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TRAVERSE CITY — Northern Michigan winemakers worry that a bill in the state Legislature will slash their distribution options and stunt wine-industry expansion.
The deep-pocketed Michigan Beer & Wine Wholesalers Association backs the proposed law, which would eliminate a practice known as dualing that allows wineries to use more than one distributor.
It would establish exclusive wine-distribution territories requiring wineries to use a single wholesaler in a specified region, similar to the system that's regulated beer sales in Michigan for almost 30 years.
Winemakers said such a law would limit their distribution outlets, especially for newer, smaller wineries that don't have long-standing relationships with major alcohol wholesalers. Dualing is not a common practice among Michigan wineries, and several area wineries said they have good relationships with their distributors.
But dualing gives them leverage against poor distributors and the ability to pursue other wholesale outlets if they can't get their products to the market. A ban on dualing would diminish that freedom.
"It's limiting our marketing and our choice," said Bryan Ulbrich, owner of Left Foot Charley Winery in Traverse City. "Distributors constantly change hands ... I could suddenly be an also-ran and they could hold my brand hostage in a warehouse."
Supporters contend the measure would not limit wine-industry growth. Its aim is to offer protection for Michigan wholesalers who otherwise might lose business to larger distributors or wineries that could be located in other regions or states, they said.
Mark Ribel, a principal at H. Cox and Sons Inc. distributors in Traverse City, said a dualing ban would establish "territorial integrity" for alcohol distributors. Local distributors take on infrastructure costs, he said, for setting up distribution systems in their areas that include warehouses, shipping equipment and employees.
Doing away with dualing would secure those investments, he said.
"It helps protect jobs and the tax base of local communities by having these laws in place," Ribel said. "I don't see a downside to our local wineries."
Area winemakers disagree.
"This doesn't seem like something that should be legislated," said Liz Berger, operations manager at Chateau Chantal winery in Grand Traverse County's Peninsula Township. "To make that kind of a contractual arrangement legislated, it seems like bad will and almost greedy."
Chateau Chantal uses multiple distributors, but its distributors' regions don't overlap. Ulbrich's winery uses one distributor and also self-distributes its products, which wouldn't be impacted by the bill. But both winemakers said losing the dualing option could limit their ability to sell their wares.
"We're small guys," Ulbrich said. "We could easily get lost in a larger wholesaler."
The deep-pocketed Michigan Beer & Wine Wholesalers Association backs the proposed law, which would eliminate a practice known as dualing that allows wineries to use more than one distributor.
It would establish exclusive wine-distribution territories requiring wineries to use a single wholesaler in a specified region, similar to the system that's regulated beer sales in Michigan for almost 30 years.
Winemakers said such a law would limit their distribution outlets, especially for newer, smaller wineries that don't have long-standing relationships with major alcohol wholesalers. Dualing is not a common practice among Michigan wineries, and several area wineries said they have good relationships with their distributors.
But dualing gives them leverage against poor distributors and the ability to pursue other wholesale outlets if they can't get their products to the market. A ban on dualing would diminish that freedom.
"It's limiting our marketing and our choice," said Bryan Ulbrich, owner of Left Foot Charley Winery in Traverse City. "Distributors constantly change hands ... I could suddenly be an also-ran and they could hold my brand hostage in a warehouse."
Supporters contend the measure would not limit wine-industry growth. Its aim is to offer protection for Michigan wholesalers who otherwise might lose business to larger distributors or wineries that could be located in other regions or states, they said.
Mark Ribel, a principal at H. Cox and Sons Inc. distributors in Traverse City, said a dualing ban would establish "territorial integrity" for alcohol distributors. Local distributors take on infrastructure costs, he said, for setting up distribution systems in their areas that include warehouses, shipping equipment and employees.
Doing away with dualing would secure those investments, he said.
"It helps protect jobs and the tax base of local communities by having these laws in place," Ribel said. "I don't see a downside to our local wineries."
Area winemakers disagree.
"This doesn't seem like something that should be legislated," said Liz Berger, operations manager at Chateau Chantal winery in Grand Traverse County's Peninsula Township. "To make that kind of a contractual arrangement legislated, it seems like bad will and almost greedy."
Chateau Chantal uses multiple distributors, but its distributors' regions don't overlap. Ulbrich's winery uses one distributor and also self-distributes its products, which wouldn't be impacted by the bill. But both winemakers said losing the dualing option could limit their ability to sell their wares.
"We're small guys," Ulbrich said. "We could easily get lost in a larger wholesaler."
Contributions, bipartisan support
A bill to eliminate wine dualing breezed through the state House on Sept. 8 by a 99 to 5 vote and moved to the Senate. But fast-track consideration slowed last week, when the Senate's Economic Development and Regulatory Reform Committee postponed a scheduled review. A new hearing date has not been set.
Several legislators who sponsored or support the House bill accepted campaign contributions from the Michigan Beer & Wine Wholesalers Association. Two co-sponsors, Republican Rep. Tory Rocca, of Sterling Heights, and Democratic Rep. Tim Melton, of Auburn Hills, received more than $2,400 in travel and lodging expenses from the Wholesalers Association to speak at its winter convention in the Cayman Islands, according to state campaign-finance records.
Rocca also received $5,000 from the Wholesalers for his state Senate campaign, while Melton received $2,500 for his re-election campaign.
Several other bill sponsors reported Wholesaler contributions for re-election campaigns or to support their efforts to run for other seats, state campaign-finance records show.
The Wholesalers group significantly contributes to candidates in both major political parties, said Rich Robinson of the nonprofit, nonpartisan Michigan Campaign Finance Network.
