RD645 - Report by the Department of Agriculture and Consumer Services on the Findings and Recommendations of the Work Group to Evaluate the Needs Related to the Distribution of Wine and Beer, as Transmitted by the Virginia Winery Distribution Company – October 2022

Executive Summary:

As required by Chapter 334 of the 2022 Acts of Assembly, the Virginia Department of Agriculture and Consumer Services (VDACS) convened a work group (Work Group) consisting of representatives of the Virginia Alcoholic Beverage Control Authority, the Virginia Wineries Association, the Virginia Wine Wholesalers Association, the Virginia Beer Wholesalers Association, the Virginia Craft Brewers Guild, and other relevant stakeholders to (i) conduct research to determine the appropriate fee structure and general fund appropriation necessary to adequately address staffing needs and perform information technology system upgrades for the purpose of accommodating winery, farm winery, and limited brewery licensees that wish to utilize the services of the Virginia Winery Distribution Company (VWDC); (ii) evaluate the number of barrels of beer allowed to be distributed by a limited brewery licensee over the course of one year; and (iii) review and evaluate alternative avenues of distribution, other than distribution through the VWDC, that could be made available to limited brewery licensees. The bill directs the Work Group to report its findings and recommendations to the VWDC Board of Directors (VWDC Board) for approval and directs the VWDC Board to report any such approved findings and recommendations to the Chairmen of the Senate Committee on Rehabilitation and Social Services and the House Committee on General Laws no later than October 1, 2022. Through presentations and discussions from Work Group participants during three meetings, the Work Group considered the history and operation of the VWDC, the legislation responsible for the VWDC’s creation, agricultural component requirements, distribution limitations, alcoholic beverage control regulations and tax structure, and associated costs as a benchmark for comparison.

The Work Group consisted of the following members, representing organizations as required by Chapter 334:

- Joseph Guthrie, Commissioner, Virginia Department of Agriculture and Consumer Services (VDACS)

- Marc Haalman, Special Agent, Virginia Alcoholic Beverage Control Authority (VABC)

- George Hodson, Veritas Vineyards, representing Virginia Wineries Association

- Doug Zerbst, Republic National Distributing Company, representing Virginia Wine Wholesalers Association

- Philip Boykin, Virginia Beer Wholesalers Association

- Paige Wernig, Virginia Craft Brewers Guild

- Courtney Mailey, Owner, Blue Bee Cider and Chairman of the Board, Virginia Winery Distribution Company (VWDC)

- Staci Saunders, VWDC Operations Manager

- Kendra Shifflett, Director of Administrative and Financial Services, VDACS

- Parker Slaybaugh, Chief Deputy Secretary of Agriculture and Forestry, Office of Governor Youngkin

- Burnie Gaskill, VABC

- Melissa Assalone, Virginia Food Industry Association

This report summarizes information presented and discussed during Work Group meetings held on June 1, 2022; July 14, 2022; and August 18, 2022.