By Michael Barbaro
Washington Post Staff Writer
Tuesday, May 17, 2005

Every year, tourists pour into the tasting room at Willowcroft Farm Vineyards in Leesburg, sip a glass of the house Riesling, proceed to a cash register and learn that, no, they may not have a case sent to their homes in New York, Michigan, Maryland or other states with restrictive wine shipping laws.

"I have a simple wish," said the vineyard's owner, Lew Parker. "I am not looking to start an Internet business, or market my wine all over the country. I just want to ship to my customers."

Yesterday, the wish was granted. The Supreme Court's decision striking down some states' laws barring interstate shipments of wine will change the economic rules by which small vineyards like Willowcroft have played for decades. Instead of navigating a patchwork of state laws that limit some out-of-state customers to whatever they can carry out the door, wineries may soon be able to ship more liberally around the country -- filling orders by catalogue, phone or the Internet.

The effect on consumers depends on where they live and how state legislatures respond to the Supreme Court ruling. In states like New York that restrict imports from elsewhere in the United States, the ruling may open up a market tilted toward local producers. In Maryland, by contrast, the state's ban on all mail-order wine sales could well be left in place because it treats in- and out-of-state producers the same.

Still, the ruling could bring sweeping changes to the $22 billion U.S. wine industry. Restrictive rules in 23 states -- some aimed at protecting local wineries, some to shelter middlemen, and some to ensure juveniles do not order wine by mail -- require thousands of small, family-owned wineries to either sell in-state or to rely on licensed national distributors.

But while the number of small wineries is growing rapidly -- there are 4,000 in the United States, each typically producing less than 5,000 cases a year -- the number of distributors has decreased through a series of mergers. Small wineries complain that the national distributors are too expensive to work with and ignore small companies in favor of a few big brands.

"Distributors have a monopoly that has cut out access to thousands of wineries," said Patrick Campbell, owner of the Laurel Glen winery in Glen Ellen, Calif., whose distributor, Lauber Imports Ltd., was just bought by the nation's largest wine wholesaler, Southern Wine & Spirits.

As a result, 80 percent of wine sales come from just 100 brands such as E&J Gallo Winery, Robert Mondavi Corp. and Beringer Blass Wine Estates Ltd., according to WineAmerica, an industry trade group.

That could begin to change if states rework their laws to allow interstate shipments, as wine industry executives expect.

Deborah Cahn from Navarro Vineyards in Mendocino County, Calif., is already starting preparations to sell to other states. The vineyard currently sells 90 percent of its wines -- the sweet Gewurztraminer being the most famous -- directly to consumers and thinks the Supreme Court ruling will significantly boost its sales.

The winery does work on a limited basis with distributors but, Cahn said, the family thinks "no one tells your story as well as you do yourself."

The ruling could prove a boon to the budding Washington-area wine industry. Virginia has 97 wineries, up 50 percent from 2000, and their sales top $100 million, according to WineAmerica. Maryland has 19 wineries. Both states stand to gain from the court's ruling, given the number of tourists who come to the region, industry experts said.

But there are potential losers from the ruling, as well. Topping that list are distributors, the profitable middlemen who stand between wine producers and the restaurants, bars and retailers who sell to consumers. A spokesman for Wine and Spirits Wholesalers of America Inc., a trade group, declined to comment.

In a statement, the group said: "WSWA supports state efforts to strengthen -- not weaken -- alcohol laws by making all producers play from the same set of rules that ensure accountable, responsible alcohol sales."

David Sloane, WineAmerica's president, said the ruling could eventually shift business away from local liquor stores, where the majority of wine is purchased. "The rank-and-file retailer is not happy about this," Sloane said. "It enables consumers to get wine without them."

But savvy retailers already see opportunity in the ruling. Michael Sands, a partner at Calvert Woodley, a wine and liquor store in Northwest Washington, said the store will probe whether it, too, can make interstate wine shipments.

Meanwhile, wineries across the country are fielding calls from out-of-state customers who have waited years to order their favorite bottle.

"Oh, my God -- first thing this morning we're getting calls from customers already and e-mails. It was, 'Yahoo you can ship to Florida!' 'To Michigan!' Everyone is cheering," said Paula Galleron, a sales associate at Trefethen Vineyards, a family-owned boutique winery in Napa, Calif. Outside of California, it sells its wine mostly in high-end restaurants such as Butterfield 9 in the District.

But Terry Hall, who oversees direct-to-consumer sales for the winery, said there are complicated state tax and shipping restrictions that the company needs to work out first. "We're not ready to send wine today, that's for sure," he said.

At Willowcroft, the Leesburg vineyard, the phone rang yesterday around noon. Richard Borror, an Indiana businessman who buys wine from the vineyard when traveling to the Washington area for work, had just learned of the Supreme Court's decision and wanted to place an order for four cases.

"I can't get it in Indiana," said Borror. The existing laws "don't make much sense," he said. "I am not a wine connoisseur. I am not pretentious about this stuff at all. I just like the wine."

Staff writer Ariana Eunjung Cha in San Francisco contributed to this report.