THOSE OUTBACK® STEAKHOUSE COMMERCIALS AREN'T HELPING

SACRAMENTO -- Make room Kangaroos. With a dedicated history of creating top quality wine in Australia, the six-generation family of expert winemakers that craft McWilliam's Wine is leading the effort to ensure expert winemaking ability is top-of-mind when Americans think of "Down Under." According to a recently conducted 1,100-respondent survey of U.S. consumers, there is considerable room for an educational effort as a whopping 81 percent of Americans first think of kangaroos or The Outback when asked about Australia. Furthermore, less than five percent of survey respondents currently think of winemaking expertise when asked about "Down Under." If hard work, rugged determination and a 129-year history of artisan-crafted quality wine has anything to do with it, Americans will soon sip and take notice.

Conducted in February 2006 by Dr. Dennis Tootelian, Professor of Marketing, College of Business Administration, California State University, Sacramento, the survey also revealed the following perceptions about Australia and U.S. consumer wine preferences:

Significantly more survey respondents report they generally drink more wine than beer (52 percent vs. 29 percent);

When asked which single factor is most important in selecting wine, respondents favored taste first (66 percent), followed by price (20 percent), brand familiarity (11 percent), country of origin (2 percent), and wine rating/award status (less than one percent);

While more than half of survey respondents (52 percent) reported they've never tried wine from Australia, more people said they'd like to try wine from "Down Under" over wine from any other country (Australia -- 65 percent, Chile -- 60 percent, Spain -- 59 percent, Italy -- 58 percent, France 55 percent);

An extraordinarily high number of survey respondents (86 percent) said they did not realize Australia has a longer history of winemaking than the U.S.; When asked what comes to mind when Australian wine is mentioned, the top answer cited was "a category of wine emerging in popularity in the U.S." (61 percent);
Overwhelmingly, an outdoor porch or veranda was identified as the perfect location to enjoy a glass of wine and share conversations/stories with friends and family (57 percent), followed by dining room/kitchen (16 percent), restaurant/bar or family room (each 14 percent);

Frequent wine drinkers are much more apt to feel that knowing the history of the wine producer or a story about the wine from the wine maker would make a wine more enjoyable than those who are occasional or seldom wine drinkers (frequent wine drinkers -- 70 percent, occasional -- 34 percent, seldom 16 percent).

Founded in 1877, McWilliam's Wines is one of Australia's oldest and most highly respected family owned wineries. The company has premium vineyards in Australia's most important growing regions, including Coonawarra in South Australia (SA), Hunter Valley and Hilltops in New South Wales (NSW), Yarra Valley in Victoria (Vic) and the Riverina (SA).

Note: Commissioned by McWilliam's Wine, the 1,100-respondent survey was conducted via a telephone survey of respondents located in three different regions of the U.S. (states surveyed include Florida, Texas and California).

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Let The Good Wines Roll!

Supreme Court strikes down discriminatory wine shipping restrictions, but maintains the integrity of states’ right to control wine sales

The dramatic case pitting winemakers and consumers against wine distributors kept the multibillion-dollar wine industry on the edge of its collective seat for months. And in the end, it was decided by the slimmest of margins.

In a classic David vs. Goliath court battle, David came out on top May 16 when the Supreme Court of the United States ruled 5-4 to throw out New York and Michigan laws banning the interstate shipment of wine. The decision clears the way for many United States wineries to bypass traditional wholesalers and ship their wines directly to out-of-state consumers; it also jeopardizes laws in 22 other states that currently ban out-of-state shipments.

The decision is a boon to many small wineries currently shut out of those states and possibly to consumers as well, who could now have a plethora of new wines from which to choose.

The wine producers in the cases before us are small wineries that rely on direct consumer sales as an important part of their businesses.”
– JUSTICE ANTHONY KENNEDY
(Majority)

In the days following the decision, a swirl of scenarios emerged depicting the case’s short- and long-term impact. “Short term, I don’t see it changing for the people of Georgia,” said Charles Willey, director of public information for the Georgia Department of Revenue. Willey said there are presently two ways for wineries — in-state and out-of-state — to ship wine to Georgia consumers. If a distributor in Georgia does not represent the wineries, wineries can obtain a special license and ship a limited amount of wine; or the consumer must be physically present at the winery to place an order and have it shipped to his or her home. Because Georgia already treats in-state and out-of-state wineries the same in this regard, the court’s decision probably won’t have much of a short-term effect. However, state legislators may take note of the court’s loosening of shipping restrictions and make it either easier or more difficult for wineries to ship wine directly to consumers. Georgia vintners are certainly hoping the state eases shipping restrictions.

