‘Wine Improvement Districts’ Promise to Sell More Wine, So Why Are They So Contentious?
It’s been a spicy topic for a California wine industry approaching economic panic: the “Wine Improvement District” — or “WID” for those actively at odds in the debate.
The idea sounds sensible enough: a small regional levy on direct-to-consumer sales, with the goal of raising funds for collective regional marketing. God knows wine needs every advantage it can muster given the current hand-wringing environment, but the seemingly reasonable proposition has set off heated exchanges.
So why has this conversation that’s simmering across different regions of California become unexpectedly thorny?
On first glance, it appears a straightforward case of collectivism versus independence. One side argues such a menially priced cooperative effort lifts all boats and provides stable funds for regional promotion, while the countermovement pans it as a layer of imposed, ineffective bureaucracy.
But a closer look reveals a complicated landscape of marketing theory, regional dynamics, and deeply concerned industry professionals looking for a handhold amid the turmoil.
The WID concept of collective effort aspires to be an effective tool to move the needle for struggling wine regions. Though, if misguided in plan or execution, it could find itself a well-meaning attempt to whack the wrong mole.
The Wine Improvement District Pitch
The Wine Improvement District idea bears more than a passing resemblance to other concepts like “Business Improvement Districts” and the occasionally reviled “Homeowners Association.”
Wine country’s version generally entails a mandated 1 to 2 percent of DTC sales assessed and collected by an administrative body for collaborative marketing purposes, though the details of each regional proposal vary. A Sacramento consultancy, Civitas, has consolidated a position as statewide guru for WID setup and collection implementation.
Temecula then Livermore were first out of the gate approving and implementing WIDs in 2021, with Amador County and Santa Barbara County following suit over the past two years. More recently, Santa Cruz Mountains, Lodi, SLO Coast, and Sonoma have all entered some stage of WID consideration.
“WIDs have appeal around the state because they bring together all producers within a region in an equitable and sustainable program to support marketing and awareness for that region,” says Brian Talley, president and CEO of Talley Vineyards and a SLO Coast WID supporter. “Positives of the WID include sustainable funding for the vintners association, and equitable support among all wineries in the region to support marketing that benefits all producers,” he says.
Even those opposed to the WID concept freely admit that it has merit in certain regards. Adam Lee, founder and former winemaker at Siduri and current owner/winemaker of Clarice Wine Company, sees them as effective fundraisers. “Wine Improvement Districts are attractive in large part because they are very successful at raising money,” he says. “If that is the goal — simply to raise money — then they do a good job.”
But this is where the agreement tends to end.
Producers Pushing Back
Winegrowers and winemakers are accustomed to some form of overarching regulation via appellations and trade groups. But while appellation adherence and trade group participation are optional, WIDs impose mandatory compliance on all producers in a given area.
Brian Loring, founder and winemaker of Loring Wine Company, fought the Santa Barbara WID to no avail. And though he’s now “pseudo-retired” and has cut production to a minimum, his frustration with the idea remains palpable. “I still don’t like the concept,” he says. “It smacks of ‘We have a problem, and doing something is better than nothing.’ [It] ends up with a half-assed fix, instead of spending the time and doing the hard work of designing something comprehensive.”
Perhaps nowhere else have WIDs been more of a lightning rod than Sonoma. The debate has been sidelined temporarily to make way for harvest and crush, but after that, the argument will pick up right where it left off.
“If you add to the cost in any way, shape, or form in the perception of the mind of the consumer — within a category that is already suffering a downturn — you run the risk of alienating more consumers.”
Even the approval of WIDs — not just their perceived virtues or supposed effectiveness — has been a contentious issue. Approval voting is weighted by individual winery sales, and Lee in Sonoma cites that lopsided dynamic as a major issue. “[Getting approved] doesn’t mean that they must have the support of most wineries,” he says. “In Lodi where a WID is being considered, one winery, Michael David, has 47 percent of the vote.”
Some smaller operations like Lee’s are concerned that their consent in the matter isn’t being adequately considered.
Additionally, though a WID supporter, Talley in the SLO Coast concedes that any mandated assessment — no matter how menial — is bound to be controversial. Some producers maintain that their marketing dollars are best kept autonomous, and according to Talley, pushback has tended to coincide with overall collective engagement. “In our area, it has been those who have been disengaged with our vintners association who have been opposed to the proposed WID,” he says. “It’s been a polarizing issue.”
