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War of the Rosés

Wine connoisseurs say new D.C. liquor legislation tramples on their grapes.

Just after 5 o’clock on a Friday afternoon, Tony Quinn sets a tower of plastic cups on the sampling table at Cleveland Park Wine, Spirits & Beer. The store’s triple-barreled name notwithstanding, most of Quinn’s customers come not for spirits and beer but for wine. Accordingly, he takes special care of his most frequent customers with events like tonight’s free wine tasting. When the first devotees of the weekly event start to trickle in, several bottles of today’s offerings—from California’s De Loach Vineyards—are waiting, uncorked, the whites well chilled.

Tonight’s guest presenter, De Loach marketing consultant John Peters, works the crowd. After handing out small sips of white zinfandel, Peters holds the bottle up to the ceiling, where the flags of a dozen wine-producing nations hang under fluorescent lights. Slowly, the seduction begins. Peters lingers over the qualities of the De Loach “zin,” made of grapes from 100-year-old vines.

“This is for the back deck on a hot day,” Peters says. “Imagine that you’re eating prosciutto and melons.”

Cleveland Park regular Laura Bischoff listens closely to Peters’ descriptions of the wine’s superb array of “flavor bridges.” Quinn knows Bischoff by her name and by her favorite wine, Tignanello, a rich, hard-to-find Tuscany cabernet that he occasionally stocks. But tonight, one swig of the De Loach red—a solid cabernet with uncommonly light tannins—visibly transports her. She snaps up a $25 bottle and contentedly heads for the cash register.

The guy on the other end of the register, though, isn’t so happy. Quinn, like wine sellers from Capitol Hill to Palisades to Cleveland Park, frets about doomsday scenarios in which local stores will no longer stock the exotic labels cherished by connoisseurs and will instead be left with a choice between Gallo and Thunderbird. Some liquor store proprietors have even circulated petitions urging the D.C. Council to preserve Washington’s “precious wine market,” a $130 million industry.

What’s the cause of this ferment? A global grape shortage? A trade war with France?

Actually, what’s troubling local retailers is a simple cuvée of business and politics.

For the last decade, lawyers representing local wine wholesalers have urged the D.C. Council to update D.C.’s Alcoholic Beverage Control (ABC) regulations. Specifically, a network of large-scale wholesalers has repeatedly tried to end the policy that permits District wine retailers to import at least some of their wine directly—in other words, without going through the wholesalers. Until recently, those efforts have floundered.

Now, however, the ABC overhaul—like a long-awaited Beaujolais nouveau—has arrived; it’s under consideration by the council. And, although the wholesalers say the changes would merely oblige everyone to pay his fair share of District liquor-licensing fees, wine sellers like Quinn say it will make it much more expensive to stock obscure brands that aren’t sold by local wholesalers and that lure in customers like Bischoff.

“Neighborhood stores and consumers could be hurt badly, and the District will lose revenues,” says Buddy Weitzman, owner of Chevy Chase Fine Wine & Spirits in Northwest. A 35-year veteran of the wine business, Weitzman, who sports a “No Wimpy Wines” button on his apron, estimates that the new law would severely restrict his ability to import wines directly and thus would reduce his store’s selection by 40 percent. “The only thing this bill aims to do is create a monopoly for wholesalers.”

Washingtonians who barely know their white from red may not realize it, but D.C. is a wine town of international repute. Ever since George Washington tried but failed to cultivate German Riesling vines along the Potomac River in 1759, Washingtonians have relied on a healthy importation system for their desired beverages. Today, retailers say their ability to import directly is the key to keeping the city’s small but highly competitive wine market flowing smoothly.

Since the end of Prohibition, all 50 states have passed laws supporting a three-tiered wine-importation system. In it, manufacturers sell to wholesalers, wholesalers sell to retailers, and retailers sell to consumers.

Like retailers in all the states, District wine retailers cannot purchase wines carried by D.C. wholesalers from any other source. But unlike retailers in all the states, District retailers can legally bypass that three-tiered system if and when they choose to stock a type of wine that “resident,” or D.C.-based, wholesalers do not have in their inventories.