“The court does this nation no service by ignoring the textual commands of the Constitution and acts of Congress.”
– JUSTICE CLARENCE THOMAS
(Minority)

“Georgia is one of the more restrictive states in terms of these regulations,” said Martha Ezzard, co-owner of Georgia’s Tiger Mountain Vineyards and a former attorney. “But the positive side is that there’s been a lot of press on this issue, and some leading people in the community are saying maybe these small guys are being treated unfairly. I’m hopeful this will cause our state leaders to make our wine laws less restrictive, especially when it comes to shipping.”

North Carolina recently dealt with the same shipping issues in its own federal case, the result of which was that both in-state and out-of-state wineries must get a permit, according to Fred Gregory, chief deputy counsel for the North Carolina Alcohol Beverage Control Commission. Gregory says now it is actually less expensive for out-of-state wineries to ship to North Carolina, so the court’s decision will have little or no short-term effect in that state either.

Alabama, on the other hand, does not allow any direct shipment of wine to consumers, said Renee Ferraz, spokeswoman for the state’s Alcoholic Beverage Control Board. Alabama requires all wineries to obtain written approval from the state before sending their wine to state-run stores where residents can pick it up.

Alabama courts and the legislature will almost certainly be addressing the ramifications of the Supreme Court decision for years to come, but a version of current laws could ultimately remain in effect. All the Supreme Court requires is that states treat in-state and out-of-state wineries equally.

Rules Must Be Fair For All
Justice Anthony Kennedy, who wrote the majority opinion for the high court, concluded that although the Michigan and New York laws were different, they had the same effect: “The object
and design of the Michigan and New York statutes is to grant in-state wineries a competitive advantage over wineries located beyond the states’ borders,” Kennedy wrote. Kennedy saw this as a clear violation of the Constitution’s commerce clause.

In a dissenting opinion, Justice Clarence Thomas wrote that since the ratification of the 21st Amendment, which repealed Prohibition, the court and Congress have said consistently that
states may indeed discriminate against each other where alcohol regulations are concerned. He sharply disagreed with the majority, claiming that he would just as soon rely on the wording of
the laws themselves “rather than the Court’s questionable reading of history.”

Despite the vintners’ victory, there are troubling aspects to the decision for both sides. Wineries worry that some states might outlaw the direct shipment of wine altogether. Alternatively, states worry that the decision may erode their powers to tax and regulate alcohol that comes across their borders.

While there are differing opinions on precisely what the national ramifications of May’s decision will be, everyone seems to agree on at least one thing. “The decision reaffirms the basic constitutionality of the three-tier system that heavily regulates the sale and distribution of wine,” said J. Alexander Tanford, lead counsel for the plaintiffs in the Michigan case and professor of law at Indiana University-Bloomington. At the same time, Tanford continued, the decision said that certain aspects of that system were unconstitutional.

Clint Bolick, who argued the case before the Supreme Court on behalf of the wineries, said a scenario where a state bans direct shipping outright is unlikely. “Because all 50 states now have
wine industries, I don’t think many will ban shipments altogether, because small in-state wineries could not survive such a regime,” Bolick said.

Tanford agreed with Bolick’s take on the situation. “This would have a huge impact on local wineries, putting many of them out of business,” Tanford said. “I cannot imagine the states would do this.”

Despite those opinions, some state legislators will undoubtedly consider the “nuclear option” of completely halting direct shipments of wine. “There’s a long road ahead, with a lot of discussion
as to what we should do to best serve the state,” said Ken Wozniak, director of executive services for Michigan’s Liquor Control Commission. He acknowledged that banning direct shipment of wine for everyone was one of several options that are on the table. In fact, the commission’s chairwoman, Nida Samona, was quoted by ABC News as saying her organization would “urge lawmakers to bar direct shipments for both local and out-of-state wineries.” But Wozniak backed away from this statement, saying the state has other options.

Although the immediate effects of the court’s decision will be slight, the thrilling end to a long and tense legal battle has clearly left the victors jubilant. “It has been a long journey since becoming a wine fan at law school at [University of California] Davis, finding I could not order my favorite wines once I moved to the East Coast,” Bolick said. “And I’m celebrating triumph today. It is a victory for consumers and small wineries against the forces of protectionism. Let the good wines roll! We are ecstatic.”