Wine Appellation Regulation in the U.S. and France as a Response to Globalization

The Case of Champagne

Champagne is one of the most well-known of France's wine producing regions, while " Wine has been produced in France for more than two and one-half millennia and has played a large role in French dietary habits, culture, and economy for centuries. Some two million French owe their livelihood directly to the vine."iii Globalization made it possible for what was once a local or regional product whose name carried the meaning that it was produced in a certain place following a certain set of rules, to turn into a world-wide dispute as to what is and is not champagne. As awareness of the quality of the effervescent French wine called champagne spread, other makers of effervescent wine in other parts of the world wanted to label their product as champagne, which would allow their product to benefit from the reputation of the French wine. " In the case of champagne, brand idealism would imply that the right marketing mix could persuade consumers to accept wines as champagnes that, as a matter of fact, do not come under the umbrella of this 'natural' brand."iv The original proprietors of the name "Champagne" as well as several other products with the reputation for quality found themselves fighting to keep their product names exclusive.

"[G]eographical indications are industrial property rights recognized and given limited protection in the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property (TRIPS or Agreement). GI's are economically as well as culturally significant, as confirmed by the resumption of the United States' request for consultations with the European Communities (EC) regarding the EC regulation of geographical indications, which has been joined by an Australian request for consultations."v

This need to self-regulate, with fairly strict enforcement comes from problems in the late nineteenth century and the early twentieth century with counterfeiting. This was achieved by putting the name of a higher-quality producing region, or even a better-known producer on an inexpensive table wine. The response was that: "national governments formally delimited grape-growing areas used in wine production, beginning with a French law in 1905 designed to combat fraudulent wine labeling" that eventually, through subsequent laws in 1919, 1927, and 1935, created the well-known French appellation of origin system for wines, spirits, cheeses, and various other agricultural products."vi This started the regulations on product appellation that continues in many forms in every wine-producing country that exists today. In their article on the protection under TRIPS of both the Basmati and Champagne names, Suman Sahai ascribes the protectionism given to certain nomenclatures:

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"Aggressive French aficionados with a well-honed sense for trade advantages have ensured that the word 'Champagne' may only be used for a sparkling wine produced in the Champagne region of France, the geographical area from which the wine derives its world famous name. Any other wine, even if it is grown from the same grapes and is identical in taste, aroma and other characteristics, may not be called Champagne. The reason is that the glamour and mystique that makes Champagne an exorbitantly priced, up-market product is associated with its name and not necessarily with the quality of the wine (which in many cases can be quite indifferent!)"vii

This is more the point of view of those who believe that the protection given to certain geographical indications creates obstacles to international trade due to the limited availability of the product,viii essentially creating a supply-driven market. "By restricting the yield of grapes and limiting the production of any wine to a particular area, the appellation laws act as a type of supply control. If this is the only region or locality in which a wine of this type is made, and if the yield is restricted, the price is likely to be higher."ix This is one of the factors behind the restrictive policies imposed by international recognition of certain appellations, the economic benefit to being able to lay claim to the most recognizable, and therefore desirable, name in a particular sub-set of the market. The other factor is more elusive, less easily calculated and graphed, but no less valid. The cultural heritage tied to a name, a product, makes protecting these geographical indications desirable. "The regulations for quality wine in the EC involve much more than identification of geographic source[...] they include demarcation of the area of production, vine varieties to be grown, cultivation methods, wine-making methods, minimum natural alcoholic strength by volume, and yield per hectare."[x] The case of champagne is not simply that of a protectionist regulation that favors a certain product with the only intention being reducing supply to drive up demand. There is a cultural basis for the regulations, and if a vineyard or winery does not follow these regulations they are not allowed to use the word 'champagne' on the labeling of their wine.

The regulations surrounding the production of champagne can be related to cultural identity, in general, in two main ways. First, and most easily determined, the definition of champagne stems from a cultural basis. The wine, in both the general characteristics and the specific production methods, stems from a cultural heritage. "[T]heir belonging to a particular species of wines, a particular production process (méthode champagnoise) and their origin in a particular viticultural region characterize certain wines sufficiently to make them champagnes, regardless of the degree of awareness consumers may have of them and irrespective of any corporate brand name."xi The wine distinctions reflect the cultural distinctions in that different areas of the country have different production methods as well as different conditions, all of which reflect the rest of the communities. The problem with trying to explain the link between wine appellations and the resulting regulations stems mostly from the difficulty in finding a workable definition of culture.

