The Alcoholic Beverage Control Act provides for specified labeling requirements for containers of alcoholic beverages sold within this state, including a requirement that any wine bottled on or after January 1, 2014, labeled with an American Viticultural Area established pursuant to federal law that is located entirely within a county of the 19th class, bear the designation Sonoma County on the label in specified type size as determined by the size of the wine container, as prescribed. The act provides that a violation of its provisions is a misdemeanor if not otherwise specified.

This bill would require any wine bottled on or after January 1, 2019, labeled with an American Viticultural Area established pursuant to federal law that is located entirely within the County of Monterey to bear the designation Monterey County on the label in specified type size as determined by the size of the wine container, as prescribed. The bill also would provide that a violation of this provision does not subject a person to civil or criminal penalties pursuant to the act, except that the bill would authorize the Department of Alcoholic Beverage Control to suspend or revoke the license of any person who violates these provisions.

The Alcoholic Beverage Control Act provides for specified labeling requirements for containers of alcoholic beverages sold within this state, including a requirement that any wine bottled on or after January 1, 2014, labeled with an American Viticultural Area established pursuant to federal law that is located entirely within a county of the 19th class, bear the designation Sonoma County on the label in specified type size as determined by the size of the wine container, as prescribed. The act provides that a violation of its provisions is a misdemeanor if not otherwise specified.

This bill would require any wine bottled on or after January 1, 2019, labeled with an American Viticultural Area established pursuant to federal law that is located entirely within the County of Monterey to bear the designation Monterey County on the label in specified type size as determined by the size of the wine container, as prescribed. The bill also would provide that a violation of this provision does not subject a person to civil or criminal penalties pursuant to the act, except that the bill would authorize the Department of Alcoholic Beverage Control to suspend or revoke the license of any person who violates these provisions.

The Alcoholic Beverage Control Act provides for specified labeling requirements for containers of alcoholic beverages sold within this state, including a requirement that any wine bottled on or after January 1, 2014, labeled with an American Viticultural Area established pursuant to federal law that is located entirely within a county of the 19th class, bear the designation Sonoma County on the label in specified type size as determined by the size of the wine container, as prescribed. The act provides that a violation of its provisions is a misdemeanor if not otherwise specified.

This bill would require any wine bottled on or after January 1, 2019, labeled with an American Viticultural Area established pursuant to federal law that is located entirely within the County of Monterey to bear the designation Monterey County on the label in specified type size as determined by the size of the wine container, as prescribed, and prescribed. The bill also would provide that a violation of this provision does not subject a person to civil or criminal provisions penalties pursuant to the act. The act, except that the bill would authorize the Department of Alcoholic Beverage Control to suspend or revoke the license of any person who violates these provisions.

The Alcoholic Beverage Control Act requires winegrowers or bottlers of wine within specified counties to keep certain records.

This bill would make a technical, nonsubstantive change to that requirement.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 394

Author:(Mark Stone and Alejo)

As Amended Ver:June 15, 2015

Majority vote

Original Committee Reference: G.O.

SUMMARY: Requires any wine bottled on or after January 1, 2019, and labeled with an American Viticultural Area (AVA) that is located entirely within the County of Monterey to bear the designation "Monterey County" on the label. Specifically, this bill:

1. Requires any wine bottled on or after January 1, 2019, and labeled with an AVA that is located entirely within the County of Monterey to bear the designation "Monterey County" on the label in a type size as specified.

2. Stipulates that the requirement in 1) above, shall not apply to any wine labeled with a viticultural area appellation of origin established pursuant to specified federal regulations when the name of the appellation is "Monterey."

3. Authorizes Alcoholic Beverage Control (ABC) to suspend or revoke the license of any person who violates the provisions of this bill.

The Senate amendments:

1. Authorize the Department of ABC to suspend or revoke the license of any person who violates the provisions of this bill.

2. Make technical change.

3. Add co-authors.

EXISTING LAW:

1. Establishes ABC and grants it exclusive authority to regulate the licensing, enforcement, and administration of the alcoholic beverage control laws.

2. Requires any wine bottled on or after January 1, 2014, and labeled with an AVA located entirely within a County of the 19th class (Sonoma County) to bear the designation "Sonoma County" on the label, as specified.

3. Requires that, when the word "Napa" (or any federally recognized viticultural region within Napa County) appears on a brand label, at least 75% of the grapes used to make that wine must be from Napa County.

4. Requires wines produced within the "Napa Valley" to be labeled as being derived from that valley, if the wine label indicates that they are produced within a separate viticultural area within the Napa Valley, in order to preserve consumer identification and understanding.

5. Prohibits the sale of wine produced, bottled, or labeled after December 31, 2008, in this state that identifies, in a brand name or otherwise, on any label, packaging material, or advertising, the name "Sonoma," unless at least 75% of the grapes used to make the wine are from Sonoma County, as specified.

6. Requires all wines produced within the current Paso Robles appellation to be labeled with the designation "Paso Robles."

7. Requires all wines produced within the current Lodi appellation to be labeled with the designation "Lodi."

8. Stipulates that every person who, with intent to defraud, either falsely makes, alters, forges, or counterfeits the label for any wine or uses the label or bottle of any wine belonging to another, without his or her consent, is guilty of a misdemeanor.

