Texas AVAs – What and Why? (Part One of Three)

American Viticultural Areas, AVAs, are an important part of the U.S. wine landscape. These AVAs distinguish specific wine-growing regions and help growers, wineries, and wine enthusiasts better define and understand where grapes and wines originate. This is Part One of a Three Part Series on AVAs.

Part One of Three: What is an AVA? What Does an AVA on a Wine Label Mean? How is an AVA Established? What is the Value of an AVA?

Part Two of Three: The Eight Texas AVAs – Size, Boundaries, Climate, etc.

Part Three of Three: Areas Not in a Texas AVA, Updated Label Laws Designate 100% Texas Wines, and Efforts to Create Additional Texas AVAs

What is an AVA?

An experience from high school popped up in memory when thinking about the What Is It question. Following an injury, I was relegated to sitting in the stands at one of my team’s Friday Night Lights football games. Our school mascot was the somewhat unusual Kangaroo and as the game progressed, the cheerleaders gleefully chanted, “Go, ‘Roos, Go!” After a bit, a little girl turned to her mama and asked an important, to her, question, “Mama, what’s a Roos?” The answer was not so straightforward as it might seem, and that may be the same with “What is an AVA?”

AVA stands for American Viticultural Area, a designated area or region with defined boundaries that, following a formal application process, has been approved by the Federal Government, specifically the Alcohol and Tobacco Tax and Trade Bureau (TTB). A key feature of an AVA is that it be a delimited grape-growing region with specific geographic and/or climatic features that distinguish it from surrounding regions and affect the characteristics of grapes grown within the defined boundaries.

The names and boundary descriptions for all established U.S. AVAs are described and published in the Code of Federal Regulations – 27 CFR part 9. As you might expect, developing an AVA proposal for the TTB, like most interactions with the U.S. government, can be somewhat complicated. Sub-sections of the Code include scope, general provisions, definitions, territorial extent, delegations of the administrator, and further sub-sections detailing the submission of the petition with its defined requirements, processing steps, and, hopefully, eventual approval by the TTB. As of end of year 2021, there are 269 recognized AVAs that exist in 34 states. Some of these are shared by two or more states, including one between Texas and New Mexico, and over one-half of these AVAs are in California (no surprise there!).

Most wine regions around the world use some system to categorize and differentiate their wine regions. The French use the familiar Appellation d’Origine Contrôlée (AOC), Australia has Geographical Indication (GI), and Italy uses Denominazione di Origine Controllata (DOC). The U.S. AVA system was designed to similarly specify grape growing regions or appellations as many call them.

Before going into more general details on AVAs, it seems appropriate at this point to outline the eight AVAs in Texas with help from the map shown in Figure 2. Six of the regions are full AVAs, including Texas Hill Country, Texas High Plains, Texoma, Mesilla Valley, Davis Mountains, and Escondido Valley. There are two sub-AVAs, Bell Mountain and Fredericksburg in the Texas Hill Country, wholly contained within the boundaries of the huge Texas Hill Country AVA. . The size, boundaries, climate, etc., of these AVAs will be further described in Part Two of this series. Also, there are large areas of Texas not currently included in an AVA designation and these will be discussed in Part Three of this series.

At this point, the suggestion is to open a delicious Texas wine, sit back, and learn more about “What is an AVA?”

What Does an AVA on a Wine Label Mean?

An AVA designation on a wine label allows vintners to more accurately describe to consumers the origin of the grapes used to produce their wines and help consumers identify wines with characteristics they prefer to purchase. Wine consumers are becoming more curious about the origin of grapes used to produce the wines they enjoy. In the broadest sense, grapes can come from anywhere – another country, anywhere else in the U.S. (another state), anyplace in Texas, or from a more carefully defined area or region in Texas. Does it matter? – Sure, it does, especially to the grape grower and winemaker! And it is beginning to matter more to consumers.

