Messina Hof Replies to For Sale in Texas Only and GO TEXAN

There has been a lot of discussion happening recently in websites, blogs, Facebook, and Twitter regarding Texas labeling practices of “For Sale in Texas Only ” and the use of the GO TEXAN logo on wine. CraveDFW and writer Andrew Chalk started the controversy with the article “Dear Whole Foods Market, Please Remove Non-Texas Wine From Your Texas Wine Display”. I’m not sure what the original purpose for the article was, but it created a lot of comments including those from winery owners and consumers, both in favor and also prompting criticism that research had not been done before writing the article. Unfortunately, Andrew Chalk pointed out Dry Comal Creek’s Comal Red XI Red Wine as the example to be used instead of just making a general statement or using retouched photos covering up the actual winery and wine. More on that later.

Blogger Russell Kane then got on board re-iterating the statement and requesting large Texas wineries to remove For Sale in Texas Only from their labels. Andrew Chalk and CraveDFW then rebounded saying “Go Texan is Meaningless When Applied To Wine” and the logo should only be used on wine labels marked as Texas appellation. They later changed their mind and said “Make Go Texan Wine 100% Texan”. Again, comments of criticism of no research were posted.

In the meanwhile Russell Kane came up with a “Texas Winemakers/Winery Owners Pledge” in which he requested Texas winemakers and winery owners to:

• Where possible, use Texas grapes to create Texas appellation wine.
• If not possible, do not use For Sale in Texas Only and label the wine as American appellation instead.
• Support efforts to expand production of Texas grapes and use them in their wines

He would then post the wineries and consumers who took this pledge.

Knowing there are always two sides of the story, I decided to go directly to Messina Hof, the fourth largest Texas winery (including Ste. Genevieve). I made an appointment with Paul V. Bonarrigo and then Gloria and I drove over an hour to Bryan to visit with Paul and Merrill Bonarrigo. I determined after 36 years of being in the Texas wine industry, they would certainly have an opinion and be able to reply to some of the allegations being made.

We met in the Messina Hof wine bar and began a discussion of the recent activity as they were fully aware of what had been happening. Two hours later we had received a lot of information.

The first topic discussed was the use of the GO TEXAN logo and the last suggestion where the logo should only be used on Texas wines made from 100% grapes. Paul Bonarrigo started with an explanation of the GO TEXAN program:

Paul: “The GO TEXAN program is a marketing program to promote value added agricultural products and that’s very important to understand, value added agricultural products. So you take an organization that does coffee. Obviously the coffee is not grown in Texas, but they roast it and create a value added situation and that’s why they qualify for the GO TEXAN program. And it’s the same way with wine. Initially when the GO TEXAN program came out, they were talking about a percentage of the product that had to be, like the grapes had to be a certain percentage of Texas grapes, but then they realized when they created the rules of the GO TEXAN program they had to be uniform and therefore they couldn’t do that. So how do you bring in a coffee company then? Plus the Texas Department of Agriculture (TDA) would not have any idea what percentage they would be anyways.”

Merrill: “It’s like they (CraveDFW) are trying to redefine what GO TEXAN is but it is already defined.”

Paul: “GO TEXAN could be 0% back to the coffee example where coffee doesn’t grow in Texas. I think there are 11 breweries in the state of Texas that are GO TEXAN members. The barley is not grown in Texas and the wheat is probably not grown in Texas. What they are doing is processing and their value add is the processing and the promotion aspect of it.”

Merrill: “This is acknowledging that this is a product which is produced in Texas. To build this marketing brand of products that is based in Texas. I think that’s different than trying to establish it as some type of quantitative product.”

Paul: “That’s not the purpose of the GO TEXAN program. If there was some kind of percentage used then all of the coffee companies would be gone, all of the restaurants would be gone, and there would not be a GO TEXAN program.”

Merrill: “The GO TEXAN program helps Texas businesses get their products out in the marketplace promoting them as Texas products.”

 

The initial article published by CraveDFW requested Whole Foods to remove non-Texas wine from their stores and had an accusation that Dry Comal Creek was using the GO TEXAN logo improperly. The article also made the statement, “If you see the phrase on a wine bottle ‘For Sale in Texas Only’ be assured that it almost certainly means that the grapes are not from Texas and that the producer is using the phrase as cover to conceal the place of origin of the grapes.” We learned the following from the Bonarrigos.

Paul: “Dry Comal Creek was actually within the guidelines of the GO TEXAN program because it actually had 10% Lenoir in it (editor: that’s a Texas grape). And as a result of the article that product from Dry Comal Creek is no longer in Whole Foods. In my opinion that has created a great disservice to them and to the GO TEXAN program because you’re indicting a program creating false parameters that it wasn’t intended to do.”

