Seagram Pulls Out of Wine Institute : State’s 2nd-Largest Wine Maker Cites Policy Differences

Jos. E. Seagram & Sons, California’s second-largest wine producer, resigned from the San Francisco-based Wine Institute over policy differences, the company said Monday.

Samuel Bronfman II, president of Seagram Vintners, said the company was taking the action because the institute “misled our industry as to Seagram’s interests and materially undermined (Seagram’s) reputation.”

Seagram spokesman Robert Casmire attributed Seagram’s move to, among other things, the institute’s support for what he called “discriminatory” federal tax treatment of spirits and of spirit-based coolers that Seagram is now testing in some markets, despite the fact that the spirit coolers, like the popular wine coolers, contain only 5% to 6% alcohol.

The distillery industry and the Wine Institute, which represents 520 of California’s 550 commercially active wineries, have been at odds for months over a Seagram advertising campaign that portrays the amounts of alcohol contained in typical servings of beer, wine and spirits as “equivalent.”

Opposed Wine Equity Act

The institute has called the so-called equivalency campaign misleading because of differences in individuals’ absorption rates and uses of the various alcoholic beverages, and because it depicts wine as a “beverage of moderation” consumed with food.

Institute President John DeLuca said another “point of great friction” was Seagram’s opposition to the federal Wine Equity Act, which took effect in January, 1985. Passage of the trade measure, vigorously supported by the institute, “permitted us to negotiate successfully with Japan, Taiwan, Korea, Canada and Singapore in opening markets for our wine,” he said.

“Seagram asked us to drop it, and we said no,” DeLuca said.

Seagram also promoted increased taxes on wine after those on spirits were raised last October, he said. Casmire denied that Seagrams had promoted higher taxes.

Seagram, the nation’s and California’s second-largest producer and marketer of wine after Modesto-based E. & J. Gallo Winery, had been paying about 10% of the dues budget of the Wine Institute, which also receives funds from the state.

Seagram’s wine brands include Paul Masson, Taylor California Cellars, Monterey Vineyard and Sterling Vineyards. Its Canadian parent, Seagram Co. Ltd., based in Montreal, is the world’s largest producer of wine and spirits.