"Notoriously impossible to define, culture is a concept whose semantic extension overlaps with the concepts of identity, language, life, world, form of life, background, horizon, tradition, and the like. When we use such concepts, we are obviously not using concepts whose meaning can be fixed or rendered fully explicit and determinate; rather, we are dealing with concepts which serve as semantic and epistemic access points for one another, and for their overlapping object domains."xii

Another problem with defining culture is its propensity to change to fit changing times and situations. It is impossible to claim that the culture of the Champagne region of France is the same as it was two hundred years in the past. One of the pieces of the past that modern scholars can use to define the past culture of Champagne is the tradition for winemaking that has continued to be passed down, especially with the help of the protective restrictions enforced by the Appellation d'Origine Contrôlée (AOC).

The second way that the regulations surrounding champagne relates to cultural identity is that in a similar way that champagne itself is a brand, so is personal cultural identity. "The emergence of specialist organizations in industries such as brewing and wine making resembles that of a social movement. The generation of a collective identity is crucial to a movement's success."xiii The concept of a cultural identity like champagne is similar to a specialist organization, in that to be unique one has to define oneself in a manner that is separate from the majority, the masses. Standing out is crucial, even when talking about a cultural identity, in that if an individual is not special in some way, they are less likely to get ahead, to make a mark, or even to be heard in an international forum. By branding oneself in a way that is unique and has a certain level of positive perceived value, it is possible to make a smaller actor into a greater power on an international playing field.xiv

The changes in cultural identity over time in relation to champagne can be viewed through the lens of the changing status and power of the Champagne region of France. During the early and mid-twentieth centuries, most of Europe as well as the United States, suffered a pestilence that almost ended many of the historical wine-producing regions' ability to produce quality wine. Many regions were slow to recover and some replaced lost vineyards with sub-par hybrids.

"Despite the loss of nearly one-third of the French vineyard hectarage between 1968 and 1988, declines were modest in some regions, and vineyard hectarage actually increased in others. The only absolute increases were in departments that produce champagne, Alsatian wines, burgundies, and cognac. With the exception of the last, these are all high-quality wines; thus the rise in hectarage reflects increased demand for a better product. The vineyard area in the Champagne region more than doubled during this period."xv

Champagne, like any other product, has gone through significant changes in both popularity as well as definition, though the definition of champagne was one of the first of many products like it to be classified, protected as well as regulated.xvi " The territorial approach of the French wine industry has been emulated in many other countries and jurisdictions, including the U.S., Australia, and New Zealand, as well as largely being adopted by the European Com-munity both internally and in relation to imports from third countries."xvii Though the concept originated in France with wine, it has spread to the United States, where the entire system is similar to the French system, but with several key differences, reflecting the difference between French and American wine culture.

American Viticultural Areas (AVAs)

The American system of wine appellation is different to that of France in several ways. Unlike France which has had a tradition for wine making that has literally stretched back millennia, in America it is still being formed, tweaked, and improved upon. However, because of this lack of historical categorization, the American system is still very much in its phase of growth and maturity. To this day, the Department of Alcohol, Tobacco, and Firearms which oversees the American system of wine appellation and regulation as approved 197xviii separate American Viticultural Areas (AVAs) in at least twenty-eight states.xix

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These AVA range in size from as small as 150 acres, the Cole Ranch AVA, to as large as 16.6 million acres, the Ohio River AVAxx, which spans the states of Ohio, Kentucky, Indiana, and West Virginia.xxi

"The U.S. regulations had two main origins. Rules about the use of regional indices were vague and difficult to enforce prior to the establishment of the viticultural areas (Lee 1992). Among these rules was the requirement that 75 percent of the grapes must originate from the locality named on the label; in the regulations of 1978 the requirement became 85 per-cent for Viticultural Areas and 75 percent for single counties or single states. In order to enforce these rules, it was necessary to define viticultural areas."xxii

