Shipping Ban Hampers Arkansas Wine Tourism

Shipping Ban Hampers Arkansas Wine Tourism
Joseph Post is outside sales manager of Post Familie Vineyards & Winery, the largest winery in Arkansas and among the top 100 in the United States. (Photo by Kat Wilson)

The state of Arkansas is seeking to promote Arkansas wineries, particularly the ones around Altus in Franklin County, as tourist destinations. It features a handy guide to Arkansas wineries on the state's Parks & Tourism website.

But Arkansas wineries say the biggest hurdle to developing tourism is the state law that prohibits them from shipping their wines out of state. Unless the law changes, they say, Arkansas wineries will never see the success of the hundreds of wineries in states like Missouri, Oklahoma, Texas and North Carolina. And the state of Arkansas will miss out on the kind of economic development that those wineries bring to their states.

Michael Langley, director of the Alcoholic Beverage Control Administration, flatly calls any potential legislative initiative to change the law a "non-starter."

That's because, he said, "You have liquor stores and liquor wholesalers who would oppose such a situation. Plus you have the governor who has consistently stated his opposition to it in the sense of allowing access to minors to alcohol."

In any power struggle between wine producers and liquor distributors, determined to retain their near-monopoly, the distributors usually win.

Compounding the political reality is the tangle of blood and marriage ties among at least four of Arkansas' better-known wineries and a long history of rivalry that has been variously compared to the Hatfields and McCoys or the Montagues and Capulets.

Stir into this mix the state's antique, arcane and confusing liquor laws, and two clear conclusions emerge: Bringing Arkansas' wine industry into the 21st century would be a challenge, and it's a challenge that all Arkansas wineries agree is necessary to truly develop wine tourism in the state.

Wine Tourism Takes Off
"Any state that takes their wine industry seriously must have a wine-shipping bill," said Michael Post, CEO of Mount Bethel Winery in Altus.

The inability to ship wine out of state is the top complaint of visitors to Post Familie Vineyards & Winery in Altus, said Tina Post McAlister and her brother Joseph Post. McAlister is in charge of retail sales and events, and Joseph is Post Winery's outside sales manager.

Thirty-nine states and the District of Columbia currently allow winery-to-consumer shipping, according to Free the Grapes!, a nonprofit that seeks "to remove restrictions in states that still prohibit consumers from purchasing wines directly from wineries and retailers." And Americans' consumption of wine has continued to grow, despite the economic downturn.

In recent decades, small wineries have bloomed throughout states like Missouri, North Carolina, Virginia, Texas and even in Oklahoma. As their numbers have grown, so has wine tourism. The increase in tourism has had a huge economic impact, officials in winery-friendly states say.

Peter Hofherr, CEO of St. James Winery in St. James, Mo., served as director of the Missouri Department of Agriculture in 2002-05.

Tourism and agriculture are the top two industries in Missouri, Hofherr said. "So there's been a concerted effort by the wineries to engage with tourism at the state level. That has evolved over the years to a strong partnership and has resulted in quite a few pieces of legislation to encourage that from the wine side as well as partnerships with the tourism organizations."

To help fund promotion of the wine industry in Missouri, the General Assembly approved a tax of 6 cents a gallon on all wine sold in the state, Hofherr said. In addition, the wine industry worked with the state to increase highway signage indicating the presence of local attractions, including wineries. "That really helped," he said.

"And then the industry also worked with the University of Missouri as well as the Department of Agriculture and the administration during the Holden years to do studies and to bring together groups for regional development," Hofherr said, "so you had agricultural, hospitality and tourism folks working on regional development for local foods, local wines, wine trails."

As for interstate shipping, he said, "We've been as open as possible for numerous years, and we've fought the large national wineries as well as the wholesalers to make sure our state stayed that way. That's really what got us in the political game in the first place."

"This battle has been waging nationally for at least 40 years, so Arkansas is not alone," Hofherr said. "Each state has had to fight this if they wanted to develop their industry."

A 2010 report prepared for the Missouri Wine & Grape Board, based on 2009 data, put the economic impact of the state's wine and grape industry at $1.6 billion annually. The state had 97 wineries in 2009, the report said, and the wine and grape industry was responsible for 14,051 jobs.

Hofherr said the wine industry made the argument: "‘Do you want a smaller piece of a lot larger pie, or do you want to continue to have a large piece of a very, very small pie?' When everybody came together, the pie grew and tourism grew, and everybody's actually in a better position than they were before."

Post is the largest winery in Arkansas, producer of about 150,000 gallons of wine annually, and among the largest 100 wineries in the United States. It employs about 50 full-time workers, including nine of the 12 children of Mathew and Betty Post. Tina and Joseph are the fifth generation to be involved in the family's business, as is their brother Thomas, a grape grower for the Post Winery.

Also in the Altus area are the well-known Wiederkehr Wine Cellars, founded in 1880, and the relatively youthful Chateau Aux Arc, a winery opened by Audrey House in 2001.
When Parks & Tourism refers to Arkansas Wine Country, it's talking primarily about Altus, Paris (home to Cowie Wine Cellars) and Wiederkehr Village, an incorporated city adjacent to Altus and home to 41 souls, by Dennis Wiederkehr's count. Dennis is vice president and national sales manager of Wiederkehr Wine Cellars, and his uncle Al Wiederkehr is CEO of the company and mayor of the town.