Merrill: “I think the shame of it is the connection to the shelf with this whole conversation as related to the retail, because what we’re really trying to do on the retail side is gain in the industry, a recognition that there is wine made in Texas, and you don’t do that if you don’t have shelf presence. I feel badly for Dry Comal Creek because they lost shelf presence, and it is so hard to get it back and they shouldn’t have lost it.”

Paul: “And it’s not like they don’t grow it. They grow Lenoir. They grow it, they produce it. We got a survey from Whole Foods a few days ago requesting all Texas wineries that are on their shelves to fill out a questionnaire, and are now questioning the percentage of Texas grapes in the product. What should be one of the biggest supporters of Texas wine is now questioning if it’s even a good idea to do that. That happens when you get an article that is negative. I’m sure Whole Foods took some heat. When the label was correct, the label was legal, the GO TEXAN was legal, and there was nothing that Dry Comal Creek did that was illegal. There was nothing that Whole Foods did that was illegal, and as a result Whole Foods is backing away, Dry Comal Creek is off the shelf, and now they are questioning all Texas wines. To me I don’t see anything beneficial about it.”

The Bonarrigos continued about the importance of shelf space and building a brand.

Paul: “Anybody who’s into distribution has to protect the shelf position. Let’s say a winery had a shelf position in one of the major grocery chains and they didn’t buy fruit from out of state and they didn’t buy blending wines from out of state. Once they lose that shelf, it would take years to get that shelf back.”

Merrill: “In my opinion a winery’s responsibility is to build a Texas brand.”

Paul: “Various states significantly support their wine industry. When I say wine industry, I mean growers and wineries. Today in the state of California 85% of all wine sold in California is from California. So they are very supportive of their California wine. In Washington State, 35% of all Washington State wine is sold in Washington State.”

Merrill: “That means when you go into a store there what you are seeing is 35% of Washington wines on the shelf.”

Paul: “When we were up there three weeks ago we walked into a store and the first thing you see when you walk into the wine section is a Washington wine display. Here in Texas if you want to find the Texas wine section it’s normally back by the restroom. In Oregon, even though they have concentrated solely on Pinot Noir and Pinot Grigio which has no diversification like Texas wines, 15% of total sales are from Oregon. With the rapid growth we’ve had in Texas, we’re less than 3% and that’s the fundamental problem.”

Merrill: “So our job as a winery is to build that percentage. If we can grow our share of Texas wines, then we can support the grapes coming in. If we are losing products off the shelf, then we don’t have a place to put all the grapes that were there already. So our job is to grow the business.”

Paul: “So this whole stress that is going on is basically going to backfire. The only reason that it is not going to be an acute backfire is because there are no grapes anyway. But let’s say we have back to back years and somebody started making a big issue about this thing, there would be a lot of grapes unpurchased because if you lose your shelf presence, then why do I need to buy more grapes and that’s the problem. And we’re trying to expand the shelf presence. The people who write the shelf set are the big wineries in conjunction with the distributors as in Gallo and Constellation (a distributor). Those guys are so big they write the set.

“Just this week HEB did resets. They’re telling us our Cab Franc is in jeopardy of being removed from the shelf and it’s a Texas wine and it’s up 57%. I spent all afternoon developing the data to counter the idea. The big guys want to control and not let Texas wines expand. If I were a California producer of Cab Franc, I’d want to get that wine out of the store as fast as I can because I don’t need any competition from the local guy.

“If you take a Texas set, it used to be 4 feet. Over the years it gradually got closer to 8 feet. Probably by fall it will be down to 6 feet. The irony is we are talking about 12 to 24 wineries back then when it was 4 feet and it went up to 25 to 40 wineries, and now we have all these other wineries and the shelf is going to be smaller.”

Merrill: “For any wineries who sign the pledge (from Russell Kane) and sell out of their retail room, that’s great, but that really doesn’t expand the brand that wine consumers really need. They need to go into the store, and they need to see a billboard and Texas wines on the shelf in order for them to think that Texas is a wine producing state.”

 

The first item in the pledge Russell Kane created is: “Where possible, use Texas grapes to create Texas appellation wine.” The Bonarrigos talked about the grape industry.

Paul: “People need to understand the vacillation of our industry, where you could have a 2012 boom crop and then have a crop like this year. I think it was rounded up to 9,000 tons of fruit last year, and I wouldn’t be the least bit surprised to see our state produce less than 1,000 tons this year. What an inopportune time to be talking about supporting Texas grapes when there aren’t any.

