipments by retailers, whether they’re Michigan merchants or those in another state. The bill was approved in committee the next day and could sail through the Legislature in the lame-duck session beginning Tuesday and be on the governor’s desk before Christmas.

“That’s crazy,” Chess said last week. “The state loses a lawsuit, and they respond by punishing consumers and retailers. It seems to me Michigan can ill afford to be hurting businesses right now.”

State regulators, some legislators and the Michigan Beer and Wine Wholesalers Association, the powerful lobby for beer and wine distributors, said it’s not crazy at all. All they’re trying to do, they said, is preserve an orderly system that dates pretty much from the repeal of prohibition. The system was designed to keep tight control over who gets to buy and sell alcoholic beverages. Michigan Liquor Control Commission spokesman Ken Wozniak said the system actually helps some in-state business by protecting them from competition.

Opening up Michigan’s consumer market to outsiders would “turn it upside-down … wide open,” Wozniak said.

Money also is a factor. The LCC is the nominal distributor of liquor in Michigan and reaps more than $200 million a year in revenue. Wozniak said the state wants to limit shipments from out of state out of “self-interest.”

Attorneys for Chess dispute the notion that the government would collect less in fees and taxes by opening up the market. Michigan could impose the same rules on outsiders that are imposed on Michigan retailers, said Alex Tanford, an Indiana University law professor engaged in an effort to open up the market for alcoholic beverages around the country.

“They can pretty much engage in any regulation they want,” Tanford said. “They just can’t impose different regulations on out-of-staters.”

The Legislature authorized shipments by in- and out-of-state wineries three years ago after losing another court case. How much traffic would be generated in an open market for direct shipment is unclear.

Chess said he believes it is relatively small, mostly confined to people like him who are interested in buying hard-to-find, high-end wine. But the attitude of the beer and wine wholesalers group suggests its members are concerned about serious erosion of market share. The group intervened in the lawsuit to defend the so-called three-tier system, which gives its members monopoly distribution rights within specific territories.

President Michael Lashbrook said last week that he believes the regulation of alcohol sales would “break down completely” if the decision by U.S. District Judge Denise Hood stands. Lashbrook said damage to Michigan retailers from passage of the legislation would be minimal because only a few use direct shipping, and it is not a major part of their business.

That’s not true for Michael Solarz and Jeff Resnick, whose Ferndale-based business, winebuys.com, is based almost entirely on direct shipment to customers. Solarz said they purchased Winebuys and brought it from California to Michigan a year ago. They have six employees but hope within two years to have as many as 25 and reach $10 million in sales.

But if the ban on direct shipping is approved, Winebuys will be growing somewhere else, Solarz said.

“I find it extremely antibusiness and distressing,” said Solarz. “We wanted to get into a business that wasn’t dependent on the Michigan economy. Then we get hit with this?”

Click to read the entire article from The Detroit Free Press

Tags: Agribusiness, Wine Industry by Dan Penning
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