How Wine Rules
by Darwin Bond-Graham and Will Parrish, July 27, 2011
If you've followed the Anderson Valley Advertiser for any length of time, you're no doubt aware that the wine industry wields inordinate political power, not only here on the North Coast, but at the state-wide level also. Whether they’re fighting to prevent regulation of their enormous appetite for water, or greasing the political gears for a big forest-to-vineyard conversion, the wine industry’s major players are deeply involved in politics. As case after case has shown, the wine industry tends to get its way with respect to water, zoning, labor laws, subsidies, and more. But what is it, specifically, that makes the grape-based booze industry so powerful?
For one thing, there's the cultural stature of the beverage itself. To appreciate fine wine is to signify membership in a learned, privileged order. No other luxury item is as capable of serving as an expression of ruling class solidarity as premium wine. And, it should be noted — if only for the purposes of this particular article – that California's ruling class certainly includes most of its elected officials and many of its would-be regulators.
Every bit as important is the fact that the wine business has become a juggernaut of free market capitalism (although underwritten partly by taxpayers, as per the socialism-for-the-rich structure of the larger economy). The California wine industry annually reaps about $20 billion in revenue, much of it through exports to Europe, Canada, and Asia. The industry has become so profitable that most of the North Coast’s officials, from county supervisors to members of Congress have internalized the notion that, perforce, their role is to do virtually everything they can to facilitate the industry's continued growth.
That's especially the case owing to the wine industry’s thorough integration with Northern California’s all-important real estate sector. More than any other artifact or image, it is the vineyard and wine glass that have come to epitomize the “good life” of Northern California for a global market of real estate investors, vacation-takers, and home buyers. Crushed grapes and autumnal vineyards became a symbol, and an important economic component, of the region’s land boom in the 1990s and 2000s. The grape-alcohol plantations, fetishized as “family estates,” or “small farm vineyards” served, through a peculiar symbiosis, to both “preserve” the pastoral countryside, while simultaneously increasing land values, thereby creating a market for both McMansions and tract housing, and all the attendant gentrification and sprawl that was the basis of economic growth between San Francisco and the Oregon border until 2008.
Wine has also been the barometer for the financial and real estate bubbles by virtue of its importance to the recreation and lifestyles of the owners, managers, and yuppie employees of the banks, insurers, realtors, brokers, and builders responsible for propelling the last decades of the area’s illusionary growth. The spread of vineyards shadowed the spread of shopping malls and half-million dollar homes. Sales of premium wines have correlated strongly with rising income inequality between the wealthy few and the indebted majority (not to mention their mostly immigrant Mexican workers). The wine industry’s power and prestige have grown in parallel with the increasing inequality fostered by this get-rich-quick economy. Wine is the unjust dessert of this society’s ruling class, a treat for the men and women who built their fortunes off consumer debt, home price inflation, and a weakened working class.
We hardly need to provide more of a description of wine’s cultural and economic integration into the real estate sector’s bubble economics, given that the Santa Rosa Press Democrat has — ironically — already done that work for us. To take one of countless examples, in a recently published article, the PD noted that one way in which the premium wine industry is a pillar of the local real estate is that it “attracts [wealthy] outsiders who want second homes nestled near vineyards or close to town squares with trendy restaurants.” This is an economy of millionaire owners, a landed class with mansions surrounded by a sea of grapes, served by an army of dispossessed waiters, baristas, cashiers, clerks, and yes, grape pickers.
Ironically, then, whereas other sorts of operations within California's still-mighty agribusiness sector, say cattle lots or melon farms, exist in tension with the real estate industry, given that suburban development has steadily eroded the amount of land devoted to agricultural production, the wine industry actually acts as a best friend of the real estate sector across many rural areas of the state — particularly in the North Coast, North Bay, and Central Coast regions.
California Politics Drunk on Wine Money
And that brings us to our final answer to the question of why the industry is so influential. Even with its symbiotic relationship to the multi-trillion dollar real estate boom, and its assumed place within the culture of the ruling class, big wine still finds it necessary to throw its weight about in crassly material ways. The wine industry's power has been achieved and maintained through the increasing influence the industry wields in the form of limit-bursting campaign contributions, a slew of political action committees staffed with well-connected executives, and an army of top-flight Sacramento lobbyists.
