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Tuesday, April 30, 2013

New Bill Would Allow Distillers to Charge For On-Site Tastings

Posted By on Tue, Apr 30, 2013 at 11:45 AM

Customers on a tour at St. George Spirits. - FLICKR/CHARLES HAYNES

St. George Spirits used to sell glassware -- and offer a complimentary taste of their spirits with a glass purchase. The reason? It's against the law for distillers to charge for tastings and sell bottles at their distilleries, like brewers and vintners can.

Although the Department of Alcoholic Beverage Control recently cracked down on St. George's creative interpretation of current regulations, St. George's tasting room might be charging for tastings as early as September. That's because the California Artisanal Distillers Guild (CADG) is on a mission to pass a bill that would enable distillers to charge for on-site tastings. At present distillers can offer free tastings.

See also: Cocktail Culture: Evolving Beyond Beards and Suspenders Into Something Weirder Still

It's not just St. George Spirits who would benefit. Charging for tastings would enable the craft spirits industry to bring in a welcome additional revenue stream, says Michael Randolph, owner of SF Vodka. "It would help with marketing, and it would give me a huge budget to work with if I could actually charge for the tastings," Randolph says.

That additional revenue would also fuel creativity, according to Arthur Hartunian, CADG president, who distills spirits too. "We're all very creative, but you can't release a product to market if a distributor doesn't want to sell it," Hartunian says. Selling bottles on site would, according to Hartunian, allow artisan distillers to try new ideas and innovate with small batches.

The bill proposed by the Guild originally included direct to consumer bottle sales, as well as paid tastings. "But it [the bill] didn't come out that way," Hartunian says, going on to explain that there was unexpected opposition from large distributors and wholesalers.

Young's Market Company and Southern Wine and Spirits are the main opposition, Hartunian says. "The score is 600,000 to 0," Hartunian says, referring to the amount of money the Wine and Spirits Wholesalers of California, the distributor's lobby group, donated to various political campaigns to secure their legislative agenda.

Young's Market Company, and Southern Wind and Spirits did not return the Weekly's calls.

Hartunian added that the proposed changes, "are about growing the industry. It's not us against them. We want distributors, we need distributors."

Not every distributor is reluctant to comment on the bill. Adam Spiegel, owner of California Street Distribution believes that changing the legislation "... will bring some great revenue to cash strapped businesses," Spiegel wrote in an email. It will also put more money into distributors hands, because of the increased production, he wrote.

All of distillers we spoke with were baffled by the opposition, believing, like Spiegel, that onsite bottle sales and tasting rooms would also be beneficial for distributors and retailers.

After a customer's first on-site taste or bottle purchase, spirits drinkers are probably not going to return to the source for a re-supply, says St. George distiller Lance Winters. However, "when they go to a restaurant to order a drink and they see St. George Spirits on the menu, they'll say 'oh, I've been there before, use their gin for my martini,'" says Winters. This could then lead them to their local retailer to buy more. "It's going to help each of those accounts," he says.

Hartunian and Winters both said that tasting rooms and onsite bottle sales have the added benefit of improving the economy in California. "Mostly local distillers use local supplies, local trucking companies, glass makers -- all of them are California companies," Hartunian says.

Winters also mentioned that the current legislation is holding back California distilleries ability to compete with distillers in states with more progressive tasting and sales regulations. Out-of-state craft spirits companies can use the additional revenue from onsite tasting and sales to, "Beat us in our home market," Winters says.

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