Wine makers push to change Prohibition era regulations

[March 21, 2022]  By Zeta Cross | The Center Square contributor

(The Center Square) – Illinois’ 139 licensed wineries say Prohibition Era laws are hamstringing them – just when they are trying to recover from the losses racked up during the COVID lockdowns.

HB 2976, introduced by State Sen. Rachelle Crowe in February, updates current regulations restricting wine sales and gives vintners access to needed business, Lisa Ellis, director of the Illinois Grape Growers and Vintners Alliance, told The Center Square.

“These laws were written decades and decades ago. We’re just looking to improve the ability of our industry to grow sales,” Ellis said.

Current regulations prevent winemakers who produce more than 25,000 gallons from selling directly to local restaurants and retailers. Crowe’s bill would increase the production cap and allow direct sales (self-distribution) of a portion of produced wine.

Under the current system, giant name-brand wine producers dangle sales incentives in front of distributors that local winemakers cannot match. Illinois-produced wines languish on the bottom shelves of retailers or retailers do not stock them at all.

“We produce the customized, locally produced wines that people are looking for, but people cannot find them,” Ellis lamented.

Getting distributors to bite has been a problem.

“It’s really, really hard to get a distributor to take you on and really promote you the way they should [in order] to get you into the right stores,” Christina Anderson-Heller, marketing director of Lynfred Winery in Roselle, told The Center Square.

SB 2976 would give vintners like Lynfred more leeway to work on smaller accounts – without having to pay distributors a 30% cut.

“It would allow us to sell some of our wine….to ourselves…to our other locations… to little local restaurants and local breweries and use distribution for the big stores [like] Binneys, Whole Foods and Mariano’s,” Anderson-Heller said.

Blue Sky Vineyard in Makanda works with a distributor that it has partnered with for six years, Ellis said. In that time, the distributor has never brought Blue Sky one new account, Ellis said.

“Blue Sky established a retail base, turned it over to a distributor who services but doesn’t really sell,” Ellis said. “There’s no growth there.”

Production caps prevent another large vintner near Mt. Vernon from self-distributing even one drop of its wine, Ellis said. The owner found an outlet that wants his wine, but the distributor does not service that area.

“This location wants his wine – cases and cases of it,” Ellis said. “But the owner has no way, legally, to get it there because the distributor does not cover that area,” Ellis said.

Vintners are not looking to cut out the middleman and circumvent the three-tier production-distribution-retail system, Ellis said.

“We are trying to gain parity with other producers of adult beverages within the system that we have in Illinois," she said.

For wineries in Illinois, the production cap is 25,000 gallons. For beer, the production cap is 930,000 gallons. Brewers are allowed to self-distribute 232,500 gallons without a distributor.

The retail equivalent for a brewer growing their own line of business outside of a distributor is upwards of $4 million – eight times more than they can make distributing wine, Ellis said. She hopes Illinois will raise the production cap and consider using the federal definition of a small wine producer, one who makes 250,000 gallons a year or less, Ellis said.