100% Texas Wine Labeling – Now Where Do We Go?
Now that HB4233 died in committee, let me get right to it.
For three years, we’ve pursued the wrong answer to the right question. In the long run, State-level Appellation wines (100% Oregon, 100% California, even 100% France) are not the most sought-after, defining and collectible wines particularly among consumers who buy, cellar, track and even write about fine wine, and true Wine Origin. State AVA wines are priced lower, tracked less by collectors and critics, and are not nearly as defining to the reputation of a wine producing region as other wines can be. State-Appelated wines are less valuable, as a category, than wines designated at AVA, Vineyard, and Estate levels.
Again – know that our heart is in the right place: Siboney Cellars is 100% Texas Grapes. In fact we believe so much in Texas and Wine Origin, we just purchased a 52 acre site atop a limestone plateau in the Texas Hill Country. A site where we will, in fact, pursue Vineyards and Wines of Origin and proudly declare them for Texas – for the Hill Country AVA, for our estate.
But we also stipulate that we should not ask the Texas Congress to legislate a 100% Texas Grape requirement at the state-AVA designated level. Instead, we urge the Texas Wine Industry to pursue a goal of Appellation-level wines to be 100% sourced from Texas Grapes.
And now that you know the end of the story, let me start from the beginning. I am doing here what I ask my wine marketing students to do in classes I teach at Texas Tech University in Fredericksburg: write a story grounded on facts. A story without facts is just opinion. Facts without a story are boring. But put both together, and you’ve got a chance to persuade.
HB4233 died in committee
The 2019 Texas Legislative session ended in May, and a couple of bills we are tracking did not receive further action and so have not been passed or even voted on. Included in the bills that died in committee is HB4233, the “100% Texas” Labeling Bill. So, where do we go now?
We think there’s a better starting point for labeling and requiring Texas wines to be sourced from 100% Texas Grapes. And, we think the benefits of doing so will be positive for all, including the consumer. In fact, it is the wine consumer that is at the heart of this idea. And the idea is simple: start at the sub-appellation level for requiring 100% Texas grapes.
Let me give you a couple of examples, then please let me explain why we think this is a more logical approach. I will back it up with market data for your own assessment. You will make up your own mind and tell me whether we are on the right track.
[Note: I also include a Legislative Recap at the bottom of this post if you’re not already up to speed on the legislative action]
100% Texas – AVA and Vineyard
Currently, wines designated as Texas High Plains, or the Texas Hill Country, or other Appellation, require 85% of the grapes to come from that AVA. Neither Federal (TTB) nor State (TABC) law makes a statement about the origin of the remaining 15% – it allows wineries to use grapes from anywhere they want for that last 15%. I propose we take a first step towards 100% Texas by requiring those remaining 15% grapes to originate from Texas.
That way, all wines with an sub-AVA are guaranteed to be 100% Texas, with 85% minimum content from the AVA.
It should be noted that Federal law does not even require imported wines to be 100% sourced from the country of origin. In fact, TTB law says 75% from the named Appellation of Origin is sufficient, provided the wines conform to those AOC laws (source: https://www.ttb.gov/appellation/index.shtml) .
In other words, the TTB decided it is not going to be the arbiter or enforcer of Terroir, Wines of Origin or authenticity. TTB is largely a tax-collecting entity applying a uniform regulatory code across a huge domestic industry doing business in a worldwide market. TABC appears to mirror TTB law in this regard, and they do not push beyond Federal laws without a darn good reason. And that reason needs to be highly supported by the vast majority of the Texas wine industry for it to become a law they are obliged to enforce (source: https://www.tabc.state.tx.us/publications/brochures/labels.pdf)
Why do this instead of State AVA @100%?
Something about the fundamental appeal of a State-Appellated wine category just didn’t resonate. Because our very wise Texas Congress has punted this issue back to the industry and cannot take up the issue for at least another two years, I thought I would do some upfront research and see where the data took me.
I pulled up CellarTracker.com to see what the consumer data on wines by Appellation looks like. Cellar Tracker is a powerful online wine tracking community used by over 600,000 wine consumers. CT users have catalogued 60 Million bottles of wine – logging shared tasting notes, tracking vintages, creating drinking windows, writing and noting critical reviews, even photographing labels as they change throughout time. As a result, CT provides a wealth of wine consumer ratings, creating an incredible database of Wines by Origin in the process. I started posting my own tasting notes under the ID “City Wine Journal” in 2008 while studying for a Wine MBA in Bordeaux, and wrote tasting notes for several years on hundreds of wines, accumulating hundreds of thousands of views from CT users in 10 years.
