Louisiana Wineries Struggle for Survival

Wineries have 90-day window to find a distributor to replace their direct-sales business taken away by a new law

Eric Arnold
Posted: August 24, 2005

Time appears to be running out for Louisiana's six wineries, as the state's Office of Alcohol and Tobacco Control has given them 90 days from the signing of the bill to find distributors to sell their wines. The decision comes after Gov. Kathleen Blanco (R) signed House Bill 338 last month, effectively taking away the right of the state's wineries to sell their products directly to retailers and restaurants.

The change came in the form of an amendment tacked on to Bill 338 in the wake of the U.S. Supreme Court's direct-shipping decision, which said that state regulations on wine shipments must treat local and out-of-state wineries equally. Louisiana's wholesalers argued that the state's law needed to be changed to prevent out-of-state wineries from selling directly to retailers and restaurants, and Blanco agreed, citing the justices' ruling in a press release after she signed the bill.

Though the wineries can sell their products to residents over the Internet, only three of the six have tasting rooms, so they've long depended on the ability to sell wine directly to stores and restaurants. "Before this law, we were selling 98 percent of our wine direct to the retailers," said Joe Cazedussus, owner of Casa de Sue Winery and president of the Louisiana Winery Association. Altogether the wineries only produce about 10,000 cases per year, so none of them had worked with distributors in the past.

Although the law was supposed to take effect immediately, the wineries were offered a 90-day reprieve. "We think it's prudent and fair that we give these people an opportunity to comply, and not just send out the reserve or National Guard and say you have to cease and desist," said Murphy Painter, commissioner of the Office of Alcohol and Tobacco Control.

But many of the wineries, which are mostly between Baton Rouge and New Orleans, have already stopped selling to stores and restaurants on the advice of their lawyers. "I don't want to violate the law," said Cazedussus. "We just want to make sure we do everything in accordance with the law so that if for any reason we are able to take it to court, they don't have anything saying that we are violating the law."

As a result, Cazedussus estimates that he's already lost 95 percent of his business. He said he has had to lay off farm workers and a delivery driver, and may not be in business at all by the time he's able to take his case to court.

Meanwhile, one distributor has taken on Casa de Sue and three other Louisiana wineries. (The other two have yet to decide on a distributor.) "We absolutely believe we can make up every bit of business they had, plus some," said Greg Lucia, president of Republic Beverage, who predicted that the recovery could occur as quickly as within the next three months, with no increase in prices for consumers. "We're a Louisiana-owned company, so we take pride in these wineries," he said. "We are setting them all up in the system as we speak."

But Cazedussus has his doubts, since Louisiana wineries will now be competing for attention with the scores of other brands in Republic's portfolio. The Louisiana Winery Association plans to push for a change to the law when the new legislative session begins in the fall. And Cazedussus, like the employees he was forced to lay off, is looking for a job.