AS PASSED BY THE ASSEMBLY, this bill, on or after January 1, 2019, requires any wine bottled and labeled with an AVA, established pursuant to federal law, which is located entirely within Monterey County to include the designation "Monterey County" on the label, unless the federal AVA is "Monterey."

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS: This bill, as amended in the Senate is consistent with Assembly actions.

Background: The Federal Alcohol Administration Act establishes broad federal regulatory authority over the interstate trade in alcohol beverage products. The Secretary of the Treasury, through the Alcohol and Tobacco Tax and Trade Bureau (TTB), administers an extensive code of regulations governing, among other things, the contents of wine labels, including brand names, the name and address of the bottling winery, and indications of the wine's origin, as well as the use of such information in advertising.

Under federal regulations, an "appellation of origin" is a geographic designation referring to the place where the grapes used to make a specified percentage of the wine were grown. For American wines, an appellation of origin includes the names of states (e.g., "California") and counties identified with the word "county" (e.g., "Napa County," "Monterey County," "Sonoma County," "Eldorado County," etc.) as well as all designated American "viticultural areas." An AVA is a grape growing region distinguishable by geographical area features, as recognized by the TTB pursuant to specified criteria and procedures.

These criteria and procedures, and a complete list of AVAs, are set forth in Code of Federal Regulations Title 27, Part 9. In brief, TTB may recognize an AVA area if it is locally or nationally known for grape growing, has particular and definable boundaries, and has geographic features distinguishing it as a grape-growing area. As of 2014, there were more than 220 recognized AVAs nationwide - 135 of which are located in California. The 135 California viticultural areas recognized by the TTB include, among others, Alexander Valley, Anderson Valley, Chalk Hill, Clarksburg, Fair Play, Hames Valley, Lodi, Los Carneros, Monterey, Napa Valley, Paso Robles, Rockpile, Russian River Valley, Santa Lucia Highlands, Sonoma Valley, Spring Mountain, Stags Leap, and Wild Horse Valley.

The regulations specify the conditions for use of each type of appellation of origin. A wine qualifies for a state or county appellation of origin if at least 75% of the volume derives from grapes grown in the area indicated by the appellation of origin. Thus, under TTB regulations the appellation of origin "California" signifies that at least 75% of the wine in the bottle was made from grapes grown anywhere in the state of California. Similarly, the appellation of origin "Napa County" or "Sonoma County" or "Mendocino County" signifies that at least 75% of the wine in the bottle was made from grapes grown anywhere in that particular County. To qualify for an appellation of origin consisting of an AVA, at least 85% of the wine must derive from grapes grown in the indicated area. The regulations do not require disclosure of the place of origin of the remaining portion of the wine.

Purpose of this bill: This bill establishes a "conjunctive labeling" provision in the ABC Act for wines made from grapes grown within recognized winegrowing areas, or American Viticultural Areas, in Monterey County. This provision mirrors existing labeling provisions for Sonoma, Napa, Lodi, and Paso Robles.

According to the author's office, California is a global leader in viticulture and wine grape cultivation, and its many wine-producing regions are known specifically by their local appellation due to their high quality products and labeling requirements. Monterey County wine producers, which are leaders in the California wine industry, provide a variety of jobs in the wine growing and supply chain, and contribute immensely to the County's economy. Monterey County is unique among wine regions because it rates very high in value, quality and awareness.

The author's office contends this bill will insure that consumers recognize every bottle of wine produced from Monterey County grapes. In addition, this bill will build brand equity for Monterey County wines and preserve and strengthen the county's position as a recognized world-class wine region while increasing sales of wines produced from the region's grapes. Consistent inclusion of Monterey County on wine labels will strengthen the county's brand over time while strengthening the diversity of AVAs within the county and the quality wines each produces.

This bill provides a three-year phase-in period to enable wineries to redesign their labels and get regulatory approval to use the new labels.

In support: In support of this measure, the Family Winemakers of California states "the Monterey appellation is one of the fastest growing premium vineyard and winery regions in California, as well as one of the state's tourism jewels. Wines produced from Monterey are becoming nationally and internationally recognized for their distinctive qualities. As the Monterey wine region continues its growth and development, it is important that smaller, separate sub-appellations benefit from and contribute to the linkage that comes with conjunctive labeling. AB 394 is designed to accommodate the desired specificity of sub-appellation labeling, but link it to the broader Monterey AVA."

There is no opposition on file.

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0001194

 THIRD READING 

Bill No: AB 394

Author: Mark Stone (D) and Alejo (D)

Amended: 6/15/15 in Senate

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 13-0, 6/9/15

AYES: Hall, Berryhill, Block, Gaines, Galgiani, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Runner, Vidak

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 78-0, 4/23/15 (Consent) - See last page for vote

SUBJECT: Alcoholic beverage control: wine labels: Monterey County

SOURCE: Monterey County Vintners & Growers Association

DIGEST: This bill requires any wine bottled on or after January 1, 2019 and labeled with an American Vitcultural Area (AVA) that is located entirely within the County of Monterey to bear the designation “Monterey County” on the label.

ANALYSIS:

Existing law:

1. Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to regulate the licensing, enforcement, and administration of the alcoholic beverage control laws.

