Posted by Byron A. Crowe II, January 25, 2013
Understanding the meaning and significance of the region listed on a bottle is one of the most important first steps for a newcomer to the world of wine. Origin has a unique impact on a wine’s intensity and body, and usually provides a clue to the grape types and winemaking practices that went into the wine. Because origin is integral to a wine’s characteristics, governments of wine-producing areas typically regulate how geographic designations can be printed on a wine label. Wine labels are complex, however, and their format often varies from producer to producer, so understanding origin can be a bit tricky, even for a would-be lawyer. The purpose of this article is to give an easy-to-understand overview of the appellation system and a brief look at the regulations governing it.
What is a wine’s place of origin and why does it matter?
There are two places of origin relating to a particular bottle of wine: the origin of the wine itself, and the origin of the grapes that went into the wine. The former is the place where the wine was fermented and aged; the latter is where the grapes were grown. This distinction is important because a wine made in one place is not necessarily made from grapes from that area. For example, a winemaker in San Diego could make a red blend entirely from grapes shipped from Sonoma County, over 500 miles away.
The location where the wine is made generally isn’t important since fermentation and aging usually take place indoors in a controlled environment. The place of origin of the grapes, on the other hand, is extraordinarily important because wine grapes are very sensitive to the environment in which they are grown. A number of factors, including precipitation, soil type, temperature, sun exposure, water quality, wind, and fog, have a big impact on the grapes and, consequently, the quality of the wine. In the wine world, the combination of these factors in a particular place is referred to as that area’s terroir.
What are appellations and who regulates them?
The terroir of certain areas makes them well-suited for growing grapes that will produce exceptional wines. As a result, wines from these areas tend to be sold at a premium, and both consumers and producers have a vested interest in maintaining the authenticity of wines sold from these desirable locations. Many countries have sought to ensure authenticity through the designation of appellations, which are geographically-defined grape growing regions with a unique terroir and history. Under an appellation system, only wines made from grapes produced within a particular appellation may be labeled with the name of the appellation.
In countries known for producing superior wine, there is usually a governing body whose job it is to regulate the labeling of wine and the designation of appellations. In France, for example, appellations are governed by the Institut National de l’Origine et de la Qualité. Here in the United States, wine labeling is regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB), which is part of the U.S. Treasury department. The TTB is empowered by the Alcohol Administration Act to promulgate federal regulations relating to the sale and distribution of wine.
In addition to federal regulation, some states have requirements for sellers and distributors of wine. While Congress certainly has the power to preempt these in relation to interstate wine shipments, the extent to which states may regulate in this area is unclear. At least one prominent case has found that a more restrictive state labeling statute is not preempted by federal regulation. Thus, states appear to have at least some authority to regulate wine labeling.
What are the different levels of appellations?
Appellations can be thought of in layers, with the outermost being the broadest and easiest to qualify for. As a general rule of thumb, the more specific the appellation, the higher quality the wine. Under federal regulations for wines produced in the United States, there are six different qualifying appellations: United States, multi-state (no more than three and must be contiguous), state, multi-county (no more than three and must be in the same state), county (must be identified with the word “county”) and American Viticultural Area (AVA). For imported wines, the U.S. recognizes appellations by country, by state/province (or political equivalent), by multi-state/province region, and by foreign viticultural area (as recognized by the country of origin). For both domestic and imported wines, appellations are not mutually exclusive. Thus, a wine may simultaneously qualify for a country, state, and viticultural area appellation.
What are AVAs and how are they created?
AVAs are the most important component of the American wine regulatory regime because they most precisely identify those areas where quality grape are grown. An AVA is a specific, legally-recognized appellation within the United States that is a “delimited grape-growing region having distinguishing features[,] . . . a name[,] and a delineated boundary . . . .” These features include things like “temperature, precipitation, wind, fog, solar orientation and radiation, and other climate [factors],” as well as geology, soil, physical features, and elevation.
Currently, there are over 200 AVAs, and each year more are recognized by the TTB. AVAs are created by a proponent submitting a petition to the TTB with a name that is “currently and directly associated with an area in which viticulture exists” along with evidence of name usage, the distinguishing features of the area, a description of boundaries and supporting evidence, and maps showing the boundaries of the proposed AVA. So long as the features and boundaries of a particular AVA are sufficiently distinguishable, federal regulations allow for the creation of AVAs within other AVAs.
What are the requirements for a wine to be labeled with a particular appellation?
