Louisville, Kentucky (March 11, 2008) – In addition to helping grow Kentucky’s wine industry by opening up new markets, state lawmakers could add “new money” to the state’s coffers without raising taxes if the Kentucky General Assembly enacts legislation permitting grocery stores to sell wine. House Bill 585 was recently introduced by House Speaker Pro Tem Larry Clark of Louisville to allow grocery stores to sell wine in communities where package alcohol sales are currently allowed.

Grocery Sales of Wine Would Have Significant Economic Impact on Kentucky

$20 Million in New Tax Revenue Projected During the First Two Years; $59 Million over the First Five Years

Louisville, Kentucky (March 11, 2008) – In addition to helping grow Kentucky’s wine industry by opening up new markets, state lawmakers could add “new money” to the state’s coffers without raising taxes if the Kentucky General Assembly enacts legislation permitting grocery stores to sell wine.  House Bill 585 was recently introduced by House Speaker Pro Tem Larry Clark of Louisville to allow grocery stores to sell wine in communities where package alcohol sales are currently allowed.

Kentucky is one of only 16 states that do not allow grocery stores to sell wine.  All but one of the seven states that border Kentucky permits wine sales in grocery stores and the single exception, Tennessee, is considering legislation this year to permit these sales.  The change in Kentucky law would add $59 million in additional tax revenues in the first five years, including $20 million during the next budget period, according to information released today by the Kentucky Wineries Association and the Food with Wine Coalition.

According to Luke B. Schmidt, consultant to the Food with Wine Coalition, Kentucky’s grocery store industry expects a significant increase in the sale of wine above the present level in the Commonwealth if grocery stores are allowed to sell wine.  Schmidt pointed out that increased sales will result in significant increases in tax collection by the Commonwealth.

Schmidt said the Coalition used historical national sales data and experiences from states which are similar to Kentucky in terms of demographics to project that wine sales will grow by nearly 50% in Kentucky during each of the first two years following the enactment of the law.  Beginning in Year Three and going forward, the industry expects that wine sales will increase by nearly 10% annually, which is consistent with the national average.

At present, wine is subject to four direct state taxes in Kentucky: the Wholesale Tax (paid by the wholesaler), a Consumption Tax (paid by the wholesaler), an Inventory Tax (paid by the retailer), and an excise tax (paid by the winery).

The passage of HB 585 will also have a “trickle-down” effect in Kentucky in terms of collection of other taxes.  New jobs will be created due to increased wine sales in Kentucky in the areas of warehousing, shipping, wine distributor personnel, grocery store personnel, etc.  More people will be required in order to handle the added volume that HB 585 is expected to create.  As new people are added to the various positions, additional state and local income taxes will be collected.

In addition, Kentucky’s 53 wineries will see improved sales from increasing numbers of visits by consumers as a result of the new interest in Kentucky wines that HB 585 will create.  This will also have a positive impact on tax collection in Kentucky.  Finally, agri-tourism and related purchases by visitors to wineries will add additional tax dollars toKentucky’s coffers.  A summary of all projected incremental taxes that HB 585 is expected to create is listed in the chart below:

Eddie O’Daniel, President of the Kentucky Wineries Association commented, “Increased sales of wine in Kentucky will directly benefit the 53 wineries and farm gate grape sales of vineyards which are located across the Commonwealth.  Our numbers clearly indicate that not only do Kentucky’s farmers and wineries benefit, but so does the Commonwealth.”

The Kentucky Wineries Association is a not for profit organization that was established in 2007.  The Association’s members include 11 of Kentucky’s leading wineries which produce approximately 75% of all wine made in the Commonwealth.  The Association is developing a comprehensive marketing campaign which will include a new Web site in the near future.

The Food with Wine Coalition is a not for profit organization that was established in 2007 by Kentucky’s grocery store industry.  The Coalition’s purpose is to educate and inform those living in Kentucky as to the advantages of allowing grocery stores to sell wine in areas of the state where package sales are currently permitted.  Interested parties are invited to learn more about the issue by visiting the Coalition’s Web site (www.foodwithwine.org).

Note: members of the media may obtain an electronic version of the Food with Wine Coalition’s logo and the Kentucky Wineries Association logo by contacting Luke Schmidt (502.292.2898 or via electronic mail, lbschmidt@lbschmidt.com).