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John on Wine – Contests and Donations

Originally published in the Ukiah Daily Journal on September 26, 2013 by John Cesano

    Because many folks in the wine industry and my friends that work at our area’s wineries read this column, this week I am writing to let them know about two things the California Alcoholic Beverage Control – CA ABC – would like them to know about.

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CONTESTS

    It wasn’t that long ago that Sutter Home winery in Napa Valley first had to exclude Californians from entering their Build a Better Burger contest, and then had to move the contest out of the state completely to avoid breaking the laws that existed regarding what wineries could give away.

    I wrote about the contest and the laws years ago, and suggested at the time that Sutter Home’s parent company Trinchero Family Estates use some of their substantial political power to see our legislature change the laws regarding contests for wineries.

    Today, Californians can Build a Better Burger, and they can do so at Sutter Home’s winery location here in California.

    Wineries may now have contests offering participants the opportunity to receive or compete for gifts, prizes, gratuities, or other things of value as determined by skill, knowledge, or ability rather than upon random selection. Skill, knowledge, or ability does not include the consumption or use of alcoholic beverages.

    Similarly, wineries can hold sweepstakes whereas a procedure, activity, or event for the distribution of anything of value by lot, chance, or random selection where the odds of winning a prize are equal for each entry. Again, consumption or use of alcohol may not be part of the sweepstakes.

    The legislature doesn’t make simple laws for the CA ABC to enforce, so read all the rules in the industry advisory at http://www.abc.ca.gov/index.html.

    Alcohol cannot be the prize and use of alcohol cannot be part of an entry. There will be no “Win a case of wine” or “One entry with each bottle purchased.”

    That said, a winery can give away olive oil, or pottery, or logo branded t-shirt through a Facebook contest; a winery could give away a boxed gift pack of organic herbs in a drawing of people who sign up for a monthly newsletter; or a winery could give away a Christmas Tree or holiday herb wreath to the person who sends in the best holiday food recipe.

    There are many exciting opportunities to increase your marketing reach, and engage in fun new ways, that were once prohibited, with your customers.

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DONATIONS

    Sometimes the cause is good, sometimes almost frivolous. They come in. Perhaps they call. Maybe they email. Sometimes, they do all three: “Hi, I’m calling because you were out when I visited, and I haven’t received a response to my email, but …,” they’re asking for wine. Relentlessly, they ask.

    For small production winery tasting rooms like the one I work at, the requests for free wine can easily exceed production.

    This year, representatives from the CA ABC, attended winery conferences to put the word out that while anyone can ask a winery for a donation of wine, wineries may only make a donation to a non-profit with a valid liquor license.

    To keep from running afoul of state law, a winery should collect copies of both the letter from the Internal Revenue Service determining non-profit status with a tax identification number, and a CA ABC daily license authorization.

    Whether charging an event ticket price where wine is poured, or selling wine, or auctioning wine, each non-profit organization must fill out a form ABC-221, and send the application at least three weeks before the event along with a nominal required fee to the closest CA ABC district office. In time, the CA ABC will sign, date, and stamp the application, and at that point it becomes an authorization.

    When approaching a winery tasting room asking for a donation, it is best to have copies of both papers in hand. Again, the CA ABC does not make laws, but they enforce them and their recent public sharing of the requirements for tasting rooms when making wine donations may very well be the first step toward enforcement, with penalties against a wineries license for infractions.

    To be clear, David Bailey who heads up the Santa Rosa district office of the CA ABC says that a winery making a wine contribution to anyone other than a non-profit with an IRS determination letter, holding a CA ABC form ABC-221 daily license authorization is, “exceeding their license privileges,” and subject to both, “suspension and a fine.” He said the penalty can vary, but the suspension could likely be 15 days and the fine $10,000.

    If you are seeking a donation, be aware, we will not put our winery license in jeopardy, so spend a nominal fee and do things legally.

