Minnesota wineries challenge state law requiring use of homegrown grapes

The Minnesota winemaking industry has long required their beverages to consist mostly of homegrown grapes. But two wineries contended Tuesday that practice is no longer feasible or appealing to the bottom line or customer tastes.

Alexis Bailly in Hastings, the state's first vineyard, and Next Chapter Winery in New Prague, filed a federal lawsuit to lift the 1980 restriction that wines must use more than 50 percent of grapes grown in Minnesota. The wineries claim the ban protects the state's grape industry from competition.

Any potential change to the law would send a significant ripple through Minnesota's blossoming wine business. Last year, the University of Minnesota reported the economic impact of winemakers and growers topped $80 million.

The suit is the first legal challenge to the state regulation, which doesn't place the same agricultural barriers on local beer or spirit makers. And not all the state's 60 wineries are on board with the suit because current stipulations protect the integrity of Minnesota's unique blends.

"I want the freedom to make the wines I choose," said Nan Bailly, owner of Alexis Bailly Vineyard. "It's already a difficult climate to grow grapes. We just want the same rights as other makers in the marketplace."

Minnesota is one of about a dozen states where homegrown wines must use a majority of local grapes. The suit, filed against state Department of Public Safety Commissioner Mona Dohman, is an attempt to correct constitutional rights violations for wineries to engage in interstate and foreign commerce. DPS is named defendant because the agency regulates farm wineries.

DPS spokesman Bruce Gordon said the agency has not yet been served with a lawsuit but that they typically don't discuss pending litigation.

The number of wineries in Minnesota have doubled in the past five years, said Meagan Forbes, an attorney with the Institute for Justice, a group that litigates civil and business rights cases. That's a strong reason why the state's grape growers and farm winery associations don't support the lawsuit.

Bailly and Next Chapter are farm wineries, which can grow and produce their own wine and are subject to the majority homegrown grape law. The $75 license for farm wineries also offers perks, such as Sunday and online sales, free samples to visitors and the option to sell wine at county or the State Fair.

Farm wineries aren't required to grow their own grapes or fruits or make raw materials such as unfermented juices and honey, but that was the plan of Nan Bailly's father when he started their vineyard in 1973. In past years, Bailly hasn't been able to grow enough grapes to comply with the law and has had to buy state-grown grapes at a higher price and sometimes lesser quality, she said.

In five of the past 12 years, Bailly experienced significant crop damage due to harsh weather conditions. She was allowed to petition for an exemption to buy out-of-state grapes and juices from California and New York to source her wine, she said. The vineyard blended and sold greater wine varieties that became popular with customers and showed "what she could do if given an open book to produce wine."

Tim Tulloch of Next Chapter Winery has struggled to source wine with a majority of state-grown grapes since opening in 2007. In 2014 and 2016, his vineyard received an exemption and bought out of state grapes. Those years, he was able to blend grapes and make merlot, cabernet sauvignon and sauvignon blanc varieties, which he wouldn't have been able to produce with only Minnesota grapes.

Wine manufacturers other than farm wineries have the same grape restrictions as farm wineries. Although the farm wineries bill was passed in 1980, they are relatively recent phenomenon in the state, the suit said.

The rise in such farms has corresponded with the development of northern climate, cold-hardy grapes. The state has about a 150-day growing season for grapes and late spring frosts can lead to significant crop damage or loss, the suit said.

The lawsuit takes place in a state familiar with wine. The University of Minnesota is recognized as one of the top wine grape research programs in the country and has been integral in creating new varieties in the state, said Assistant Professor Matt Clark, grape-breeding project leader at the U. The wine grape breeding program began in the mid-70s, and in 2000 an enology lab and research winery opened at the Horticultural Research Center.

More than 12,000 experimental vines are cultivated on 12 acres, and about 100 selections are in advanced tests, as well as more than 400 named varieties from other breeding programs around the world. Growers then report back to the U if there were any disease, insects or weather issues.

When a new grape is released, nurseries get a well-tested selection that has been evaluated for 15 years or more. The university developed several white-fruited mutations of Frontenac and Frontenac Gris, sold as Frontenac Blanc. Its newest grape, Itasca, produces a wine like a sauvignon blanc or pinot grigio.

"In my personal and professional opinion, we are seeing a whole growth of all local food movements," Clark said. "By locking into the use of local grapes, you can reach a new market such as millennials and others who can experience a new wine that has a sense of place."

Tami Bredeson, owner of Carlos Creek Winery in Alexandria and executive board member of the Minnesota Farm Winery Association, declined to be a part of the lawsuit. Although she respects any business owner's right to pursue legal action, "It's difficult to grow a Minnesota wine industry without using Minnesota grapes," she said.

"I understand the difficulties of growing grapes in the state, but that should challenge us to work harder to make world class grapes," she said. "Without the law, grape prices could drop and we would lose talented growers."

Many in the industry weren't aware a lawsuit would be filed Tuesday, including Irv Geary, outgoing president of the Minnesota Grape Growers Association. He didn't understand the need for it because Bailly could apply for a wine manufacturing license that has no restriction on the grape source — but doesn't allow the wine to be labeled as a Minnesota wine. Bailly said she had no interest in such a license.

If Bailly and others wanted a change in the law, he wished they wouldn't have used the courts rather than working with his association and other industry partners to bring the issue to the Legislature. He found it a bit ironic that Bailly's father was the architect behind the 1980 law. Any change to that law would harm the industry, he said.

Bailly hopes for a similar victory that occurred in New York in 2005 when a law similar to Minnesota's was found unconstitutional.

"The current law may allow me to sustain my business, but not my entire family," she said.

David Chanen • 612-673-4465