In bat­tle over wine la­bels, key ques­tion goes unasked

San Francisco Chronicle - Late Edition (Sunday) - - BUSINESS REPORT - By Es­ther Mob­ley

The war over wine­maker Joe Wag­ner’s Ore­gon wine la­bels has es­ca­lated.

For months now, the Ore­gon wine com­mu­nity and a state law­maker have al­leged that Wag­ner vi­o­lated state and fed­eral reg­u­la­tions in the la­bels of two of his wine brands, Elouan and the Wil­lamet­ter Jour­nal, which are com­posed of Ore­gon grapes but vini­fied in Cal­i­for­nia. The bat­tle es­ca­lated last month with of­fi­cial rul­ings against him.

But now Wag­ner is fight­ing back — by claim­ing that his op­po­nents have ul­te­rior mo­tives, in­clud­ing a trade­mark dis­pute and a po­lit­i­cal con­flict of in­ter­est.

The is­sue: Wag­ner’s bot­tle la­bels and mar­ket­ing ma­te­ri­als used terms like “Ore­gon Coast” and “Wil­lamet­ter” that seemed to im­ply geo­graphic ori­gins with­out tech­ni­cally meet­ing the re­quire­ments for fed­er­ally rec­og­nized Amer­i­can Viti­cul­tural Area sta­tus. (It was not Wag­ner’s only clash with the Ore­gon wine es­tab­lish­ment this fall. It also cried foul af­ter he can­celed $4 mil­lion worth of con­tracts with grape grow­ers in

“The state of Ore­gon has con­cluded that they have crossed the line from fan­ci­ful to fraud­u­lent.” Rep. David Gomberg, Ore­gon

south­ern Ore­gon, cit­ing ex­ces­sive smoke taint from the sum­mer’s wild­fires.)

Now, the Al­co­hol and Tobacco Tax and Trade Bureau, which over­sees the wine-re­gion des­ig­na­tions, has or­dered Wag­ner to change seven of his wine la­bels, which the bureau pre­vi­ously ap­proved. And based on the vi­o­la­tions, the Ore­gon Liquor Con­trol Com­mis­sion has rec­om­mended that Wag­ner be blocked from sell­ing wine in that state.

Many in the Ore­gon wine in­dus­try, in­clud­ing Wil­lamette Val­ley Vine­yards owner Jim Ber­nau, are cel­e­brat­ing the de­ci­sions as vic­to­ries. “I re­ally ap­plaud” the bureau, Ber­nau said. “I don’t think the (bureau) is any­where near fin­ished with the is­sue.”

Wag­ner said he is com­ply­ing and has al­ready changed the la­bels but main­tained that he never vi­o­lated any la­bel­ing rules.

He sees how events un­folded very dif­fer­ently.

“It has turned into noth­ing but a slan­der­ous mar­ket­ing cam­paign,” said Wag­ner, who pro­duces a num­ber of wine brands un­der his St. He­lena com­pany Cop­per Cane Wine and Pro­vi­sions.

Wag­ner claims the la­bel­ing skir­mish is re­ally about a trade­mark dis­pute. Af­ter de­but­ing his new Wil­lamet­ter Jour­nal brand, Wag­ner got a call in early 2018 from Ber­nau, who holds the trade­marks to “Wil­lamette Val­ley Vine­yards” and “Wil­lamette.” He felt Wag­ner’s use of “Wil­lamet­ter Jour­nal” vi­o­lated his trade­marks. “I was po­lite, but I was firm,” said Ber­nau. “I said, ‘Joe, I’m re­ally gonna have to ask you to stop sell­ing that wine.’ ”

“We didn’t see any con­fu­sion at all,” said Wag­ner of the im­pli­ca­tion of trade­mark in­fringe­ment. Af­ter mul­ti­ple phone calls, Ber­nau said he would hand off the dis­cus­sions to the le­gal team for Wil­lamette Val­ley Vine­yards, which is a pub­licly held com­pany. Wag­ner went fur­ther: He filed to have Ber­nau’s trade­mark can­celed.

“Wil­lamette Val­ley is an ap­pel­la­tion, and we be­lieve you should not be able to trade­mark an ap­pel­la­tion as a brand name,” said Wag­ner. Sev­eral other wine com­pa­nies hold trade­marks for ap­pel­la­tion names, like Che­halem Win­ery, Stags Leap Wine Cel­lars and Alexan­der Val­ley Vine­yards. The FindLaw web­site de­scribes wine trade­marks as an area that’s “ripe for con­fu­sion.”