According to campaign contribution figures, which we obtained from the California Secretary of State, there are over 200 winery and vineyard corporations actively funding North Coast and statewide politics today. The largest of these dominate the cash game, acting as the Daddy Warbucks for winery and vineyard owners large and small. Ten wine corporations alone account for 57% of all cash given to the incumbent Assembly members and Senator representing the northern California appellations.
Wineries, vineyards, and wine industry trade associations have spent upwards of $300,000 over the past four years to help elect the North Coast's current batch of state Assembly members representing the 1st, 6th, and 7th Districts, and the 2nd District Senate seat. These three Assembly members and single State Senator together represent nearly every acre of Napa, Marin, Sonoma, Lake and Mendocino counties: the epicenter of California's multi-billion dollar wine industry.
E&J Gallo and the Wine Institute, in particular, exert enormous leadership within the industry. Over the past four years. Gallo alone has spread $98,000 among the campaigns of State Senator Noreen Evans, State Assembly members Wes Chesbro and Jared Huffman, and Governor Jerry Brown. The Wine Institute has cut campaign checks for another $69,000 to this pool of candidates and Lieutenant Governor Gavin Newsom. Other major wine industry funders include Swanson Vineyards, Sutter Home, Family Winemakers of California PAC, and the California Association of Winegrape Growers PAC.
The industry's primary torch-bearers in Sacramento are 2nd District State Senator Noreen Evans and 1st District Assemblyman Wes Chesbro, whose district boundaries largely overlap. Chesbro currently represents northern Sonoma County, and all of Mendocino, Lake, Humboldt, Trinity and Del Norte Counties. Evans represents Mendocino, Lake, Napa, and Humboldt Counties, and parts of Solano and Sonoma Counties. Few places on earth grow more wine grapes.
Owing to California’s strict term limits, Assemblyman Chesbro once held Evans' Senate seat, and Evans once held the 7th District Assembly seat currently occupied by Michael Allen. Evans currently chairs the Senate Select Committee on Wine, once Chesbro's stomping grounds. Evans and Chesbro are by far the most active agents of vino-agribusiness in Sacramento, initiating most wine-friendly legislation, and involving themselves with virtually every bill affecting the industry.
Prior to Evans and Chesbro, the Senate’s 2nd District seat was occupied by none other than Congressman Wine Guy himself, Mike Thompson. In addition to owning his own vineyard in Lake County — “Adobe Creek,” a former pear orchard he converted to Sauvignon Blanc— Thompson is the current US Congress Rep for the North Coast region.
Over her political career, Evans has raked in at least $139,000 in wine industry campaign contributions. Chesbro has received at least $141,000 from grape alcohol planters and vendors. For both Evans and Chesbro, these figures represent about one in every ten campaign contribution dollars over their careers. Neither construction companies, nor real estate brokers, nor any other industry have contributed as much to either politician. Wine is by far the leader purely in terms of cash.
Top wine funders for both Evans and Chesbro include the massive E&J Gallo Corporation, and the wine industry's largest Political Action Committee (PAC) the Wine Institute. Other major sources of alcohol dollars for Evans and Chesbro include a roster of dozens of wineries and vineyard holding companies. Both Evans and Chesbro prominently feature images of vineyards on their official web sites, with Evans going so far as to advertise in the first sentence of her official biography that the 2nd District “is home to a world-renowned wine industry.”
The larger sources of wine industry cash like Gallo and the Wine Institute also operate sophisticated policy shops staffed with influence peddlers who can talk when even money can’t. For example, E&J Gallo’s political muscle is bolstered by its well-connected leadership, including board members like John DeLuca, the former CEO of the Wine Institute whose links include advisory posts to the University of California and Harvard, and a past term on the board of the Export-Import Bank. According to his official biography, “while at the Wine Institute, DeLuca concentrated on reducing restrictive state regulations and foreign trade barriers […] He encouraged members and staff to enhance media and trade appreciation for California wines throughout the nation and encouraged their export around the world.” The Wine Institute’s current president is ex-US President George W. Bush's brother-in-law, Robert Koch. Koch previously worked for former House Majority Leader Dick Gephardt and former Majority Whip Tony Coelho. As with DeLuca, Koch is a member of the US Agricultural Policy Advisory Committee for Trade. As with most other large industries, the wine industry’s PACs are clearly led by well-connected executives who understand how to do business with the politicians they also fund.
