Texas wine, the Legislature, and the state's budget crisis

This Texas industry is recognized around the country as a leader and innovator, providing thousands of jobs and adding more than a billion dollars to the state's economy. Yet the Texas Legislature is about to strangle this industry by cutting off its seed money and eliminating the work it does to market and research its product.

If this industry was oil and gas, or even wind (in which Texas leads the country in production), would the Legislature be so eager to eliminate its funding? Of course not. But because the industry is wine, the Legislature is poised to cut its $4.3 million in state funding.

This is a huge mistake, and not just because I write about wine. The Texas wine industry is an important part of the state's economy, and the money it receives from the state has played a key role in the wine industry's growth. In this, Texas wine is not some effete pastime enjoyed by a bunch of outsiders who don't like to drink Lone Star and eat chicken fried, but big business. Or, as we like to say here, Big Bidness.

Texas wine sales increased six percent in 2010, with consumers buying almost 240,000 cases of Texas wine from retailers that Nielsen surveys (which doesn't include Walmart-owned stores or restaurants). That, by the way, compared to a five percent or so increase for all wine sales in the U.S. Even more impressive: Texas wine outsold Argentine and Chilean wine -- combined -- in the state in 2010. The cost of this success? That $4.3 million in seed money, paid every two years. That comes out to less than $6 a Texan, or $3 a year. After the jump, how that $3 a person investment has paid off.

Full disclosure: I have received some of that tax money. The state department of agriculture, which oversees the wine marketing and research programs, has paid me to produce and consult for wine events. In addition, several good friends of mine will lose their jobs if the $3 a person tax goes away, and several others that I respect for their skill and professionalism will also be fired.

Texas' budget crisis is monumental. The state faces a $27 billion deficit over the next two years, and compounding the problem is that we're a small government state. This means there are few taxes to raise (no state income tax, for example) and few services to cut to pare the deficit. Hence the state budget board recommendation to take the $4.3 million in wine funding, which comes from the state excise tax on wine, and put it back in the general fund. In other words, this isn't money from a special tax to benefit the wine business; it's tax money already being collected. Which should give you an indication of just how bad things are here.

There are a couple of reasons why this proposal is being made. The first, to quote the much missed Molly Ivins, is that when the Texas Legislature convenes, many a village will be missing its idiot. The kinder and gentler view is that state's legislators have no idea how important wine is to the Texas economy. Old attitudes die hard here. Two-thirds of Dallas, the state's second city, was effectively dry for almost 80 years until an election last fall. A Dallas judge once told me that a wine trip to West Texas would not get me out of jury duty, since Texas didn't have a wine industry.

So consider this the Legislature's wakeup call. We're not saving $4.3 million; we're cutting off a finger because our leg is broken:

• Texas is one of the five or six biggest wine markets in the country, along with the New York City area, metro Washington, D.C., south Florida, Chicago, and California.

• Four Texas labels -- Ste. Genevieve, Llano Estacado, Becker, and Messina Hoff -- are among the top 100 wine brands in the state, says Nielsen. Ste. Genevieve sells more wine in the state than Gallo Family Vineyards; Llano sells more than Fetzer; and Becker sells more than Santa Margheritia.

• The state's best-selling viogniers are Texas wines, from Becker and Brennan, according to Nielsen. This is exactly the point of the $3 a person tax, which pays for the research necessary to find out if a grape like viognier will make quality wine here.

• Becker sells more cabernet sauvignon in Texas than Barefoot does. This is mind blowing, and if I wasn't looking at the numbers as I write this, I wouldn't believe it. In fact, Yellow Tail -- the Yellow Tail, the brand that invented cheap Australian wine, the brand with the worldwide, seemingly unlimited marketing budget -- sells about 15,000 cases of cabernet in the state. Becker sells about 11,000, and its marketing budget is mostly Richard and Bunny Becker, who run the winery, shaking people's hands.

Hopefully, thanks to the magic of the cyber-ether, this post will make its way to the Legislature. And, hopefully, they will see that Texas wine is not a hobby, but a business, and deserves to be treated as such. I've been here almost 30 years, and for 30 years, I've listened to state officials proclaim Texas' pro-business ethos (and hand out cash and tax breaks to some decidedly dodgy programs in the process). Now that they have a chance to be pro-business for a business that deserves their help, they should act on it and restore the $4.3 million.

Comments

[Bill Skrapits]

Great, in-depth article about what the Texas wine industry and what it brings to our economy. It affects everyone, not just the wine industry, consumers and retail, but everyone. I only hope that Molly Ivin's "village idiots" have a moment of clarity and that we can raise enough awareness around this that the obvious choice, for the state and citizens, is to nix this legislation.

[Jeff Siegel]

Thanks for the kind words, Bill. The thing that strikes me about economic development in the 21st century is that politicians say we need to try new things, and then they don't. The World War II era manufacturing economy ended two decades ago, and we need to change the way we look these things.

[OffShore]

7. Wow! You are definitely a magician. I have always liked to know others feelings and thoughts, but I must say your article is one of the best I have read. And I suggest others to read it. OffShore