Question for consumers about a 2% DTC assesment

The Santa Barbara Vintners is proposing to create the first Business Investment District(BID) in the wine industry. BIDS were used initially to build parking lots. The hospitality industry started using BIDs decades ago to finance their marketing. The SB Vintners is proposing a 2% assessment on all Direct to Consumer(DTC) sales. It would include wine club sales in California and tasting room DTC sales. The BID would also apply to tasting room non-wine purchases like glasses, hats, shirts etc. as well as to winery events such as wine maker dinners and weddings. Wholesale wine sales to restaurants, hotels, grocery stores and wine shops would be excluded. The BID would raise about $1.6M and be used for marketing, promotions, operating expenses and advocacy. The wineries supporting the BID contend consumers are used to paying BIDs for their hotel stays and won’t object or the consumer won’t notice or care about the 2%
What do consumers on the board think?
Those in the biz can reply as well.
Thank you.

I’m not a fan of this idea. Why should I have to pay a surcharge to help a group of winemakers further market a product I’m already buying?

Let them do it through cooperative association fees rather than on the backs of consumers.

Marketing is a standard expense for any business. Why not ask me to help pay for electricity to run the store?

It reminds me of being asked to pay supplements on a restaurant bill to subsidize health care costs for owners of dining establishments.

Ultimately the business can just bake in added cost … be it marketing or health care coverage … into the price of the final product if they like. But it irks me to be nickel and dimed on what should just be a normal business expense.

A $50 bottle becomes a $51 bottle — doubt you’re going to lose many customers over that. I would, however, let it just be a price increase without revealing exactly what it’s designed to fund. Even though customers are already paying for advertising, and electricity, and every other expense, customers prefer the idea of paying for the product over the idea of paying for any given operational expense. Revealing to the customers what the 2% increase is for is likely to turn off more customers than if you don’t reveal what it’s for.

I agree. Itemizing prices isn’t necessarily a good thing. I’d rather pay an airline for a ticket that includes everything than pay for the ticket and then pay line by line for a carry-on, seat selection, checked baggage, etc. Somehow you feel like you’re being nickel and dimed to death everywhere these days, and telling people that they have to pay another buck to advertise an area and a product that I’m already consuming isn’t a great marketing plan.

And I love that “it’s only two percent”. That’s just two percent. It’s so little and they’ll be able to do so much with it. Hey! Maybe they should make the big wineries pay for it since they screwed everyone otherwise they wouldn’t be big.

BIDs are used all over these days. In New York, business pays a lot of taxes. They help finance the Dept of Sanitation. But the City couldn’t clean up it’s garbage so they created BIDs to have guys sweep the streets.

The most successful tax is the latent tax.

Agreed. The vintners already have customers paying health care for their workers via “auctions.” Now they want consumers to pay for marketing? Frankly, I don’t buy any wines from this region so I don’t really care, but this seems like a way for producers to raise their prices and then blame the government.

I’ll be the contrary cat here and suggest that stuff like this actively turns me off. If I know a restaurant wants to do the surcharge game for their staff benefits, I’d avoid it if I can. Why not just charge all the association members 50k (or however its fair to apportion it) without showing the end customer the additional cost? All that nickel and diming is kind of degrading for both parties. How can people sell high end wine…while offering the full Ryan Air experience…

This doesn’t bother me at all. Only thing I would add is that any addition such as this needs to be prominently displayed in advance so that first time its seen isn’t on the check/receipt. Same for restaurants. Charge me however you want, just disclose it all prominently on your website, menu and at entry to your establishment. Same as an auction buyers premium. As long as I know going in, don’t care. Also, many restaurants that add these charges for BOH, health care, etc (outside of maybe those in San Francisco) will remove it without issue if you just ask…it doesn’t go to sever anyway so they don’t really care.

Unless you are only DTC, you are selling a $50 retail wine to a wholesaler for let’s say $25. Let’s assume you are making a profit at that price. Now you want to charge your high margin DTC client a surcharge instead of eating that cost. Sorry, you just lost me as a customer.

You got it right [winner.gif]

The point of the BID is to move away from voluntary support towards mandatory collections to increase revenue for marketing and avoid any free-rider effects.

It would apply to sales in tasting rooms and also items shipped to CA customers (any sales subject to CA sales tax), but not to shipments out of state.

Depending on mix of wholesale vs CA DTC sales and also how well a winery has an established brand recognition, the monetary impact and the benefits will vary by winery. A larger winery that sells a lot through wholesale will have a lower fraction of sales impacted than a smaller winery that is nearly all DTC. A well-established brand (SQN would be an extreme example) doesn’t need the extra marketing.

Whether it’s taxation without representation depends whether it’s viewed from the winery or consumer perspective. Note it’s also not one winery, one vote. Each winery’s vote is weighted by the sales that would be subject to the assessment.


There is so much more to this then what was presented. And there are something potential changes to this that will be announced shortly.

The bottom line is that the Santa Barbara County wine community has been and continues to be very very splintered. It is incredibly difficult to get consensus on anything, and besides that, most wineries have no idea of the concept of rising tides.

As a region as a whole, we remain pretty unknown to the majority of the wine world, including consumers right in our own backyard.

Are positive impact on the economics of Santa Barbara County have pretty much gone unnoticed by our local government, and therefore, decisions made at the county level most often times do not take our industry into account. This is mainly our fault but changes are afoot along these lines as well.

if one looks at the infrastructure of most wine region associations, there is an entire staff of folks working on behalf of their industry, most of the time with at least five or six full-time employees. At present, our local Association only has two full-time employees trying to do the jobs of many many more.