“In 2012 when we had a boom crop, I am not aware of a single grower of Texas grapes that did not find a home. The issue that there is a secondary hidden agenda that Texas wineries really don’t want to buy Texas fruit and would rather buy some other state’s juice or wine and not have to buy Texas fruit, that’s ridiculous. I talked to one of my growers today and he has received 30 phone calls from 30 different Texas wineries because they heard he had some fruit available. So the whole contention about Texas wineries not wanting to buy Texas fruit is ridiculous.

“In 2014 the tanks are going to be empty and there is going to be tremendous demand again. What’s going to happen in 2014 is there will probably be a 50% crop because it takes two years to recover from a freeze at least, so we’re not going to have a problem with Texas fruit being purchased in 2014. I think that’s really the heart of the issue. Are the wineries of Texas going to support the growers and I firmly believe the answer is absolutely yes. And this is the beauty of a shortage. Let’s talk about that little winery that questions $1,800 a ton for Texas Merlot when I can buy California Merlot for $900 a ton, well then I’m going to buy California Merlot. There’s going to be another Texas winery that will go to that grower and say fine, if he doesn’t want it, no problem. After the years, that guy who is not interested in investing in Texas grapes is never going to achieve I think what the state is all about. Ultimately when you look 10 years down the road and assuming we continue to plant, we’ll have a full Texas appellation.

“I spoke to Bobby Cox today wondering if Bobby has changed some of his thoughts about rootstocks and grape varieties as a result of these freezes. And he said you bet it has. Growing grapes is an evolving never ending awareness. There’s a lot of discussion that we should be Mediterranean and we should not do French varietals, but when you look statistically at the number of awards given to French varietals, it well overwhelms Mediterranean varietals. Part of it is the reason they have been around longer, but the category of some of those wines like Tempranillo and Viognier, you won’t even find domestic Tempranillo in the statistics. It’s less than 1% of the total market. I tell people it doesn’t mean you should not grow Tempranillo, just be cautious. Don’t put 100 acres of Tempranillo in and expect the broad market to accept it.

“All Texas wines from established Texas wineries were once For Sale in Texas Only and American because there were no grapes. But when you look at the established wineries, you see them all moving in the direction of establishing relationships with growers and buying more fruit. In 2012 we were up to 85% of all the juice was Texas grapes and our goal was to be 100% in the next five years. It’s not that we were not willing to buy the fruit, it just wasn’t there. One of the varieties that came on later in the evolution of our industry was Pinot Grigio. Right now we’re contracted with 10 acres of Pinot Grigio and we need 110 acres of Pinot Grigio. It takes 3 to 5 years before that happens and fortunately we have had guys willing to take the risk and investment in vineyards like that.”

Merrill: “There’s a conversation about grapes and that’s one industry. And then there’s a conversation about wine and that’s a different industry even though the grape industry needs the wine industry and vice versa. But you also have to look at the needs of both industries. And that’s really where TWGGA (Texas Wine & Grape Growers Association) gets the two together.”

Paul: “We’re the only major state in which our wine association has both wineries and vineyards. All the other states have already separated. They have divided interests and they have conflict between the two. I don’t want that to happen over this issue.”

 

The biggest discussion seems to be regarding using For Sale in Texas Only and the proposal to use American instead. On the initial post by CraveDFW, there was also the statement, “I have never heard a convincing other reason to use the phrase.” Stephen Morgan of Saddlehorn Winery commented on the post saying, “As it turns out, a winery cannot label a wine as ‘Black Spanish’ according to TTB regulations. For a winery to use this name for their wine, which we do, the label can only be filed as an exception and must carry the For Sale in Texas Only moniker. Now you have one reason.”

As we learned from the Bonarrigos, there are other reasons.

Paul: “Regarding the For Sale in Texas Only, it’s a federal rule. Every state in the union has access to it and every state in the union uses it when there is an insufficient amount of grapes. It’s there to create an opportunity to gain entry into the marketplace and stimulate the viticulture side to be able to supply the grapes. 10 years ago if you had American on the label you could not put a vintage date and you had a difficult time putting a varietal. They changed the rules now where you can put a vintage and a varietal. But that’s only happened in the last few years. So that’s the reason most of the guys who’ve been around a long time have used the For Sale in Texas Only because it was easier to bypass the federal label approval and get Texas label approval. You couldn’t put the vintage date on it, so that’s the reason we went with For Sale in Texas Only.

“The second reason which now still exists is to go through the TTB and get label approval takes anywhere between three and six months, and their rules change every year. For Sale in Texas Only takes four weeks. When the TTB gets the application, they see the exemption line, and since it’s out of their jurisdiction, they just pass it on to the state.