    There are plenty of folks who we donate to, they have their paperwork in order and are a joy to work with. There are a couple of folks this year that I wish we could have donated to that did not have any paperwork at all and they could easily get their license, so I hope they do so next year. Also, working for a small winery tasting room, I must confess that the law actually helped us reduce the number of requests to consider.

Sutter Home Family Vineyards, the revenue engine behind Trinchero Family Estates, is celebrating the 20th Anniversary of their Build A Better Burger contest.

Back in June, I contacted Sutter Home asking why they excluded California residents from participating in their contest.

Sutter home responded, “we cannot offer the Build A Better Burger Contest or other sweepstakes promotions to California residents. However under California law and regulations, a California wine producer is prohibited from giving a California consumer anything of value over $1.” Sutter Home further suggested that I begin a rallying effort to change things for them.

I contacted the California ABC and spoke with Chris Albrecht, Deputy Division Chief at HQ and member of the CA ABC’s Executive Management Team, overseer of the Trade Enforcement Unit. Albrecht expressed the opinion that the contest, if held in California, was illegal regardless where the participants resided. Albrecht felt that the contest, featured nationally on Food Network, brought Sutter Home material benefit, and therefore the award of a prize greater than $1 violated California Business and Professions Code Section 25600 and the California Department of Alcoholic Beverages Control regulation 106(j). These are precisely the codes and regulations that Sutter Home pointed at when explaining why Californians were excluded from the contest.

I don’t like presenting a problem without suggesting a solution. I explored solutions to Sutter Home’s Burger contest quandary with Albrecht. I proposed, and Albrecht agreed Sutter Home could hold the contest out of state, in Las Vegas (where outdoor grilling in the Summer sun is close to Hell) as an example, and that a contest out of state could include competitors from California.

I shared Albrecht’s comments with Sutter home, and spoke with Ron Larson, Sutter Home’s Senior Vice President and General Counsel. Larson said that he had determined the appropriateness of the contest rules and operation with the [CA] ABC. I suggested he speak with Mr. Albrecht.

In June, Larson and Sutter Home were convinced the contest, held in California without California residents, was legal. I reported here that Albrecht and the CA ABC said it was not legal if held in California. Last week, Sutter Home announced that the Build A Better Burger contest will be held in Miami, FL this year.

Sutter Home explained in part, “Sutter Home Build a Better Burger Contest received more entries from Florida this year than any other state,” but has previously stated that Californians accounted for 60% of all entries when they were previously allowed to compete.

While the move to Miami was likely necessitated by the law (possibly due to my reporting), with the intention of reopening the contest to Californians next year, not all of the response on Sutter Home’s pages has been favorable:

“If I am one of the winners I would preferred to go to Napa Valley and visit that beautiful wine paradise.” – Cynthia

“I really wanted to get into the top ten so that I could get a trip to California…I am not sure they realize that it is 90 degrees in Miami with 95% humidity in September. I built a grill in my house so that I did not have to grill outside in the summer!” – Robert

“Miami??! In the middle of hurricane season? Good luck with that! As a north FL girl, I would so prefer Napa.” – Joy

Sutter Home writes about other Miami events, notably Superbowls and Food and Wine Festivals, but fails to mention that the events are held in February and not September for a reason. No reasonable person travels in August or September to hot, humid, and hurricane-threatening Miami to cook outdoors. This is as nearly as bad as the Las Vegas option I had written about.

I know how Sutter Home can:

  • Solicit Applications from all over, including California,
  • Conduct the cooking at Sutter Home’s beautiful Napa Valley winery again,
  • Award a check for $100,000 to the person the judges deem the best, and
  • Operate completely within the law.

End the Build A Better Burger contest after this year. Call it a successful 20 year run. Put it to bed. Finito. Final. 30. Over. Done.

Beginning with 2011, start the Build A Better Burger job search, modeled after Murphy-Goode Winery’s incredibly successful A Really Goode Job search.

