The Santa Barbara Vintners has renewed its campaign for a Wine Business Improvement District, a growing standard for how distinctive wine regions support California’s wine industry and gather funds for heightened marketing.

The Santa Barbara Vintners’ plan for Santa Barbara County wineries would implement a 1% fee on all wineries’ sales within California. For example, a fee collected on a $100 sale would be $1, said Tim Snider, president of Fess Parker Winery and president of the Board of Directors of the Santa Barbara Vintners.

The economic impact of Santa Barbara County’s wine industry is $1.7 billion once winery guests dine at restaurants, stay in regional lodging and attend special events, according to a fact sheet provided by the SBV.

The new proposal — which organizers are calling a “Wine Preserve” — is the association’s second attempt at an assessment. After marketing a 2% or 1.5% assessment to Santa Barbara County winemakers for about two years, the association suspended its efforts in 2020 after lawsuits were threatened, alleging the proposed assessment was unconstitutional.

A business improvement district (BID) is a specific geographical region that delivers funding for an industry via a fee collected from sales. Consumers pay the fee, which is tracked and managed by a third-party agency.

Since 2021, both the Temecula and Livermore wine regions passed business improvement districts, and closer to home, the Paso Robles and Monterey wine regions are pursuing their own, Snider said.

Alison Laslett, CEO of the Santa Barbara Vintners, said that “more than 75 wineries are in support of the (new) BID. Many have changed their position from the last time because a lot of misinformation was spread about what the Wine Preserve actually is.”

A vital point: The proposed “preserve” would not create a tax — the funds don’t benefit the government. The assessment is supported by a majority of an industry and supports visibility and visitation to any region.

For example, she said, under a BID, “the small wineries stand to benefit more than the big wineries who may already have marketing budgets and public relations firms, but will also be paying the lion’s share of the assessment” based on their annual sales.

“That’s why the formation of the district is a vote that is weighted based on the total sales of the winery — the bigger wineries pay more, so they get a bigger formation vote,” Laslett said.

“Once that is done, everyone has an equal vote, so it’s a huge win for a small winery. Plus, the assessment can be passed onto the consumer and association dues go away. You can break out that 1% on the receipt, or disclose at the bottom that 1% of sales goes to the Wine Preserve for the protection and promotion of our region.”

Laslett said Santa Barbara County is home to more than 350 licensed wineries/labels, with about 100 of those members of the association.

Some Winemakers Already on Board

Two of those SBV members are Eric Carucci, owner/winemaker of Carucci Cellars, and Keith Saarloos, owner with his family of Saarloos & Sons Winery and a member of the board of directors of the SBV. Both Carucci and Saarloos have tasting rooms in Los Olivos, and both focus on direct to consumer (DTC) sales because they are very small producers.

Carucci and Saarloos — who returned a call from his tractor — emphasized that consumers are accustomed to paying BID assessments.

“Show me someone who has stayed at a hotel recently and not paid resort fees/taxes,” Carucci said. These fees “are exactly what we are talking about here — on a significantly smaller scale. As a consumer myself, I know that I am already conditioned to paying BID fees; it’s part of doing business with many industries.

“It’s exactly how most regions in the world drive tourism traffic, and it’s proven to be very effective.”

Having the BID would make Santa Barbara County’s wine region more competitive overall, “and allow us to advocate with local government in one of the most tightly controlled wine regions in the world,” Carucci noted. “It will allow our region to stay top of mind in a short news cycle” as consumers are constantly bombarded with something new.

Both he and Saarloos said they marveled at how Santa Barbara County’s wine tourism increased in the wake of $750,000 the Santa Barbara Vintners raised from recent grants to help market the region.

“That showed me that if we had a budget and a preserve, we could all benefit,” Saarloos said, likening the effort to “a rising tide lifts all boats.”

Santa Barbara County’s microclimates make the region one of the world’s best for most grape varieties.

“We have pinot noir, grenache and Bordeaux grapes growing just miles apart. Ours is the world’s best place to grow wine,” Saarloos said.

Both he and Carucci noted that the Santa Barbara Vintners’ proposal is not an ideal solution.

“No solution is perfect, and those waiting around for one that is are going to wish we acted sooner,” Carucci said.

“If someone’s got a better idea, I’d love to hear it,” Saarloos said. “But we need to pay for marketing to get people here. It’s up to us — this BID is us helping ourselves within our industry.”