The Mechanics of Collective Marketing
In the contentious WID cauldron of Sonoma, those who study the wine business are watching with keen interest.
When asked for his analysis of the situation, Damien Wilson, faculty director of the Wine Business Institute at Sonoma State University, had plenty to say.
Wilson agrees that a sales-based weighted voting system is destined to create friction. He believes that the broad idea, though, leans very positive, and he understands the urge to do something to provide reliable marketing dollars for the region to fund and enhance sustained regional promotion in a unified way.
“So the real relationship between the Wine Improvement District’s initiation and success was very, very questionable. In fact, if you talk to a number of the producers in Temecula, a lot of them are saying ‘We don’t know where those numbers have come from.’”
Yet he hedges that passing along the bump to the average consumer in this economic environment, no matter how small, is dicey. “If you add to the cost in any way, shape, or form in the perception of the mind of the consumer — within a category that is already suffering a downturn — you run the risk of alienating more consumers,” he says.
That aside, WID success would depend on the planning and implementation. If the concept and execution are off the mark in terms of advertising strategy and target audience, it’s all for naught regardless of how much collaborative coffers swell.
He’s also skeptical about the efficacy of a regional-awareness style of campaign to begin with. “Wineries in particular hope that leads to better brand awareness,” Wilson says. Brand awareness as the end result of a region-themed campaign, though — if that’s the plan — is questionable.
“We’ve done the research on this, and we’ve verified it by repeating the process eight years later,” he says. “If you get a large sample of regular wine drinkers in the U.S. and ask them to name the wine regions they’re familiar with, half of them will come up with Napa, a quarter will come up with Sonoma, and then it’s daylight before any other AVA comes up.”
“I think it’s imperative that we come together as a community and push to think outside the box. The WID discussions did encourage that regardless of what individuals thought about the district itself. I’m grateful for that.”
For regional recognition-based marketing, unless you’re already a legend like Napa or Sonoma — or concoct a supremely clever and catchy campaign — Wilson argues the effort may deliver diminishing returns. Even if that’s not how the funds are earmarked to be spent, a principle of marketing suggests that bigger businesses come away with outsized benefits in any collective push, regional or not.
“We’ve got laws in marketing now that we know are pretty much very difficult to get around. They’re laws because they apply across geographies, times, and industries,” he says. “One of them is that when you put money behind something across a multitude of businesses, the biggest ones are going to get the most benefit.”
While it’s not a zero-sum situation — smaller players may very well benefit — having the majority of the spoils reaped by the bigger operations is potentially a sore spot for smaller wineries.
The most concerning aspect of the conversation for Wilson, though, lies in the numbers. The longest-standing WIDs of Temecula and Livermore have touted the grand success of their plan and execution, but Wilson cautions that those numbers could be correlation, not causation.
He refers to a Temecula metric — one that’s frequently cited as a WID selling point — that claims an almost 100 percent increase in DTC sales. But that was across a timeframe that included the Covid-era paradigm shift, and those numbers were an estimate from a private report.
“So the real relationship between the Wine Improvement District’s initiation and success was very, very questionable. In fact, if you talk to a number of the producers in Temecula, a lot of them are saying ‘We don’t know where those numbers have come from,’” Wilson says. “Frankly, if you’ve had that sort of success, you can really expect to have those numbers put under scrutiny — and the scrutiny doesn’t hold up well amongst a number of people from the region.”
All in the Same Boat
For all the conflict, producers on opposing sides remain invested in one another’s professional success. Many are friends and have deep admiration for each other’s work. For such a large state with an immense amount of wine production, it’s still a socially small industry.
Above all, though, there’s one thing that everyone agrees on: something must be done.
“I think it’s imperative that we come together as a community and push to think outside the box,” says Prema Kerollis, co-founder and general manager of Sonoma’s Three Sticks Wines. “The WID discussions did encourage that regardless of what individuals thought about the district itself. I’m grateful for that.” There’s an understanding that a rising tide will lift everyone to some degree or another, and the WID tension is very much about the how of it all.
As an alternative to Sonoma’s current WID push, Lee has organized collective brainstorming on how to best help the region’s producers. While he opposes the Sonoma WID proposal in its present form, Lee agrees with the broader call for collaboration — but with the devil hiding in the details.
“Show us how the money is going to be spent and how it will benefit us, and we may be in favor of it,” he says. “With no plan, it’s hard to generate support.”
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