Sonoma County considers wine tax to fund marketing moves
A proposed Wine Improvement District in Sonoma County could see a small self-imposed tax on direct-to-consumer wine sales, aimed at funding marketing efforts to “re-engage” Gen Z and Millennial drinkers.
Tax to fund targeted marketing
Wine industry leaders in Sonoma County, California, are exploring the creation of a Wine Improvement District (WID) as part of a plan to reverse declining interest in wine among younger consumers.
The proposed WID would introduce a small, self-imposed tax on direct-to-consumer sales – including those via tasting rooms, wine clubs, events and packaged food – while excluding retail sales in shops, grocery stores and liquor outlets. Industry leaders hope to use the revenue to fund a large-scale marketing campaign aimed at promoting Sonoma County as a premier wine destination.
“We’re talking about pennies per bottle. It shouldn’t be that noticeable to a consumer,” said Rob McMillan of SVB, a leading financial services provider to the US fine wine industry. “It’s a flat-out marketing programme.”
Such marketing initiatives, he noted, have worked well for other sectors, citing California Raisins, Almonds and the ‘Got Milk?’ campaign. Wine districts in regions such as Livermore, Lodi, Santa Barbara, Temecula and Amador have also implemented similar models with success.
The proposal comes amid mounting pressure across the US wine industry from shifting consumer trends and broader economic challenges.
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Reconnecting with younger drinkers
The WID’s focus is to target consumers aged 22 to 44 – Millennials and Gen Z – who are increasingly turning to alternative drinks such as hard seltzers, ciders, canned cocktails, spirits and beer.
“Every so often you need to reset and reconnect with new generations of consumers,” said vintner and grower Ned Hill, who is leading the campaign. “Trying to come up with something that’s different; that’s not what somebody’s parents or grandparents enjoyed, but something that is new-age if you will.”
Prema Kerollis, co-chair of the steering committee behind the proposal and co-founder of Three Sticks Wines, described the move as “bold, coordinated action” to help Sonoma County remain a “global leader in wine, sustainability and innovation”.
“The primary purpose of a WID would be to establish a reliable funding mechanism to promote Sonoma County as a premier wine destination,” the Sonoma County Winegrowers organisation stated on its website. Activities could include media outreach, digital and print campaigns, special events and direct sales efforts.
A vote by local wine businesses that sell on-site will be required to advance the WID. While no timeline has been confirmed, outreach to industry members is currently underway.If approved, the WID would be formed for an initial five-year period, with the option to renew for 10 years.
Steering committee co-chair Steve Sangiacomo of Sangiacomo Family Vineyards said the model would provide “a sustainable funding model that unites both sides of the wine business” and “secure the future” for Sonoma’s growers and vintners alike.
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First of all, this practice is not a self-imposed tax. The biggest businesses can easily meet the 51% of budget required to form a district. Small businesses have no say whatsoever and proponents know this.
Also, if the funds are spent on a general marketing campaign to target a generation, or to advertise in general “come to Sonoma County,” or “our wine is the best,” the assessments become an unconstitutional tax under Prop 26.
And, businesses located in agricultural and residential zoning cannot be assessed SHC 36632. And, the assessment could not be passed through to the customer.