The idea behind the BID will be to help to preserve our local wine industry in the face of a lot of changes coming our way. A lot of the money will be used for advocacy, bringing on a full-time staff member to deal with government relations.

It will also allow us to better communicate with consumers both near and far as well as with folks in the trade.

there has been talk of doing a grape Commission as they do in Sonoma County. This is a great idea and will be looked at seriously hopefully soon after the bid process. There are serious limitations, though, as to how you can use the proceeds from the grape Commission. From what I understand, they can only be used for marketing purposes.

As far as hiding this fee, I totally disagree. I think that visitors need to understand why we would be doing this and what exactly it would be used for. We truly honestly believe it will benefit not only our industry but those who enjoy our local industry as well.

I will certainly keep all of you posted and please feel free to reach out to me if you haven’t any particular questions as I remain actively involved in this process as an ongoing owner and winemaker in this region.


Maybe Stephen is asking how consumers would react if they saw an explicit BID surcharge on their bill.

There have been numerous threads about shipping that make it clear that many consumers hate paying for shipping and are happier if the winery charges a bit more per bottle and subsidizes some or all of the shipping costs. They want to pay for the product they bought, not add-on costs.

Another example is provided by the San Francisco law mandating SF restaurants provide a minimum level of sick leave and health care spending for staff. Some restaurants responded by adding SF Mandates surcharges to their bills (nothing about the law requires funds to be collected this way). Those surcharges were/are extremely unpopular with customers even though the spending was mandated by the county and there is an obvious cusomer interest/benefit from better sick leave and health care spending for restaurant staff. Those are viewed as business costs that restaurants should build into their revenue and cost model

In contrast to the SF healthy mandate, the SBC BID assessment (if successful) would be mandated by the winery owners and they would be among the most direct beneficiaries. What are the goals of successful marketing? To be able to make and sell more wine, and/or to raise prices.

I’d say it’s pretty clear many or most consumers will resent the BID surcharge to cover regional marketing costs. It’s more difficult to estimate the degree to which it would influence consumer behavior. But, if I were an SBC winery and this passes, I’d try to cover it through the wine (merchandise) prices rather than through a surcharge.


As I mentioned, this goes well beyond ‘marketing events’ - please see above.

And I feel it would be disingenuous to not explicitly state this fee - and better to explain the true meeting of why we are doing it.


I think it is better to state that a portion of your revenue is being paid towards it than have this be an additional fee on the price. Even though they accomplish the same thing, only one of them feels punitive as a consumer.

Three thoughts:

  1. Two percent is quite a steep surcharge.
  2. Don’t talk this on like sales tax. That’s irking to consumers, not least because they may make a buying decision based on the state price only to find an add-on they didn’t expect. Build it into the price. That way consumers can more easily compare Santa Barbara prices with those from other areas, and it will be clearer to producers that it’s a tax they are paying.
  3. Who’s getting the money and do producers trust them? This sounds like it could have the potential for some empire building.

There is a lot of information about the proposed SBC wine BID at the following link:

Money would go to the Vintners Association, typically has officers from the industry, some number of employees (apparently two at present in SBC), and has voting procedures by member wineries about actions (those votes would be one winery, one vote).

Build it into the price. That way consumers can more easily compare Santa Barbara prices with those from other areas, and it will be clearer to producers that it’s a tax they are paying.

The only advantage I can see to tacking on a surcharge is that it allows the proponents to state to the wineries who will vote on the proposal that it’s the consumers who are paying. As you know, it’s somewhat in the eye of the beholder, which is most correct really depends on the degree to which behaviors are influenced by the apparent optics.

As far as transparency, wineries don’t reveal the degree to which prices reflect other fees and costs, eg, the example of subsidized shipping. As far as that example, some wineries claim they are just covering those costs out of their revenue/margin, the same would be true in this case.



To answer your questions:

  1. It may not end up being 2% but if it turns out it is, that’s the number that gets us to the budget that we feel we need to accomplish what we feel is necessary

  2. It may legally need to be stated as an additional fee and it may be possible to ‘hide it’ - I’ll get back to you on that with certainty

  3. A new, larger Vintner’s Association will be created and the money will go back to it - with a budget that has already be created and one that needs to be kept to legally with a few small exceptions. No empire building here

Hope that helps.



See my latest post - we may need to spell out this separate fee, just as a hotel that is part of a BID legally needs to as well.

There is no doubt that consumers will be picking up the tab for this fee at present - with the hope that the BID will be reduced and will eventually go away as other funding sources are developed as our region and its association matures.

Again, reach out if you have any further questions - I’m more than happy play ‘point person’ on this and be as objective as possible.


The state of Oregon just instituted a Corporate Activity Tax. This is a .57% tax on all GROSS revenue a business does in the state of Oregon over $1 million. There’s a small discount for wages paid. I see no viable way to directly pass this along. We simply cannot tell folks that we’re adding 1% (or whatever, it would have to be greater than the .57% as a certain percent of sales are to other businesses that we couldn’t possibly pass the tax to) to their bill. We’ll eat it. Maybe raise the price of one wine $1. Maybe not. I haven’t fully considered it. Just found out about it recently. This is one that comes from on high. Would not be excited about one that we were self-implementing for marketing purposes.