Vintners in search of an outlet

FABER - In the mountains of Nelson County, tucked behind tree-lined roadways, the iron gates of DelFosse Winery greet tourists coming to sample Claude DelFosse’s selection.

Workers on tractors are preparing the vineyards for the upcoming year’s harvest.

DelFosse said they’ll bottle this year’s wine in two weeks.

But selling that wine just became more difficult. This was the last week DelFosse and other small wineries around the commonwealth were able to distribute wine themselves to restaurants, individuals and wine retailers. Winery owners expect a letter from the Virginia Department of Alcoholic Beverage Control any day now telling them to stop distributing the wine.

Winery owners fear the change, which was prompted by a ruling in U.S. District Court, will slow Virginia wine sales and push some of them out of the market.

Virginia winery owners have distributed their own products for the past 25 years. During that time, the number of wineries across the commonwealth went from six to more than 100, including more than a dozen in Central Virginia.

Even though the end of self-distribution was clearly in sight, DelFosse said he didn’t spend a lot of time this week traveling to the small wine shops and restaurants that sell his wine.

He said many of them buy wine only when they need it and don’t order ahead of time.

“It’s not a good change,” DelFosse said, sitting at a table on the porch where the winery holds tastings. “It basically gives distributors a legalized monopoly.”

Distributors have argued that allowing out-of-state wineries the right to self-distribute hurts their business and disrupts the state’s three-tiered alcohol distribution system, a marketing arrangement based on alcoholic beverage manufacturers, licensed wholesalers and licensed retailers.

DelFosse said he always planned on hiring a distributor. He just doesn’t like the government telling him when to do it.

The road leading away from self-distribution started in 2005 when a U.S. District Court judge ruled that Virginia’s winery law unconstitutionally favored state businesses over competitors in other states.

The General Assembly had previously created laws that allowed small Virginia wineries to self-distribute their wines to stores, restaurants and individuals. These laws, however, were not extended to out-of-state wineries.

After the court’s ruling, ABC didn’t take action because of the upcoming 2006 legislative session. Wineries were allowed to continue business as usual because ABC did not have the data to assume the court order was being violated.

A bill introduced by Del. Christopher Saxman would have allowed small out-of-state wineries to personally deliver their products to Virginia stores and restaurants, but was tabled by a committee in February.

Without a new law to protect self-distribution, wineries now face a big change. They will have to go from being independent to relying on a distributor.

When the bill was tabled in February, many owners expressed their frustrations because they didn’t know how their business would fit in with a distributor.

“I don’t have much of a choice,” DelFosse said.

DelFosse said he’s talked to distributors, and they said they would be happy to work with him.

But by putting a distributor between him and his customers, DelFosse believes the availability of his wines will go down while the price goes up.

“Large wineries are already distributed,” he said.

Most distributed wineries vary in size. DelFosse Winery is considered small, bottling only up to 3,500 cases this year. The average winery in Virginia produces about 3,000 cases of wine; almost all are fewer than 10,000.

He said his wine will become a small portion of a large distribution catalog and it will still be up to him to go out and sell it.

The winery was a part of DelFosse’s retirement plans when he moved to Virginia from California. He said it’s been a lot of work to transform the former apple orchard into a vineyard that produces the wine he wants.

“As the owner, you get involved with everything from A to Z,” he said.

Even though, he admits he is not always up to the 9 a.m. wine tasting.

DelFosse looks at this new step as a challenge. He said he would have to build a new infrastructure of distribution and learn about the distribution channels.

DelFosse signed a deal with Charlottesville wine distributor, Commonwealth Wine LLC, on Friday.

He said he would miss the control he had over his product.

“You’re in charge, which is what any business owner wants,” he said.

“That’s part of the issue. We’ll see how it’s going to work.”