A new wine labeling rule proposed June 22nd by the Federal Alcohol and Tobacco Tax and Trade Bureau (TTB), known as Notice 160. Proposed Revisions to Wine Labeling and Record Keeping Requirements would cut the teeth out of a common mechanism used to create wine labels designed to mislead wine buyers into thinking that a California jug wine is a Texas wine. That mechanism, labelling a wine For Sale In Texas Only (FSITO), allows the producer to omit the location of the origin of the grapes from the label. This loophole has created an industry of companies that buy finished bulk wine, typically from California’s Central Valley where bulk wine sells for as little as $15/gallon, ship it to Texas in tanker trucks, and label it with lots of Texas symbology — longhorn cattle (the symbol of the University of Texas no less!), Hill Country poets, state flag colors, etc. On the back label, often in a tiny typeface, appear the salient words For Sale In Texas Only.
These labels are so deceptive that they have fooled Masters of Wine, Costco (the nation’s largest wine retailer), and the restaurant critic of the Dallas Morning News (who has written a book about wine), among others.
If the proposed TTB rule goes into effect, it would be the biggest change in the legal framework within which the Texas wine industry operates since the industry was allowed to open tasting rooms for consumers. FSITO wines displace sales of real Texas wines, which hurts Texas wineries and, in turn, Texas grape growers. They also discredit Texas wine in the minds of consumers who are likely to decide to just buy real California wine in the future.
Enter the TTB. It has proposed an amendment to U.S. wine labelling regulations that, while tortuously complicated to read, can be simplified to two key changes. First, a wine made from out-of-state fruit would not be able to use a vintage date on the label. Second, it would not be able to mention a grape variety. In other words, such wine would have to be sold as just generic red or white table wine, the lowest grade on the quality scale. Michael Kaiser, Director of Public Affairs for The National Association of American Wineries, told me that this rule would apply to FSITO wine. FSITO wines currently affect to be varietal, vintage-dated Texas wines, but the label change will force them to declare themselves as all the way down at the bottom of the wine quality scale.
What will FSITO producers do? Many may decide that the jig is up and decide to honestly label their California jug wines as American. Others will decide to go authentic and buy Texas grapes (there is a huge surplus at the present time) and make real Texas wine. Either way, the rules change would be a big win for Texas consumers, Texas wineries making Texas wine, and Texas vineyards.
The TTB rule goes out for discussion and is not a slam dunk to pass. However, one thing in its favor is that the principal instigator of the change is the California wine industry. Every single member of the California congressional delegation backs it. Since California produces over 90 percent of the nation’s wine, it is a powerful ally.
In Texas, there has been an articulate lobby in favor of the abolition of FSITO, consisting of media figures, an increasing number of Texas wineries focused on authenticity, and sommeliers. The TTB proposal comes out of left field but is welcome nonetheless. It is the culmination of two years of increased authenticity and transparency in the Texas wine industry. In 2015 we got Go Texan wines up to 75 percent minimum Texas grapes. Now the bigger issue of FSITO is folding as well. It all presages a brighter future for the Texas wine industry.