Murphy-Goode received video applications from 1,997 job applicants, including many from Californians, in what may be the most visible publicity coup of recent memory within the wine industry. The job applicants were encourage to drum up support and Murphy-Goode enjoyed millions of hits on their A Really Goode Job website. The almost two thousand were winnowed down to a top 50, and then a top 10. The top 10 were flown to California, put up at the beautiful Healdsburg Hotel, and a more performance oriented interview took place. Eventually, Hardy Wallace was chosen to be Murphy-Goode’s “Lifestyle Correspondent” and received $60,000 and luxury accommodations in wine country.

Sutter Home could post an employment opening for a “Burger Ambassador” with a $100,000 paycheck. Applications with a recipe resume could be solicited. Californians could compete for the job. Applications could be winnowed down to a top 10. The top 10 applicants for the Sutter Home Burger Ambassador job opening could be flown out to California, put up in Napa Valley, and their performance oriented interview would entail cooking burgers for judges. The judges would award a job to the person who cooks the most delicious burger, and the one year paycheck of $100,000 would be awarded.

Sutter Home gets to have their winery location in all of the Food Network camera shots, Californians can compete, someone is chosen the best and receives $100,000, the CA ABC’s codes and regulations regarding contests become moot, because Sutter Home is not holding a contest, but a thoroughly vetted employment interview competition for a job.

If Trinchero Family Estates wants to thank me for following up, for thinking outside the box, for coming up with the solution that eluded every great mind employed within the company – well, you know how to contact me. I’m available for Social Media Marketing, Traditional Marketing, Special Events Marketing, and Corporate Communications. You can also add me to the Trinchero Napa Valley review sample shipping list. Cheers.

Shortly after pulling off a guest chef job for Parducci Wine Cellars, and having fielded offers from two other wineries to consider future culinary collaborations, I turned my attention to Sutter Home Winery’s 2010 Build a Better Burger Contest.

With dreams of my own big fat prize check, I went to Sutter home winery’s website.

I had a mental leap of creativity that would ensure that my submission would be unique, and I thought it a genuine stand out recipe idea, for good or ill; I was either go to turn heads or stomachs.

Visiting Sutter Home’s Build a Better Burger, I was thrilled to find that the prize had been increased to $100,000 for 2010, the contest’s 20th Anniversary. My elation turned to confusion, then unhappiness, as I read of an exclusion that would effect me.

The Rules

2. The Contest is open to U.S. residents, aged twenty-one (21) years or older, except for the following:
(a)  Residents of California, Puerto Rico and other U.S. territories or possessions…

I pored over Sutter Home’s burger contest site, and found some information regarding the exclusion of Californians, and other relevant information.

Sutter Home’s Burger Contest History Page

Shortly after the 1998 cook-off, Sutter Home Public Relations Director Stan Hock made the bleak announcement that “this was our last Build a Better Burger® contest. We are not discontinuing the promotion because of any dissatisfaction on our part but because the State of California has changed its regulations on contests. It is no longer legal for us to sponsor any contest in which the prize exceeds one dollar And that’s no prize, because for a buck you can only get one of those other burgers, not the one-in-a-million variety but just another one of the eight or twenty billion or so.”

As it turned out, the legal experts at Sutter Home determined that the new California law only made California residents ineligible to participate in the contest, joining the state of Utah where the contest is also illegal, so BBB was able to continue after all.

With Californians now ineligible to participate in BBB, [in 1999] an effort was made to generate more entries to make up for losing the state that had generated 50 to 60 percent of the contest submissions. A winning recipe was chosen each day from Memorial Day through Labor Day and awarded $100. Sutter Home wine bottles on grocery store shelves sported bottleneck brochures containing burger recipes, mail-in grocery and wine rebate offers, and instantly-redeemable coupons for mustard and cheeses.

In an effort to make it possible [in 2002] for Californians to once again participate in the contest, the American Culinary Federation presented the competition, with Sutter Home and National Cattlemen’s Beef Association as sponsors. Finalists were chosen in two divisions: Best Beef Burger (Grand Prize) and Best Alternative Burger.

[In 2008] Jeffrey Starr, Sutter Home’s Culinary Director and Executive Chef, announced the winners and Bob Torkelson, Sutter Home’s President, presented them with giant checks and arty trophies.