Even though these regulations are becoming more stringent as time passes, they are not nearly as rigorous as those faced by growers and vintners in Champagne. This is best, and simply, said by Daniel Gade in his article: "French wine remains the classic product of geographical indication in the world. The concept has spread to other countries, including the U. S., but without the same stringent requirements or seriousness of application."xxiii The inflexibility of the French system, stemming from previous millennia of experimentation, is a distinct contrast to the American system which is based almost solely on place of vineyard and winery in relation to what is advertised on the label of the finished wine. In American wine appellation there are several different layers of nomenclature possible: "state and the county appellations [which] are based on current political divisions or subdivisions, whereas American Viticultural Areas (AVA) are specially designed for the wine industry."xxiv This system of AVA has only existed for a couple of decades, and is still in the stages of development, which can be seen through the lens of the ever changing regulations for registering new AVA, or simply through the number of AVA which rises slowly, but surely.xxv

"Nevertheless, there is no officially recognized hierarchy among these appellation categories. “ATF does not wish to give the impression by approving a viticultural area that it is approving or endorsing the quality of the wine from this area”; “ATF approves a viticultural area by a finding that the area is distinctive from surrounding areas, but not better than other areas” (as quoted in W. Lee 1992: 6; emphasis added).xxvi

This is in distinct contrast to the French system, by which there are provisions for different gradations of perceived quality in several of the recognized, and AOC sanctioned, wine-producing regions.xxvii This is not to say that American producers have more free reign to put whatever they want onto their wine labels and have it pass inspection. " In 2001 Rabbit Ridge Winery (Healdsburg) paid a record settlement of $810,000 after a six-month investigation by the [ATF] revealed that between 1994 and 2000 the winery had mislabeled seventeen thousand cases of wine with erroneous vintage dates, geographical information, and brand names."xxviii Even without the French system of gradation by quality, certain AVA are more readily recognized as producing superior wine. This leads to creative maneuvers by some companies so as to market from the more well-known AVA.xxix

Not only are certain AVA more commonly known, so too are some of the larger families and companies that own and operate wineries, especially in California where they use their political power to attempt to sway the market and legislation in their favor. " Wine makers like Tim Mondavi, Jess Jackson, and Phil Wente argued for a new California Coast label [in order to] keep wineries from using cheap, low-quality wines in the coastal blended labels."xxx Groups with similar aims, joining together so as to get closer to their mutual goal are key to the ongoing evolution of the American wine appellation system. "The collective identity of organizations plays a key role in the evolution of specialist organizations within industries. Specialist organizations often try to establish a collective identity that is distinct from that of generalist organizations."xxxi The case of several smaller constituent groups joining together to promote their cause is not a new one, but it is one that seems to be gaining in power as groups seek to define themselves.

The American system of wine appellation is still in the formative process, ever defining and redefining itself. The current trend is towards: "Farm wineries [that] typically manufacture premium, varietal wines, often from a designated vineyard, operating on a relatively small scale. These wineries have variously been called "boutique," "chateau," and "small" wineries."xxxii This trend is something relatively new in the U.S., previous trends have included the absolute polar opposite, when wineries and vineyards were considerably consolidated and purchased by companies such as Nestlé and Coca-Cola.xxxiii Because there has not been the same history of a cultural identity to the American wine industry, it still is inventing new ways to define itself. Because of this there are times of confusion, as rules change, leaving some wanting things to return to the way that things were before the changes. This can be seen in the Blog of the General Manager of Tablas Creek Vineyard in the Paso Robles AVA, who is on the Paso Robles AVA Committee which has been discussing possible sub-divisions within the Paso Robles AVA.xxxiv

The need to define the smaller and smaller sections of each AVA seems to come, in part, from the exploration of where the borders should be drawn, as there is no historical perspective to draw from. By defining small areas , which may favor some areas over others simply because of better geographical situation or climate, there is a definition of insiders versus outsiders, in which some feel left out or unfairly treated.xxxv In wine appellation regulation this is often exacerbated by economic concerns. "When ATF defines parcels of land as within or outside a viticultural area (especially those with reputations for producing superior wines), they certainly influence the consumers' perception of quality and the producers' ability to sell."xxxvi Certain areas are more well-known and, though they may not produce the highest quality wine in a geographical region, their familiarity to consumers is part of their strength. The focus on branding oneself with a cultural identity that distinguished one from the multitudes is something that is important to both wineries as well as human beings, especially with the increasingly globalized world where there are more people, places, ideas, and products to compete with simply because of the increased global interconnectedness.

