TED Case Studies: Zinfandel

Number 662
January, 2002

II. Legal Cluster
III. Bio-Geographic Cluster
IV. Trade Cluster
V. Environment Cluster
VI. Other Clusters

I. Identification

1. The Issue

While American winemakers were the first to call their particular type of wine Zinfandel, recent genetic tests, which have proven that Zinfandel and an Italian wine called Primitivo are genetically identical, led Italian winemakers to begin marketing and labeling Primitivo under the name Zinfandel, hoping to ride a wave of popularity. In January, 1999, the European Union granted Italian Primitivo growers permission to use the name Zinfandel; the California vineyards have answered with quite an outcry. Using historical documents, the American winemakers have traced the lineage of the term Zinfandel back to the arrival of the first vine itself, cut from the Viennese imperial plant collection, on American shores in the 1820s. Beyond this, they have claimed that since Italians have historically referred to Italian Zinfandel as Primitivo and that the name Zinfandel originated in the United States, it is therefore a name that belongs distinctly to California-produced Zinfandel grapes and wines. Having spent many marketing dollars on ad campaigns that have significantly raised the profile of Zinfandel in recent years, American winegrowers seem reluctant to hand the title over to a brand of Italian wine that they fear may be a threat to their market niche in the United States and the European Union.

2. Description

The cultural history of Zinfandel in the United States cannot be denied - the particular type of wine hasbeen referred to by that name since its arrival on American shores. Likewise, since 1790, all Italian wine of the same variety has been called Primitivo and most of the more prestigious winemakers continue to call their brands Primitivo regardless of European Union allowances. For this reason, it is difficult to make a true historical case for the labeling of Primitivo as Zinfandel, or vice-versa. Each name has historically been confined to its specific country of origin. Zinfandel, a name without any specific or truly known origins other than its first usage, seen in the timeline under "Culture" in an 1832 advertisement, may have been the title of the original vine cutting from the Austrian imperial collection. Primitivo, however, a specifically Italian name, has been in usage in that country for much longer, though never has it been used to refer to Zinfandel in America.

According to American wine producers, genetic fingerprinting means little: the vines are identical, but the ownership of the name is cultural. The fact that the vine itself was found to have actually originated in Croatia originally weakened Italian claims of original ownership of the vine, but has solidified their case for common origin of species. More than anything, both sides seem to be at the mercy of governments using the Zinfandel case as a bargaining chip for other trade issues between them. The case presently seems to be on the back burner for a while, though its future lies in either acceptance of Italian Primitivo as Zinfandel by American wine producers, overturning the ATF ruling allowing Italians the use of the name Zinfandel, a bilateral agreement between the United States and Italy on name ownership, or an eventual dispute before the World Trade Organization (WTO).

California wine producers have spent millions of dollars advertising Zinfandel in the United States and abroad as a high class, high quality wine. The wine industry in California is a lucrative economic sector, and Zinfandel accounts for over twelve percent of wine sales in the United States each year. The climate of Napa Valley or Sonoma Valley is not remarkably different from that of Puglia, the Primitivo-producing province in Italy, though because of different soils there is a slightly different taste to Primitivo as opposed to Zinfandel wine. California Zinfandel, as a result of oak flavorings, often has raspberry, black cherry, or blackberry taste. Primitivo, on the other hand, tends toward less of a "bite" than the American varietals, with undertones of licorice and aniseed.

The arguments for this case have been heard before. Generally, however, they are heard from the other side of the Atlantic and are directed toward American winemakers. After years of complaints against the Americans for the usage of such familiar types as Chablis, Champagne and Burgundy, Italians now feel they have a legitimate argument for their use of the name Zinfandel. The California winemakers seem to feel differently, and in July, 2000 lodged a complaint against would-be Italian Zinfandel producers with the U.S. Bureau of Alcohol, Tobacco and Firearms, hoping the Bureau would overturn their earlier decision that permitted such name usage. So far, they have not been successful, though they seem more than ready to defend their reputations and market shares. According to Katie Quinn of ZAP (Zinfandel Advocates and Producers), "Zinfandel is a unique product, developed in America, and it is the culmination of history, cultivation, selection and geography."

3. Related Cases

BUDWEIS: Who Owns the Name Budweiser?, by Blanka Homolova

GRAPPA: Who owns Grappa? Name and EU-South Africa Trade Agreement, by Petra Ticha

TEQUILA: Tequila: Trade, Culture and Environment, by Joshua James

KIMCHI: Japan Korea Kimchi Dispute, by Misuzu Nakamura

BACARDI: Bacardi Dispute over Intellectual Property and Its Role in Politics, by Jackie Lirtzman

BASMATI: Who owns It?: US-India Basmati Rice Dispute in WTO by Yemi Adewumi

PISCO: Pisco Liquer, Trade and Intellectual Property Issues between Chile and Peru, by Pamela Oakes

FETA: Intellectual Property Rights of Feta Cheese, by Constantino Halkias

SCOTCH: Intellectual Property Rights of Scotch, by Elizabeth McRoberts

4. Author and Date: Anita Tepsic, January 2002

II. Legal Clusters

5. Discourse and Status: Discourse in Progress

As the legal issues in this case revolve primarily around international intellectual property law, the primary legal document is the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), signed in 1995 during the Uruguay Round. The TRIPS Agreement states in Article 22, paragraph 2a that "the use of any means in the designation or presentation of a good indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good" is prohibited (or at least subject to dispute by the country of the geographical area). According to the TRIPS Agreement, these "indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin" justify the usage of rules of geographical origin with respect to product name ownership.