Anthony Torres, Principal and Senior Vice President Administration of Trinchero Family Estates, welcomed the [2009] invited guests gathered under the big tent. Wendy Nyberg, TFE Senior Director of Marketing, announced the news that BBB would be doubling the Grand Prize money for 2010, making the contest the highest paying annual cooking contest in America!…Roger Trinchero, Vice Chairman and CEO of Trinchero Family Estates, joined his nephew Anthony Torres in welcoming all of the finalists back to the stage. James McNair announced the winners, who were presented with checks.

I contacted Sutter Home to ask about the exclusion of millions of Americans, roughly 12 percent of the US population, through Facebook, and the unsatisfying response came quickly.

“Hey John – Unfortunately, Californians are excluded from both Wine & Burger University and the Build a Better Burger competition due to California alcohol laws.”

I also e-mailed Sutter Home and asked for a more detailed response for a possible future article (you are reading it now). Again, the response was timely, and although more detailed, it was no more satisfying.

Dear John,

Thank you for taking the time to write to us regarding the Build a Better Burger Contest. We are as frustrated as you that we cannot offer the Build A Better Burger Contest or other sweepstakes promotions to California residents. However under California law and regulations, a California wine producer is prohibited from giving a California consumer anything of value over $1.

Under California Business and Professions Code Section 25600, no licensee, i.e. alcoholic beverage manufacturer, wholesaler or retailer, shall give any premium, gift, or free goods in connection with the sale or distribution of any alcoholic beverage, except as provided by rules that shall be adopted by the California Department of Alcoholic Beverages Control (ABC). The ABC adopted regulation 106(j) which states that a supplier is prohibited from the giving of any premium, gift or goods of any sort, whether by way of sweepstakes, drawings, prizes, cross-merchandising promotions with a nonalcoholic beverage product or products or any other method if the value of the premium, gift or goods given to an individual exceeds $3.00 with respect to beer, $1.00 with respect to wine or $5.00 with respect to distilled spirits.

Until California residents convince the state legislature to change the law, we unfortunately have to prohibit California residents from entering our contest and sweepstakes. Maybe you can rally California consumers to work toward changing the law. We would love to open up the Build A Better Burger Contest to California consumers!

Graciela DeHaro

Trinchero Family Estates

Sutter Home Winery

While I think Graciela DeHaro was somewhat graceless in her communication to me – Trinchero Family Estates might have sought a solution in the California legislature anytime in the last 10 years rather than suggest the impetus for change is mine – I was inspired to see what I could do.

I initially contacted Mike Korson who heads up the Santa Rosa District Office of the California ABC, responsible for matters in Lake, Marin, Mendocino, Napa and Sonoma Counties.

Mike Korson directed me to contact Alma Yamada, District Administrator at the ABC HQ for the Trade Enforcement Unit.

I called and left a message for Ms. Yamada.

Chris Albrecht, Deputy Division Chief at HQ and member of the CA ABC’s Executive Management Team, overseer of the Trade Enforcement Unit, called me back.

My initial reading of 25600 and 106(j) did not lead me to conclude that the prohibition for Californians exists, the prize earning event was unrelated to the sale, distribution, or promotion of wine and 25600/106 did not obtain, but I am neither a lawyer nor certain that I was reading the most recent versions of the code and regulation. I found it odd that the California legislature could conceivably pass rules that punish only Californians, at least as it applies Sutter Home’s burger contest.

Sutter Home Winery/Trinchero Family Estates, a multimillion dollar wine industry leader, certainly makes political contributions to ensure access for situations like this. It boggles my mind that a smart and successful business would ignore the opportunity to correct an unnecessary inequity, but seems to take Californians for granted.

Albrecht did not understand how Sutter Home could possibly think they could hold the event in California, regardless of where the competitors hail from; he believes that the contest is a gross violation of 25600 and 106, and the case law that come from tests of 25600 and 106, preclude not only Californians from the contest but anyone from any place as the contest increases Sutter Home’s brand awareness, is held in California, and a gift/prize is being awarded here in California. Albrecht said excluding Californians from participating in the contest was had no bearing on whether 25600 and 106 were being followed or violated.