Globalization and the Wine Industry

Globalization has become one of the most recent areas of interest and study in many fields for the simple reason that it, in many ways, encompasses or touches upon most of the areas of everyday life for a large portion of the world. First of all, to define globalization:

"Held et al. (1999:483) define globalization as 'a process (or set of processes) that embody a transformation in the spatial organization of social relations and transactions, generating transcontinental or interregional flows and networks of activity, interaction, and power'. What is important about this definition is both the focus on different types of process (social, economic, political, cultural) and the focus on transformation."xxxvii

Through this definition it is easy to see the connection between globalization and the proliferation of wine appellation regulations based upon the French model in most corners of the world, from the United States to Australia.xxxviii The concept not only originated in one country and was disseminated to several others, but it also allows the various countries to form international trade agreements using the similar system of appellation as a basis for negotiation.xxxix This facilitates international trade as well as international agreement on punishment of those who break the rules.

This concept of globalization also goes a little further into exploring the reasons behind the push to define AVA in smaller and smaller focus. It is as Martin Edwards says in his article, that "[w]hat's distinct about globalization is its qualitative character: these transactions (and the interactions between different types of transactions) are believed to matter by changing how actors perceive themselves and their interests."xl As the scope of the wine industry changes through globalization both the French and the American wine appellation systems are continually redefining their interest. For the French, the main importance has been on protecting their wine from fraudulent winemakers elsewhere in the world, using the French names to boost the credibility and perceived value of their product.xli In the United States it is, primarily a matter of ever-evolving product branding, though there is a smaller element of protecting existing appellations and brands from similar misuse.xlii

The advent of a global economy has increased the size and breadth of many industries, including wine-production. "Mature industries typically feature a high degree of market concentration. With increasing concentration, generalists tend to compete vigorously for the center of the market, thus allowing specialists to thrive on the periphery."xliii In the case of the wine industry, the specialists are those wineries and vineyards that are seen to be in desirable, or high-quality locations, while the generalists are those who are more content to produce in larger quantities, giving them the added benefit of an economy-of-scale in exchange for specialization.xliv Similarly, cultural identity, in the face of globalization, has not seemed to be headed to 'global citizenship', but rather to find more and more narrow definitions of self, as can be seen in the fact that there has not been a drop in civil wars, but rather a rise.xlv

Conclusion

Through the lens of the differences and changes in wine appellation regulations, it is possible to see the connections to both cultural identity and globalization. This view of cultural identity is two-sided, one in which the regulations originate from and reflect a distinct culture that has formed a basis over millennia or is still struggling to find its footing. The other viewpoint of cultural identity is in the need for cultural identity to, in essence, 'brand itself' in a similar fashion as the wine appellations themselves act as brands. Globalization is not an entirely positive or negative force on wine appellation regulations. It both allows for international agreement on regulations as well as pressures appellations and the individual wineries inside with the influx of international opportunities.

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[i] Barbieri, Katherine and Rafael Reuveny. "Economic Globalization and Civil War," The Journal of Politics 67, no. 4, (Cambridge University Press on behalf of the Southern Political Science Association: Nov., 2005): 1228, http://www.jstor.org/stable/3449903

[ii] Echols, Marsha A.. "Geographical Indications for Foods, TRIPS and the Doha Development Agenda," Journal of African Law 47, no. 2, (Cambridge University Press on behalf of the School of Oriental and African Studies: 2003): 199, http://www.jstor.org/stable/30038563

[iii] Crowley , William K. "Changes in the French Winescape," Geographical Review 83 no. 3 (American Geographical Society: Jul., 1993): 252, http://www.jstor.org/stable/215728

[iv] Grassl, Wolfgang. "The Reality of Brands: Towards an Ontology of Marketing," American Journal of Economics and Sociology 58, no.2 (American Journal of Economics and Sociology, Inc.: Apr., 1999): 318, http://www.jstor.org/stable/3487720

[v] Echols, Marsha A.. "Geographical Indications for Foods, TRIPS and the Doha Development Agenda," Journal of African Law 47, no. 2, (Cambridge University Press on behalf of the School of Oriental and African Studies: 2003): 199, http://www.jstor.org/stable/30038563

