Bronco Reaches Settlement on Its Napa Brands
Ending a lengthy legal dispute, huge California producer agrees to make three labels only if they contain Napa grapes
California's Bronco Wine Co. has thrown its hands up and will stop making its Napa Ridge, Napa Creek and Rutherford Vintners brands with grapes grown outside of Napa County. In a settlement with the California Department of Alcoholic Beverage Control, the mass-market producer agreed to sell off any remaining inventory of those wines by Sept. 29.
Furthermore, Bronco reached an agreement with the Napa Valley Vintners, a trade organization representing 270 wineries, that it would continue making those three brands only if the wines qualified to carry a Napa appellation designation.
The two settlements resolve the Ceres, Calif.-based producer's unsuccessful five-year legal effort to overturn a California labeling law that requires any wine using Napa or its subregions in its name to be composed of at least 75 percent Napa-grown grapes.
The litigation officially ended on Jan. 23, when the U.S. Supreme Court denied Bronco's last-gasp request for appeal. The case was Bronco's attempt to overturn a California law that was passed in September 2000 to close a loophole in federal wine-labeling regulations. Federal law dictates that at least 75 percent of the grapes in a wine with a geographic brand name must come from the referenced region. But a federal grandfather clause exempted brands, such as Bronco's, started prior to July 7, 1986.
Bronco had been making Napa Ridge, Napa Creek and Rutherford Vintners primarily with grapes from the California Central Valley, where CEO Fred Franzia owns approximately 40,000 acres of vineyards. Claiming that this could damage the reputation of their region, which is best known for high-end Cabernets and Chardonnays, Napa vintners pushed for legislation to restrict practices such as Bronco's.
The California law only applies to wines made in California, so Bronco could conceivably have continued making the brands in question with non-Napa grapes by shifting production to another state or even another country. But the company's deal with the Napa Valley Vintners covers production both nationally and internationally. Instead, Bronco has started a new brand, called Harlow Ridge, for the non-Napa wines previously bottled under the Napa Ridge, Rutherford Vintner and Napa Creek labels.
Franzia had doggedly fought implementation of the California law, so the decision to now offer what looks like an olive branch is unexpected. However, the settlements give Bronco a reasonable amount of time to sell its existing inventories of the three brands, and technically, any non-Napa wines bearing Napa brands became illegal as soon as the U.S. Supreme Court denied Bronco's request for appeal. "Everybody gave a little bit, and everybody got something in return," said a source familiar with the negotiations who would not speak for attribution.
The Napa Valley Vintners, who led the legal effort against Bronco, welcome the resolution. "We think it's goodwill. We think he really wants to put it behind him, and he wants to put it out there that he's going to be compliant," said Terry Hall, communications director of the NVV. "We'll continue to be vigilant. This is only a California law, so we just spent a week in March wandering around Capitol Hill and D.C., talking to the wine caucus, the California delegation and the Ways and Means Committee. We wanted to make them aware that [protection of the Napa name] is a larger issue and isn't going away."
The lag time between the U.S. Supreme Court decision and this final resolution was a simple matter of logistics, according to John Carr, public information officer of the California ABC. "We had to do a statewide investigation and that takes time to determine if [the wine] is still being produced and where it's being offered for sale. So we had to assess that and work out a settlement," he explained.
Though some Napa vintners had feared that Bronco would crank up production of the brands and flood the market before a deadline to comply with the court ruling, Bronco apparently anticipated a legal defeat and did not produce any of the wines in question in the 2005 vintage. According to California state authorities, Bronco had about 50,000 cases of inventory on hand in January and was down to about 25,000 cases at the beginning of April.
Any of the wines in question remaining in Bronco's inventory after Sept. 29 will need to be relabeled, destroyed or distilled.