2. Requires any wine bottled on or after January 1, 2014 and labeled with an AVA located entirely within a County of the 19th class (Sonoma County) to bear the designation “Sonoma County” on the label, as specified.

3. Requires that, when the word “Napa” (or any federally recognized viticultural region within Napa County) appears on a brand label, at least 75% of the grapes used to make that wine must be from Napa County.

4. Requires wines produced within the “Napa Valley” to be labeled as being derived from that valley, if the wine label indicates that they are produced within a separate viticultural area within the Napa Valley, in order to preserve consumer identification and understanding.

5. Prohibits the sale of wine produced, bottled, or labeled after December 31, 2008, in this state that identifies, in a brand name or otherwise, on any label, packaging material, or advertising, the name “Sonoma,” unless at least 75% of the grapes used to make the wine are from Sonoma County, as specified.

6. Requires all wines produced within the current Paso Robles appellation to be labeled with the designation “Paso Robles.”

7. Requires all wines produced within the current Lodi appellation to be labeled with the designation “Lodi.”

8. Stipulates that every person who, with intent to defraud, either falsely makes, alters, forges, or counterfeits the label for any wine or uses the label or bottle of any wine belonging to another, without his or her consent, is guilty of a misdemeanor.

This bill:

1. Requires any wine bottled on or after January 1, 2019 and labeled with an AVA that is located entirely within the County of Monterey to bear the designation “Monterey County” on the label in a type size as specified.
   
   

2. Stipulates that the requirement in item #1 above shall not apply to any wine labeled with a vitcultural area appellation of origin established pursuant to specified federal regulations when the name of the appellation is “Monterey.”
   
   

3. Authorizes the Department of ABC to suspend or revoke the license of any person who violates the provisions of this bill.

Background

Federal Law. The Federal Alcohol Administration Act establishes broad federal regulatory authority over the interstate trade in alcohol beverage products. The Secretary of the Treasury, through the Alcohol and Tobacco Tax and Trade Bureau (TTB), administers an extensive code of regulations governing, among other things, the contents of wine labels, including brand names, the name and address of the bottling winery, and indications of the wine’s origin, as well as the use of such information in advertising.

Under federal regulations, an “appellation of origin” is a geographic designation referring to the place where the grapes used to make a specified percentage of the wine were grown. For American wines, an appellation of origin includes the names of states (e.g., “California”) and counties identified with the word “county” (e.g., “Napa County,” “Monterey County,” “Sonoma County,” “Eldorado County,” etc.) as well as all designated American “viticultural areas.” An American Viticultural Area (AVA) is a grape growing region distinguishable by geographical area features, as recognized by the TTB pursuant to specified criteria and procedures.

These criteria and procedures, and a complete list of AVAs, are set forth in Part 9 of Title 27 of the Code of Federal Regulations. In brief, TTB may recognize an AVA area if it is locally or nationally known for grape-growing, has particular and definable boundaries, and has geographic features distinguishing it as a grape-growing area. As of March 2015, there were 230 recognized AVAs nationwide – 134 of which are located in California. The California viticultural areas recognized by the TTB include, among others, Alexander Valley, Anderson Valley, Antelope Valley, Arroyo Seco, Carmel Valley, Central Coast, Chalk Hill, Clarksburg, Cucamonga Valley, Fair Play, Howell Mountain, Livermore Valley, Lodi, Los Carneros, Malibu Coast, Mendocino, Napa Valley, North Coast, Paso Robles, Rockpile, Russian River Valley, Rutherford, Santa Cruz Mountains, Santa Lucia Highlands, Sierra Foothills, Sonoma Valley, Sonoma Coast, Spring Mountain, Stags Leap, Temecula Valley, Trinity Lakes, and Wild Horse Valley.

In certain circumstances, wine labels must bear an appellation of origin. For example, a label must bear an appellation of origin if the label states either the grape type (“varietal”) used in the wine or the year in which the grapes were harvested (“vintage”). Recognized varietals include, among others, Cabernet Sauvignon, Pinot Noir, Merlot, Zinfandel, Malbec, Sauvignon Blanc, Chardonnay, Riesling, Pinot Grigio, Syrah, Souzao, Primitivo, and Zinfandel. The regulations mandate that the appellation appear in direct conjunction with and in lettering substantially as conspicuous as the varietal or other class or type designation.

The regulations specify the conditions for use of each type of appellation of origin. A wine qualifies for a state or county appellation of origin if at least 75% of the volume derives from grapes grown in the area indicated by the appellation of origin. Thus, under TTB regulations the appellation of origin “California” signifies that at least 75% of the wine in the bottle was made from grapes grown anywhere in the state of California. Similarly, the appellation of origin “Napa County” or “Sonoma County” or “Mendocino County” signifies that at least 75% of the wine in the bottle was made from grapes grown anywhere in that particular County. To qualify for an appellation of origin consisting of an AVA, at least 85% of the wine must derive from grapes grown in the indicated area. Thus, the appellation of origin “Napa Valley” signifies that at least 85% of the wine in the bottle was made from grapes grown anywhere in Napa Valley. The regulations do not require disclosure of the place of origin of the remaining portion of the wine.