To set the stage, let’s consider two examples from other wine regions. A wine from France could carry the broad appellation of France, meaning grapes from anywhere in the country, a narrower appellation like Bordeaux, a large, famous wine region in southwestern France, or the label could say Saint-Julien, a specific area in Bordeaux around the village of Saint-Julien where very high-quality grapes are grown. A U.S. example would be the designation of California on the label indicating the grapes came from somewhere in that state. A narrower label designation of Napa Valley AVA indicates the grapes were grown in that famous region north of San Francisco. Further, a designation of Rutherford Bench indicates the grapes were grown in a specified area (a Napa Valley sub-AVA) around the town of Rutherford near the center of Napa Valley where some of the highest quality vineyards are located.

Translating this to Texas relates to grapes grown anywhere in the state, in one of the eight specified AVAs (see the map, Figure 2), or outside a designated AVA. From time to time, Texas vintners have purchased grapes from other parts of the U.S., especially California, and those wines should carry the label designation American. If at least 75% of the grapes come from Texas, but not specifically from a defined AVA, the wine may legally carry the label designation Texas. If at least 85% of the grapes come from a Texas AVA, then the wine can carry the label designation of that AVA, such as Texas Hill Country or Texas High Plains. You are probably beginning to get the picture here that TTB guidelines allow a narrowing of the grape source designation based on the AVA system.

This narrowing concept follows TTB rules although some states have opted for selective tightening of the requirements.

Appellation	Label Designation	Min. % of Grapes from the Appellation
Country	American	75%
State	Texas	75% (100% for CA and OR)
County	County Name	75%
AVA	AVA Name	85% (95% for OR)
Vineyard	Specific Vineyard Name	95%

As the Texas wine industry evolves, it is important to market the specific appellations and micro-climates as distinct growing regions with different characteristics. After all, Texas is a big state and connecting wineries and wines with defining characteristics of an appellation will enhance the drinking experience by providing consumers with that “sense of place.” Recent efforts have helped to tighten some of these requirements in Texas, and that subject will be addressed in Part Three of this series.

In the meantime, sit back with your glass of Texas wine, and let’s continue this educational adventure to learn about how an AVA is established.

How is an AVA Established?

To start the process of creating an AVA in any state, a petition to the Alcohol and Tobacco Tax and Trade Bureau (TTB) is required. This involves a relatively complicated set of guidelines specified under the Code of Federal Regulations 27 CFR 9.12. The petition must include all evidentiary materials and other information specified, and sufficient information, data, and evidence such that no independent verification or research is required by TTB (lazy government?). The burden of building an AVA petition is clearly on the submitter(s). A streamlined summary of these guidelines and the overall process follows.

A key first step is establishing a NAME for the AVA. This is not nearly so simple as it might seem and has frustrated many attempts to establish AVAs. The name proposed must be currently and directly associated with an area in which viticulture exists. The entire area within the proposed AVA boundary must be nationally or locally known by the name specified in the petition. The petition must completely explain in narrative form the manner in which the name is used for the area covered by the proposed AVA. The name and the evidence in support of it must come from sources independent of the petitioner, such as historical and modern government or commercial maps, books, newspapers, magazines, tourists, and other promotional materials, local business or school names, and road names. Anecdotal information by itself is not sufficient, but statements taken from local residents with knowledge of the name and its use may be included to support the AVA name. WOW!

Boundary evidence is the next hurdle. The petition must explain in detail the basis for defining the AVA boundary and include reference name evidence and other distinguishing features. In support of the proposed boundary, the petition must outline the commonalities or similarities within that boundary and explain with specificity how those elements are different from adjacent areas outside that boundary. WOW, again!

The petition must also provide a description of common or similar features of the proposed AVA that affect viticulture and make it distinctive. Again, there is the requirement to explain why these characteristics differ from adjacent areas outside the proposed boundaries. For this part of the proposal, information relating to distinguishing features affecting viticulture should include the following:

• Climate – temperature, precipitation, wind and fog patterns, solar orientation and radiation levels, degree growing days, and other climate-related information
• Geology – underlying formations, landforms, geophysical histories such as earthquakes, eruptions, and major flood
• Soils – major and various other soil series or phases of a soil series, denoting parent material, texture, slope, permeability, drainage, and fertility
• Physical features – flat, rolling, hilly, or mountainous topography, geographical formations (like Enchanted Rock or Bell Mountain), bodies of water, watersheds (rivers and streams-like the Pedernales River, Barons Creek, and Colorado River), irrigation resources (like the Edwards Aquifer), and other physical features
• Elevation – minimum and maximum elevations, typical elevations for vineyards, the impact of elevation on climate characteristics

The next requirement, often arduous and detailed, is to provide a clear and understandable boundary description of the proposed AVA that can be drawn and shown on an appropriate scale on a U.S.G.S. map(s). The exact boundary of the AVA must be prominently and clearly drawn on the map(s) without obscuring the underlying features that define the boundary line.

