The beauty of the land, the legacy of the generations of families farming grapes and making world-famous wines down the word is a part of Wine Country living. And we welcome visitors from all over the world who, by paying to enjoy our paradise, help keep the North Bay prosperous. So what could be wrong with this picture?
Nothing is perfect, even in the best of possible worlds. The rich and luscious agricultural land that has nourished populations for generations with fruit and nut and meat and produce and now makes up the Wine Country is so expensive that only grapes, and a thriving wine industry can afford to compete with housing for the possession—and preservation—of the land. When you look at rolling vine-covered hills and picturesque wineries, you’re looking at a serious agricultural industry that makes possible and sustainable the paradise people enjoy. One cannot exist without the other. This paradox lies at the heart of the concerns that neighborhood groups have been bringing before the boards of supervisors of both counties.
“One of the things that keeps coming up in these neighborhood groups is they’re astounded that agriculture, with these events and wineries, is ‘turning into commercial’,” says Martini, proprietor at Taft Street Winery. How would they think it would not be commercial? And how would they not expect noise and dust and all the commotion that a normal agricultural process entails? “All of these apple trees, all of these specialty vegetable farms—they’re not planted so people have nice things to look at,” he says. ”They’re going to be harvested; they’re going to need trucks; they’re going to have people.” The land, he reminds us, is zoned for agriculture. “Not as ‘agriculture lite,’ or as ‘rural residential,’ but as intensive agriculture.” That means, at harvest time, noises at night, grape trucks lumbering along the roads, and for each new winery, more traffic.
There is a shadow side to Wine Country living for residents—traffic and parties. Everyone hates traffic. While it may be tempting to blame the increase in volume of traffic on wineries, the Napa Valley Transportation Authority 2014 traffic study found that the majority of the cars on the road were not tourists or commuters, but locals going about their business within the county. As Napa County’s planning director, David Morrison, reminds us, 10 years ago, we had 10,000 fewer people living (and driving cars) in Napa County alone. Another 8,400 are projected in the next 10 years. So traffic is increasing, wineries or not. In addition, the increased popularity of cycling in both counties throughout the year present challenges of both safety and access. Traffic safety is a high concern for both counties, and new wineries’ use permits cover requirements for road improvements and the impacts of visitor traffic.
Winery parties are another matter. If you’re throwing a party, great success comes from laughter, loud music and people staying over time. For the family living next door, thoughts do not run so kindly. Kirsty Shelton, land use planner with the Wine Country Office of Farella Braun + Martel LLP, says that most of the complaints she hears are about the activity around visitation of the wineries. “Harvest only comes once a year. Crush and bottling happens, and then there’s not much going on. But with parties, it’s a different impact,” she says. She mentions that people trying to get children to bed may have real problems with loud music that goes on longer than permitted, or to have winery visitors parking in their spaces or behaving badly as result of alcohol excess. “Sometimes a neighbor will buy into the reality of the winery and ag operations, but then parties come and you don’t know what’s expected,” she says. “It’s fine if it happens in the afternoon from 2 to 4 p.m., but it’s a whole different atmosphere when it’s an evening event that goes from 6 to 10 p.m.”
The Sonoma County Board of Supervisors is looking for community-based solutions to these problems and has asked for countywide standards to be generated by staff, including clear definitions of marketing and events. “From a policy standpoint, it means having local communities, where the impacts are being experienced, to develop their own solutions,” says Tennis Wick, Sonoma County Permit and Resource Management Department director. The board is looking at three areas of potential over-concentration: Westside Road area, Dry Creek area, and Sonoma Valley. “As a planner,” says Wick, referring to his years of experience in the area, “I think when communities solve their own problems, using professional guidance where necessary, knowing their community better than we do, why not let them come up with their own solutions? That’s happened in Dry Creek, it’s happening in Sonoma Valley and the board is looking to create a group in the west side area for solutions there.” The Dry Creek group has generated its own guidelines for evaluating proposals around winery events while the planners are stepping back and conducting traffic studies. “We anticipate that the board will still want us to have county-wide definitions of what events are, and to have specific authorization for winery events distinct from other types of agricultural promotional activities in specific agricultural districts,” says Wick. In a county as large and diverse as Sonoma County, with its unique geography, differing climates and different communities, local communities will generate guidelines fitting their conditions, and the overall definition of terms will apply on a countywide basis. “It’s going very well,” says Wick. “Dry Creek is basically done. Sonoma Valley is on a good, constructive path. West Side will probably take more time because the group has yet to be formed.”
