Hoosier Wineries Want To Eliminate “Middleman”
August 22, 2013 — TheStatehouseFile.com
INDIANAPOLIS – Owners of Indiana farm wineries told lawmakers on Wednesday that the permits required to distribute their wine to restaurants and stores without using a middleman are cost prohibitive.
Despite a growing industry in Indiana, wineries can’t sell their own products to retailers unless they can have a micro wholesaler permit.
The Small Winery Act of 1971 allowed Indiana wineries to sell their wine directly to the public instead of through distribution channels. But in 2006, that option was taken away with the creation of the micro wholesaler permits for wineries.
With the micro wholesaler permit, wineries can sell up to 12,000 gallons of wine and brandy per year. But without that permit, wineries can sell only on the winery’s premises or at a farmer’s market.
Owners of small farm wineries said the micro wholesaler permits are expensive to maintain. Even though the state permit costs $100, small wineries said it costs about $3,600 to establish the permit and $1,200 to $1,800 per year to maintain because of insurance and administrative costs.
Lisa Hays, who serves as counsel for the Indiana Winery and Vineyard Association, asked the Interim Study Committee on Economic Development on Wednesday for a partial reinstatement to the 1971 law.
Hays said as wineries grow, they will eventually need to use a wholesaler to distribute their wine, but she said the micro wholesaler permits present additional challenges for small wineries.
“That slashes you away and puts you in the red if you’re small,” she said.
Patti Clutter opened Mystique Winery in Lynnville, about 25 miles north of Evansville, with a commitment to her family’s dream. Her family runs the small farm winery even as she continues to work full time at Toyota.
She said since the fall 2012 grand opening, restaurants within a 25-mile radius have requested to carry the wine.
“It’s small businesses supporting small business,” Clutter said.
But she said the winery has had to turn them down because a micro wholesaler permit is cost prohibitive and not feasible for the small winery.
Gary Humphrey opened River City Winery in New Albany to help revitalize the downtown city in Southern Indiana.
Humphrey started his winery four years ago, using money he had saved and had received from his father’s estate. He said friends considered him crazy for wanting to start a winery in a bad economy, but he was dedicated to his town.
Humphrey said 200 people entered his winery on the first day, and since then, many restaurants and businesses have asked to sell his wine. But without a micro wholesaler permit, Humphrey rejects the offers.
He said the ability to sell his wine without the permit could hurt his winery because people could go to other locations to purchase it. But it could be beneficial for the town of New Albany, he said.
“It’s very good for my original intentions,” Humphrey said.
He said Hoosiers should support local sales specifically regarding wine.
“To send my wine to 25 miles away, that would bring people 25 miles away,” Humphrey said.
He said he his proud of his winery and credited it helping to transform the city of New Albany.
But Jim Purucker, executive director of the Wine and Spirits Wholesalers of Indiana, said he doesn’t think the wine industry has explored all of its options. He said the hassle of obtaining the permits have probably kept wineries from doing so.
“For every businessman, it would be easier to not have regulation, but we are in the business of selling alcohol, and the system is in place for a reason,” Purucker said.
Bob Kraft, director of state government relations for Indiana Farm Bureau, said he appreciated the committee for recognizing the issue for farm wineries.
“We encourage anything this committee can do to recommend legislative measures that will indeed increase economic development in the state,” Kraft said.
The Interim Study Committee on Economic Development is required to study farm winery issues and other topics as a result of legislation passed during this year’s session of the General Assembly.
The issues regarding wineries are some of the 20 items the committee will study before the next legislative session begins in January.
Sen. Jim Buck, a Republican from Kokomo who chairs the committee, said the group will meet four more times before making a summary of its findings and voting on its recommendation.