April 18, 2008; The Commonwealth of Virginia yesterday started operating the Virginia Winery Distribution Company, toasting the launch during a ceremony at King Family Vineyards in Crozet, Virginia. The new venture is the result of a move by the Virginia General Assembly to provide wineries and farm wineries an alternative to using independent wine wholesalers.

Any Virginia winery that chooses to participate may distribute up to 3,000 cases of their wine per year through VWDC, which is associated with the Virginia Department of Agriculture and Consumer Services.

In the past, self-distribution allowed wineries to market and sell their products directly to shops and restaurants without using an independent wine wholesaler.

In September 2005, though, Virginia's wineries were dealt a huge blow when a federal court ruled that self-distribution by Virginia wineries was "unconstitutional" because it granted Virginia wineries privileges that were not extended to out-of-state wineries. Moreover, in July 2006, a new Virginia law eliminated all self-distribution privileges in Virginia. At that time, nearly two-thirds of Virginia wineries did not use independent wholesalers.

In 2007, legislation was introduced creating the VWDC, which operates within the existing wine distribution system, a "wine wholesaler" for small Virginia wineries. Using VWDC, winery workers will continue to market their wine to shops and restaurants. However, they will act as agents of VWDC when placing orders and making wholesale deliveries of their wine. The VWDC will provide electronic purchase orders and invoices, collect and remit taxes, and submit government reports. By contract, VWDC and the winery share delivery workers, bonded warehouse space and delivery vehicles. The cost to Virginia wineries using the services of VWDC will be $5 per transaction initially.

According to Todd Haymore, Commissioner of the Virginia Department of Agriculture and Consumer Services, the Virginia wine industry credits self-distribution with being the single most important factor in the growth of the number of farm wineries. There were six wineries in Virginia in 1980 and according to Wine Business Monthly's proprietary database, there are 147 bonded wineries there today.

"Losing the capability to self distribute was a major blow to many of our farm wineries," Haymore said in announcing the launch of the new distribution cooperative."

The VWDC is governed by a Board that consists of two winery owners, two wine wholesalers and the Commissioner of VDACS. David King, owner of King Family Vineyards in Crozet, Virginia, is board chairman. So far, 52 wineries and farm wineries have signed up to use VWDC, with 18 more pending.