In the Name of the Grandfather: Wine Origins in the USA

StefanoThis post finds its roots in a virtual conversation that I had a while ago with fellow blogger Suzanne from the cooking blog A Pug in the Kitchen in the comment section of my post on Flora’s Table about my participation in the 2011 Vintage Port Tour in NYC.

In that context Suzanne asked me about a bottle of “Port” that someone had gifted her, a Port that was made in the United States (California), from a grape variety that is not among the over 100 grape varieties that are recommended or permitted by Portuguese regulations for the production of Port and that (literally speaking, dulcis in fundo) had some chocolate syrup added to it (ugh). The ensuing discussion prompted me to promise her that I would publish a post about what is kosher and what is not in the US in regard to the use of certain notorious foreign geographical terms associated to wine, so here we go.

In a Nutshell

The short of it is that there is good news and bad news for the American wine consumer. The good news is that since 2006 the US has had a set of rules in place to prevent the appropriation of those famous foreign wine terms by wineries in the United States; the bad news is that those same rules contain a grandfather provision to the effect that those US wineries that already marketed their wines using those restricted foreign names before 2006 are authorized to legally continue to do so as an exception to the general rule. But let’s dig a little deeper into this.

The Sad State of Affairs Pre-2006

US regulations (namely, section 5388(c) of Title 26, Internal Revenue Code, of the US Code – in short, 26 USC 5388(c)) identify certain “name[s] of geographical significance, which [are] also the designation of a class or type of wine” that “shall be treated as semi-generic” designations. These semi-generic names include such world-famous European wine names as Burgundy, Chablis, Champagne, Chianti, Marsala, Madeira, Moselle, Port, Rhine Wine, Sauterne, Sherry, Tokay and others.

Until 2006, those US regulations permitted the appropriation of any of such names by any US winery provided that the winery disclosed on the label, next to the appropriated name, “the true place of origin of the wine” (for instance, “Russian River Valley Champagne”, such as the one that was unfortunately served on the occasion of the inauguration of President Obama’s second term in office and other US Presidents before him).

In essence, by so doing US wineries were legally authorized to exploit the notoriety of those wine names that were clearly associated with specific European territories, permitted grape varieties and strictly regulated enological practices (to have an idea of what I am talking about, you may want to refer to my previous post on Champagne and other Classic Method sparkling wines) by slapping those names on the bottles of their wines and just adding the State they were made in. This prompted the birth of not only Zinfandel-made “Chocolate Port” but also such other enological creations as “Almond Flavored California Champagne“, “California Chablis” coming in 5-liter cartons reportedly made from such varieties as Thompson Seedless, Chasselas, and Burger (instead of Chardonnay), and so on.

Which begs the question: what purpose were those rules serving? Were they in the interest of the education of the US consumers or perhaps were they just meant to increase the sales of domestic wine producers by allowing them to piggy back on world famous names that had gained notoriety through centuries of know how, hard work and quality regulations? One gets to wonder, because it looks like such rules were actually promoting confusion and misinformation among most of the vast US wine consumer base without educating them about the importance of concepts such as appellations, terroir, traceability, authenticity, specific enological practices, local traditions and ultimately quality.

2006: New Dawn or Unsatisfactory Compromise?

On March 10, 2006 the US Government and the European Union executed an agreement on trade in wine (the “US/EU Wine Agreement“) pursuant to which, among other things, (i) each party recognized the other’s current winemaking practices; (ii) the US agreed to restrict the use of such semi-generic wine names in the US market to wines originating in the EU; and (iii) each party recognized certain names of origin of the other party in its own market.

As a result of the US/EU Wine Agreement, legislation was passed in the US (in the context of the Tax Relief and Health Care Act) on December 20, 2006 to amend 26 USC 5388(c) so that it would be consistent with the principles set forth in the US/EU Wine Agreement.

So, everything seemed finally to go in the right direction, with a commitment by the US Government to prohibit potentially deceptive practices such as appropriating famous foreign wine names. However, things are rarely black and white and, as they say, for every rule there is an exception: enter the grandfather clause.

Beside agreeing on banning the appropriation of such famous foreign wine names going forward, the US/EU Wine Agreement “grandfathers” (i.e., exceptionally tolerates) those same prohibited practices as long as they had already been in place in the US and approved by means of the issue of a COLA (Certificate of Label Approval) before March 10, 2006.

This exception is the reason why certain US wineries still enjoy the privilege of legally calling wines made in the United States Champagne, Port, Chablis, Chianti, Sherry and so on.

Boycotting Grandpa

From a strictly legal standpoint, I can see the reasons why the US Government had a hard time stripping wineries that had until that time been authorized to legally use those names of the right to use them anymore.