Federal regulations require the wine label to bear a “brand name.” The regulations provide that, in general, “a brand name of viticultural significance may not be used unless the wine meets the appellation of origin requirements for the geographic area named.” This prohibition is subject to an exception. If a brand name was in use before July 7, 1986, it is considered grandfathered. Grandfathered brand names of viticultural significance may be used for wines that do not meet the appellation of origin requirements for the geographic area named, provided the wine is labeled with a true appellation of origin consisting of a county or viticultural area (if the brand name refers to a geographic area smaller than a state) or a state or lesser appellation (if the brand name refers to a state).

Federal regulations require that the name and address of the “bottling winery” appear on the wine label, accompanied, in certain circumstances, by a phrase such as “bottled by.” There is no requirement that the bottling winery be located in the geographic area where the wine was made or the grapes were grown.

Federal law also provides that wine may not be sold or shipped in interstate commerce unless it bears a label that TTB has previously approved. A certificate of label approval (“COLA”) is obtained by submitting an application to the TTB. The application must include an exact replica of the label as well as other information regarding the wine covered by the label.

Purpose of AB 394. This bill establishes a “conjunctive labeling” provision in the ABC Act for all wines made from grapes grown within recognized winegrowing areas, or AVAs, in Monterey County. This bill mirrors existing conjunctive labeling provisions for Napa, Lodi, Paso Robles and Sonoma. Additionally, this bill makes it explicit that the provisions of this act apply only to wines bottled on or after January 1, 2019 to enable wineries to redesign their labels and get regulatory approval to use the new labels.

According to the author’s office, the purpose of conjunctive labeling is to build an association of quality in an increasingly competitive global wine market for the delivery of Monterey County wines.

The author’s office states that there are currently eight AVAs contained within the Monterey AVA: Arroyo Seco, Carmel Valley, Chalone, Hames Valley, San Antonio Valley, San Bernabe, San Lucas, and Santa Lucia Highlands.

Prior/Related Legislation

AB 1798 (Evans, Chapter 242, Statutes of 2010) required any wine bottled on or after January 1, 2014 and labeled with an AVA located entirely within a County of the 19th class (Sonoma County) to bear the designation “Sonoma County” on the label, as specified.

AB 2397 (Aghazarian, Chapter 75, Statutes of 2008) required any wine bottled on or after January 1, 2009 and labeled with a viticultural appellation of origin that is located entirely within the Lodi viticultural area to bear the designation “Lodi” on the label.

AB 87 (Blakeslee, Chapter 674, Statutes of 2007) required any wine labeled with a viticultural area appellation of origin established pursuant to federal law, other than the viticultural area “Paso Robles,” that is located entirely within the “Paso Robles” viticultural area name to bear the designation “Paso Robles” on the label in conjunction with the area designation of wine.

AB 892 (Evans, 2007) would have provided that a wine, as described, is entitled to the appellation of origin “California,” or a geographical subdivision thereof, if the wine meets specified criteria, including the requirement that 100% of the wine’s volume is derived as specified and described. (Held in this Committee at author’s request)

SB 1253 (Migden, 2006) would have established “Zinfandel” as the historic wine of California. (Vetoed by Governor – message stated, “Californians should be proud of all our California Grown agricultural products… singling one out in special recognition would be inappropriate.”)

SB 1380 (Chesbro, Chapter 879, Statutes of 2006) prohibited the sale of wine produced, bottled, or labeled after December 31, 2008, in this state that identifies, in a brand name or otherwise, on any label, packaging material, or advertising, the name “Sonoma,” unless at least 75% of the grapes used to make the wine are from Sonoma County, as specified.

SB 1293 (Chesbro, Chapter 831, Statutes of 2000) added a provision to the ABC Act for the stated purpose of eliminating consumer confusion with respect to the origin of wine grapes and protecting the value of the Napa Valley name. Essentially, this measure made it explicit that when the word “Napa” appeared on a brand label, at least 75% of the grapes used to make that wine must be from Napa County.

SB 771 (Thompson, Chapter 588, Statutes of 1989) required wines produced within the “Napa Valley” to be labeled as being derived from that valley, if the wine label indicates that they are produced within a separate viticultural area within the Napa Valley, in order to preserve consumer identification and understanding. This requirement applied to all wines bottled on or after January 1, 1990.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 6/22/15)

Monterey County Vintners & Growers Association (source)

Family Winemakers of California

Monterey County Board of Supervisors

Monterey County Farm Bureau

Monterey County Hospital Association

OPPOSITION: (Verified 6/22/15)

None received

ARGUMENTS IN SUPPORT: Writing in support, the Monterey County Vintners & Growers Association emphasizes that consistent representation of Monterey County on labels will: (1) enhance brand equity and loyalty for Monterey County wines; (2) preserve and strengthen the County’s position in the world wine market; (3) boost sales of wines produced from Monterey County grapes; (4) increase recognition for every AVA within Monterey County and ensure that consumers understand where they are located; and, (5) enhance California’s reputation as a premier international wine region.

The Family Winemakers of California (FWC) indicates Monterey County is one of the fastest growing premium vineyard and winery regions in California, as well as one of the state’s tourism jewels. Wines produced from Monterey are becoming nationally and internationally recognized for their distinctive qualities. FWC asserts it is important for these smaller, separate AVAs to benefit from and contribute to the affinity with Monterey County labeling, and that AB 394 will accommodate the desired specificity of sub-appellation labeling while linking wine to the broader Monterey AVA.