[vi] Maher, Michael. "On Vino Veritas? Clarifying the Use of Geographic References on American Wine Labels," California Law Review 89, no. 6 (California Law Review, Inc.: Dec., 2001): 1885, http://www.jstor.org/stable/3481251

[vii] Sahai, Suman. "Of Basmati and Champagne: Protection under TRIPS," Economic and Political Weekly 31, no. 9 (Economic and Political Weekly: Mar. 2, 1996): 513, http://www.jstor.org/stable/4403852

[viii] Echols, Marsha A.. "Geographical Indications for Foods, TRIPS and the Doha Development Agenda," Journal of African Law 47, no. 2, (Cambridge University Press on behalf of the School of Oriental and African Studies: 2003): 199, http://www.jstor.org/stable/30038563

[ix] Moran, Warren. "The Wine Appellation as Territory in France and California," Annals of the Association of American Geographers 83, no. 4, (Taylor & Francis, Ltd. on behalf of the Association of American Geographers: Dec., 1993): 704, http://www.jstor.org/stable/2563600

[x] Moran, Warren. "The Wine Appellation as Territory in France and California," Annals of the Association of American Geographers 83, no. 4, (Taylor & Francis, Ltd. on behalf of the Association of American Geographers: Dec., 1993): 697, http://www.jstor.org/stable/2563600

[xi] Grassl, Wolfgang. "The Reality of Brands: Towards an Ontology of Marketing," American Journal of Economics and Sociology 58, no.2 (American Journal of Economics and Sociology, Inc.: Apr., 1999): 318-319, http://www.jstor.org/stable/3487720

[xii] Kompridis, Nikolas. "Normativizing Hybridity / Neutralizing Culture," Political Theory 33, no.3, (Sage Publications, Inc.: Jun., 2005): 318-319, http://www.jstor.org/stable/30038423

[xiii] Swaminathan, Anad. "Resource Partitioning and the Evolution of Specialist Organizations: The Role of Location and Identity in the U.S. Wine Industry," The Academy of Management Journal 44 no. 6 (Academy of Management: Dec., 2001): 1171, http://www.jstor.org/stable/3069395

[xiv] Grassl, Wolfgang. "The Reality of Brands: Towards an Ontology of Marketing," American Journal of Economics and Sociology 58, no.2 (American Journal of Economics and Sociology, Inc.: Apr., 1999): 313, http://www.jstor.org/stable/3487720

[xv] Crowley , William K. "Changes in the French Winescape," Geographical Review 83 no. 3 (American Geographical Society: Jul., 1993): 257, http://www.jstor.org/stable/215728

[xvi] Moran, Warren. "The Wine Appellation as Territory in France and California," Annals of the Association of American Geographers 83, no. 4, (Taylor & Francis, Ltd. on behalf of the Association of American Geographers: Dec., 1993): 699, http://www.jstor.org/stable/2563600

[xvii] Moran, Warren. "The Wine Appellation as Territory in France and California," Annals of the Association of American Geographers 83, no. 4, (Taylor & Francis, Ltd. on behalf of the Association of American Geographers: Dec., 1993): 696, http://www.jstor.org/stable/2563600

[xviii] The U.S. Department of the Treasury, "Wine Appellations of Origin," Alcohol and Tobacco Tax and Trade Bureau, (1/7/2010), http://www.ttb.gov/appellation/us_by_ava.pdf

[xix] Maher, Michael. "On Vino Veritas? Clarifying the Use of Geographic References on American Wine Labels," California Law Review 89, no. 6 (California Law Review, Inc.: Dec., 2001): 1895, http://www.jstor.org/stable/3481251

[xx] Maher, Michael. "On Vino Veritas? Clarifying the Use of Geographic References on American Wine Labels," California Law Review 89, no. 6 (California Law Review, Inc.: Dec., 2001): 1895, http://www.jstor.org/stable/3481251

[xxi] The U.S. Department of the Treasury, "Wine Appellations of Origin," Alcohol and Tobacco Tax and Trade Bureau, (1/7/2010), http://www.ttb.gov/appellation/us_by_ava.pdf

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