I find it funny that the ABC had no idea that Sutter Home ran such a contest, Food Network’s broadcast of the event is pretty showy; ironically, it took a suggestion from Sutter Home that I become involved to bring it to the attention of the ABC. While there are many wineries that run similar, smaller profile, contests – and do allow Californians, I did not mention them to the ABC. I only mentioned the Sutter Home event because Sutter Home sent me out on my own to do their work for them.

In view of the Albrecht’s statement that the burger contest is not legal, I asked Albrecht about options, and it was determined that Sutter Home could hold the contest out of state, in Las Vegas (where outdoor grilling in the Summer sun is close to Hell) as an example, and that a contest out of state could include competitors from California.

Laws are amended over time, and case law further clarifies what a law means. Albrecht explained that the giant checks, the enormous cash prizes, awarded at the California winery location, with television and other media coverage, generate enormous benefit and promotion. The recent June 11, 2010 Food Network rebroadcast of the 2005 Burger Contest featured hundreds of Sutter Home logo sightings, and the many if not most of the burger recipes chosen included Sutter Home wine as an ingredient; pretending that there exists no promotional effort or benefit on Sutter Home’s part stretches credulity. The winery owners and officers are tied to the giant prize checks by the winery’s own contest website.

Giant Sutter Home logo branded prize awards made at California winery site – as seen on TV

I shared my initial initial findings in an e-mail to Graciela DeHaro, asking for a response. In a very short time, Ron Larson, Sutter Home’s Senior Vice President and General Counsel called me directly.

Larson had never heard of Albrecht, but said that he had determined the appropriateness of the contest rules and operation with the “ABC’s head of enforcement Matt.”

While I assume Larson referred to Matthew Botting, General Counsel for the CA Dept. of ABC; in a follow up, Albrecht wrote that he was, “not aware of any specific conversation between Sutter Home’s counsel and General Counsel Matt Botting or any other Department employee, but I can assure you that during our conversation, I provided accurate and consistent information on the subject.”

I do not know whether the contest is legal, but I would encourage Sutter Home and Trinchero Family Estates to work to make it so for Californians – the CA ABC does not operate in a vacuum; Sutter Home can and should use whatever political influence a multi million dollar California business leader, with decades of past political contributions to pave the way, enjoys to create an environment where California wineries can hold contests, with prizes over $1, that generate promotional benefit and feature branding and press coverage, without fear of bending and breaking the law.

It is obvious that Sutter Home must see the effect of 25600/106 differently than Albrecht, and I will cut and paste any comments left by Sutter Home or the CA ABC in response to this post into the body of this post where it will be more visible.

Contest or not, I tried out my revolutionary burger idea and can report that the cutting edge ingredient and preparation that inspired me to go to Sutter Home’s website in the first place was a complete and total disaster. I have subsequently come up with a delicious new twist, a burger recipe unique to me, and look forward to the day Sutter home is able to include Californians again.

I am writing this blog post from a borrowed PC; I find the exercise nearly painful. I can use a PC at work, at school, but I have not used a PC at home for several years.

I have written every post on one computer, my iMac, and it was stricken a few days ago with a computer ailment and refuses to boot up.

In addition to the ease of article creation that comes with the Apple OS, allowing effortless manipulation of pictures and text, I had a second monitor linked to my iMAC allowing me two large screens to spread bits of text, quotes, pictures, articles, so that I could easily pull from them to craft a little blog post.

I have made an appoiontment with a computer psychologist to delve into why my iMac is impersonating a PC. I should be back writing posts soon. My next two posts, unless something juicier captures my attention, will be about 1) Sutter Home’s Build A Better Burger Contest (exploring the exclusion of Californians and whether the contest may be in violation of laws, codes, regulations) and 2) a follow up on my follow up of my article (or 3rd article in a continuing series) about the threat the European Grapevine Moth poses to Mendocino County’s green winemaking industry.

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