ASSEMBLY FLOOR: 78-0, 4/23/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

NO VOTE RECORDED: Campos, Salas

Prepared by: Arthur Terzakis / G.O. / (916) 651-1530

6/26/15 14:34:14

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Isadore Hall, III

Chair

2015 - 2016 Regular

Bill No: AB 394 Hearing Date: 6/9/2015

SUBJECT: Alcoholic beverage control: wine labels: Monterey County

DIGEST: This bill requires any wine bottled on or after January 1, 2019 and labeled with an American Vitcultural Area (AVA) that is located entirely within the County of Monterey to bear the designation “Monterey County” on the label.

ANALYSIS:

Existing law:

1. Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to regulate the licensing, enforcement, and administration of the alcoholic beverage control laws.

2. Requires any wine bottled on or after January 1, 2014 and labeled with an AVA located entirely within a County of the 19th class (Sonoma County) to bear the designation “Sonoma County” on the label, as specified.

3. Requires that, when the word “Napa” (or any federally recognized viticultural region within Napa County) appears on a brand label, at least 75% of the grapes used to make that wine must be from Napa County.

4. Requires wines produced within the “Napa Valley” to be labeled as being derived from that valley, if the wine label indicates that they are produced within a separate viticultural area within the Napa Valley, in order to preserve consumer identification and understanding.

5. Prohibits the sale of wine produced, bottled, or labeled after December 31, 2008, in this state that identifies, in a brand name or otherwise, on any label, packaging material, or advertising, the name “Sonoma,” unless at least 75% of the grapes used to make the wine are from Sonoma County, as specified.

6. Requires all wines produced within the current Paso Robles appellation to be labeled with the designation “Paso Robles.”

7. Requires all wines produced within the current Lodi appellation to be labeled with the designation “Lodi.”

8. Stipulates that every person who, with intent to defraud, either falsely makes, alters, forges, or counterfeits the label for any wine or uses the label or bottle of any wine belonging to another, without his or her consent, is guilty of a misdemeanor.

This bill:

1. Requires any wine bottled on or after January 1, 2019 and labeled with an AVA that is located entirely within the County of Monterey to bear the designation “Monterey County” on the label in a type size as specified.
   
   

2. Stipulates that the requirement in item #1 above shall not apply to any wine labeled with a vitcultural area appellation of origin established pursuant to specified federal regulations when the name of the appellation is “Monterey.”
   
   

3. Authorizes the Department of ABC to suspend or revoke the license of any person who violates the provisions of this bill.

Background

Federal Law. The Federal Alcohol Administration Act establishes broad federal regulatory authority over the interstate trade in alcohol beverage products. The Secretary of the Treasury, through the Alcohol and Tobacco Tax and Trade Bureau (TTB), administers an extensive code of regulations governing, among other things, the contents of wine labels, including brand names, the name and address of the bottling winery, and indications of the wine’s origin, as well as the use of such information in advertising.

Under federal regulations, an “appellation of origin” is a geographic designation referring to the place where the grapes used to make a specified percentage of the wine were grown. For American wines, an appellation of origin includes the names of states (e.g., “California”) and counties identified with the word “county” (e.g., “Napa County,” “Monterey County,” “Sonoma County,” “Eldorado County,” etc.) as well as all designated American “viticultural areas.” An American Viticultural Area (AVA) is a grape growing region distinguishable by geographical area features, as recognized by the TTB pursuant to specified criteria and procedures.

These criteria and procedures, and a complete list of AVAs, are set forth in Part 9 of Title 27 of the Code of Federal Regulations. In brief, TTB may recognize an AVA area if it is locally or nationally known for grape-growing, has particular and definable boundaries, and has geographic features distinguishing it as a grape-growing area. As of March 2015, there were 230 recognized AVAs nationwide – 134 of which are located in California. The California viticultural areas recognized by the TTB include, among others, Alexander Valley, Anderson Valley, Antelope Valley, Arroyo Seco, Carmel Valley, Central Coast, Chalk Hill, Clarksburg, Cucamonga Valley, Fair Play, Howell Mountain, Livermore Valley, Lodi, Los Carneros, Malibu Coast, Mendocino, Napa Valley, North Coast, Paso Robles, Rockpile, Russian River Valley, Rutherford, Santa Cruz Mountains, Santa Lucia Highlands, Sierra Foothills, Sonoma Valley, Sonoma Coast, Spring Mountain, Stags Leap, Temecula Valley, Trinity Lakes, and Wild Horse Valley.

In certain circumstances, wine labels must bear an appellation of origin. For example, a label must bear an appellation of origin if the label states either the grape type (“varietal”) used in the wine or the year in which the grapes were harvested (“vintage”). Recognized varietals include, among others, Cabernet Sauvignon, Pinot Noir, Merlot, Zinfandel, Malbec, Sauvignon Blanc, Chardonnay, Riesling, Pinot Grigio, Syrah, Souzao, Primitivo, and Zinfandel. The regulations mandate that the appellation appear in direct conjunction with and in lettering substantially as conspicuous as the varietal or other class or type designation.