The North Coast's other Assembly members, Jared Huffman and Michael Allen, have also benefited from wine industry donations and connections. In his 2010 run for the Assembly, Allen received contributions from six wine companies totaling $2,454. All in all, Allen is clearly the least booze-dependent in the group. Huffman's campaign took in contributions from nine wine corporations for a total of $17,152, or about 4% of his entire campaign coffer, making wine a significant, but not dominant source of cash.
No other industry within an industry (wine being part of the larger California agribusiness sector), with such a particular regulatory agenda, funds North Coast politicians at a comparable level. Wine is possibly the largest, most coherent interest group funding North Coast politics. But wine money and influence is spread further than just the region’s own Assembly and Senate seats.
Governor Jerry Brown's 2010 campaign fund, for example, included $143,516 in contributions from wineries and vineyard owners, according to our analysis of data from the Secretary of State. Brown reaped $25,000 in donations from E&J Gallo and the Wine Institute, respectively, placing these industry power-brokers in the first tier funders class with Silicon Valley billionaires, the largest public employee unions, big oil, and investor owned utilities, among other political titans. The 40 wine companies that gave money to Brown's 2010 campaign mostly hail from just a few locales concentrated in Napa and Sonoma Counties. Some are headquartered in more recently gentrified “wine country” territory like Paso Robles in San Luis Obispo County.
All understand that potential reforms to environmental regulations and labor laws that could cut into their profit margins are most likely to emerge at the state level in the legislature. All understand that the governor can veto most of these potential threats, and that there is a permanent Republican and conservative Democratic Party minority in the State Senate sufficient to prevent a veto over-ride. All therefore understand the importance of lavishing campaign bucks on any and all gubernatorial contenders. These campaign bucks can also buy appointments for industry partisans to agricultural, labor, and natural resources boards controlled by the governor.
What’s important to also take into account is that measuring the wine industry’s financial impact on state politics in the way we have here doesn't even account for the wealth and influence wielded by such prominent wine industry stakeholders like Bill Foley. A winemaker-cum-banker who was rated by Fortune magazine as the country's fourth most well-compensated CEO in 2007 (with compensation at his Fidelity National Bank post alone worth $175.6 million), Foley has been Sonoma County's most active purchaser of vineyard estates since the 2008 economic meltdown. Or take corporate farming billionaire Stewart Resnick, a notoriously influential friend of California Senator Dianne Feinstein, who owns an expensive winery and vineyard in Paso Robles, on California's Central Coast. These sorts of hyper-wealthy and uber-connected characters are heavily invested in the wine business and make large donations to state-level politicians, but they often do so under different guises than the wine industry.
Outside of election cycles, the wine industry relies on its professional lobbyists in Sacramento to shape environmental, labor, and other regulations pertaining to vineyard plantations and retail alcohol. Wine is, in fact, now the dominant bloc within the state's agribusiness lobby. According to figures filed with the Secretary of State, wineries and their political action committees spent $2.1 million, or one in every four dollars of agribusiness money, used to lobby lawmakers and regulators in the 2009-2010 year. In dollar terms, the Wine Institute is now the second largest agribusiness lobbying organization after the Farm Bureau, which is itself dominated by grape growers in many locales, including Mendocino County. The California Association of Winegrape Growers is the fourth largest agribusiness lobby, spending hundreds of thousands of dollars each year to influence legislation and regulations.
No other commodity growers spend a fraction of the amount of the wine industry does to influence state politics. The state's cotton farming industry, represented by only two PACs, spent only 2% of what the wine industry did in 2010 on lobbying. In a given year, the state's tomato growers and strawberry farmers target less than 1% of the wine industry's usual expenditure on lobbying. Even large transnational biotechnology corporations like Monsanto routinely spend less than 5% of what the wine industry shells out in a given year to influence Sacramento lawmakers. These numbers speak for themselves; wine is now the establishment, the leader of the agribusiness lobby, protecting the general interests of California farm corporations with huge sums of political money that no other sector can muster.
