Virginia wine -- supported by strong consumer laws
Virginia wine — supported by strong consumer laws

Virginia’s wine industry is on a roll, and one of the factors driving growth are some of the most wine-friendly consumer laws in the country. Virginia is one of seven states to win a perfect A+ rating from the Virginia Wine Consumer Coalition in its 2013 state-by-state report card on consumer access to wine.

“Wine consumers benefit and are well served when the laws of their state allow for easy access to wine products and provides for convenience in using and accessing wine products,” states the report. However, “nearly every state imposes restrictions of one sort or another that deprive wine consumer of access to the wines they want,” when they want and where they want.

The study graded states by six criteria (in order of importance to consumers):

  1. Ability to have wine shipped to home from any winery
  2. State monopoly on the wine sales
  3. Ability to have wine shipped to home from any wine retailer
  4. Ability to purchase wine on Sundays
  5. Ability to bring wine into a restaurant and drink with a meal
  6. Ability to purchase wine in grocery stores

In a press release, Governor Bob McDonnell put an economic-development spin on the ranking:

Virginia wines are in more demand now than ever, setting an all time record for the most recent fiscal year at 511,000 cases sold. The AWCC report confirms that thanks to efforts across the Commonwealth our consumers know what great wines we produce here in Virginia and they can find them in the many places they shop. Increased exposure for Virginia wines drives greater sales and means more good job opportunities for our citizens at our wineries, in wine tourism and throughout our rural regions where many of our vineyards are located.

Bacon’s bottom line:

The best path to economic development is creating a favorable legal and regulatory climate, not by the granting of state subsidies and tax breaks. At present, wine is a niche agricultural product in Virginia not regarded (outside of Virginia itself) as a competitive wine-producing region. (See these January 2012 Virginia Wine Board findings.) However, the perception is improving, at least locally. The eat-local movement is a plus, and winery tours are growing in popularity. Critically, Virginia retailers are becoming bigger fans of Virginia wines.

State policy minimizes barriers between Virginia vintners and Virginia consumers. Excellent. But, wisely, the state is not trying to force-feed (so to speak) the growth of the industry through subsidies and tax breaks. The industry will prosper based upon its ability to produce quality wines at a competitive price, which is how it should be.

Update: Turns out that an individual and corporate income tax credit up to $250,000 is available for Virginia farm wineries and vineyards “in an amount equal to 25 percent of the cost of all qualified capital expenditures.” (Hat tip: Larry Gross). So much for a level playing field.


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5 responses to “Virginia Is for Oenophiles”

  1. umm.. you might want to check the tax policies for land used for vineyards.. I believe they get some favorable tax treatment….compared to other land uses.

  2. From the document you linked to: “An individual and corporate income tax credit is available for Virginia farm wineries and vineyards in an amount equal to 25 percent of the cost of all qualified capital expenditures made in connection with the establishment of new Virginia farm wineries and vineyards and capital improvements made to existing Virginia farm wineries and vineyards.”

    I eat my words.

  3. geeze.. I’m embarrassed…. sort of..

    just trying to keep you free market types “honest” I guess…

    I guess I sort of thought you’d take the opposite tact and claim that no business including wineries should be taxed on capital equipment. (something I’d probably agree with but it sort of screws up your initial point).

  4. Breckinridge Avatar

    Favorable tax treatment aside, it is the improvement in quality that is making a difference for the Virginia wine industry. Even in the past five years the general quality of the product has been rising. The challenge is that a good bottle from a Monticello APA winery will cost $25 and a similar bottle from CA or Australia can be found at Kroger or Total Wine for $12. But there are bottles from King Family, Lovingston, etc. in the wine fridge now and congrats to all on the growth of the industry. Get away from the climate of the Blue Ridge and I’m less impressed with the quality of VA wine.

    That said, in the greater scheme of things, it is still a tiny industry. The day may come when people come to Virginia for a week for the wine the way they go to Napa and Sonoma today, but we aren’t there yet. When that happens the investment will pay off.

    I’ll go with Larry’s point — Virginia should either stop or greatly reduce its taxation of machinery and tools. Why wine makers get a break that manufacturers do not befuddles me.

  5. DJRippert Avatar

    It’s OK for there to be a tax break for Virginia wineries. They have paid their tithe to The Imperial Clown Show in Richmond:

    Virginia’s General Assembly – the best government money can buy.

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