How many of those make sparkling wine? I think I can count them on my fingers.
There have been new big-money investments all over the state. Napa Valley no longer has the franchise, or even the lead, on $20 million winery projects. But is there a new Schramsberg, Domaine Carneros or J? Not that I know of.
You might think the reason for this is that Americans still don't drink enough sparkling wine. It accounted for only 4.6% of U.S. wine sales in 2010, according to the Gomberg-Fredrikson Report.
But are 4.6% of the wineries in this country bubbly makers? Are there 100 sparkling wine producers in Calfornia? I wish.
Moreover, the category is booming, as 2010 sales were up 10% over the previous year. Maybe all those years of telling Americans that bubbly is great any day with any meal -- or by itself -- are finally paying off.
But are any of the major wine companies -- Constellation, Gallo, the Wine Group, Bronco -- pouncing in to capitalize? Not that I'm aware of. Everybody's into slightly fizzy Muscat; a bottle of Yellow Tail Muscat arrived at my door last week, which means the Muscat boom is about to hit a backlash. But traditional-method bubbly remains the province of a handful of players.
This is stunning when you think about the number of newbie
There's a hidden reason that savvy businessmen like the Wine Group know, but the rest of us wouldn't consider: taxes.
The irrepressible Adam Lee of Siduri Winery sends along some amazing data on wine taxation levels. Most people realize that still wine is taxed at different rates based on how much alcohol it contains. Wines under 14% alcohol are taxed at $1.07 per gallon, with a $0.90 per gallon credit for wineries that produce less than 250,000 gallons -- a great tax incentive for the little guys. Wines from 14% to 21% alcohol are taxed at $1.57 per gallon, with the same small-producer credit.
Sparkling wines are among the lowest in alcohol. Yet sparkling wines are taxed at $3.40 per gallon (67 cents per 750 ml bottle), with NO small producer credit. In other words, if you're a small wine producer, you would pay 20 times as much tax to make bubbly as you would to make, say, Sauvignon Blanc. Or, for that matter, slightly fizzy Muscat. No wonder there's no Two Buck Chuck Bubbly.
Even compared to small producers making high-octane, DUI-inducing Zinfandel, sparkling winemakers have a heavy tax burden: 5 times as much tax on bubbly as on still wines over 14% alcohol.
Isn't this an issue that should unite wine-loving Democrats with tax-hating Republicans?
This tax must have been slapped on bubbly just after Prohibition, perhaps to wean rich Americans from the illicit Champagne that had been smuggled from Canada and to get them to buy California wine instead.
But it has turned into a tax that is stifling small business and investment at a time when the country needs them.
|A professional riddler, Schramsberg's Ramon Viera, in 2001|
|The Riddler. Different.|
And making sparkling wine in the USA is not only a good job, it's a job that can't be outsourced. It's a job where a worker with any level of education can eventually learn the skills needed to be a riddler (not The Riddler, of course), which pays well.
We make some fine sparkling wine here this days, and not just in California. Argyle makes nice bubblies in Oregon; Gruet makes excellent values in New Mexico and Chateau Ste Michelle makes decent ones in Washington. I'm sure there's good bubbly in New York too, and Evan Dawson will probably hop on in the comments to tell me which.
But we could make so much more. I'd like to see the Congressional Wine Caucus take on this inequitable tax.
The revenue loss of lowering sparkling wine taxes to still wine levels would presently be tiny, simply because we don't make that much sparkling wine here. And the long-term payoff could be great. It's really true that cutting sparkling wine taxes could be revenue-neutral, because it would result in more bubbly being made. And I can't think of a way to make the country a happier place to be than to have lots more bubbly. Can you?
Republicans, I'm talking to you. Y'all are always saying that high taxes stifle investment. Here's a clear example. Do something about it.