By Cindy Skrzycki
Tuesday, July 1, 2008
To a group of Napa County, Calif., winegrowers, adding "Tulocay" as a geographic designation to their products' labels had a lot more cachet as a marketing device than the more geographically correct "Coombsville." So they were unhappy when Treasury Department regulators wouldn't let them burnish their bottles with the new moniker.
On June 19, the Alcohol and Tobacco Tax and Trade Bureau, which reviews about 15 requests a year to award such identity labels for wine, issued a rare denial. It said supporters of Tulocay didn't have enough proof of its local or national recognition to qualify.
The disagreement reflects the impact of growth and competition in the wine industry. With $30 billion in sales in the United States last year, wine-growing areas earning a government-approved geographic appellation often can confer a more exclusive pedigree and a premium price.
"Americans want to know the place of origin of their wines," said Terry Hall, a spokesman for Napa Valley Vintners, a trade group in St. Helena, Calif., that supported Tulocay. And ultra-savvy buyers like to collect from various smaller growing areas because of the distinctiveness of those wines.
The rejection distressed petitioners, a group of about 60 landowners who hoped regulators would allow them to advertise the unique quality of their grapes grown in the cool, southeastern Napa area, more commonly known as Coombsville.
Led by Aaron Pott, a consulting winemaker who filed a petition with the government in 2006, the growers said the word Tulocay had deep, local roots that harkened back to an 1859 land plat showing Tulocay Rancho. Plus, they didn't think Coombsville was a pretty enough or marketable name to put on cabernets that are commanding as much as $125 a bottle.
"For every line you add to the label, you can add $5" to the price, said Tyler Colman, who writes a wine blog called Dr. Vino, offering another rationale for seeking the Tulocay designation. "The more information, the more exclusive it is."
The Treasury bureau, which regulates the labeling and taxing of alcohol, has awarded geographic appellations since 1980 as a way for consumers to better place the identity of the wines they are buying. There are 167 such designations. Once approved, 85 percent of the grapes used in wines bottled under the appellation must be from that area.
Napa became a special viticultural area in 1981 and now produces some of the best domestic wines. There are also 14 sub-appellations within Napa, including Oak Knoll and Rutherford.
In this case, a regulatory drinking brawl broke out when Pott and the group snubbed the Coombsville faction.
"We felt Coombsville sent kind of a redneck vibe," Pott said in an interview -- a point he also made in comments to a national wine magazine. He said the decision made by the tax and trade bureau showed "the tyranny of the minority."
Under federal rules, new viticultural areas must be supported with evidence that the name is locally or nationally known. This includes maps, historical evidence and other distinguishing features.
Before regulators could pull out their maps and surveys to check the boundaries of the place name, they were receiving opposing comments from other growers who said the only references to Tulocay were a cemetery -- on Coombsville Road -- and a creek.
These growers cited real estate ads, references in the local newspaper, and directions given by locals that referred to the area as Coombsville, named after Nathan Coombs, one of the early settlers and founding fathers of the city of Napa.
"The petitioners chose to ignore this obvious choice because they didn't like the sound of it," said Tom Farella, a winemaker at Farella Vineyard. Farella supports the idea of a viticultural area that would distinguish the area's wines from other parts of Napa, just not Tulocay.
In its decision, the tax and trade bureau said the conflicting comments "demonstrate a lack of unity among the industry's members as to what the name of the petitioned-for viticultural area is locally and/or nationally known as" and thus cast doubt on the choice of Tulocay.
The case for the application became further complicated because there is already a Tulocay Winery, which is on Coombsville Road.
Bill Cadman, owner of the winery, trademarked Tulocay as a brand name in 1975 and has been using it since. "I like the name. It's an old Indian word," Cadman said, adding that he chose it because "it doesn't conjure up anything."
Cadman said he first thought a Tulocay viticultural area would help publicize his brand. Then he wondered if a new state law that protects geographic identities would force him to drop the Tulocay name, dump the wine he had branded under that name, or require he use grapes mostly grown in the new area.
He consulted Kristen Techel, an attorney with Hinman & Carmichael in San Francisco. Techel told regulators that approving the Tulocay name as a geographic appellation would have meant economic ruin for Cadman's small winery since he buys grapes from surrounding counties to make vintages like Amador County Zinfandel, made from Amador County grapes.
Cadman raised a glass to the regulators and said justice was done when they saw the confusion a Tulocay viticultural area would have created in consumers' minds.
He added he does appreciate that the name goes down easier than Coombsville.
"Coombsville sounds like it ought to be in Arkansas," he said.
Cindy Skrzycki is a regulatory columnist for Bloomberg News. She can be reached at email@example.com.