For an American wine to be labeled with a county or state, at least 75% of the wine must be derived from fruit or agricultural products from that state or county. The wine must also have been fully finished (besides cellar treatment and blending) within the state of the labeled county or, for state appellations, within an adjacent state. Lastly, the wine must conform to the laws and regulations of the named county or state that govern the composition, method of production and designation of wines made there. For a wine to be labeled with an AVA, it must meet three requirements: (1) the AVA must be approved by the TTB; (2) no less than 85% of the wine must be derived from grapes grown within the boundaries of the AVA; and (3) the wine must have been finished (besides cellar treatment and blending) within the state of the labeled AVA.
American requirements for imported wine are similar, but incorporate the requirements of foreign jurisdictions. For an imported wine to be labeled with a particular country or a foreign state/province, 75% of the wine must be derived from fruit grown in the indicated appellation. Also, the wine must conform to the requirements of the foreign laws and regulations governing the composition, method of production, and designation of wines available for consumption within the country of origin. For a wine to be labeled with a foreign viticultural area—for example, a wine from the Mâcon-Villages appellation in Burgundy, France—the area must be approved and recognized by the appropriate foreign government and no less than 85% of the wine must come from grapes grown within the boundaries of the foreign viticultural area. In addition, the wine must conform to the requirements of the foreign laws and regulations governing composition, production, and designation.
The place of origin of a wine can be a strong indication of its characteristics. As a result, ensuring authenticity in labeling is important. In the U.S., the TTB designates appellations and regulates labeling of domestic and foreign wines to ensure that every bottle gives a fair representation of where its grapes were grown.
Byron Crowe is a J.D. candidate at Cornell Law School, where he is the Senior Online Editor for the Cornell International Law Journal . He holds a B.A. in economics from Tufts University and has over seven years of experience in the food and beverage industry. He enjoys Pinot Noirs and New Zealand Sauvignon Blancs.
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 However, for some wines, the production process relies on the local environment. See, e.g., Karen MacNeil, The Wine Bible 443 (2001) (discussing flor, a wild strain of yeast necessary for the production of Sherry that blooms spontaneously in the Sherry region’s humid, coastal air but dies in other parts of the world).
 For example, certain areas, like Bordeaux and Napa Valley, consistently produce superior Cabernet Sauvignon. See Gregory Jones, Professor of Envtl Studies, S. Oregon Univ., Address at the American Society for Enology and Viticulture Annual Meeting: Is There an Ideal Climate for Cabernet? (June 26, 2009), available at http://www.sou.edu/envirostudies/gjones_docs/Jones%20ASEV%202009%20Cabernet%20Symposium.pdf.
 See Robin Cross et al., What is the Value of Terroir?, 11:3 American Economic Review 152, 156 (2011) (“[O]ur results make clear that the concept of terroir matters economically, both to consumers and to wine producers.”).
 This was previously done by the Bureau of Alcohol Tobacco and Firearms (ATF). However, in 2003, the ATF was moved to the Department of Justice as a result of the Homeland Security Act, and the TTB was created to regulate and collect revenue from the alcohol and tobacco industries. See ATF Moves to the Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Dep’t of Justice, http://www.atf.gov/press/releases/2003/01/012403-atf-moves-to-doj.html.
 See 27 U.S.C. 205.
 See, e.g., Cal. Bus. & Prof. Code § 25241 (West 2001).
 Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372 (2000).
 Bronco Wine Co. v. Jolly, 95 P.3d 422, 425 (CA 2004), cert. denied, 544 U.S. 922 (2005). For an analysis of the case, see Jeff Ikejiri, The Grape Debate: Geographic Indicators vs. Trademarks, Sw. U. L. Rev. 603, 612–13 (2007).
 Karen Page and Andrew Dornenburg, The Food Lover’s Guide to Wine 93 (1st ed. 2011).
 See 27 C.F.R. § 4.25(a)(1)–(2).
 27 C.F.R. § 9.12(a)(3).
 See American Viticultural Areas, Alcohol and Tobacco Tax and Trade Bureau (last updated 10/18/2012), http://www.ttb.gov/appellation/us_by_ava.pdf
 27 C.F.R. § 9.12(a)(1)–(4).
 Id. at § 9.12(b).
 See id. at (b)(1)(i)–(iii).
 See id. at (e)(3)(i)–(iv). Considering the underlying policy of the appellation system, it appears that this rule is overly broad. The purpose of regulating labeling is to ensure the grapes, not the wine, came from a particular region. However, under the current rule, a wine maker in Oregon would be precluded from labeling a wine as from California or the Russian River Valley, even if 100% of the grapes were sourced from the Russian River AVA.
 See id. at (b)(2)(i)–(ii).
 See id. at (e)(3)(i)–(iv). More detailed explanations of foreign wine regulations are forthcoming in future country-specific articles.