BILL ANALYSIS                                                                                                                                                                                                    

                                                       Bill No:  SB  
                       Senator Roderick D. Wright, Chair
                           2009-2010 Regular Session
                                 Staff Analysis

          SB 1101  Author:  Wiggins
          As Amended:  March 23, 2010
          Hearing Date:  April 13, 2010
          Consultant:  Art Terzakis

                              Alcoholic Beverages

          SB 1101 clarifies that winemakers who participate in  
          instructional events or "meet the winemaker dinners", held  
          at a retailer's licensed premises for consumers, may offer  
          minimal samples of wine from "bottles."  Specifically, this  

          1.  Modifies an existing provision of the Alcoholic  
            Beverage Control (ABC) Act which allows winemakers  
            participating in instructional events for consumers at a  
            retailer's premises to offer samples of wine from barrels  
            or tanks to also allow for wine samples (no more than  
            three one-ounce tastings per consumer) at the event from  
            "bottles" of wine provided by the winemaker.

          2.  Provides that minimal amounts of the samples or tastes  
            provided at the instructional event do not constitute a  
            thing of value.

          3.  Stipulates that any unused wine provided by the  
            winemaker for the instructional event must be removed  
            from the retailer's premises by the winemaker. 
                                  EXISTING LAW

           Existing law establishes the Department of Alcoholic  


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          Beverage Control (ABC) and grants it exclusive authority to  
          administer the provisions of the ABC Act in accordance with  
          laws enacted by the Legislature.  

          Existing law, known as the "tied-house" law, separates the  
          alcoholic beverage industry into three component parts, or  
          tiers, of manufacturer (including breweries, wineries and  
          distilleries), wholesaler, and retailer (both on-sale and  

          Tied house refers to a practice in this country prior to  
          Prohibition and still occurring in England today where a  
          bar or public house, from whence comes the "house" of tied  
          house, is tied to the products of a particular  
          manufacturer, either because the manufacturer owns the  
          house, or the house is contractually obligated to carry  
          only a particular manufacturer's products.   

          The original policy rationale for this body of law was to:  
          (a) promote the state's interest in an orderly market; (b)  
          prohibit the vertical integration and dominance by a single  
          producer in the marketplace; (c) prohibit commercial  
          bribery and protect the public from predatory marketing  
          practices; and, (d) discourage and/or prevent the  
          intemperate use of alcoholic beverages.  Generally, other  
          than exceptions granted by the Legislature, the holder of  
          one type of license is not permitted to do business as  
          another type of licensee within the "three-tier" system.  

          Tied-house law generally prohibits any alcoholic beverage  
          manufacturer, winegrower, agent, importer or wholesaler  
          from holding any interest in the business of a retailer of  
          alcoholic beverages or to give any thing of value to a  
          licensed retailer of alcoholic beverages.  Licensees are  
          also prohibited from giving away any gift, premium or free  
          goods in connection with the sale or distribution of  
          alcoholic beverages.

          The ABC Act permits an on-sale retail licensee of wine or  
          distilled spirits to conduct "instructional" consumer  
          tastings on the licensed retail premise provided the  
          following conditions are met: (1) no more than  ounce of  
          distilled spirits is offered in one tasting; (2) no more  
          than one ounce of wine is offered in one tasting; and, (3)  
          no more than three tastings are offered to an individual in  
          one day.  An instruction may include the history, nature,  


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          values and characteristics of the product being offered,  
          and the methods of presenting and serving the product.  

          Existing law authorizes beer manufacturers and wholesalers  
          to offer beer samples (not to exceed 8 ounces per person,  
          per day) to individuals of legal drinking age at on-sale  
          retail licensed premises under specified conditions.  
          Existing law permits a licensed winegrower, manufacturer,  
          importer, or wholesaler to provide samples of the alcoholic  
          beverages which are authorized to be sold by the licensee  
          in accordance with rules prescribed by the ABC.  A retail  
          licensee, however, is not authorized to provide any free  
          samples of alcoholic beverages.  Moreover, ABC regulations  
          provide that samples of alcoholic beverages may only be  
          given away to licensees or employees of licensees who are  
          in a position to purchase the product or who are in need of  
          additional information about the product, as specified.

          As a limited exception to the general tied-house rule,  
          existing law (Business and Professions Code Section  
          25503.4) permits winegrowers and their agents, including  
          wine importers, to conduct and participate in instructional  
          events and dinners held at a retailer's premises featuring  
          the winemaker's wine, provided certain conditions are met.   
          Although no wine can be given away at the events, minimal  
          amounts of wine, taken from barrels or tanks, may be sample  
          Purpose of SB 1101:   As noted above, current law allows  
          winemakers to conduct and participate in, and serve wine  
          at, instructional events and "meet the winemaker dinners"  
          held at a retailer's premises featuring wines produced by  
          or for the winegrower or, imported by the wine importer,  
          provided the wine samples are taken from "barrels" or from  
          "tanks."  This measure would simply clarify that winemakers  
          participating in such events may also offer samples of wine  
          (three one-ounce tastes) from bottles. 

           Arguments in Support:   Proponents note that this measure  
          "responds to the practical aspects of how meet the  
          winemaker dinners are conducted."  Proponents also  
          emphasize that "the tastes, which are instructional, will  
          conform to existing law on the number and size of tastes  


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          allowed during a dinner."

           Staff Comments/Historical Perspective:   As noted above,  
          alcoholic beverage licensees are generally prohibited from  
          giving away any gift, premium or free goods in connection  
          with the sale or distribution of alcoholic beverages.  AB  
          2868 (Floyd), Chapter 471, of 1992 (Business and  
          Professions Code Section 25503.4) was introduced to clarify  
          existing law and allow winemakers, alcoholic beverage  
          retailers and importers, to advertise and promote winemaker  
          dinners and tastings featuring specific wines of a winery.   

          The events addressed by AB 2868 (Floyd) of 1992 were  
          commonly known and advertised as "winemaker dinners" or  
          "meet the winemaker events."  Such events were intended to  
          offer consumers an educational opportunity to learn more  
          about food and wine pairing and a bit of the wine's unique  
          history.  At that particular time, the activities  
          encompassed by AB 2868 (Floyd) were commonplace however the  
          Department of ABC had expressed concern that such  
          activities might violate the prohibition against licensees  
          giving away things of value.  AB 2868 (Floyd) of 1992 was  
          introduced on behalf of the Wine Institute and the Family  
          Winemakers of California so that the ability of vintners  
          and restaurateurs to advertise and participate in such  
          events would not be constrained.  

                                PRIOR LEGISLATION

          AB 611 (Cortese) Chapter 394, Statutes of 1993.   Provided  
          that an adult resident of California may apply for a permit  
          to receive, under specified conditions, a shipment of wine  
          (not more than nine liters in any calendar month) from  
          another state that allows adult residents of that state to  
          receive shipments of wine from California.  Also, deleted  
          the requirement that wine taken from barrels or tanks, and  
          sampled at winemaker dinners, be the same wine used to  
          blend the bottled wine featured at the dinners.
          AB 2868 (Floyd) Chapter 471, Statutes of 1992.   Authorized  
          a winegrower, California winegrower's agent, importer, or  
          their specified representatives, to participate as  
          described, in an instructional event for consumers held at  
          a retailer's premises featuring wines produced by or for  
          the winegrower or imported by the importer, under specified  


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          SUPPORT:   As of April 9, 2010:

          Family Winemakers of California
          Wine Institute

           OPPOSE:   None on file as of April 9, 2010.

           FISCAL COMMITTEE:   Senate Appropriations Committee