Would a Wine Without Label Have Bouquet?

For the elite winemakers of California’s Napa Valley, it is an issue of protecting the good name of their famous region. Fearful that the jug wine hordes are at their doorstep, they have turned to the California Legislature for emergency help.

For Fred T. Franzia, a feisty San Joaquin Valley grape grower and bulk wine producer, it’s a question of a trademark he bought for $42 million and darn well intends to use.

“There are people who want to put on airs and raise prices,” said Franzia, co-owner of Bronco Wine Co. in Ceres, a farming town near Modesto. “We just want to sell wine.”

Franzia, whose family has been making wine in California for a century and pioneered the box wine business, is building a huge new bottling plant in Napa capable of handling more than double the narrow valley’s current production. To meet capacity, tons of grapes would have to be imported from other, less-renowned California regions such as Lodi, Mendocino and San Luis Obispo.

Under existing state and federal law, Franzia has the right to sell the wine he bottles at the new plant under his Napa Ridge, Domaine Napa, Napa Creek and Rutherford labels.

This horrifies the Napa Valley Vintners’ Assn., the clubby group of 179 Napa winemakers who are worried that consumers at home and abroad will confuse Franzia’s cheaper, mass-produced wine with their more artisanal, and expensive, products.

“What is at stake is the good Napa name,” said association President Jack Stuart, owner of Silverado Winery. “For decades, great growers and winemakers have worked hard to build a name for the Napa Valley. What we are trying to do with state legislation is close a loophole in federal law that allows people to sell wine under the Napa name that doesn’t contain a drop made from Napa Valley grapes.”

In 1994, Franzia was fined $500,000 and sentenced to five years’ probation after pleading guilty in a massive federal grape fraud case. Bronco Wine was fined $2.5 million for attempting to pass off 5,501 tons of common grapes as more expensive zinfandel and Cabernet Sauvignon varietals.

Napa vintners became concerned a few years ago when Franzia quietly began buying up old labels containing the name “Napa.” They bristled when he bought the label for Rutherford Vintners, bearing the name of a tiny Napa Valley town.

They went into full alert in January, when the Bronco Wine co-owner paid $42 million to Napa-based Beringer Wine Estates for the rights to the popular Napa Ridge label.

Federal regulations require that at least 75% of the grapes in wines named after registered regions be grown in those regions. California, where winemaking is a $33-billion annual business, has 81 recognized viticultural areas. The law grants an exception for labels established before 1986.

The Napa winemakers contend that Franzia, former chairman of the California Wine Institute, intended to exploit that “loophole” when he bought the Napa Ridge label. Napa Ridge was created by Beringer before 1986. Although it initially had some Napa Valley grapes in it, it now is made entirely with grapes from other regions.

“When Fred Franzia pays $42 million for a Napa Valley brand name, it shows you exactly how valuable the name is,” said Tom Shelton, CEO and president of Napa’s Joseph Phelps Vineyards. “Why would you pay so much unless it was your intention to confuse consumers into thinking that this wine comes from Napa Valley, trading unfairly on a reputation that Napa Valley vintners have spent literally billions to develop?”

In an attempt to block Franzia and others from using Napa labels without Napa grapes, the vintners association has sponsored legislation by Assemblywoman Patricia Wiggins (D-Santa Rosa) that would prohibit any reference to “Napa” on wine labels or advertising unless the wine is made predominantly from grapes grown in Napa County. The bill also would authorize the state Department of Alcoholic Beverage Control to suspend or revoke the license of a winemaker who violated its provision.

The bill will go before the Senate Appropriations Committee Monday.

But the bill (AB683) faces significant opposition, not only from Franzia but also from other large, non-Napa winemakers who fear that it will add another layer of regulation to their market. The opposing winemakers have formed ranks under the banner Californians for Fair Wine & Grape Marketing Practices.

“I’m very sympathetic to those in Napa Valley with their stunning soils and great climate,” said Sonoma County winemaker Don Sebastiani, a former three-term member of the state Assembly. “But I think it is unwise for the state of California to single out one county for special treatment. This is not a proper matter for the Legislature.”

Gary Heck, chairman of Korbel Champagne Cellars, which owns several California wineries, agrees. “I strongly believe the state should not interfere with an area that is best left to federal regulations,” he said.

If the bill gets through committee Monday, as expected, it will have the bouquet of a vintage floor fight in the waning days of an otherwise timid, election-year Legislative session. And beyond the Legislature, the fight is almost certain to end up in the courts, pitting trademark laws against truth-in-labeling concerns.

“This is not an emotional thing. The bottom line is that you can’t take intellectual property from the person who owns it,” Franzia said.