Further, the petition must include a detailed narrative description of the proposed AVA boundary based on U.S.G.S. map markings. This description must have a specific beginning point, must proceed unbroken from that point in a clockwise direction, and must return to that beginning point to complete the boundary description. The boundary description must refer to easily discernable reference points on the U.S.G.S. map(s), including the following:

• State, county, township, forest, and other political entity lines
• Highways, roads (including unimproved roads), and trails
• Contour or elevation lines
• Natural geographical features, including rivers, streams, creeks, ridges, and marked elevation points (such as summits or benchmarks)
• Human-made features (such as bridges, buildings, windmills, or water tanks)
• Straight lines between marked intersections, human-made features, or other map points

Similarly, petitions can be submitted to propose the establishment of a new sub-AVA entirely within or overlapping, an existing AVA. Also, petitions can be submitted to TTB for modifications of an existing AVA, such as boundary, name, distinguishing features, or boundary evidence and description.

Obviously petitioning for a new AVA or sub-AVA is a time-consuming, detailed process that requires a lot of thought and input by those who submit the proposal to the TTB. More AVA petitions are expected in Texas over the next several decades, and we should all appreciate the efforts that will be made by our friends and associates in the Texas wine industry to better define key sources of our grapes. Don’t forget to enjoy some Texas fine wine while you cheer the petitioners on!

What is the Value of an AVA?

One certainly may wonder about the value, financial and otherwise, of having an AVA designation and using such on a wine label. Many studies have concluded that an AVA can usually deliver a recognizable elevated price effect on grapes and wines from the delimited region.

Some of the most informative studies have been published in the Journal of the American Association of Wine Economics edited by Karl Storchman, a long-time wine enthusiast and professor of Economics at New York University. He is extremely knowledgeable, and it has been my privilege to taste wine with him on several occasions.

Studies to determine AVA value have been done in many wine regions worldwide. U.S. studies have mostly focused on the economic value of differentiation, creating sub-AVAs within high-end appellations, such as Napa Valley (CA) or Willamette Valley (OR). These efforts to define and designate sub-AVAs within a major region like Napa Valley, almost always result in higher premiums for their grapes and wines as well as elevate the value of vineyards and surrounding land.

It will probably then come as no surprise that in certain popular wine regions, well-established wineries and vineyards can decide to band together and define some measure of separation from their neighboring properties with lesser reputations or qualifications, or simply from those with different climate and growing characteristics. Once differentiated, the expectation is that these wineries and vineyards will be able to capitalize on their newly defined distinctiveness as a designated sub-AVA and enjoy a greater regional reputation that results in higher premiums for their grapes and wines.

This is a very common practice in some of the major U.S. wine regions like Napa Valley AVA, CA (now with 16 sub-AVAs), Willamette Valley AVA, OR (now with 9 sub-AVAs), and Columbia Valley AVA, WA (now with 13 sub-AVAs) This is certainly the trend we expect to see in Texas as these huge AVAs like the Texas Hill Country (nine million acres) and Texas High Plains (eight million acres) get further defined with designated sub-AVAs to group smaller, yet more similar growing areas.

These AVA and sub-AVA designations have a definite influence on wine consumers. Take my case for example. I look particularly for Napa Valley wines with either a Stags Leap or Spring Mountain sub-AVA label designation since wines from these areas have been most notable in my past experiences. From Oregon, Pinot Noir wines from Willamette Valley with sub-AVA designations Eola-Amity Hills and Yamhill-Carlton District have a special attraction. And from Washington, sub-AVAs of the extensive Columbia River Valley AVA, like Walla Walla and Red Hills, designate areas from which favorite wines are sourced. This is the goal for Texas – to find ways to designate specific growing areas which produce grapes and wines that consumers can recognize and support through further purchases.