However, in practical terms, I think that creating a division in the market between those wineries that are authorized to continue a potentially deceptive practice and those that are not just because the former happened to start such practices before (or instead of) the latter is wrong because:

(i) it keeps confusing the consumers and does nothing to educate them by introducing them to the originals of some of the world’s most famous wines; and

(ii) it sounds like an unjustified penalty to all those US wineries that had “done the right thing” by refraining from following such dubious practices and building customer recognition for their own products based on their merits alone, instead of taking the shortcut of “name dropping”.

Because of the reasons mentioned above, I have personally decided not to patronize or review wines made by those US wineries that have chosen to carry on those potentially deceptive practices, although permitted under the grandfather clause of the US/EU Wine Agreement.

Wine Origins

On a final note, in 2005 the regions of Champagne (France) and Porto (Portugal) joined forces to create an organization based in Washington DC that is called The Center for Wine Origins and that aims at educating and sensitizing the US consumers and lawmakers as to the importance of the place of origin of a wine and of affording greater protection to wine place names by keeping wine labels accurate so that consumers are given a chance to make informed choices when selecting their wines. You can learn more about this initiative through the organization’s Web site, www.WineOrigins.com.

As always, feel free to share your thoughts on this subject through the comment section below.

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16 thoughts on “In the Name of the Grandfather: Wine Origins in the USA

  1. ChgoJohn

    Thank you for this, Stefano. I had wondered how our wine companies got away with calling a sparkling wine “champagne”, for example, when these things are so closely policed in the EU. It just didn’t make sense — until now, The Old Grandfather Clause — the bane of consumers everywhere. 🙂

    Reply
    1. Stefano Post author

      Thank you for reading and commenting, John: you know I always appreciate your thoughtful comments as well as the exquisite style in which you convey your opinions. 🙂

      Reply
  2. Heather (Sweet Precision)

    Such a wonderfully informative article Stefano! As a public policy nerd I love the history of legislation that you dive into. I knew of the regulations passed in 2006, however I wasn’t aware of the grandfather clause that still allows some wineries to continue with their deceptive naming. I can see why the government chose to do so but I definitely agree with your assessment that it’s wrong. Thank you for a wonderful post- love it!

    Reply
    1. Stefano Post author

      Thank you very much, Heather: glad to see that there are other public policy nerds out there! 😉 I am very happy that you found it an interesting read.

      Reply
  3. the winegetter

    My dear friend, thank you so much for this. And I hate that this never popped up in my WordPress Reader…sucky little thing.

    Some thoughts, comments, you name it:

    First of all: I am impressed that the US Senate actually voted positively on an international agreement. That is a rare enough fact in and of itself. (One of the reasons the US government has a rather hard time in multilateral deliberations these days is that pretty much everyone knows that it is virtually impossible to get any such treaty through the Senate…)

    Next: I do not believe that the initial legislator had wine consumer education on its mind. It is a business legislation, and most of these pre-2006 rules might have been around from a time where consumer protection wasn’t as much of a focus as it is these days…

    That said, I also believe that the wineries that use(d) these terms had very clear business interests in using them, so I would not be surprised if some lobbying on their part helped further that cause. It is kind of ironic, given the US’s obsession with copyright and trademark laws relating to Chinese infringements, but when it goes against Europeans, then please, go ahead and do whatever you want…just saying.

    As to the grandfather clause: The problem is a legal principle that is definitely around in Europe and probably also in the US, which is called “Vertrauensschutz” in German, “protecting faith”. It means that those that relied on something that was deemed legal once, should be able to further rely on that rule in order not to be harmed by a change in legislation. A sensible provision: If you were allowed to build a house on a rock that later becomes a nature preserve, the government should not be allowed to just tear your house down if you did nothing illegal when you built it.

    However, this seems like a different case, because there is no real damage to these wineries. Well, there is, because they probably will lose some accidental buyers, but they don’t really have to make any monetary changes to their production facilities or anything, just come up with a new name. And that is where Vertrauensschutz usually ends: it doesn’t protect you from future potential damages in, say loss of sales. It just protects the investment you already made (the house and the cost of building it, but not the prospect of living there forever).

    Whatever the thinking behind this clause was, it was definitely flawed and there does not seem to be a legal necessity for it. But then again, we’re in trial-happy country, so who knows what some court might have come up with in litigating this…still, a rather sad state of affairs.

    Sorry this became so long. Thanks for the really informative piece!! (Almost) made me miss my deeper legal days…;)

    Reply
    1. Stefano Post author

      Thank you so much for your wonderfully articulate comment, Oliver! I am so glad that you contributed to the discussion! 🙂
      Regarding the grandfather clause, I totally agree with you: as I hinted at in the post, legally speaking I understand the reasons behind the clause, but from a practical perspective it still seems to be an unsatisfactory solution as it allows select few to continue potentially deceptive practices otherwise prohibited to all others…

      Reply
      1. the winegetter

        I think the point I was trying to make is that even when you put the faith clause that is behind the grandfather clause into the picture, this is not a case where it is legally necessary because it should not protect future earnings, just investments made…

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