Under what’s known as the “permit system,” if the District’s wholesalers—dominated by two major companies, National Distributors and Washington Wholesalers—don’t see fit to stock their warehouses with cases of Fattoria Di Felsina, a classic chianti from Italy, stores like MacArthur Beverages in Palisades can find an alternative provider of Felsina and purchase as much of it as they choose.

Currently, the system allows non-District suppliers to obtain special permits to bring wine into D.C. Many of the suppliers that regularly sell to local retailers are based in Maryland, Virginia, or Pennsylvania, but the market is in fact open to importers from all over the world. Most of the nonlocal suppliers are not otherwise licensed to do business in D.C.—meaning they contribute little to the District’s piggy bank. The current law requires only that suppliers selling to District stores pay the excise tax on the incoming wine and a painless $2 permit fee that covers a virtually unlimited number of cases.

Yet they might have to start paying up soon. Under the revised ABC provisions, the importation laws would change in three ways. First, suppliers who do not have warehouse space in the District could no longer sell their goods without obtaining a $250 license. Second, the permits required to make individual deliveries would increase in cost from $2 to $25, with a new per-permit limit of 35.7 gallons (roughly 15 cases). Finally, stores could no longer import wines from alternate sources without obtaining the permission of the primary importers or distributors.

If the bill passes, Quinn estimates, the price of many bottles would rise 15 percent to 20 percent. That means that Bischoff’s bottle of Tignanello, now about $80, could push the $100 mark.

D.C. wholesalers, though, say they’re the ones who’ve been paying through the nose for too long and that the system promotes unfair competition. While they’ve been paying full liquor-license fees, says Paul Pascal, president and general counsel for the District of Columbia Association of Beverage Alcohol Wholesalers, nonlicensed vendors have been able to sell to stores without contributing to the city’s coffers anything close to what his clients pay.

“Contrary to what some retailers say, the association does not want to end the permit system so much as regulate it and see that proper fees are collected, so everybody’s paying their fair share,” says Pascal. “This bill would simply bring Washington into the 21st century. If anything, it will encourage more wholesalers to come to town and gradually increase selections.”

“If you do the math,” adds Pascal, “the new laws would add only about 14 cents to the cost of each bottle.”

The bill’s supporters say that’s an easy swallow given the estimated $300,000 in fees that the new provisions would bring to the city. Like many components of the ABC bill, the wine-importation provisions are meant to generate revenue for the ABC Board, which has long been short of cash and personnel. The bill’s patron, Ward 6 Councilmember Sharon Ambrose, says she mainly wants to help the ABC Board—not wreck the wine business. For Ambrose, that makes for good politics: The neighborhood-minded legislator gets a lot more calls from constituents who claim shoddy ABC enforcement has filled their streets with drunks than from constituents thirsty for an obscure Uruguayan vintage.

“This wine issue has turned into a cause célèbre, but the new provisions are really just meant to level the playing field for the business community,” says Ambrose. “The current system of importation is antiquated and protectionist. And, frankly, if this particular change helps bring in a little bit more revenue to bolster the ABC Board—which benefits the entire city—that’s not a bad thing. By contrast, if the cost of expensive wines go up a little, is that really a major concern?”

But according to wine writer Pierre Rovani, it’s not just a matter of keeping a lid on the price of pricey wines. Rovani says that word on the retail grapevine has it that the wholesalers, tired of missing out on the estimated 15 percent of the local wine business that takes place under the permit system, want to rein in the retailers. A writer and critic for the Wine Advocate, D.C. resident Rovani claims that he is the only objective voice in the wine debate because he has no financial stake in the outcome. In his recent testimony at a public hearing on the proposed import revisions, Rovani told D.C. officials that the new fees and rules would deter many smaller importers and distributors from doing business in the city at any price.

“If you make it harder for stores to import, many small wineries will no longer be represented on the shelves,” says Rovani. “In this business, supply exceeds demand, so any roadblocks to the system will encourage [small] distributors to go elsewhere.”

And although Ambrose may have the reputation for taking care of the quality-of-life issues, Bischoff says that a healthy wine market affects the city’s quality of life, too. “It’s one of the benefits of living in town,” says Bischoff, insisting that she’s no connoisseur, despite her fondness for the pricey Tignanello. “It’s something that sets D.C. apart from the suburbs, where you just find many of the same things everywhere.” CP