Federal Government Shutdown Impact on Wine Industry

As the federal government's partial shutdown reaching its 33rd day (with no end in sight), we've seen the far reaching consequences, including long TSA lines, national park closures, cancelled State of the Union address, etc. In fact, the partial shutdown even affects the wine industry, as federal and state approval for: (1) starting a new business; (2) new or changed labels; and (3) ingredient changes.

Wineries typically submit approval for label changes ahead of their spring releases (a process that takes up to 36 days), and without approval from the Alcohol and Tobacco Tax and Trade Bureau (which is closed), wineries are in limbo. While certain label changes are exempt (i.e. simply changing the vintage for already approved labels), the rollout of new wines will almost certainly be impacted. As a result, wine makers face a dilemma: go ahead with labeling and bottling with the risk that the labels will be later rejected, or delay bottling and release, thereby potentially impacting deals with retailers.

Just for a sense of the scale of the impact (just focusing on wineries; there are downstream ripple effects for distributors): 

• Per WineAmerica, a trade association representing 600+ wineries, ~70% of respondents in a survey indicated that they are waiting on label approval
• Per Wine-Searcher: In 2018, 192,000 labels made their way through the TTB's system

The impact is expected to be most acute for new / small wineries, who don't have a backlog of older vintages they can dip into. 

Sources: 

• https://www.winespectator.com/webfeature/show/id/Your-Rose-May-Be-Late-this-Year
• https://www.news5cleveland.com/news/state/ohio-wine-and-beer-industry-impacted-by-government-shutdown
• https://www.wine-searcher.com/m/2019/01/us-government-shutdown-hits-wine-hard