San Luis Obispo Coast Wine District

ABOUT THE SAN LUIS OBISPO COAST WINE DISTRICT
The San Luis Obispo Coast (SLOC) is home to world-class wineries and winemakers. As competition between wine regions intensifies, a Wine Improvement District (WID) offers an opportunity to strengthen our region’s promotional efforts while providing a more reliable funding stream for these initiatives.

A WID is a geographically defined area where wineries contribute funding, primarily based on direct-to-consumer sales, to promote the wine industry in the region. This collaborative effort aims to market the San Luis Obispo Coast as a premier wine destination, attracting new visitors and supporting local businesses. Our proposed Wine Improvement District will align with the boundaries of the San Luis Obispo Coast AVA.

FUNDING AND MANAGEMENT OVERSIGHT

Civitas is a well known organization that specializes in development of, and advocacy for, specialty funding strategies surrounding tourism. From the onset, Civitas will work with members of the current SLOCWC Board to determine, establish, and structure the WID. Civitas provides support through all phases of the establishment, from beginning to end.

The WID is funded through a small assessment applied to direct-to-consumer (DTC) retail sales. The proposed rate for the SLOC Wine District is 1% of all DTC sales subject to CA sales tax. For example, on a $50 purchase, this would amount to $0.50.

WID funds are managed by a nonprofit organization, typically the area’s existing wine association. In our case, the SLO Coast Wine Collective (SLOCWC) will oversee the funds. Importantly, the board of directors of the SLOCWC is an elected body, giving members control over the management of these funds via elected directors. As a result, the more engaged wineries are in the governance process, the greater influence they will have on how the funds are allocated. Working closely with Civitas, the SLOCWC will draft new bylaws specifically formulated for the organization with the WID in mind. In an effort to broaden the input from district members, these new bylaws will likely include an increase in board seats and parameters surrounding membership nomination and election. Currently, nominations for board seats begin in November, with elections taking place in December of each year.

A District Service Plan will outline specific details, including the assessment rate, collection methods, budget, and usage of funds. The Service Plan will be created by the SLOCWC board in conjunction with Civitas, before being reviewed and voted upon by wineries within the proposed district. Following a passing vote by the wineries within the district, the Service Plan needs approval from the County Board of Supervisors and other elected bodies (City Councils) within the district.

Examples of how funds may be spent include:

– Brand Awareness, Marketing, and Promotion
– Trade and Public Relations
– Special Events
– Educational Programs
– Research and Development
– Community and Industry Advocacy

The sole purpose of the WID funds is to strengthen the promotional and marketing efforts of local wineries—these funds are strictly for the benefit of the wine industry and do not go to any government entity or other sectors.

CALIFORNIA WINE DISTRICTS AND BUDGETS
Several other wine districts have been established across California, with additional regions in development. These districts are generating significant revenue and awareness for their respective regions. Examples include:

Temecula Valley Wine and Agricultural Heritage District: 1% on retail sales, $1.7M budget. WID established 2021.
- 88% increase in DTC sales ($99.6M to $187.5M) 2018 (pre-WID) vs 2023.
- 75% increase in paid tastings (708k to 1.2M) 2018 (pre-WID) vs 2023.
Livermore Valley Wine Heritage District: 2% on retail sales, $500K budget.
Santa Barbara County: (Budget details TBD).

Other districts in development include Sonoma, Monterey, Lodi, and Amador. Once the SLOC Wine District is fully formed, we will have more definitive budget estimates, but early projections suggest that we could expect a budget in the range of $380,000-$400,000 for marketing and promotional activities specific to our SLO Coast.

FREQUENTLY ASKED QUESTIONS (FAQ)

Who pays the assessment?

All wineries within the district will contribute. It’s common for wineries to pass the assessment on to customers directly through the point-of-sale (POS) system.

Who collects the funds?

A non-affiliated third-party accounting firm (HDL) will collect the assessment and then distribute it to the nonprofit managing the district (the SLOCWC). Assessment fees are self-reported. Establishment of the reporting cycle, penalties for non-payment, and other details are yet to be determined. Most frequently, these details mirror those of CA sales tax payments and collections.

How do we ensure everyone is paying their fair share?

The data used to process the assessment is the same data submitted for California sales tax filings. The assessment payments will be audited against sales tax records. Penalties and interest apply to wineries not complying.

Who decides how the money is spent?

These funds will be managed by a nonprofit organization, typically the area’s existing wine association. In our case, the SLO Coast Wine Collective (SLOCWC) will oversee the funds. Importantly, the board of directors of the SLOCWC is an elected body, giving members control over the management of these funds via elected directors. As a result, the more engaged wineries are in the governance process, the greater influence they will have on how the funds are allocated.

Further, more granular information regarding the potential use of funds will be included in the forthcoming Service Plan.

Is this a tax?

No. This is not a tax. These funds are exclusively for the benefit of wineries and do not go to any government entity.

Are Wine Districts permanent?

The SLOC Wine District will initially be formed for five years, with the option to renew for up to 10 years.

When does the petition process begin?

Typically, once initiated, the process takes between 8-10 months.

FINAL THOUGHTS & NEXT STEPS

We believe that the creation of the SLOC Wine District will provide a tremendous opportunity to elevate our region’s visibility and promote growth for all wineries involved. We encourage you to get involved, ask questions, and stay engaged in this important process. You can submit your questions or comments using the link below.

SLOCWC WID Communication Form

For additional information, please contact any of the following.

Josh Baker, Tolosa Winery, josh@tolosawinery.com

Krista Fredrickson, Baileyana Winery, krista@baileyana.com

Brianne Engles, Chamisal Vineyards, brianne.engles@chamisalvineyards.com

Leigh Woolpert, Biddle Ranch Vineyard, leigh@biddleranch.com

Brian Talley, Talley Vineyards, brian@talleyvineyards.com

Paula Dooley, Stephen Ross Wine Cellars, paula@stephenrosswine.com

Kathleen Naughton, SLO Coast Wine Collective, kathleen@slocoastwine.com