Alcohol Content and Wine Quality: How a New Law Could Transform Your Wine Collection

MENTIONED IN THIS POST:

• -Kosta Browne
• -Rhys

 You might assume that it costs the same for a winery to make wine with high alcohol by volume (ABV) as it does to make wine with low ABV. But this isn’t the case in the United States. We actually tax low ABV wines at $1.07 per gallon, whereas we tax higher ABV wines at 50 cents more per gallon. It might not seem like much, however, that 50 cent difference could mean hundreds or thousands of dollars in lost revenue, especially for wineries that produce a great deal of wine. This tax law has forced many wineries to limit the ABV in their wines in order to avoid paying the higher tax rate.

But the ABV taxation problem could have a solution for the first time in decades. A new bill making its way through Congress would reduce the tax on high ABV wine, putting it closer in line to its lower ABV peers. As a result, we might see improvements in alcohol content and wine quality, and perhaps even stronger (and more age-worthy) wines on the market.

What You Need to Know About the New Law

The new Craft Beverage Modernization and Tax Reform Act of 2017 would reduce excise tax rates on wine, beer, and distilled spirits, and slash the tax rate for high ABV wine. Currently, wines at 14 percent ABV or lower receive the lowest possible tax rate, whereas wines between 14 and 16 percent ABV receive the highest rate. When this original tax law went into effect decades ago, lawmakers wanted to limit the overall ABV in wine because they thought that this would be safer for consumers. They believed that consumers weren’t aware of ABV, and that as a result, people would consume too much high alcohol wine, resulting in significant health risks. By taxing wineries for making high ABV wine, they limited the number of high ABV bottles available on the market by increasing the distribution costs for producers.  

However, that tax plan backfired in a number of ways. To start, rather than lowering the ABV, some wineries simply tweaked the numbers on their labels to make the wine appear lower in alcohol than it actually is. This made wine more dangerous for consumers (who don’t know how much alcohol is actually in the bottle), and it made it harder for collectors to decide whether the wine is age-worthy. I know collectors who try not to invest in any Pinot Noir with over 14 percent ABV, meaning that if the ABV listed on the label isn’t accurate, they could accidentally buy Pinot Noir that’s higher in alcohol than they usually prefer. Additionally, the current tax law makes it harder to find high alcohol wines, since relatively few are available on the market.

We Could See Stronger, Less Expensive Wines

The new tax reform law would give wineries more freedom to make wine in the style that they prefer, without fear of economic repercussions. As a result, we’ll likely see more robust, boozy wines on the market, and these wines will cost less overall than they do right now. This is potentially good news for collectors and casual drinkers alike, since high alcohol wines usually reach their peak drinking window sooner than wines lower in ABV. Most of the collectors I know drink their high alcohol wines while the wines are still young, while they wait for their lower-alcohol wines to mature. Lower taxes on high ABV wines will mean that collectors have more options to choose from on the market, and that these wines will be less expensive. Usually, collectors are willing to splurge on their age-worthy bottles, but when it comes to jammy bottles that are meant to be drunk young, they often prefer spending less.

If this new law takes effect, it will make it easier for collectors to tell if a wine is worth collecting. Wine alcohol content impacts the value of a bottle significantly. It’ll also make it easier to guess at the character of a wine. For instance, you might see a bottle of Kosta Browne Pinot Noir with an ABV of 13.8 percent, and a different bottle of Rhys at 12.9 percent. Knowing that these listed percentages are completely accurate allows you to decide whether you want the Kosta Browne, which is higher in alcohol (and likely bolder in its youth), or the Rhys, which is lower in alcohol (and likely more delicate). With more accurate ABV listings, you don’t necessarily have to try the wine to know which you’ll likely prefer.

Better Alcohol Content and Wine Quality Means More Choices

Although this new law hasn’t passed yet, we’re already seeing it spark conversations over alcohol content and wine quality, and whether high ABV wines are worth an investment. As high ABV wines become more common on the market due to lowered tax costs for wineries, we’ll almost certainly see more varietals like Shiraz, Zinfandel, and Grenache-Syrah-Mourvedre blends on the market. For years now, many collectors have brushed these wines aside as cheaply-made bottles that are poor investments. However, as the tax cost on these wines decreases, we’ll see more wineries craft these styles, which might result in better competition and higher quality grapes. This means that it will be easier to find collectible, age-worthy bottles made from these grapes, which will diversify your wine collection and make your collection more eclectic.

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