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Frustrations bottle up at Utah wineries
Alcohol » Utah winemakers say high taxes, restrictive laws are holding back their award-winning products.


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Losing ground • Other Utah regulations also work against small wineries as they endeavor to place their products in state-controlled liquor stores. Wineries are required to buy back slow-selling products at full retail price, making it impossible to adjust pricing by paying the difference in the wholesale price or buying it back for the lower price paid by the state.

Those slim profit margins have forced some local wineries to forgo Utah-grown ingredients for cheaper out-of-state concentrates and bulk wines, said Stacey Dezelsky, owner of Spanish Valley Vineyards in Moab.

At a glance

Utah wineries production*

Castle Creek Winery » Moab, 12,000 gallons

Kiler Grove Winegrowers » South Salt Lake, 6,000 gallons

The Hive Winery » Layton, 5,000 gallons

Iron Gate Winery » Cedar City, 2,600 gallons

Spanish Valley Vineyards » Moab, 2,100 gallons

Chanela Farms » St. George, 2,000 gallons

Slide Ridge Winery » Mendon, 1,000 gallons

Ruth Lewandowski Wines » South Salt Lake, 800 gallons (2012)

Planet Party » West Valley City, all products sold out of state

La Caille Restaurant » Sandy, new ownership, not in production yet

Summum » Salt Lake City, wine produced for religious services

*Estimated 2011 harvest

Source: Utah Department of Alcoholic Beverage Control

Utah wine tastings

Layton » The Hive Winery, 1:30 p.m. to 6:30 p.m., Monday-Saturday, 1220 West Jack D Drive (450 North)

South Salt Lake » Kiler Grove Wine Growers, 11 a.m. to 5:30 p.m. Wednesday; noon to 7 p.m. Thursday-Saturday, 53 W. Truman Ave. (2330 South)

South Salt Lake » Ruth Lewandowski Wines, tasting begins April 20 by appointment. Call 801-230-7331; 3340 S. 300 West

Moab » Castle Creek Winery, tasting noon to 6:30 p.m., Monday-Sunday, Milepost 14, Hwy 128

Moab » Spanish Valley Vineyards, noon to 7 p.m., Monday-Saturday, off Highway 191, corner of Stocks Drive, Zimmerman Lane

Cedar City » Iron Gate Winery, 11:30 a.m. to midnight, Monday-Saturday, 100 N. 200 West

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"More and more vineyards are being ripped out, neglected, being put on the market for their land," said Dezelsky, whose property is for sale. "I don’t have the financial resources to go upstate and lobby, but I’d like to see tax breaks given to wineries producing from Utah products."

Interest in growing grapes in the region where the borders of Utah, Colorado, Arizona and New Mexico meet dates to 1980 and a report by the University of Arizona, which published results of a seven-year study that promised salvation for failing family farms.

"Grape and Wine Production in the Four Corners Region" said wine grapes could grow vigorously in the sandy desert soil. It added that one acre of grapes would use 20 percent of the water needed to grow a field of alfalfa, Utah’s No. 1 cash crop.

In 1989, Utah’s first winery, Arches, opened and produced 1,500 gallons of wine — after an intense lobbying effort that culminated in a 1988 state law making it legal to make and sell wine.

Across the state line in Colorado, farmers also read the study and began planting grapes.

Today, Colorado has 1,000 acres of thriving grapes under cultivation (compared with Utah’s 61 acres) and 100 wineries (Utah has 11). Colorado also has a full-time state viticultlurist who works out of Grand Junction, while Utah has no one in its agriculture extension offices who specializes in wine grapes.

"Why am I the go-to person for farmers needing information about growing grapes?" asked Dezelsky, who has been doing so since the 1990s. "It’s because we have no state support."

Gov. Gary Herbert, who in recent months has pressed the Legislature to increase the number of available restaurant liquor licences in the name of economic development, has little say about Utah’s wine industry and its challenges. He referred questions about issues raised by winemakers to the Governor’s Office of Economic Development, which initially said it would comment but never followed through.


