Updated Jan. 28: On Jan. 25, lawmakers on Capitol Hill reached a deal to reopen the federal government; President Donald J. Trump signed the stopgap spending bill late that evening. The resolution will keep federal agencies open until Feb. 15, while negotiations over border security continue. Vintners are hoping the Alcohol and Tobacco Tax and Trade Bureau can process the backlog of label applications within these three weeks, as another government shutdown is possible if negotiations fail.
Benovia winery in the Russian River Valley was planning to label and release its first Blanc de Noirs sparkling wine this spring, but the partial government shutdown has put those plans on hold. Due to the lapse in funding, the government agency responsible for approving Benovia's wine labels, the Alcohol and Tobacco Tax and Trade Bureau (TTB), has shut its doors and suspended its approval process for new alcoholic beverages, leaving the winery in a bind.
"Until you have label approval they won't let you label and ship the wine," Benovia co-owner and winemaker Mike Sullivan told Wine Spectator. "It's sort of in limbo until the government opens up."
Similar stories are playing out across the country as wineries and breweries feel the sting of the shutdown. Without label approval, some winemakers may have to wait to bottle their wines currently sitting in tanks and barrels. Those delays could eventually mean financial consequences for winemakers and fewer choices for consumers on store shelves.
Spring releases are in limbo
During the shutdown, wineries may continue to send their labels to the TTB, but the labels won't be approved, a process that normally takes up to 36 days. That's creating headaches for winemakers since they are required to submit new labels, as well as existing labels that have been changed, to the TTB for a Certificate of Label Approval (COLA), in order to sell their wines.
Last year the TTB, which enforces laws regulating alcohol production, importation and distribution, processed more than 192,000 labels.
The good news for wine lovers is that the shutdown will only impact wines that require approval. Winemakers can change the vintage and other exempted information on a previously approved wine label without obtaining a COLA. That means many wineries such as Benovia will still be able to bottle and release the majority of their wines without any delays.
"For any wine that requires a COLA for a new label, it's extremely problematic," said Kent Humphrey of Eric Kent in Sonoma, who is awaiting approval on several labels. Like many wineries, Eric Kent releases some of its wines, including its rosé, in the spring, with a second set of releases in the fall. Humphrey didn't need a new COLA for his blush wine but he says one of the wineries he consults for is still waiting for its new rosé to be approved.
As the shutdown drags into its fifth week, winemakers are now facing a dilemma. Do they attempt to bottle and label the wines without approval and risk the TTB rejecting them? Or do they wait to bottle the wine and release them late, potentially impacting deals with restaurants and retail shops?
Ste. Michelle Wine Estates, the largest wine company in Washington State, hasn't seen any significant delays, according to Ryan Pennington, senior director of communications. But Pennington acknowledges that the shutdown could become a serious issue if it continues, ultimately affecting some of Ste. Michelle's planned new product launches.
But the greatest impact will be felt by small wineries; especially those that use custom-crush facilities and mobile bottling lines. It can cost more than $2 to bottle and label a case of wine. And wineries will have to find space to store the wine if they can't legally sell it. Bottling without approval or labels comes with risks. "If you are a small winery and you have a decent-sized lot [of wine] and have to label it a second time, you could be out $20,000," said Adam Lee, who makes the wines at Siduri, as well as his new Pinot Noir label, Clarice.
The shutdown will also affect imported wines. Imported wine labels have to be approved by the TTB before they can reach the market in the U.S. "We have 20 to 30 [labels] at the TTB that haven't been approved yet," said Gavin Speight, vice president of Old Bridge Cellars, which imports wines from Australia, France, Italy and New Zealand. "It's going to put us back a month or so on shipping."
Label approval is not the only issue facing winemakers. The shutdown could also delay new wineries from opening their doors since they require a permit from the TTB to operate their business.
How bad is it? That depends on how long it lasts.
How big of a financial impact the shutdown will have on the industry is still undetermined. "It's hard to quantify," said Michael Kaiser, vice president of WineAmerica. The trade association, which represents 600 wine producers around the country, is conducting an industry-wide survey on the shutdown and its impacts on wineries. Kaiser says that over 70 percent of respondents so far have indicated that they are waiting on label approval.
Wine, beer and spirits groups are now taking their case to Capitol Hill. Kaiser is meeting with members of Congress to voice the association's concerns. "This is getting some notice," he said.
Even after the shutdown ends, winemakers will have to wait for the TTB to work through its backlog of labels. That could delay approval by months. "We need to get past this," said Lee. "It is hurting business in ways that's not currently being thought of."
With no end to the government shutdown in sight, winemakers will have to decide what their next steps will be. Some winemakers are already devising strategies for potential future shutdowns. For some that would mean submitting their labels months in advance of bottling. "It will make me think about label approval in a different way," said Sullivan.
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