What does the data show? It clearly shows that fine wines designated at the AVA are much more collectible, more highly regarded, produced in more abundance, and as a result, more valuable than wines designated at state or national levels.
Here’s what I did. I examined several wine categories we have discussed over the years in relation to the 100% Texas debate:
- Pinot Noir from Oregon
- Cabernet Sauvignon from California
- Wines from France
- Wines from Texas
I have done the homework for you, so let me tell you what the data shows (and I will publish the numbers separately).
CellarTracker.com findings (as of June 1, 2019):
- Oregon is a common point of comparison for Texas wine, a state pursuing quality and creating label laws more stringent than required by TTB.
- CellarTracker shows over one 1 million bottles of Oregon Pinot Noir cataloged by thousands of users around the world.
- Of these, only 3.2% carry a State-Appellation designation.
- The remaining 96.8% are designated as Oregon Pinot Noirs at an AVA, Vineyard, or Estate level.
- In other words, the vast majority of Pinot Noir wines of interest are NOT state-level designated wines.
- Now, when I cut the data by price, when the search is restricted to premium wines that are $20 and higher, the proportion of State-Appellated wines falls even more, to under 2% of all Oregon Pinots
- Implication: Not only are State-appellated Oregon Pinor wines less collectible, and produced in substantially smaller numbers, they are priced lower and do not command a premium price level as compared to AVA, Vineyard, and Estate Oregon Pinots
What about California? The state with the the most wines tracked in the USA, and the oldest wine appellation designations in the country. How do State-Appellated Cabernet wines compare to wines from sub-appellations like Napa, Sonoma, and Central Coast? The difference is even more pronounced:
- Over 7.3Million bottles of California Cabernet are logged in CellarTracker.
- Of these, only 1.6% are “100% California” designated Appellations
- And above $20? The proportion drops to 0.3%.
- IN other words, virtually nobody is tracking State-appellated California Cabernets above $20. In fact you may be interested to know there are more Texas wines in total being tracked on CT than California-State-Appellated Cabernet!
Let’s look at France. There are over 20 million bottles of French wine tracked and cataloged on Cellar Tracker today. How many proudly say “100% French” at the national level, rather than declaring an AVA?
- 0.3% Of the 20M bottles indicated on CT, just 55,000 are Natioanlly Appellated. The rest are all at the appellation level – Bordeaux, Burgundy, Loire, or many hundreds of sub-communes, vineyards, and estates.
- And above $20? Forget it. 0.1% Just 17,000 bottles with an AOC France designation are cataloged in CT. That is less than the number of Texas AVA designated wines.
- First of all, I was pleased to see Texas wines even referenced in CT, this is a good thing for sure!
- About 45,000 Texas wines are tracked by CT users.
- Of these, 33% are State Appellation level, and 66% are AVA or vineyard/Estate designated.
- Above $20, State Appellated wines drop to 25%.
So even in Texas, the overall theme is consistent with the data from the other regions. This data clearly shows that among the strongest wine consumers in the world, wines designated at the AVA level or vineyard level are much more collectible, more highly regarded, produced in more abundance, and as a result, more valuable than wines designated at state or national levels.
This data has important implications for industry policy, winery operations, consumer demand, vineyard growth, and even distribution.
It also tells us another point. If you look at where “100% State” wines wines are a little less irrelevant, it is in the under-$20 price level. These are not DTC wines, these are retail wines sold through distribution, competing on the world market on store shelves at HEB, Total Wine, Specs, and many other retailers.
In the under $20 category, the first defining consumer priority is price, the second is volume, the third is consistency and availability, and it all must work at the demands of the retailers in order to even be stocked. There are hundreds of quality wines below $20. Many are named-varietal wines. Many are below $15, and even $10.
This to me is also critical. Texas is larger than France. Larger than Spain. Yet we have less than 10,000 acres under vine. France has 2.3M, Spain has 2.9M acres under vine. California has about 600,000.