In Wag­ner’s mind, the la­bel­ing com­plaints are “ret­ri­bu­tion” for his trade­mark dis­agree­ment with Ber­nau. Al­though Ber­nau is by no means the only fig­ure who called for ac­tion against Wag­ner’s wine la­bels, it’s true that Wil­lamette Val­ley Vine­yards was among his most vo­cal crit­ics. The win­ery is­sued its own press re­leases about Wag­ner’s la­bel­ing vi­o­la­tions and hosted an on­line sem­i­nar in early Novem­ber to an­swer ques­tions.

Wag­ner has also claimed that there is po­lit­i­cal cor­rup­tion at play. State Rep. David Gomberg, who brought the la­bel­ing con­cerns be­fore the Ore­gon Depart­ment of Jus­tice and to the House Com­mit­tee on Eco­nomic De­vel­op­ment and Trade, is an in­vestor in Wil­lamette Val­ley Vine­yards.

“We have an elected of­fi­cial us­ing tax­payer dol­lars against a com­pet­ing win­ery that he sees as gain­ing ground in the mar­ket­place,” Wag­ner said.

Gomberg con­firmed that he is an in­vestor in Wil­lamette Val­ley Vine­yards — one of 17,000 in­vestors, he said. His in­vest­ment in the win­ery is worth $6,287, he said, “so the in­fer­ence that I’m here try­ing to make money is laugh­able.” Ber­nau has do­nated $9,700 to the Gomberg for State Rep or­ga­ni­za­tion since 2012, ac­cord­ing to Ore­gon state records.

“I should make it clear that yes, I’m an in­vestor in an Ore­gon win­ery,” Gomberg said. But he dis­missed the no­tion that his work­ing to ex­pose Wag­ner’s la­bel­ing vi­o­la­tions was rooted in any­thing other than con­cern for his con­stituents: “I’m not do­ing this for the money, I’m do­ing this be­cause I think it’s wrong . ... I think we’ve got a large Cal­i­for­nia com­pany that is not only try­ing to take ad­van­tage of our in­vest­ment but also try­ing to bully his way to a re­sult that ben­e­fits him.”

“If he thinks that there’s a cam­paign waged against him,” Gomberg con­tin­ued, “I would say that there’s a cam­paign be­ing waged against Ore­gon.”

Trade­mark dis­putes, la­bel­ing vi­o­la­tions, smoke taint claims: It’s been a rocky year for Wag­ner’s re­la­tion­ship with the Ore­gon wine in­dus­try. To what ex­tent are th­ese three is­sues re­lated?

It’s easy to un­der­stand why Wag­ner might strike some in Ore­gon as a bull in a china shop. The heir to a Napa Val­ley wine dy­nasty — his grand­fa­ther founded Cay­mus Vine­yards — Wag­ner shocked the wine world when, in 2015, he sold his Pinot Noir brand Meiomi to Con­stel­la­tion Brands for $315 mil­lion, a deal that in­cluded no vine­yards or win­ery. The par­ent com­pany for his var­i­ous brands, Cop­per Cane, is on track to pro­duce 1 mil­lion cases of wine an­nu­ally by 2021.

If Wag­ner is known for any­thing, it’s for a style of Pinot Noir that’s sac­cha­rine, fruity and boozy — a kind of low­est-com­mon­de­nom­i­na­tor style beloved by the mass market and loathed by afi­ciona­dos. His Pinots, whether un­der the Elouan, Wil­lamet­ter Jour­nal or Belle Glos la­bels, are cer­tainly not the Pinots that are most of­ten as­so­ci­ated with Ore­gon — a state that has worked hard to es­tab­lish a rep­u­ta­tion for earthy, low-al­co­hol, Bur­gundy-style Pinot Noir. So Wag­ner goes to Ore­gon, trucks a bunch of grapes back to Ruther­ford, fash­ions them into his style of Pinot Noir. Was that Wag­ner’s main of­fense? No, but it cer­tainly did not in­gra­ti­ate him to the Beaver State.

Wag­ner’s main of­fense, at least as far as the la­bel­ing is­sue is concerned, was fairly sim­ple. To re­view: If you pick grapes in Ore­gon but then bring them out of the state to vinify — as Wag­ner did — you for­feit the right to use spe­cific ap­pel­la­tions, such as Wil­lamette Val­ley or Rogue Val­ley or Um­pqua Val­ley, on your wine la­bel. You can only call them Ore­gon wines. Wag­ner claims that both the Elouan and Wil­lamet­ter Jour­nal bot­tles fol­lowed this rule, since their la­bels did not lit­er­ally name viti­cul­tural ar­eas.