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In Colorado, there has been no shortage of support. Its boom began taking shape in 1990, when the General Assembly passed legislation creating the Colorado Wine Industry Development Board under the authority of the Colorado Department of Agriculture. At the time, Colorado had only five licensed wineries. The board is funded by a tax on every bottle of wine, part of the proceeds of which also go promoting Colorado wine and to fund viticultural research at Colorado State University.

"The biggest thing that differentiates Colorado’s wine industry from Utah’s was the creation of the Colorado Wine Industry Development Board," said Doug Caskey, the agency’s executive director. "It gave us a 10-year leg up over Arizona and New Mexico, and today all three states have a significant leg up over Utah."

About the same time the Colorado board was formed, the Utah Legislature was moving more cautiously, allowing Arches to have a tasting room, which is a standard feature of wineries worldwide. In 1992, lawmakers gave a tax break for wine sold at the winery after the LDS Church dropped its opposition to the bill.

Eternal hope • Little has changed in the ensuing years. For a Utah winery to sell its own wine, the tasting room technically becomes a state wine store. The winery pays the state a $3,800 licensing fee, plus an annual renewal fee of $1,400 to $2,900, based on the amount produced. The winery also pays 10 percent to the school lunch fund, 1 percent to the Department of Public Safety, plus a 5 percent administrative fee to the DABC. Instead of being sent to a liquor store, the wine stays on the grounds where it was made and where everything is built, owned, staffed and maintained by the winery (from which it can be sold).

"It’s weird. I’m paying the state money when I’m producing the wine and selling it from my own winery," said Evan Lewandowski, who opened Ruth Lewandowski Wines in South Salt Lake last year. "But I have a crazy optimism that in my lifetime, things will change."

Hive owner Yahne shares that sentiment. He is pushing for state wine stores to highlight Utah wines with better product displays on the sales floor. He also would like to see restrictions eased on the quantity of wine that small growers must produce to become eligible for placement in state liquor outlets.

He and wife Lori, both geotechnical engineers, began making fruit wines as a hobby 15 years ago. Their first was from a bumper crop of Bing cherries from trees in the front yard of Yahne’s parents’ home in Clinton. By the end of this year, the Yahnes will have a selection of 40 speciality wines. They use locally harvested honey and fruits such as red raspberries and black currants from Weeks Berries of Paradise and Cox Honeyland in Logan.

Yahne rejects the notion of moving to a less-restrictive state, even after liquor cops conducted an undercover sting to test whether he would sell a discounted bottle of wine (he didn’t).

He has yet to find a lawmaker to sponsor legislation that could help small wineries, "but this is my home. I’m passionate about making wine — and I’m not going anywhere."

dawn@sltrib.com

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U.S. wine production tops in world

Wine sales worldwide increased 2 percent in 2012 from the previous year, to a record of 360.1 million 9-liter cases, with an estimated retail value of $34.6 billion.

In the U.S., California accounted for almost two-thirds (207.7 million cases) of wine sales, with an estimated retail value of $22 billion, said wine industry consultant Jon Fredrikson of Gomberg, Fredrikson & Associates. Including exports, 2012 California wine shipments to markets worldwide reached 250.2 million cases.

“The U.S. is the largest wine market in the world with 19 consecutive years of volume growth,” said Wine Institute President and CEO Robert Koch.

Wine shipments to the U.S. market have climbed by nearly 50 percent since 2001, “and it is likely that American consumption will continue to expand over the next decade as wine continues to gain traction among American adult consumers,” said Fredrikson.

Chardonnay remained the most popular varietal (made primarily from a single grape variety), with a 21 percent share of volume, followed by Cabernet Sauvignon, 12 percent volume share; Merlot, 9 percent share; and Pinot Grigio/Gris, 8 percent share.

Top markets for U.S. exports were the European Union’s 27-member countries, accounting for $485 million, up 1.7 percent from last year; followed by Canada, $434 million, up 14 percent; Hong Kong, $115 million, down 30 percent; Japan, $111 million, up 6 percent; China, $74 million, up 18 percent; Vietnam, $27 million, up 22 percent; Mexico, $20 million, up 4 percent; and South Korea, $16 million, up 26 percent.

Source: Wine Institute



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