The Media School

Indiana wineries desire self-distribution rights

April 18th, 2019 by
Photograph by Caleb Yarling

As growing season began at Brown County Winery, wineries lobbied to the state legislature on self-distribution rights.

Angie Nozaleda is a wine fan. She enjoys Oliver Winery’s Cherry Moscato and wine deals from Costco. She is from Spain and was shocked to learn that Oliver Winery was an Indiana-grown wine. Nozaleda supported local wine but believed the system for wine distribution was archaic.

“It’s time to move on,” she said.

Indiana wineries used Monarch Beverage Company before they closed their wine distribution on September 1, 2018. Since then, Indiana wineries have struggled to get their wine into local shops. In that same time, online out-of-state wine distribution and micro-wholesaler permits paved a new way for businesses to expand.

Ed Clere, a Republican state representative from New Albany, initiated a bill during the current session. The law would allow for wineries to own the wholesale and winery permits. The bill was met with resistance from Republican National and Southern Glazer’s, national alcohol distributors.

The model has been used for over 80 years to sell at City of Bloomington events and chain grocery stores. Wineries have to go through a distributor. The model forced wineries to get creative.

Ben and Jonas Schrodt work at Brown County Winery with their parents while the parents own the winery. Ben Schrodt cited paperwork and bureaucracy as barriers.

“These are just examples of all the hoops you have to jump through,” he said. “We should have the option to sell to a liquor store five miles up the road.”

Indiana wine is now controlled by out-of-state distributors. The new distributors took over the portfolio of Monarch Beverage Company and now control 94 percent of Indiana’s wine. In February 2019, wineries started lobbying to Indiana senators and representatives for more self-distribution rights, up to 12,000 gallons.

Ben Schrodt is a believer in the dual-permit for wineries and distribution.

“It would definitely help,” he said. “It’s distributing within Indiana which is the big help. If you expand 10, 20, 50 miles that’s where the dual permit will definitely help.”

Photograph by Caleb Yarling

Eric Sundin (left) and Joe Butler (right) labeling freshly corked bottles. Recent machinery upgrades were thanks to distributors getting their wine into new cities within Indiana.

This amount would apply to in-state wine sales. Wineries like Brown County Winery and Butler Winery use the service Vinoshipper. The online portal takes care of the paperwork and shipments of individual wine to customers in approved states throughout the United States. Brown County and Butler Wineries work with Vinoshipper.

The diversification of consumers and ease of achieving legal paperwork appeased B. Schrodt.

“Vinoshipper helped bring in some permits,” he said. “It’s easier to expand business from an out-of-state perspective to smaller states we don’t have a foothold in.”

In 2006 when the state introduced micro wholesaler permits. This gave wineries rights to expand locally, Jonas Schrodt said.

“We have our own micro-wholesaler’s permit called Old Barrel Distributors LLC that we got so we can self-distribute to local restaurants in Bloomington, Nashville, Columbus and liquors stores in the area,” he said.

Permits are vital to the wineries. Restrictions after Prohibition stopped the monopolies of organized crime. States were given the right to make their own alcohol laws once the 21st amendment was passed.

Ben Schrodt believed more distribution would help grow the name recognition of up-and-coming wineries.

“A lot of small wineries that can’t get the distribution because no one will pick them up,” he said. “He can’t get to the liquor store down the street because he can’t legally have the distribution.”

Any person who doesn’t have stock in the winery can have the micro-wholesale license.

“I run the micro-wholesaler while my parents run the winery,” Jonas Schrodt said.

Ben Schrodt believed the micro-wholesaler permit benefited the local reach for wineries.

“Its hard to do a bigger reach with just the micro wholesaler’s while still running the winery, we can’t go off to Fort Wayne but can go 20 miles down the road,” he said.

The distribution business changed as Indiana wineries began to shut down. Ben Schrodt said Indiana Upland Wineries had their own issues with Monarch. Their orders would sit for months, with no pickup. When the pickups would occur, payment from Monarch became a problem.

“We should have the option to sell to a liquor store five miles up the road.” – Ben Schrodt, Employee, Brown County Winery

Ben Schrodt said more distribution would help grow the name recognition of up-and-coming wineries.

“A lot of small wineries can’t get the distribution because no one (distributor) will pick them up,” he said. “He can’t get to the liquor store down the street because he can’t legally have the distribution.”

Johnson Brothers Liquors company focuses on selling the cheapest types of wine. That  struck a chord with Eric Sundin of Butler Winery. He preferred the approach of his old distributor, Monarch.

“Our relationship with Monarch was really good,” he said.  “They helped us design our wine labels. They really concentrated promoting local business.”