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Government Goes Back to the Drawing Board with AVAs

Wineries clash among themselves, and with the federal government, over new proposals to overhaul the system that ultimately dictates what geographic information can appear on wine labels

Lynn Alley
Posted: December 7, 2007

Don't be surprised if someday you see a wine label carrying a disclaimer along these lines: "The name of this winery does not reflect where the wine was produced." The federal government has proposed changes to the regulations governing American Viticultural Areas (AVAs), the regional designations on wine labels that let consumers know where a wine came from. The move is intended to clear up confusion among growers concerning the rules for establishing new AVAs, but some wineries and vintners associations object that certain proposed changes could end up misleading consumers instead.

The new ideas arrive less than six months after the Alcohol and Tobacco Tax and Trade Bureau (TTB), overwhelmed by the rapidly increasing number of new AVA petitions, put a freeze on AVA approvals last August. Since 1986, when the system was first established, more than 100 new AVAs have been approved (there are more than 180 nationwide), some of them AVAs within AVAs. Some of the proposals to create or modify AVAs have created conflicts between wineries over where the boundaries should be drawn. Other proposals have run into complications when a new AVA has the same name as an established brand of wines from outside the designated area.

The catalyst for the current controversy involves a request from growers and producers to create a Calistoga AVA within Napa Valley. Two recently established wine producers, Calistoga Cellars and Calistoga Estate, make wines using a substantial amount of grapes from outside the Calistoga area. If the Calistoga AVA were approved, under current regulations, those wineries would no longer be able to use the Calistoga name on their labels unless they started using at least 85 percent Calistoga-grown grapes in their wines. (A grandfather clause already exempts wineries established before 1986 from that requirement.)

The TTB has recommended approval of the Calistoga AVA, while grandfathering in any Calistoga brand names in use as of March 31, 2005 (when the Calistoga AVA proposal was published in the Federal Register)—provided that the bottle labels clearly dispel any impression that the wine is made from at least 85 percent Calistoga-grown fruit. The TTB is seeking public comment on precisely what wording would dispel such an impression, as well as on the cutoff period in which wineries could be grandfathered.

"It's something that looks like it would work for everybody involved," said Robert Young, managing member at Calistoga Partners, which has produced the Calistoga Cellars label since 1998. Young said his company is still reviewing the details of the proposal.

However, Calistoga Estate began using its name after March 2005 and, therefore, would probably be forced to change its brand name if the new regulations are approved.

"I think it is very unfair to arbitrarily pick a March 2005 cutoff date, when they gave us our label approval as of November 2005. They should have at least warned me that there was a potential conflict with an AVA petition that was sitting on their desk at that time," said Marvine Stirman, managing director of Calistoga Estate. "I could've chosen another brand name. Instead, I've invested all this money and three years building a brand and expanding into seven states, and I now stand to have it all taken away."

Going far beyond Calistoga, a second proposal by the TTB is designed to address the greater problems that emerge when new AVAs are created. This proposal suggests more clearly defined requirements for establishing new AVAs, especially sub-AVAs within existing AVAs; the TTB could choose to remove the smaller AVA entirely from the boundaries of a larger existing AVA, thereby preventing producers in the smaller AVA from also using the larger AVA name as an appellation of origin on their labels. This move is already seeing opposition from wineries and their trade associations, as it goes against traditional appellation systems. But the TTB makes the point that if the smaller AVA is distinct in its own right, being worthy of AVA status in the first place, a winery there shouldn't be able to trade on the name of the larger, surrounding AVA as well.

In addition, the proposal questions whether new AVAs should be given precedence over established brand names, or if a system of rolling grandfather-clause dates and label disclaimers (like those suggested for Calistoga) should be created to protect the wineries that would be affected. In part, that system would also serve as a preventative measure to ensure that an AVA petition isn't submitted by one winery or group of wineries purely to harm the business of another.

"Until now, people have assumed that submitting a petition automatically meant that the petition would be granted," said TTB spokesperson Art Resnick. "We want to clarify the grounds for which a petition can be denied."

The Napa Valley Vintners (NVV), the trade association in charge of promoting Napa Valley wineries, has announced its opposition to the TTB's plans. In a media release, NVV communications director Terry Hall complained that both proposals would have substantial consequences for all U.S. wine regions. The NVV argues that the continued use of the Calistoga brands in question, as well as of rolling grandfather-clause dates, would conflict with consumers' interests in truth-in-labeling—in essence, the group believes no wineries should be allowed to use what it considers to be "geographically misleading" brands. (This issue was made famous by Bronco Wine Company's Fred Franzia, who ultimately lost his legal battle to continue making his Napa Ridge and Napa Creek wines without using Napa-grown grapes.)

The San Francisco based Wine Institute, a group that represents California wineries, has only gone so far as to inform its members about the deadline for submitting comments to the TTB. General counsel Wendell Lee said he needs more time to study the TTB's proposals because of their complex nature and language. In the meantime, though, he doesn't expect the conflict to soften at all. "Nothing gets wineries more excited … more ready to have a food fight … than geography," said Lee.

The TTB is accepting public comments on its website, www.ttb.gov, for the next several weeks.

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