“I’ll give you a good reason why to do For Sale in Texas Only instead of American. We trademarked the words ‘double barrel aged.’ We own the trademark and we went through great pains and expense to get the trademark. We are using French oak and we are using American oak and it was defined that way. The federal government for whatever reason came up with the idea that it can’t be called ‘double barrel aged’ anymore. I can’t use my own trademark. So all my labels were now disapproved that said ‘double barrel aged’ whereas if it was For Sale in Texas Only there is no problem anymore. So we lost ‘double barrel aged.’ Because they were primarily in my Private Reserve wines, we went through the procedure of seeking label approval all over again. We had to drop ‘double barrel aged’ but crazily they said, but you can call it ‘double barrel.’ I said, ‘Can you explain to me why?’ And they said, ‘We don’t have to explain to you why.’ Because I had to resubmit my label approval, I had to change all my labels for every red wine to go through label approval again. It took six months to go through all of them again. So I lost my trademark essentially.

“A couple years ago we’re doing our wines and we’re calling it a Bordeaux blend. The government decided you can’t do that anymore, but all my labels prior to then were just fine. If I wanted to say this is a Bordeaux blend of Cabernet/Merlot which was approved on a Texas label, all of a sudden the government came back and said it was no longer approved. Now I had to go through the whole process again of changing it which I did. I dropped Bordeaux blend and now it’s a blend of Merlot and Cabernet. Now I had to stipulate the percentage of Merlot and percentage of Cabernet. The problem with that is it changes every year, so that means I have to resubmit the whole thing all over again if I decide to use that kind of wording. So I dropped the wording because I can’t afford to do that every year. That’s the major reason for the For Sale in Texas Only because it eliminates all that hassle.

“For Sale in Texas Only basically says I could have 100% Texas in the bottle, and I’ve had some wines that have been 75% or more, but they already had their labels printed.

“60% of my Riesling is Texas appellation so 40% is not. And it’s not because I’m not buying the grapes, it’s just that they don’t exist. So in this case I would use a For Sale in Texas Only label.”

 

I asked about using American with an appellation such as Columbia Valley.

Paul: “You don’t think that’s confusing? We had a bunch of Texas wineries doing that. I would say 99% of all the Texans think that Columbia Valley is in Texas.”

Merrill: “For me personally, American means nothing. American to me says it could have been imported from New York. What would you do if it was 60% Texas and 40% California? You can’t put it on a label because they’re not contiguous states. In order to put an appellation on the label of a state with American, two or no more than three states must be contiguous and share a border.

“Let’s say in order to fulfill the slots we’re talking about with the shelf space in one variety we need 1,000 cases. In order to put Texas on the label, 75% of those grapes need to be from Texas vineyards. We’re not going to be able to do that because the grapes weren’t there. But we have to fill those slots. So we take whatever Texas juice we have and will have to blend it and hope we can get to 75%. And if it only hits 60%, you still have to fulfill those 1,000 cases so you have to use out of state grapes. At that point if it was American, you would have to go through the long label approval again. Back to what I said originally, our job as a winery is to fill those slots so our growers have a place to sell their grapes. And of course our job as a winery is to make sure the quality of our wines is good enough because if not, you’re not going to be on the shelf anyways.”

Paul: “If we were going to pledge to support Texas grapes, we would be back with everyone together. There could be a couple opportunistic people trying to take advantage of the system, but they’re in the minority and there will always be people like that. Cupcake Vineyards is a good example. Look at the appellation on Cupcake. Even though they are using Australian grapes, it’s still in the California section. With their price point they don’t care because it’s a commodity at that price.

“We had some varieties that were in the $10-$12 range. We did not have enough Texas fruit, so we did source some California but it was not 75%, and we did send it out of state under an American appellation. I can honestly tell you it made no difference whatsoever.”

Merrill: “When you put American on the label there’s nothing special about it. Why would anybody out of state want to buy it? What they want to buy is something from Texas. So if I have enough product of something that I can sell it out of state, it’s going to have Texas on the label. They’re going to buy it and they’re going to know that it is from Texas. When you have American on the label, they don’t know where it’s from.”

Paul: “You can put American on the label as long as it’s within the 50 states of the United States. As far as Cupcake sourcing grapes from outside the United States, we did this in 1996. We couldn’t get any Merlot in the United States. I bought a whole bladder of French Merlot to hold our position on the shelf. I had to get an import license and go through the licensing process and the bottle said France on the label. Once you leave the United States, you have to indicate the country and the country’s appellation then applies.

“The posted articles are coming from a position where they feel this is a conscious effort to deceive the public which is not true.”

 

The finals words brought the whole subject in perspective.

Merrill: “We are fourth in wine production in the United States and yet there are still Texans who don’t know there are Texan wines.”

Paul: “To me that is where the news should be focused. How do we make Texas a wine culture? It’s not by stirring the pot. It’s not by creating controversy. All that’s going to do is serve the California wine industry.”