Estimates of the average prices and value of wine grapes crushed in California, for example, have clearly shown that AVA and sub-AVA designations have a positive impact. Similar observations have been made in other key wine states like Washington and Oregon. Differentiation of grape prices has begun to be significant in Texas and the key factors, as expected, include AVA, vineyard location, and grower reputation. Many growers and winemakers believe that the creation of selected sub-AVAs in the two major regions of Texas, Texas High Plains and Texas Hill Country, will continue to pay dividends. Certain important grape growing regions of Texas not yet in a designated AVA will continue to push for TTB approval of their own AVA applications (addressed in Part Three of this Series).

Because of the limited number of AVAs and sub-AVAs in Texas, one increasingly valuable method of differentiation comes from the use of county names on labels to more specifically define the source origin of grapes used to make wines. The Texas High Plains AVA is so widespread over all or parts of 24 counties, that designations like Hockley County (Levelland, west of Lubbock), Terry and Yoakum Counties (Brownfield and Plains, west southwest of Lubbock), and Gaines County (Seagraves and Seminole south of Lubbock) have begun to take on enhanced meaning when noted on a wine label. An example of this would be a wine labeled Texas High Plains – Terry County, compared to the similar impact of, say, Napa Valley – Spring Mountain.

Other examples exist in the Texas Hill Country and even more so in areas of Texas not included in an AVA. An example of this can be seen with Brennan Vineyards in Comanche County, located just north of the Texas Hill Country AVA boundary. Remember, at least 75% of the grapes in the labeled wine must have been grown in that county. Additionally, with recent legislation signed into law in summer 2021, the remainder of the grapes must also come from Texas vineyards. So, wines carrying a Texas County designation now can tell the consumer more specific details of grape origin and that the wine is produced from 100% Texas-grown grapes.

AVA designations can also impact the value of terroir, which refers to the special characteristics of a place that imparts unique qualities to the wine produced. This can be translated not only to higher reputations and prices for grapes and wines from a specific area but also to the actual value of the vineyard or land area in which the grapes are grown. Many growers see this as an advantage, especially when the time may come to sell their vineyards.

Another note on AVA value comes from a study by Moss Adams, LLP, a financial and tax consulting company that does a lot of business with the wine industry. It turns out that AVA designations can translate into potential tax savings for wineries. An AVA may have an intangible value associated with the quality of the grapes produced within it. Unlike land, producers may be able to amortize the value of this asset for tax purposes. I do not understand this concept, and certainly cannot explain it to you, but there appear to be ways to translate an AVA status into financial savings when tax time comes.

A final point to make regarding the value of an AVA relates to the TTB requirement on the use of Estate Grown on a label. To use Estate Grown, the grape source and winery involved must be included in an AVA. This causes problems for many Texas wineries that are not in an AVA. Again, an example is Brennan Vineyards in Comanche County which is not allowed to use the Estate or Estate Grown designation even though many of their wines contain only grapes from their owned and managed vineyards. Another example is Kiepersol in East Texas which only uses grapes from their vineyard on the property, but they are not in AVA. Changing this part of the TTB rules is unlikely, but at least with the updated county designation, things should get better here in the Lone Star State.

References:

Alcohol and Tobacco, Tax and Trade Bureau (TTB), Code of Federal Regulations – 27 CFR part 9.

Journal of the American Association of Wine Economics edited by Karl Storchman, New York University

American Viticultural Area Valuations Offer Potential Tax Savings for Wineries, by Donovan Trone, Senior Manager, Valuation Services, MossAdams, LLP, 28-Jun-2019, updated 24-Aug-2020.

https://austin.eater.com/22671850/texas-wine-regions-grapes-guide

Appellation America – An Introduction to the Texas AVAs, by Eleanor & Ray Heald, December 1, 2009

Other useful sources that contributed to this post include: Go Texan website, Texas Fine Wine, Texas Hill Country Wineries, and the Texas Wine and Grape Growers Association