Wick says that the shared principle governing all the groups falls under the rubric of the general plan. “We support agriculture. To support agriculture, we’re going to allow ancillary uses on agricultural zones to do so. I’m trying to use my office in an unofficial capacity to get people to reach a cooperative result without necessarily having to do it all through permit conditions.”
It’s all about balance. “That’s our job,” says Wick, “to hopefully provide a balance of uses out there and help people anticipate conflicts so they can avoid regulation in the first place.”
“In Napa County, everything goes back to the underlying premise that wineries are allowed because they are accessory to the agricultural use of the property which, for most of our land, is grapes,” says Morrison. To help wineries market their product, Napa County allows events that introduce, familiarize and educate people about the wine. The balance is part of the rule. “If you have 30 people at your winery and you provide food pairing as part of a two-hour event, at least one hour has to be spent talking about the wine, touring the winery, learning how to taste the wine, learning about the vintage or heritage of the wine.” Weddings and corporate events are not allowed, he says (except in those few cases where they are grandfathered). Nor is rental of wineries for parties allowed. “There are temporary event permits allowed; separate and distinct from winery permits, for festivals, concerts or other artistic or expressive activities allowed under the First Amendment, which is under a different area of the law.” In short, most events are only allowed because they help to market the wine.
Who gets to be grandfathered? The 1990 Winery Definition Ordinance was added to the County Code to further protect agriculture lands and open space. Wineries that were approved prior to 1991 are “grandfathered” to the extent that they can demonstrate that they had engaged in particular uses or events prior to 1991. “Just because you existed isn’t enough,” says Morrison. “We have a handful of wineries that are allowed to have weddings, but they had to demonstrate that they were holding commercial weddings prior to 1991.”
“Compliance is becoming more of an issue,” says Shelton. “Both counties are urging wineries to know what’s in their permits and that local rules will be enforced. In the California land use law, every use permit is conditional and subject to revocation.”
“I wake up more thinking about our wineries,” says Jean Arnold Sessions, former executive director of Sonoma County Vintners. “Do they understand the regulations, are they working at a high level of best practice and if they aren’t, why not? It’s all about education. The regulations are complicated. We’re doing classes at the Vintners, helping educate owners and their staff to know and understand their use permits. If someone’s not consciously following that, then my job becomes a little harder, and may involve some conflict resolution and we do that as well.” As in other areas of life (think traffic laws) those who take advantage and exceed allowed limits make it harder for those who try to stay in harmony with regulations and what they represent. “For the most part the vintners want to do the right thing,” says Sessions. “We’re all working as good neighbors because I wake up in the morning as a neighbor, too.”
“I think the generational families understand reaching out to their neighbors,” says Sessions, adding that it’s important for newcomers to understand how important it is that you are letting your neighbors know what you’re doing, you’re being inclusive, and for the neighbors to reach out to you. “It’s a two-way street.”
It is important for wineries to participate in the process, says Wick. “They have come a long way to being active participants in the process, which I really appreciate, and they understand that we are going to take enforcement seriously.”
Sometimes it’s as easy as opening communication. “Every December I send a note out to my neighbors—that’s about 100 properties,” says Martini. “I let them know what’s coming up in the year, and I let them know my cell phone number. I say if there’s an issue, call me. Most of the issues will be someone is parking in someone else’s driveway. I make sure to have caution tape, and reserve space in another vineyard, and I hire someone to direct the parking. For the most part I get along pretty darn well. Most of them know what I’m trying to do, and most of them come down to the party!”
“We’ve got to be good, clear-minded stewards,” says Sessions, “to sit at the table and think—30 years out, where do we want our children to be living? We want a sustainable, profitable county and lifestyle, so how do we do that?”
Why do wineries need events? “In 2005, a Supreme Court Decision known as the Granholm Act changed our business model for wineries,” says Jean Arnold Sessions, executive director for the Sonoma County Vintners. The act detailed fair trade and that meant if a winery could ship wine from inside the state to outside, then the state had to allow wineries from outside the state to ship wine in. “It’s all based on the idea of the equal playing field.”
At that time, most wines were sold through the three-tiered winery-distributor-retail or restaurant model, according to Sessions. But the direct-to-consumer idea was gaining traction. “We all started getting our licenses to ship direct to the consumer in 2005,” she says. This was a survival move, especially for smaller wineries because distribution outlets were drying up. “Wholesalers had shrunk from approximately 4,000 down to about 1,500,” she adds. “They would have 18,000 different wines in their portfolio.” As a result, it was hard to be competitive.
