BILL ANALYSIS Ó
AB 394
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Date of Hearing: April 8, 2015
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
AB 394
(Mark Stone) - As Amended March 19, 2015
SUBJECT: Alcoholic beverage control: wine labels: Monterey
County
SUMMARY: Requires any wine bottled on or after January 1, 2019,
labeled with an American Viticultural Area (AVA) established
pursuant to federal law that is located entirely within the
County of Monterey (County) to bear the designation "Monterey
County" on the label. Specifically, this bill:
1) Requires any wine bottled on or after January 1, 2019,
labeled with an AVA established pursuant to the Code of Federal
Regulations, that is located entirely within the County of
Monterey shall bear the designation "Monterey County" on the
label in a type size not smaller than two millimeters on
containers of more than 187 milliliters or smaller than one
millimeter on containers of 187 milliliters or less.
2) Authorizes ABC to suspend or revoke the license of any
person who violates the above-mentioned provision.
3) Specifies that the provision shall not apply to any wine
labeled with a viticultural area appellation of origin
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established under Federal Regulations when the name of the
appellation is "Monterey."
EXISTING LAW:
1) Provides for specified labeling requirements for containers
of alcoholic beverages sold within this state.
2) Existing provisions of the Act, known as "tied-house"
restrictions, generally prohibit a winegrower from having an
ownership interest in an on-sale alcoholic beverage license,
with limited exceptions. Among other exemptions, existing law
exempts from the tied-house restrictions any licensed winegrower
who meets specified conditions, including that the winegrower,
or his or her officer, director, or agent, enters into an
undertaking, approved by the ABC, that makes specified
statements regarding the sale or furnishing of wine by the
winegrower, or any officer, director, or agent of the
winegrower.
3) Requires that, when the word "Napa" (or any federally
recognized viticultural region within Napa County) appears on a
brand label, at least 75 percent of the grapes used to make that
wine must be from Napa County.
4) Requires wines produced within the "Napa Valley" to be
labeled as being derived from that valley, if the wine label
indicates that they are produced within a separate viticultural
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area within the Napa Valley, in order to preserve consumer
identification and understanding.
5) Prohibits the sale of wine produced, bottled, or labeled
after December 31, 2008, in this state that identifies, in a
brand name or otherwise, on any label, packaging material, or
advertising, the name "Sonoma," unless at least 75 percent of
the grapes used to make the wine are from Sonoma County, as
specified.
6) Requires all wines produced or bottled within the current
Paso Robles appellation to be labeled with the designation "Paso
Robles."
7) Requires all wines produced or bottled within the current
Lodi appellation to be labeled with the designation "Lodi."
8) Requires, beginning on or after January 1, 2014, that any
wine labeled with an AVA located entirely within a County of the
19th class (Sonoma County) must display the designation "Sonoma
County" on the label, as specified.
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FISCAL EFFECT: Unknown
COMMENTS:
Background : The Federal Alcohol Administration Act establishes
broad federal regulatory authority over the interstate trade in
alcohol beverage products. The Secretary of the Treasury,
through the Alcohol and Tobacco Tax and Trade Bureau (TTB),
administers an extensive code of regulations governing, among
other things, the contents of wine labels, including brand
names, the name and address of the bottling winery, and
indications of the wine's origin, as well as the use of such
information in advertising.
Under federal regulations, an "appellation of origin" is a
geographic designation referring to the place where the grapes
used to make a specified percentage of the wine were grown. For
American wines, an appellation of origin includes the names of
states (e.g., "California") and counties identified with
the word "county" (e.g., "Napa County," "Monterey County,"
"Sonoma County," "Eldorado County," etc.) as well as all
designated American "viticultural areas." An AVA is a grape
growing region distinguishable by geographical area features, as
recognized by the TTB pursuant to specified criteria and
procedures.
These criteria and procedures, and a complete list of AVAs, are
set forth in Part 9 of Title 27 of the Code of Federal
Regulations. In brief, TTB may recognize an AVA area if it is
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locally or nationally known for grape growing, has particular
and definable boundaries, and has geographic features
distinguishing it as a grape-growing area. As of 2014, there
were more than 220 recognized AVAs nationwide - 135 of which are
located in California. The 135 California viticultural areas
recognized by the TTB include, among others, Alexander Valley,
Anderson Valley, Chalk Hill, Clarksburg, Fair Play, Hames
Valley, Lodi, Los Carneros, Monterey, Napa Valley, Paso Robles,
Rockpile, Russian River Valley, Santa Lucia Highlands, Sonoma
Valley, Spring Mountain, Stags Leap, and Wild Horse Valley.