County Shares Retail Sales Data with Vintners

During the May 7 meeting of the Santa Barbara County Board of Supervisors, the Santa Barbara Vintners made a request for “aggregate data on the retail sales of our industry” — a vital first step in the campaign, Laslett said.

“You cannot begin the process of pursuing a business improvement district until you first know how big that district might be,” she said.

The process for approval starts with submitting petitions from wineries that will be assessed in the district. On average, the process takes up to a year.

In 2020, when the Santa Barbara Vintners received data on wine sales (in aggregate), this was the sales breakdown, Laslett noted:

• 92 wineries (or labels) reported no sales activity
• 80 wineries reported less than $9,999 in sales
• 85 wineries reported sales of $10,000 to $99,000
• 48 wineries reported sales of $100,000 to $199,000
• 81 wineries reported sales of $200,000-plus

She said 81 wineries generated 82% of the retail sales in the wine industry in 2020, which is a “significant statistic to understand” when discussing the wine industry and membership in the Santa Barbara Vintners.

“Given this context, you can see that having 100 wineries in the Santa Barbara Vintners comprises a majority large enough to pursue membership in the association,” Laslett said.

“(The Vintners) have, and we have always had, the majority economic support of the industry.

“The data we requested the county share with our consultants, Civitas, will allow us to understand the economic make-up of our industry, again.”

Laslett noted that the confidential analysis of sales tax data has been approved by cities and counties every time a business improvement district is formed — it’s “how the value of an industry is determined.”

The county’s tax data consultant, HDL, and Civitas, the Vintners Association wine BID consultant, sign non-disclosure agreements to make sure the data stays confidential, she said.

“We never see any of the details of the individual wineries in this process, and it’s important that is communicated and understood.”

She detailed the process by which the BID will face approval.

“The Board of Supervisors will have to vote on our Management District Plan, which is the document that describes how our Wine BID and organization will operate.” Following that, the plan will face approval by all the cities within the county, and return to the supervisors for formation.

“Opportunities for the public to be heard are an inherent part of the process,” Laslett noted.

Sta. Rita Hills Vineyard Owner Opposes BID

Some winemakers who opposed the Santa Barbara Vintners’ first effort for a BID are also challenging the new campaign.

Steven Pepe, owner of Clos Pepe Vineyards in the Sta. Rita Hills, warned the supervisors on May 7 that they “are setting in motion a course of action which will have significant legal and monetary consequences for the county.”

The current campaign, Pepe continued, is a “rebottling of the Vintners’ 2000 wine bid that was opposed by most small winemakers and the Lompoc City Council.”

Laslett described how the timing of the Santa Barbara Vintners’ first bid coincided with a Lompoc city tax. Each city within the proposed bid “map” has a right to vote whether to participate.

“In the case of Lompoc, right when the Wine BID was proposed in 2020, a city tax — a real tax that funds the government — had just been proposed and passed. There was real concern that adding another 1% to customers’ bills in the tasting room would put the total fees on a receipt over 10%. The vintners of Lompoc did not like the optics of that,” she said.

When he addressed the supervisors last week, Pepe said he was speaking on behalf of the owners of four other Lompoc wineries that also oppose the Vintners’ plans: Flying Goat Cellars, Ampelos Cellars, Loring Wine Co. and Babcock Winery.

Pepe, who described himself as a founding member of the Sta. Rita Hills Winegrowers Alliance, told the supervisors that the Vintners’ proposal “will kill the SRHWGA as a group, because small wineries cannot pay twice and large wineries’ CFOs will not pay a voluntary payment and a second, double payment because of tax.”

Laslett said she was “very surprised” to hear Pepe speaking on behalf of the SRH Wine Alliance.

“We have spoken with (Alliance) members and their executive director specifically about the Wine Preserve, and have plans to continue to do so,” she said. “Mr. Pepe was not at that meeting and there were members in support of the (proposal) … when I followed up with the alliance’s leadership, they were surprised to hear he spoke on their behalf; he may have spoken for some members, but certainly not all,” Laslett said.

In response to Pepe’s comments to the Board of Supervisors, I emailed Barbara Satterfield, executive director of the SRHWGA, and winemaker Laura Hughes, president of that board.

“At this time we are still gathering information and opinions on the Wine Bid, taking the time to evaluate what is proposed,” Hughes wrote in response.

“We support the rights of our members to express their opinions on the issue; however, this is their individual opinion and is not reflective of any determination that we may make in the future.”

Hughes also noted that Pepe had not reached out to the SRHWGA regarding the BID before he addressed the supervisors.