"They're agnostic as far as party goes, as far as I can tell," Robinson said. "It's almost anybody who's sucking air who's not a teetotaler."
The churn of politicians guaranteed by state term limits means political fundraising is "more aggressive than it's ever been," Robinson said, and special-interest groups want lawmakers to address their pet issues before they leave office.
"Any interest group that gives money to office holders is making an investment, and they're going to want some policy payback on their investment," Robinson said. "They don't hand this money out for selfless reasons. That's the system we have."
Democrat state Rep. Dan Scripps, of Leland, supported the House bill, despite opposition from wineries in his home base of Leelanau County, including Leelanau Cellars, the state's largest wine producer.
Scripps accepted nearly $2,500 in Wholesalers' contributions in the current election cycle, but he disputed the suggestion that campaign cash spurred the dualing bill.
"There are very good arguments for this legislation outside of campaign contributions," Scripps said. "If I believed this was bad for our local wineries, I would've voted against it."
Several legislators who sponsored or support the House bill accepted campaign contributions from the Michigan Beer & Wine Wholesalers Association. Two co-sponsors, Republican Rep. Tory Rocca, of Sterling Heights, and Democratic Rep. Tim Melton, of Auburn Hills, received more than $2,400 in travel and lodging expenses from the Wholesalers Association to speak at its winter convention in the Cayman Islands, according to state campaign-finance records.
Rocca also received $5,000 from the Wholesalers for his state Senate campaign, while Melton received $2,500 for his re-election campaign.
Several other bill sponsors reported Wholesaler contributions for re-election campaigns or to support their efforts to run for other seats, state campaign-finance records show.
The Wholesalers group significantly contributes to candidates in both major political parties, said Rich Robinson of the nonprofit, nonpartisan Michigan Campaign Finance Network.
"They're agnostic as far as party goes, as far as I can tell," Robinson said. "It's almost anybody who's sucking air who's not a teetotaler."
The churn of politicians guaranteed by state term limits means political fundraising is "more aggressive than it's ever been," Robinson said, and special-interest groups want lawmakers to address their pet issues before they leave office.
"Any interest group that gives money to office holders is making an investment, and they're going to want some policy payback on their investment," Robinson said. "They don't hand this money out for selfless reasons. That's the system we have."
Democrat state Rep. Dan Scripps, of Leland, supported the House bill, despite opposition from wineries in his home base of Leelanau County, including Leelanau Cellars, the state's largest wine producer.
Scripps accepted nearly $2,500 in Wholesalers' contributions in the current election cycle, but he disputed the suggestion that campaign cash spurred the dualing bill.
"There are very good arguments for this legislation outside of campaign contributions," Scripps said. "If I believed this was bad for our local wineries, I would've voted against it."
Bill opposition
Two other northern Michigan representatives, Republicans Wayne Schmidt, of Traverse City, and Kevin Elsenheimer, of Kewadin, were among the five House members who opposed the bill.
"Some of the larger wineries in northern Michigan expressed their concern with the bill," Schmidt said. "I thought it was important to vote with them on this particular issue."
State Sen. Jason Allen, R-Alanson, hasn't taken a position on the bill and planned to meet with regional winemakers to discuss the proposal, said Norm Saari, Allen's chief of staff. Saari said the dualing bill is part of several pieces of pending legislation that could affect the state's licensed beverage industry, including proposals to raise close to $9 million in revenue through new fees on the industry.
A spokesperson for Gov. Jennifer Granholm's office said she is reviewing the wine-dualing bill and hasn't taken a position.
Mike Lashbrook, state Wholesalers president, said the wine industry is divided on the bill, and some Michigan vintners favor it. A law would not change the status quo for most wineries that already use a lone distributor in a particular region or self-distribute their products, Lashbrook said.
If the state outlawed dualing, it would eliminate the potential for large, out-of-state wineries or distributors that might set up a "vertical monopoly" in certain areas that could crush smaller, local wineries' products, Lashbrook said.
"It really doesn't change anything in the marketplace today as far as who's handling what," Lashbrook said.
But Robert Elhenicky, a lobbyist hired by bill opponent Wine Michigan, countered "the dual is the only way to keep your wholesaler honest."
"To take away the only check-and-balance that exists for wineries is counter-productive to growing an industry," he said.
"Some of the larger wineries in northern Michigan expressed their concern with the bill," Schmidt said. "I thought it was important to vote with them on this particular issue."
State Sen. Jason Allen, R-Alanson, hasn't taken a position on the bill and planned to meet with regional winemakers to discuss the proposal, said Norm Saari, Allen's chief of staff. Saari said the dualing bill is part of several pieces of pending legislation that could affect the state's licensed beverage industry, including proposals to raise close to $9 million in revenue through new fees on the industry.
A spokesperson for Gov. Jennifer Granholm's office said she is reviewing the wine-dualing bill and hasn't taken a position.
Mike Lashbrook, state Wholesalers president, said the wine industry is divided on the bill, and some Michigan vintners favor it. A law would not change the status quo for most wineries that already use a lone distributor in a particular region or self-distribute their products, Lashbrook said.
If the state outlawed dualing, it would eliminate the potential for large, out-of-state wineries or distributors that might set up a "vertical monopoly" in certain areas that could crush smaller, local wineries' products, Lashbrook said.
"It really doesn't change anything in the marketplace today as far as who's handling what," Lashbrook said.
But Robert Elhenicky, a lobbyist hired by bill opponent Wine Michigan, countered "the dual is the only way to keep your wholesaler honest."
"To take away the only check-and-balance that exists for wineries is counter-productive to growing an industry," he said.