The regulations specify the conditions for use of each type of appellation of origin. A wine qualifies for a state or county appellation of origin if at least 75% of the volume derives from grapes grown in the area indicated by the appellation of origin. Thus, under TTB regulations the appellation of origin “California” signifies that at least 75% of the wine in the bottle was made from grapes grown anywhere in the state of California. Similarly, the appellation of origin “Napa County” or “Sonoma County” or “Mendocino County” signifies that at least 75% of the wine in the bottle was made from grapes grown anywhere in that particular County. To qualify for an appellation of origin consisting of an AVA, at least 85% of the wine must derive from grapes grown in the indicated area. Thus, the appellation of origin “Napa Valley” signifies that at least 85% of the wine in the bottle was made from grapes grown anywhere in Napa Valley. The regulations do not require disclosure of the place of origin of the remaining portion of the wine.

Federal regulations require the wine label to bear a “brand name.” The regulations provide that, in general, “a brand name of viticultural significance may not be used unless the wine meets the appellation of origin requirements for the geographic area named.” This prohibition is subject to an exception. If a brand name was in use before July 7, 1986, it is considered grandfathered. Grandfathered brand names of viticultural significance may be used for wines that do not meet the appellation of origin requirements for the geographic area named, provided the wine is labeled with a true appellation of origin consisting of a county or viticultural area (if the brand name refers to a geographic area smaller than a state) or a state or lesser appellation (if the brand name refers to a state).

Federal regulations require that the name and address of the “bottling winery” appear on the wine label, accompanied, in certain circumstances, by a phrase such as “bottled by.” There is no requirement that the bottling winery be located in the geographic area where the wine was made or the grapes were grown.

Federal law also provides that wine may not be sold or shipped in interstate commerce unless it bears a label that TTB has previously approved. A certificate of label approval (“COLA”) is obtained by submitting an application to the TTB. The application must include an exact replica of the label as well as other information regarding the wine covered by the label.

Purpose of AB 394. This bill establishes a “conjunctive labeling” provision in the ABC Act for all wines made from grapes grown within recognized winegrowing areas, or AVAs, in Monterey County. This bill mirrors existing conjunctive labeling provisions for Napa, Lodi, Paso Robles and Sonoma. Additionally, this bill makes it explicit that the provisions of this act apply only to wines bottled on or after January 1, 2019 to enable wineries to redesign their labels and get regulatory approval to use the new labels.

According to the author’s office, the purpose of conjunctive labeling is to build an association of quality in an increasingly competitive global wine market for the delivery of Monterey County wines.

The author’s office states that there are currently eight AVAs contained within the Monterey AVA: Arroyo Seco, Carmel Valley, Chalone, Hames Valley, San Antonio Valley, San Bernabe, San Lucas, and Santa Lucia Highlands.

Prior/Related Legislation

AB 1798 (Evans, Chapter 242, Statutes of 2010) required any wine bottled on or after January 1, 2014 and labeled with an AVA located entirely within a County of the 19th class (Sonoma County) to bear the designation “Sonoma County” on the label, as specified.

AB 2397 (Aghazarian, Chapter 75, Statutes of 2008) required any wine bottled on or after January 1, 2009 and labeled with a viticultural appellation of origin that is located entirely within the Lodi viticultural area to bear the designation “Lodi” on the label.

AB 87 (Blakeslee, Chapter 674, Statutes of 2007) required any wine labeled with a viticultural area appellation of origin established pursuant to federal law, other than the viticultural area “Paso Robles,” that is located entirely within the “Paso Robles” viticultural area name to bear the designation “Paso Robles” on the label in conjunction with the area designation of wine.

AB 892 (Evans, 2007) would have provided that a wine, as described, is entitled to the appellation of origin “California,” or a geographical subdivision thereof, if the wine meets specified criteria, including the requirement that 100% of the wine’s volume is derived as specified and described. (Held in this Committee at author’s request)

SB 1253 (Migden, 2006) would have established “Zinfandel” as the historic wine of California. (Vetoed by Governor – message stated, “Californians should be proud of all our California Grown agricultural products… singling one out in special recognition would be inappropriate.”)

SB 1380 (Chesbro, Chapter 879, Statutes of 2006) prohibited the sale of wine produced, bottled, or labeled after December 31, 2008, in this state that identifies, in a brand name or otherwise, on any label, packaging material, or advertising, the name “Sonoma,” unless at least 75% of the grapes used to make the wine are from Sonoma County, as specified.

SB 1293 (Chesbro, Chapter 831, Statutes of 2000) added a provision to the ABC Act for the stated purpose of eliminating consumer confusion with respect to the origin of wine grapes and protecting the value of the Napa Valley name. Essentially, this measure made it explicit that when the word “Napa” appeared on a brand label, at least 75% of the grapes used to make that wine must be from Napa County.

SB 771 (Thompson, Chapter 588, Statutes of 1989) required wines produced within the “Napa Valley” to be labeled as being derived from that valley, if the wine label indicates that they are produced within a separate viticultural area within the Napa Valley, in order to preserve consumer identification and understanding. This requirement applied to all wines bottled on or after January 1, 1990.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

Monterey County Vintners & Growers Association (sponsor)

Family Winemakers of California

Monterey County Board of Supervisors

Monterey County Farm Bureau

Monterey County Hospital Association

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: Writing in support, the Monterey County Vintners & Growers Association emphasizes that consistent representation of Monterey County on labels will: (a) enhance brand equity and loyalty for Monterey County wines; (b) preserve and strengthen the County’s position in the world wine market; (c) boost sales of wines produced from Monterey County grapes; (d) increase recognition for every AVA within Monterey County and ensure that consumers understand where they are located; and, (e) enhance California’s reputation as a premier international wine region.

