New York wine industry bruised in battles

The New York wine industry has emerged bruised from the Legislature’s still unfinished effort to address the state’s US$16bn budget deficit.

The industry, America’s fourth largest (in terms of wineries), has been wrestling with three issues simultaneously: an attempt to get wine into supermarkets, a tax hike, and a threat to the New York Wine and Grape Foundation’s future.

Despite a strong effort to get wine sold in supermarkets and convenience stores, Governor David Paterson and the grocery store lobby was defeated by an opposing group representing wine and liquor shops across the state.

Afraid to alienate retailers who currently carry their wines, many wineries opposed this proposal. Some, however, supported it openly, and may lose customers as a result.

As part of the new budget emerging from negotiations between the governor and the state Assembly and Senate, the excise tax on sales of wine is set to be increased by 58% (from 19 to 30 cents a gallon). Wineries, which would foot the bill, fear that passing it along to consumers might cause a drop in sales.

In another move, the New York Wine and Grape Foundation, a trade association representing the state’s 261 producers, has temporarily staved off the governor’s attempt to wholly eliminate its funding in the new fiscal year.

Last year, the foundation was awarded US$1m, which the wine industry had to match with another $1m. It also got $1.8m, which it did not have to match, from the state government. Months later some of that money was cut back.

This year, the foundation appears likely to receive about $951,000, which again must be matched by its members. The sum could be reduced, however, during the complex legislative process.

If the $951,000 grant remains, ‘we will be able to continue our core research and promotion programs but nothing beyond that,’ said foundation president James Trezise.

Written by Howard G Goldberg in New York