These are mature wine growing regions who can supply the world with nice quality varietal wines at quantities and prices that Texas cannot compete with. Not yet.
If you make a law that says, for example, Llano Estacado has to source 100% of its state-appellate retail wines from Texas Vineyards in order to proudly call it a Texas wine, they will have to raise prices, alter blends, and potentially be displaced at retail shelves, or lose margin and lose shelf space. It will change the economics of their entire value proposition. It might even put their current Texas vineyard contracts at risk as an unexpected consequence. Because there simply is not a big enough substitute bulk wine market at the varietal level where large retail wine brands can substitute a Texas source with enough supply, quality and consistency at a price that allows them to compete at those prices. Not yet.
In other words, the rational choice for Llano would be to maintain its shelf space, and price points, and company profitability, by substituting more out-of-state grapes and abandon Texas grapes in favor of other sources just to maintain its current position.
Now, Texas vineyard growers are working to meet these quality and volume requirements, and prices will also adjust over time as more acreage comes on line with varietals that meet consumer and supplier demand. But to put a 100% requirement into law and tell the winery to expect no change in their business practices at the market or consumer or supplier level is naive, and in fact is punitive. We NEED the Llanos and the Messina Hofs and other Texas Wineries to invest in larger contracts with more acreage planted in Texas. The 100% Real Texas Wine group is not primarily focused on this market, nor are they sized to seriously drive it, even if they are moving some wine through the channel now, it’s not their main profitability mission. They will continue to play the premium DTC game at the AVA level. And do it exceedingly well.
That’s why this proposal has a certain logical feel to it. It validates every premium AVA-level Texas wine as 100% authentic. These are wines of distinction and Origin, great wines above $20, sold direct to consumer. It pursues Terroir at the AVA level, the vineyard level, the block level.
This idea allows the larger State-AVA and varietal-focused wine producers to compete under price and volume pressures on a worldwide level under $20 while complying with federal and state 75% laws for Texas grapes & varietals. It leaves them with the means to continue to invest in Texas vineyards — to increase highly-desired varietal plantings, get more “locally sourced” supply into their product, meet consumer demand for good wine from Texas Wineries under $20, with broad availability.
We agree: the foundational element of the advocates for 100% Texas wines is spot-on target — the goal of aligning Origin with Wine labels and appellation is worthy, and valuable. But now we can see how and where to do it. It should be done at the appellation level. And below. Where Origin matters the most. Not at the state level.
Let me restate from our first blog post:
“Our view regarding 100% Texas Wine is clear, and we state it on every bottle. No Stickers, no Legislation needed. We will continue to produce amazing Texas Wine. And we are grateful if you count us as a friend of every Texas Winery and Grape Grower, no matter what your position is. You have our Word.”
Miguel and Barbara Lecuona
Dripping Springs, Texas
Recap: (Skip this if you’re already up to speed on the legislative action)
As you recall, HB4233 would require wineries to use 100% Texas grapes in any wine labeled with the Texas Appellation (not an AVA or vineyard designation, just Texas), with a 5 year phase in. Currently, the law requires a minimum of 75% Texas fruit for a Texas-Appellated wine, but significantly higher levels for labeling indicating a specific AVA like the High Plains and the Hill Country). Further, it would require the wine to be fully produced here, never leaving the state to finish production, to be labeled as Texas Appellation. This was deleted 1 minute before public testimony began. It also gave the Texas Agriculture Commissioner the right to allow non-Texas grapes in years where the state harvest is deemed “Insufficient to meet projected production estimates”. (How that is determined and monitored is unclear, but I doubt the head of the Dept really wants to sit in judgment and referee on such issues).
At the testimony, there were about equal numbers of wineries and testimonials in favor and in opposition, indicating that the industry was clearly divided, not reconciled about the wisdom of legislative action. Siboney Cellars is one 100% Texas Winery that openly, and respectfully, testified in opposition to this particular legislation. There are others. We have heard from a few after posting our perspective on this issue, too. We are not here to cause a ruckus. We are here to support a more thoughtful, expansive look at the issue of 100% Texas fruit, and forge a solution that is embraced by many more wineries and vineyards.. Following the two legislative failures in 2017 and 2019, and the divide remaining within the Texas Wine Industry, we do think it is time for another option to gain more visibility and consideration.