Jackson Family Wines CEO calls for protections against imports

Saying he believes foreign wine imports could exceed the number of U.S. brands sold in America by 2050, Jackson Family Wines CEO Rick Tigner on Wednesday called for a reciprocal tax to ensure fair trade, not free trade.

'There are free trade agreements in other countries. We need a better, higher pricing structure and tariff protection to compete with rising imports," he said at a Santa Rosa meeting of local business and community leaders. "So how do we get a tax on wine imports to achieve a fair playing field around the globe?'

Tigner, who joined Kendall Jackson in 1991 in sales and was named CEO and president of Jackson Family Wines in 2015, spoke to about 200 at the general membership meeting of Sonoma County Alliance.

Tigner said imports were once a smaller part of the total wine business. In 1990 imports were about 25% of wine sales across the country, and now imports are closer to 40% of the business. 'By 2050, there will be more imported wine in America than American made wines.'

'We let import wines into America almost for free. On the world stage, we are getting killed. Imagine owning a business where you're taxed up to 30-60+% to sell wine in a country that sells its wine to the U.S. with far less tariffs. American wines are at a disadvantage. We should have fair wine trade which means getting other wine producing countries to lower their tariffs, taxes and duties. That's why I believe in a reciprocal taxation policy.'

Tigner said Jackson continues to produce and sell imported wines, some 30,000 cases from the family's wineries from Italy, France, Australia, South Africa and Chile come to the U.S. annually. 'There are 125,000 individual wine SKUs in the U.S. with more imported SKUs arriving all the time from hundreds of thousands of wineries on our planet.'

Tigner cautioned about the impact of imported wines.

'If we were to continue selling wine from other nations, we would be teaching the next generation to drink imported wine," he said. "... There are 125,000 wine SKUs in the U.S. with more imported SKUs arriving all the time from some of the 150,000 wineries on our planet.'

Family-owned Jackson's premium collection of 43 wineries and vineyards span the globe, located in countries such as South Africa, Australia, Chile, Italy, and France as well as in the Williamette Valley of Oregon and Sonoma, Napa, Monterey and Santa Barbara counties in California. The company's products are sold under 50 brands, and its brands produced outside the country also are sold in the U.S. It produces six million cases a year and continues to set records. Jackson portfolio wines received more than 1,233 ratings at 90-plus points and above in 2018 alone.

'Our founder, the late Jess Jackson, told me years ago he had three goals – to pay down the company's debt, raise the average price of JFW wines in every category it is in, and to be the best damn wine company in the world. He didn't want his firm to get bigger, just better. This is what drives us. For us, quality is No. 1. Today JFW is the price and volume leader in its category. We're not in the brand business, we're in the winery business,' Tigner said. 'This is why we are 50% ahead of our nearest competitor.'

For example, Kendall Jackson chardonnay was No. 1 in 1991 and is still the leader 28 years later. According to Tigner, some 95% of its chardonnay is barrel-fermented, and 2.5 million cases are produced annually to meet market demand.

Tigner pointed out that having sustainability certifications and placing these logos on bottles is a key way to maintain Jackson's unique differentiation in a crowded field. 'All of our vineyards and wineries are 100% certified by California Certified and Sustainability In Practice (SIP) programs. Third-party certification supports best management practices for sustainability performance.'

He said being sustainable means 'putting your money where your mouth is. We set a series of objectives to be achieved in the 2020-2030 timeframe to help Mother Earth. Our goal to cut Green House Gass emissions by 25% by 2020 has already reached 30%.'

The goal to reduce our use of water by 33% has been surpassed at 36%. We currently use 3.68 gallons of water to make one gallon of wine. We want to get this down to three gallons of water.'

With a total of more than 300,000 barrels, Jackson washes six at a time while also recycling water nine or ten times during the process. Tigner says the company is twice as water efficient as the U.S. industry average, saving 31 million gallons per year.

Jackson's goal of reaching a 2020 electricity offset from onsite renewables of 50% is currently above 32%. The 85% certification goal as a sustainable fruit grower is above 80%. Another objective to reduce waste in JFW wineries and tasting rooms with 90% diversion by 2020. This benchmark has already been met by a 98% diversion of bottling waste last year that was previously sent to landfills.

In terms of employee volunteerism and social responsibility, the company reports 75% participation in various charities and community service organizations among Jackson's 1,700 employees – which Tigner says should be 100%.

'Our owner, Barbara Banke, came to me a while back saying we should pay a living wage of $15 an hour. Today a number of employees are at $22/hour and others are even higher. Big doesn't pay, but family-owned wine does. We also offer a 401k matching program and health care. We also provide employee training courses and support more than 50 community organizations – including the Rooted for Good Volunteer Program and the JFW Cares Foundation.

Housing has been another focal point. Thirty acres owned by the company in Wikiup became the site for 64 housing units, including a golf course and park as a way to give back to the community.

Jackson also provides farm labor housing for its 360 H-2A visa farm workers in various counties.

JFW works with an outside Farm Labor Contractor that specializes in the H-2A program. This contractor houses and transports the H-2A employees. JFW allows this contractor to use ranch houses for some of these H2A workers.

'We clearly need immigration reform to continue to have good workers and maintain a sustainable workforce. At $15 to $22 an hour, to live in Sonoma County means you are probably not going to vacation in Hawaii.'

He said several Jackson workers in Napa County moved to the Fresno area to benefit from a lower cost of housing. 'Our tasting room staff members earn from $17 to $18 per hour. We need them. I worry a lot about both our farm and tasting room people and don't want to lose them.'

On energy use, Tigner said Jackson has the U.S. wine industry's largest solar portfolio comprising 7.1 megawatts DC plus 4.2 megawatts of storage capacity. It also introduced Blue Ray sanitation technology to sterilize its stainless-steel wine tanks.

Wine losses of 5% to 6% due to evaporation are being countered using humidity management techniques. With 100,000 tons of fruit processed annually and stored in 300,000 barrels, every 1% saved from evaporation is equivalent to 1,000 tons, or 250 acres, of grapes.

On land conservation, of the 40,000 acres owned by the Jackson family, only 14,000 are planted, leaving a majority as open space and animal habitat that can also serve as a carbon sink for carbon dioxide and enhance biodiversity.

Tigner said Jackson is also striving to reduce carbon dioxide and volatile organic compounds by working with the University of California, Davis, to discover ways to capture and sequester carbon dioxide, the chief greenhouse gas scientists say contributes to climate change and global warming.

'We want to measure our GHG footprint and set mid- and long-term reduction strategies, while also increasing renewable generation capacity and planning to cope with a future characterized by higher temperatures. A favorite Jess Jackson quote comes to mind. Take care of the land and it will take care of you. This is why we focus on land stewardship and soil health.'

Corrections: All Sonoma County vineyards are California Certified and Sustainability in Practice. Jackson Family Wines produces wines in multiple countries and sells those in the U.S.

Clarification: On Thursday, Rick Tigner clarified his remarks related to the growing number of imported wines and tariffs.

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