The is­sue, for his crit­ics, is that Elouan boxes and other mar­ket­ing ma­te­ri­als men­tion that the wine comes from Rogue, Um­pqua and Wil­lamette; and that “Wil­lamet­ter” is aw­fully close to “Wil­lamette Val­ley.” In other words, the charge is that Wag­ner at­tempted to use fancy terms to get around the rules, and he used geo­graphic terms that were de­signed to mis­lead con­sumers into be­liev­ing that the bot­tles car­ried those des­ig­na­tions.

“In sim­ple terms,” Gomberg said, “Cop­per Cane has been say­ing that they’re en­gaged in fan­ci­ful mar­ket­ing, and the state of Ore­gon has con­cluded that they have crossed the line from fan­ci­ful to fraud­u­lent.”

Here’s the thing. The Wil­lamet­ter Jour­nal Pinot Noir does come en­tirely from Wil­lamette Val­ley fruit, ac­cord­ing to Wag­ner. He ad­mit­ted he may have used some non-Wil­lamette Pinot Noir to top up evap­o­rated por­tions of the wines (which is stan­dard across the in­dus­try), but he swore: “The Wil­lamet­ter Jour­nal is over 99 per­cent Wil­lamette Val­ley.” Sim­i­larly, he em­pha­sized, the Elouan wine does come from fruit from the Rogue, Um­pqua and Wil­lamette val­leys.

So why should he lose the abil­ity to ad­ver­tise that his grapes come from the Wil­lamette Val­ley just be­cause the grapes cross state lines? Be­cause Ore­gon has stricter rules than the fed­eral stan­dard — stricter, too, than Cal­i­for­nia. Ore­gon re­quires that a wine be at least 95 per­cent from its listed Amer­i­can Viti­cul­tural Area (fed­eral law re­quires just 85 per­cent), and at least 90 per­cent its listed grape va­ri­ety (fed­eral law re­quires just 75 per­cent).

Ore­gon’s wine in­dus­try wants to en­sure that all Ore­gon wine la­beled with a pres­ti­gious AVA like the Wil­lamette Val­ley is held to th­ese high stan­dards, and it can’t en­sure that if the wine is pro­duced in Cal­i­for­nia. Ore­gon’s laws may be the strictest in the na­tion, but some feel they’re still not strict enough: At the mo­ment, the Ore­gon wine in­dus­try is con­sid­er­ing in­creas­ing the per­cent­age re­quire­ments for both viti­cul­tural area and va­ri­ety to 100 per­cent.

This presents one cru­cial ques­tion that, as this saga has played out over re­cent months, no one has asked yet. If Wag­ner isn’t ac­tu­ally mis­char­ac­ter­iz­ing where his grapes came from — if in­stead, his of­fense is only that he made his wine in Cal­i­for­nia rather than in Ore­gon — how is the con­sumer be­ing harmed? Sure, it would ben­e­fit the lo­cal in­dus­try to make more wine in Ore­gon rather than out­sourc­ing it to the south, but there’s no ev­i­dence that the trans­port of the grapes across state lines di­min­ishes their qual­ity.

To the ex­tent that stylis­tic dif­fer­ences play any role in the Ore­gon wine in­dus­try’s beef with Wag­ner, those com­plaints shouldn’t in­form gov­ern­ment de­ci­sions. If Wag­ner makes Pinot Noirs that many be­lieve to be adulterated adap­ta­tions of Ore­go­nian ter­roir — if they seem like stylis­tic aber­ra­tions from the low-al­co­hol, Bur­gun­dian ideal — that is his pre­rog­a­tive.

Es­ther Mob­ley is The San Fran­cisco Chron­i­cle’s wine critic. Email: emob­[email protected] sfchron­i­cle.com Twit­ter: @Es­ther_­mob­ley In­sta­gram: @es­ther­mob

Con­nor Rad­novich / The Chron­i­cle 2016

Cal­i­for­nia vint­ner Joe Wag­ner has been or­dered to change seven of his wine la­bels.

Con­nor Rad­novich / The Chron­i­cle 2016

Joe Wag­ner walks through Las Al­turas Vine­yard in Mon­terey County’s Santa Lu­cia High­lands re­gion in 2016. Ore­gon has chal­lenged his wine la­bels.

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