It's also what legislation that's not even considered that truly marks the wine industry's power. In California, water policy is an unregulated free-for-all given the legislative stranglehold wielded by water-intensive industries like agribusiness. Even to entertain implementation of a tighter regulatory regime like that which exists in much of Europe (which has plenty of problems of its own, it should be noted) would be considered blasphemous. Big wine has been very successful in nipping such possibilities in the proverbial bud.
In addition to preventing stricter environmental and labor laws, the wine industry also funds politics in order to push for legislation and policy changes that expand the market for premium wines. For example, among the many bills written by and for the industry are a series that were sponsored by Senator Evans: AB 1470, which expands the permissibility of alcohol licenses for wineries; AB 1964, which encourages nonprofits to receive, store, sell, and otherwise market wine through fundraisers; AB 2004 which legalized outdoor drinking in picnic areas; AB 2090 which created a category of temporary alcohol licenses for special use by the wine industry's lobby and trade organizations, and; AB 323 which enables wineries to serve their product at nonprofit events.
Assemblyman Chesbro has an equally lengthy list of wine industry-friendly legislative accomplishments. Rep. Thompson’s list of legislative favors for the wine industry would require another article just to begin summarizing.
To their collective credit, the North Coast's legislative contingent in Sacramento — Senator Evans and Assembly members Chesbro, Huffman, and Allen — all voted in favor of SB 104, a bill passed earlier this year by both houses that would have instituted a procedure known as card check for union drives among agricultural workers. Card checks make unionization efforts less susceptible to employer sabotage. (It should go without saying that nearly all vineyards rely on un-unionized, low-wage workforces composed mainly of recent Mexican and Central American immigrants and migrants who have little to no input into management practices or the working conditions they endure. Those who don’t work in the grape fields are often employed to clean the McMansions nestled in quaint vineyards, or to cook in Napa’s trendy bistros, or to landscape for Sonoma’s event centers, or to….)
The wine industry mounted strong opposition to SB 104 and card check through its PACs, but one of the paradoxes of the special geography and climate of the premium wine industry is that these typically conservative agribusinesses exist in otherwise liberal districts with strong union organizations that elected representatives must advocate for. However, even with the wine industry's own home turf politicians voting for card check, Governor Brown (who, ironically, created the state’s agricultural worker labor relations law back in the 70s) — now a recipient of considerable donations from agribusiness and anti-union corporate funds, including a great deal of wine money — vetoed the bill. And as we previously explained, there’s little chance of an over-ride.
Labor leaders chastised Brown for vetoing SB 104, especially because his signed veto message provided little in the way of specific reasoning. He was cheered by the plantation owners who spoke through the California Association of Winegrape Growers, implying — amazingly — that their concerns rested with the rights of the men and women who toil in their fields, not their large profit margins based on an often scapegoated and super-exploited labor force. “Governor Brown made clear that union interests should not trump the rights of agricultural employees,” The Winegrape Grower’s spokesperson said without a hint of irony.
The previous director of the California Association of Winegrape Growers was one Karen Ross, who went on to become Assistant Secretary of Agriculture in the Obama Administration, and who now serves as California Secretary of Agriculture under —you guessed it — Jerry Brown. One compelling way to read appointments like this — and Ross is only one example — is that they are political kick-backs in exchange for the industry's generous campaign donations. As noted above, wine, being the most politically active branch of California’s agribusiness lobby, poured big money into Brown’s campaign. Of course it was more than cash the wine industry was pouring.
Back in January, Governor-elect Brown's inaugural committee was given 15 cases of Montevina wine (roughly $1100 worth of their pricy product) by the Trinchero Family Estates, owners of the Sutter Home brand and one of the largest political donors in the industry. Montevina Winery's 400 acres were planted in the Sierra Foothills in the 1970s, expanding rapidly in the 80s and 90s with the craze for White Zinfindel. That varietal, the company claims, exhibits “delightful aromas of summer strawberries and honeydew melons.”
It seems Montevina's wines also exude pungent odors of money, influence, and access — as with so many other “family estates” in California.