The regulations specify the conditions for use of each type of
appellation of origin. A wine qualifies for a state or county
appellation of origin if at least 75 percent of the volume
derives from grapes grown in the area indicated by the
appellation of origin. Thus, under TTB regulations the
appellation of origin "California" signifies that at least 75
percent of the wine in the bottle was made from grapes grown
anywhere in the state of California. Similarly, the
appellation of origin "Napa County" or "Sonoma County" or
"Mendocino County" signifies that at least 75 percent of the
wine in the bottle was made from grapes grown anywhere in that
particular County. To qualify for an appellation of origin
consisting of an AVA, at least 85 percent of the wine must
derive from grapes grown in the indicated area. The
regulations do not require disclosure of the place of origin of
the remaining portion of the wine.
Purpose of the bill : This bill establishes a "conjunctive
labeling" provision in the ABC Act for wines made from grapes
grown within recognized winegrowing areas, or American
Viticultural Areas, in Monterey County. This provision mirrors
existing labeling provisions for Sonoma, Napa, Lodi, and Paso
Robles.
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According to the author's office, California is a global leader
in viticulture and wine grape cultivation, and its many
wine-producing regions are known specifically by their local
appellation due to their high quality products and labeling
requirements. Monterey County wine producers, which are leaders
in the California wine industry, provide a variety of jobs in
the wine growing and supply chain, and contribute immensely to
the County's economy. Monterey County is unique among wine
regions because it rates very high in value, quality and
awareness.
The author's office contends this measure will insure that
consumers recognize every bottle of wine produced from Monterey
County grapes. In addition, the bill will build brand equity
for Monterey County wines and preserve and strengthen the
County's position as a recognized world-class wine region while
increasing sales of wines produced from the region's grapes.
Consistent inclusion of Monterey County on wine labels will
strengthen the County's brand over time while strengthening the
diversity of AVAs within the County and the quality wines each
produces.
The bill provides a three-year phase-in period to enable
wineries to redesign their labels and get regulatory approval to
use the new labels.
In support : In support of this measure, the Family Winemakers
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of California states "the Monterey appellation is one of the
fastest growing premium vineyard and winery regions in
California, as well as one of the state's tourism jewels. Wines
produced from Monterey are becoming nationally and
internationally recognized for their distinctive qualities. As
the Monterey wine region continues its growth and development,
it is important that smaller, separate sub-appellations benefit
from and contribute to the linkage that comes with conjunctive
labeling. AB 394 is designed to accommodate the desired
specificity of sub-appellation labeling, but link it to the
broader Monterey AVA."
Prior legislation: AB 1798 (Evans), Chapter 242, Statutes of
2010. Required, beginning on or after January 1, 2014, that any
wine labeled with an AVA located entirely within a County of the
19th class (Sonoma County) must display the designation "Sonoma
County" on the label, as specified.
AB 87 (Blakeslee), Chapter 674, Statutes of 2007. Required all
wines produced or bottled from any sub-appellation located
within the current Paso Robles appellation to carry the
designation "Paso Robles" on the label.
SB 1380 (Chesbro) Chapter 879, Statutes of 2006. Prohibited the
sale of wine, produced, bottled, or labeled after December 31,
2008, that identifies, in a brand name or otherwise, on any
label, packaging material, or advertising, the name "Sonoma",
unless at least 75% of the grapes used to make the wine are from
Sonoma County, as specified.
SB 1293 (Chesbro), Chapter 831, Statutes of 2000. Prohibited
the use of the word "Napa" on a brand label unless at least 75%
of the grapes used to make that wine came from Napa County. One
of the stated purposes of this law was to minimize consumer
confusion because consumers assume brand names of wines suggest
the origin of the grapes.
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REGISTERED SUPPORT / OPPOSITION:
Support
Family Winemakers of California
Monterey County Vintners and Growers Association
Opposition
None on file
Analysis Prepared by:Eric Johnson / G.O. / (916) 319-2531