The state has several other wineries, including a few that have sprung up fairly recently such as Keels Creek Winery in Eureka Springs.

Doug Hausler, who founded Keels Creek in 2006 with his wife, Edwige Denyszyn, said he was able to reach more customers because he was in a town that already draws tourists. Nevertheless, he said, the interstate shipping prohibition and Arkansas' 40 "dry" counties inhibit growth of wine tourism.

"Missouri has a very big organization that helps promote the wineries within the state legislature and that's true of the other states," Hausler said. "Even now we don't have a true critical mass of wineries to influence the laws" in the Arkansas Legislature. "Some of that has to do with - let's just leave it there."

When asked whether Arkansas wineries usually cooperate with each other to achieve common goals, Hausler deliberated for several seconds, finally saying, "There's limited cooperation in some areas."

What the wineries can agree on is that one of those areas is tourism and interstate shipping.

"The wineries generally work together very well concerning tourism and concerning the wine shipping bills that we have attempted to have enacted," said Michael Post, president of the Arkansas Wine Producers Association.

"There are other issues maybe that we don't always see eye to eye on, but in general we all have the same goals as far as tourism is concerned. And it benefits all of us to have Altus - our area anyway - recognized as a wine-producing region. We would not be recognized as such if there were only one winery."

If there's a common foe, it would be the three-tiered system of alcohol regulation that developed after the repeal of Prohibition. Under this system, a producer (winery in this case) must sell to a distributor (liquor wholesaler) who then sells to a retailer (package or grocery store) who then sells to the consumer. That's assuming the consumer is in a "wet" county. The state licenses this bureaucracy.

However, some wine producers, like Post Winery, say they have great distributors. And some wine producers, like Mount Bethel, are their own distributors.

Over the years, the regulations regarding wine sales began to be relaxed. In 2001, Arkansas wineries were allowed to sell their products in grocery and convenience stores.
In 2005, the state Legislature approved a law, Act 1806, permitting Arkansas residents to have wine produced in the state shipped to their homes; out-of-state wineries, however, couldn't ship directly to Arkansas.

Arkansas liquor wholesalers and retailers filed suit in 2006 to have the law overturned as an unconstitutional restraint of trade.

In response, the state Legislature enacted the Small Farm Winery Law, defining small-farm wineries as those that sold fewer than 250,000 gallons of wine yearly. It applied to wine producers both inside and outside the state and allowed them to apply for a permit to sell their products in grocery and convenience stores.

But the law banned direct shipments from either in-state or out-of-state wineries. That, now, is what Arkansas' wine producers want to correct.

Asked what was preventing state lawmakers from addressing the wine shipment law, Michael Post said, "I don't want to answer you."

Joe David Rice, state tourism director, said, "I know the governor is a big advocate of free enterprise. I suspect if the wine folks got together he would hear them out."

However, he added, "The local producers and the wholesalers in the state perhaps may not get along. I suspect there are some deep-seated politics in this that I'm not privy to."

Arkansas Wineries Linked by Blood, Marriage would be useful in understanding Arkansas' wine industry:

  • Mathew and Betty Post have 12 children, nine of whom - including Joseph and Thomas Post and Tina Post McAlister - are involved in running Post Familie Vineyards & Winery in Altus.
  • Michael Post, chief of Mount Bethel Winery at Altus, is first cousin to Tina, Joseph, Thomas and their other siblings.
  • Al Wiederkehr, CEO of Wiederkehr Wine Cellars, is third cousin to Michael, Joseph, Tina, Thomas and their Post siblings.
  • Dennis Wiederkehr, Al's nephew, is vice president and national sales manager of Wiederkehr.
  • Gary Wiederkehr, Dennis' cousin and also Al's nephew, is president and manager of wine production at Wiederkehr.
  • Audrey House, founder of Chateau Aux Arc, is the former wife of Thomas Post and the mother of his two young children.
  • The Posts descend from Jacob Post, a German who arrived in the United States in 1872.
  • The Wiederkehrs' progenitor in Arkansas was Johann Wiederkehr, who emigrated with his family from Switzerland to Altus in 1880.

‘It Wouldn't Be in Arkansas'

Audrey House, founder of Chateau Aux Arc in Altus, began growing grapes in 1998 and opened her winery in 2001.

The prohibition against shipping Arkansas wines out of state is killing her business, House said. Her wine production, once at about 20,000 gallons a year, has declined to 5,000. Before 2007, when the law forbidding out-of-state shipments went into effect, her winery employed up to 25 workers. She's now down to three full-time employees.

"The traffic is just not what it used to be," House said. "Arkansans don't even know we're here."

While some producers use grapes grown outside the state to make their wines, House seeks to use only grapes grown in Altus. At the very least, her wine uses only Arkansas grapes.

Her labels are printed in Little Rock on recycled paper, she says. House stoppers her wine bottles with real cork. "I create with whatever nature produces."

Like other wine producers devoted to using locally grown grapes, House wants to give customers a taste of the area's "terroir," meaning its soil.

But she's discouraged.

"I got into this business when I was 20. Now I'm 35 and if I had to do it all over again, it wouldn't be in Arkansas."