The Family Winemakers of California (FWC) indicates Monterey County is one of the fastest growing premium vineyard and winery regions in California, as well as one of the state’s tourism jewels. Wines produced from Monterey are becoming nationally and internationally recognized for their distinctive qualities. FWC asserts it is important for these smaller, separate AVAs to benefit from and contribute to the affinity with Monterey County labeling, and that AB 394 will accommodate the desired specificity of sub-appellation labeling while linking wine to the broader Monterey AVA.

Date of Hearing: April 15, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 394

Author:(Mark Stone) – As Amended Ver:March 19, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill, on or after January 1, 2019, requires any wine bottled and labeled with an American Viticultural Area (AVA), established pursuant to federal law, that is located entirely within Monterey County to include the designation "Monterey County" on the label, unless the federal AVA is "Monterey."

FISCAL EFFECT:

Minor and absorbable enforcement costs to the Department of Alcoholic Beverage Control.

COMMENTS:

1) Purpose. According to the author, this conjunctive labeling bill will ensure consumers recognize every bottle of wine that is produced from Monterey County grapes. The author believes the additional labeling will build the Monterey County wine brand and strengthen the county's position as a recognized, world-class winegrowing region. Similar conjunctive labeling rules exist for Sonoma and Napa Counties as well as Lodi and Paso Robles.

2) Monterey Wine. The Family Winegrowers of California (FWC) indicate Monterey County is one of the fastest growing premium vineyard and winery regions in the state. According to the Monterey County Vintners and Growers Association, there are currently eight AVAs contained within the Monterey AVA: Arroyo Seco, Carmel Valley, Chalone, Hames Valley, San Antonio Valley, San Bernabe, San Lucas, and Santa Lucia Highlands. FWC asserts it is important for these smaller, separate AVAs to benefit from and contribute to the affinity with Monterey County labeling, and that AB 394 will accommodate the desired specificity of sub-appellation labeling while linking wine to the broader Monterey AVA.

Analysis Prepared by: Joel Tashjian / APPR. / (916) 319-2081

Date of Hearing: April 8, 2015

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Adam Gray, Chair

ABPCA Bill Id:AB 394

Author:(Mark Stone) – As Amended Ver:March 19, 2015

SUBJECT: Alcoholic beverage control: wine labels: Monterey County

SUMMARY: Requires any wine bottled on or after January 1, 2019, labeled with an American Viticultural Area (AVA) established pursuant to federal law that is located entirely within the County of Monterey (County) to bear the designation “Monterey County” on the label. Specifically, this bill:

1) Requires any wine bottled on or after January 1, 2019, labeled with an AVA established pursuant to the Code of Federal Regulations, that is located entirely within the County of Monterey shall bear the designation “Monterey County” on the label in a type size not smaller than two millimeters on containers of more than 187 milliliters or smaller than one millimeter on containers of 187 milliliters or less.

2) Authorizes ABC to suspend or revoke the license of any person who violates the above-mentioned provision.

3) Specifies that the provision shall not apply to any wine labeled with a viticultural area appellation of origin established under Federal Regulations when the name of the appellation is “Monterey.”

EXISTING LAW:

1) Provides for specified labeling requirements for containers of alcoholic beverages sold within this state.

2) Existing provisions of the Act, known as "tied-house" restrictions, generally prohibit a winegrower from having an ownership interest in an on-sale alcoholic beverage license, with limited exceptions. Among other exemptions, existing law exempts from the tied-house restrictions any licensed winegrower who meets specified conditions, including that the winegrower, or his or her officer, director, or agent, enters into an undertaking, approved by the ABC, that makes specified statements regarding the sale or furnishing of wine by the winegrower, or any officer, director, or agent of the winegrower.

3) Requires that, when the word "Napa" (or any federally recognized viticultural region within Napa County) appears on a brand label, at least 75 percent of the grapes used to make that wine must be from Napa County.

4) Requires wines produced within the "Napa Valley" to be labeled as being derived from that valley, if the wine label indicates that they are produced within a separate viticultural area within the Napa Valley, in order to preserve consumer identification and understanding.

5) Prohibits the sale of wine produced, bottled, or labeled after December 31, 2008, in this state that identifies, in a brand name or otherwise, on any label, packaging material, or advertising, the name "Sonoma," unless at least 75 percent of the grapes used to make the wine are from Sonoma County, as specified.

6) Requires all wines produced or bottled within the current Paso Robles appellation to be labeled with the designation "Paso Robles."

7) Requires all wines produced or bottled within the current Lodi appellation to be labeled with the designation "Lodi."

8) Requires, beginning on or after January 1, 2014, that any wine labeled with an AVA located entirely within a County of the 19th class (Sonoma County) must display the designation "Sonoma County" on the label, as specified.

