Supreme Court voids ban on interstate wine sales.

Byline: Scott Maben The Register-Guard

Oregon wineries are toasting the U.S. Supreme Court for striking down laws in two states that prevent their residents from ordering wine directly from out-of-state vineyards.

In a 5-4 decision Monday, the court said laws in New York and Michigan are discriminatory and anti-competitive because they allow shipments from in-state wineries but not those from anywhere else.

In all, 24 states bar interstate shipments. They require outside wineries to sell through licensed wholesalers within the state.

The ruling is a victory for wine-growing regions such as Oregon, the country's fourth-largest producer with more than 300 wineries. Most of those are small operations that lack distributors but can do well on mail orders, often through their Web sites. They also want their visitors to be free to ship bottles home.

"We're thrilled," said Ted Farthing, executive director of the Oregon Wine Advocacy Council, the lobbying arm of the state's wine industry. "This is especially important to our smaller wineries, because direct shipping is their absolute lifeline."

But nothing changes yet. States that ban out-of-state shipments first must review their laws to make sure all wineries are treated equally. Legislatures could do that by simply banning all shipments, from in-state and out-of-state vineyards.

Farthing said he expects supporters of unrestricted interstate sales will have to battle for every state.

"It's a significant decision, but time will tell how much a precedent it really sets. What we do know is there's a long, long fight ahead," he said.

Alcoholic-beverage distributors that supply stores, restaurants and bars have pushed for restrictions on interstate sales. A powerful lobby, the distributors argue that direct sales make it easier for minors to obtain wine, although studies have shown that retail sales to minors are far more common.

Some states also object to interstate wine sales because they'll lose the opportunity to collect millions in alcohol taxes.

The court case centered on a thorny debate pitting free and unrestricted interstate commerce against the constitutional right of individual states to make decisions not specifically reserved to the federal government.

At Secret House Winery in Veneta, some customers are surprised and disappointed to learn they can't have the wine shipped directly to their home, winery manager Cynthia Ziegler said. The court's ruling could end the confusion and level the playing field, Ziegler said.

"It's a start," she said. "Basically it opens the door up for those states to pass legislation to allow us to ship. We're hopeful each state will do that so we can begin shipping into those states."

King Estate, Lane County's largest winery, sells 80 percent of its wine outside Oregon. Direct sales, including those in its tasting room, account for 5.5 percent of all sales, said Steve Thompson, the Lorane winery's sales manager.

The court ruling certainly may boost direct sales, Thompson said, but King already gets its wine out through a network of distributors. It sells 7,000 cases a year in New York, he said.

The niche wineries stand to gain the most from Monday's decision, Thompson said.

"I think it's a fantastic opportunity for small, family-owned wineries to be able to get their wine out into the marketplace," he said.

The system favors large producers and those whose wines score high in reviews and competitions, he said. Consumers will benefit from lower prices the more that direct sales are allowed, he added.

Distributors also could benefit from loosening interstate regulations, Thompson said. Their customers may see growing interest in wines from other states, prompting more wholesale orders, he suggested.

"This really challenges distributors to add more value to their service, to have extremely knowledgable salespeople and offer same-day delivery," he said. "If they do those things well, they will be successful."

CAPTION(S):

King Estate, the county's largest winery, already sells 80 percent of its wine out of state through distributors. A King employee called the ruling `fantastic' for smaller vineyards.