To make matters worse, the recession hit in 2009. “Credit for our distributors to carry our inventory went away,” says Sessions. “They ratcheted back their inventory and cut out some smaller producers who may not have been performing that well, who didn’t have marketing budgets or reps.” High end wineries who sold primarily to restaurants and hotels were hurt as well, as those businesses flagged. “But people were still buying wine, so our direct-to-consumer business went up.”
The advantage of the direct-to-consumer model is that when you take out the middleman you retain more of your own profits. That means retaining 70 percent of profits when selling direct-to-consumers, compared to 30 percent when selling to a distributor, according to Sessions.
The challenge of the model is attracting and communicating with customers. Social media was starting at about that time, and has grown to be a useful marketing tool. But the key to marketing direct-to-consumer is developing your own distinctive brand, story and culture around fine wine. “The best place to convert someone to your club is at your property,” says Sessions. “You want people coming to your tasting room. It’s not unlike the farm-stand concept. We want a relationship. We’re providing access to the winemaker and vineyard manager, and the sons and daughters of the winery.”
Customers learn about the wines, listen to the stories and “bond” with the brand by experiencing and tasting. The goal is to build a long-term relationship with customers by offering a wine club, and when people are making decisions about whether to join the wine club, the types of events offered often factors into the decision.
Marketing events are not only subject to the restrictions of their individual use permits, they’re also subject to the restrictions of certain state and federal laws, which can cause pain in terms of fines or license revocation when violations (wittingly or unwittingly) occur. These “tied house” laws were put in place after Prohibition when crime and alcohol became intertwined and corruption ran straight through the system.
To curb corruption and break up monopolies, the U.S. imposed what the English called “tied house” laws. “The tied house laws were designed to place barriers between the three tiers of the alcoholic beverage distribution chain—the producers, distributors and retailers,” says Richard Van Duzer, who specializes in construction, real estate and the wine business as a partner at Farella Braun + Martel, LLP in St. Helena and San Francisco. “The point was to prevent predatory producers and, worse yet, organized crime from infiltrating all three tiers of the system.” According to Van Duzer, the name goes back to the days of old in England, where in a one-pub village, patrons may have the choice of only one brew—either because the brewery has a deal with, or owns, the pub. This would be in contrast with the “free-house” pubs, where the patron pours a variety of brews from numerous breweries of his choice.
“The tied house laws are codified in the California Business and Professions Code of the California Code,” says Van Duzer. “The code includes a series of statutes that govern what wineries and other licensed alcohol beverage provides can (or can’t) do to market and sell their products.” Additionally, there are also the Department of Alcoholic Beverage Control (ABC) rules and regulations. “Oftentimes, these put meat on the bones of the more general provisions in the Business and Profession Code. The main point of many of these rules is to prohibit or restrict licenses from giving any money, premiums, gifts, free goods or any other item of value in connection with the sales and marketing of their alcoholic beverage products.”
The tied house laws require serious attention to detail and boundaries. For example, “If I’m Winery X in Napa, and I want to hold a winemaker’s dinner at Some Great Restaurant, the ABC does not want you to advertise the event saying, ‘Some Great Restaurant is a fantastic place.’ That’s because the ABC deems you’re advertising for that retailer, or providing something of value to that retailer.” You can advertise your event listing the time, date and place, but not endorse the retailer. Furthermore, if a winery holds an event in a hotel or other location, it can’t sell its wine at the event, but can take orders and fill them later at the winery. When a winery plans an event, it’s best to check your own use permits first, and then check other applicable state laws or rules.
A word of caution: Just because the state tied house rules allow a certain practice does not mean you’re out of the woods. “If you plan to host an event or provide tastings at your winery premises, for example, you have to have entitlements from the county to do what it is you’re doing, which is in your use permit. In Napa, for example, new wineries are not allowed to conduct tastings that are open to the public. Any new use permits issued to wineries in Napa County, therefore, typically allow wine tasting by appointment only. The county wants to control the number of people coming in or out of the county to some extent.”
What’s the best course of action in planning winery events? Van Duzer advises accepting the fact that the wine industry is heavily regulated, but not to be discouraged. “In many cases, the rules and restrictions are designed to permit (subject to certain conditions), rather than prohibit, the types of activities wineries believe help them market their product. As long as you know what rules and regulations you’re operating with, you can hold the events you want—just structure them in a way that satisfies the law.”
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