FISCAL EFFECT: Unknown

COMMENTS:

Background: The Federal Alcohol Administration Act establishes broad federal regulatory authority over the interstate trade in alcohol beverage products. The Secretary of the Treasury, through the Alcohol and Tobacco Tax and Trade Bureau (TTB), administers an extensive code of regulations governing, among other things, the contents of wine labels, including brand names, the name and address of the bottling winery, and indications of the wine's origin, as well as the use of such information in advertising.

Under federal regulations, an "appellation of origin" is a geographic designation referring to the place where the grapes used to make a specified percentage of the wine were grown. For American wines, an appellation of origin includes the names of states (e.g., "California") and counties identified with the word "county" (e.g., "Napa County," "Monterey County," "Sonoma County," "Eldorado County," etc.) as well as all designated American "viticultural areas." An AVA is a grape growing region distinguishable by geographical area features, as recognized by the TTB pursuant to specified criteria and procedures.

These criteria and procedures, and a complete list of AVAs, are set forth in Part 9 of Title 27 of the Code of Federal Regulations. In brief, TTB may recognize an AVA area if it is locally or nationally known for grape growing, has particular and definable boundaries, and has geographic features distinguishing it as a grape-growing area. As of 2014, there were more than 220 recognized AVAs nationwide - 135 of which are located in California. The 135 California viticultural areas recognized by the TTB include, among others, Alexander Valley, Anderson Valley, Chalk Hill, Clarksburg, Fair Play, Hames Valley, Lodi, Los Carneros, Monterey, Napa Valley, Paso Robles, Rockpile, Russian River Valley, Santa Lucia Highlands, Sonoma Valley, Spring Mountain, Stags Leap, and Wild Horse Valley.

The regulations specify the conditions for use of each type of appellation of origin. A wine qualifies for a state or county appellation of origin if at least 75 percent of the volume derives from grapes grown in the area indicated by the appellation of origin. Thus, under TTB regulations the appellation of origin "California" signifies that at least 75 percent of the wine in the bottle was made from grapes grown anywhere in the state of California. Similarly, the appellation of origin "Napa County" or "Sonoma County" or "Mendocino County" signifies that at least 75 percent of the wine in the bottle was made from grapes grown anywhere in that particular County. To qualify for an appellation of origin consisting of an AVA, at least 85 percent of the wine must derive from grapes grown in the indicated area. The regulations do not require disclosure of the place of origin of the remaining portion of the wine.

Purpose of the bill: This bill establishes a "conjunctive labeling" provision in the ABC Act for wines made from grapes grown within recognized winegrowing areas, or American Viticultural Areas, in Monterey County. This provision mirrors existing labeling provisions for Sonoma, Napa, Lodi, and Paso Robles.

According to the author’s office, California is a global leader in viticulture and wine grape cultivation, and its many wine-producing regions are known specifically by their local appellation due to their high quality products and labeling requirements. Monterey County wine producers, which are leaders in the California wine industry, provide a variety of jobs in the wine growing and supply chain, and contribute immensely to the County's economy. Monterey County is unique among wine regions because it rates very high in value, quality and awareness.

The author's office contends this measure will insure that consumers recognize every bottle of wine produced from Monterey County grapes. In addition, the bill will build brand equity for Monterey County wines and preserve and strengthen the County’s position as a recognized world-class wine region while increasing sales of wines produced from the region's grapes. Consistent inclusion of Monterey County on wine labels will strengthen the County's brand over time while strengthening the diversity of AVAs within the County and the quality wines each produces.

The bill provides a three-year phase-in period to enable wineries to redesign their labels and get regulatory approval to use the new labels.

In support: In support of this measure, the Family Winemakers of California states "the Monterey appellation is one of the fastest growing premium vineyard and winery regions in California, as well as one of the state's tourism jewels. Wines produced from Monterey are becoming nationally and internationally recognized for their distinctive qualities. As the Monterey wine region continues its growth and development, it is important that smaller, separate sub-appellations benefit from and contribute to the linkage that comes with conjunctive labeling. AB 394 is designed to accommodate the desired specificity of sub-appellation labeling, but link it to the broader Monterey AVA."

Prior legislation: AB 1798 (Evans), Chapter 242, Statutes of 2010. Required, beginning on or after January 1, 2014, that any wine labeled with an AVA located entirely within a County of the 19th class (Sonoma County) must display the designation "Sonoma County" on the label, as specified.

AB 87 (Blakeslee), Chapter 674, Statutes of 2007. Required all wines produced or bottled from any sub-appellation located within the current Paso Robles appellation to carry the designation "Paso Robles" on the label.

SB 1380 (Chesbro) Chapter 879, Statutes of 2006. Prohibited the sale of wine, produced, bottled, or labeled after December 31, 2008, that identifies, in a brand name or otherwise, on any label, packaging material, or advertising, the name "Sonoma", unless at least 75% of the grapes used to make the wine are from Sonoma County, as specified.

SB 1293 (Chesbro), Chapter 831, Statutes of 2000. Prohibited the use of the word "Napa" on a brand label unless at least 75% of the grapes used to make that wine came from Napa County. One of the stated purposes of this law was to minimize consumer confusion because consumers assume brand names of wines suggest the origin of the grapes.

REGISTERED SUPPORT / OPPOSITION:

Support

Family Winemakers of California

Monterey County Vintners and Growers Association

Opposition

None on file

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531