California wine producers have long prospered off of their geographical names (such as Napa or Mendocino Valley), which are well-protected under rules of geographical origin such that only wines from Napa or Mendocino Valley can claim this on their label or advertisement. The Zinfandel case is a slightly different situation, because there exists no geographical region entitled "Zinfandel," as there often is with European wines, so they cannot claim historical or cultural justification for usage because under ATF regulation 27 C.F.R. §4.39(j), "product names with specific geographical significance may not be used on labels, unless the Director of the ATF finds that, because of their long usage, such names are recognized by consumers as fanciful product names and not representative of origin." In other words, Italian wine producers, under both TRIPS and ATF regulations, are technically within their legal rights in using the name Zinfandel, as Zinfandel and Primitivo are (by genetics and similar historical origin), the same product. American wine producers have not been able to convince the ATF that there exists a distinctly American cultural significance linked to the word "Zinfandel," regardless of the history of name usage. There is a fine line within both TRIPS and ATF regulations between protecting cultural significance and geographical significance, and the similar viticultural origins and techniques associated with both Zinfandel and Primitivo blurs these lines.

The numerous arenas in which this dispute is being played out hint at its complexities. The WTO aside, the ATF is responsible for implementing TRIPS insofar as the bureau is responsible for the regulation of alcoholic beverages. Because the ATF is able to rule on the labeling of such products, it decides what can and cannot be included on a label, such as the origin. In this way, it is also responsible for implementing and overseeing TRIPS in regard to American wine labeling and origin regulations, as well as product name usage. Should the Zinfandel debate go before the WTO, American producers will have to take into account the ATF ruling allowing Italian Primitivo to be marketed in the United States as Zinfandel.

6. Forum and Scope: United States (ATF) and Bilateral

7. Decision Breadth: 2

8. Legal Standing: Treaty (WTO TRIPS)

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: North America

b. Geographic Site: Western North America

c. Geographic Impact: United States

10. Sub-National Factors: Yes

11. Type of Habitat: Temperate

IV. Trade Clusters

12. Type of Measure: Intellectual Property, under cultural geographic location guidelines of TRIPS

13. Direct v. Indirect Impacts: Direct

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: No

b. Indirectly Related to Product: Yes, wine

c. Not Related to Product: No

d. Related to Process: Yes, Intellectual Property

15. Trade Product Identification: Zinfandel (Wine)

16. Economic Data

The Zinfandel case involves a dispute between the United States and Italy over ownership of the name Zinfandel. Italy serves mainly as an exporter in this case, as American winemaker's largest fear is Italian Primitivo being marketed as Zinfandel for export to the United States and countries in the European Union. Thus, wine producers in the United States would be in competition with Italian Zinfandel both in the American market and those of (especially) the European Union. To understand the position of American winemakers, it is important to note the key position of wineries in the American economy.

As seen in Table 1, under the subheading "Trade Data," wineries in the United States exported 2.6 billion dollars worth of their 6.9 billion dollar total shipments for 1999, or approximately 38% of the total wine shipped for that year. This means that 62% of all wine produced in the United States is intended for domestic consumption. However, the value of wine exports to the US in 1999 amounted to only $551,000,000 -- an amount approximately one-twelfth of the wine consumed by Americans produced in America. Table 1 also shows the relative importance of the wine industry in the United States, which employed 21,000 people in 1999, mostly concentrated in relatively small geographic, wine-producing zones specified and regulated by the American government.

 

Table 1:

 

 

Zinfandel falls under several categories in trade specifications: imports are either classified asHarmonized Tariff Schedule (HTS) number 2204294000 (defined as grape wine, other than sparkling, over 14% vol. alcohol, in containers holding over 2 but not over 4 liters) or 2204298000 (same, in containers holding over 4 liters); exports are classified as either HTS number 2204217000 (wine of fresh grapes, of an alcoholic strength by volume of over 14% volume, in containers holding 2 liters or less) or 2204290040 (same, in containers holding over 2 liters).

As seen in Table 2, the United States imported $560,000 worth of the two import classifications in the year 2000 from Italy, who was the second leading importer to the United States of these two classifications of wine behind Portugal. The next leading country to import from was Chile, who accounted for less than one-fifth of the imports brought into the United States from Italy. To view these imports in relation to consumption of domestically-produced wine, the total imports in 2000 of the two HTS classifications among the top eight countries amounted to $1,316,000As noted before, American-produced shipments amounted to 6.9 billion dollars in 1999 and Zinfandel accounts for roughly twelve percent of the wine sold in the US each year. In this case, Zinfandel's share of the market for domestically-produced and -consumed wines would be approximately $8.25 million. Obviously, though American Zinfandel producers may be correct in worrying about Italian threats to their market share, Zinfandel imports for consumption do not amount to even a fraction of the value of domestically-produced and -consumed varieties of Zinfandel.

 

Table 2: Customs Value for Zinfandel by HTS Number and Customs Value

 

 

In contrast, Table 3 shows that the United States exported $15,483,000 worth of its two export classifications in the year 2000, $2,647,000 of which was to European Union countries among the top ten countries exported to by the United States, where Primitivo is widely accepted as Zinfandel based on a 1999 European Union ruling allowing Italian winemakers to use the name for export purposes. In the United States, the ruling body on alcohol classification is the Bureau of Alcohol, Tobacco and Firearms (ATF), which ruled in favor of Italian winegrowers using the name Zinfandel. Because California winegrowers argue that the name Zinfandel implies a Californian origin, they have claimed that the ATF ruling allowing Italian Primitivo to be marketed as Zinfandel is in violation of the TRIPS agreement. The Italian winemakers, on the other hand, argue that since Primitivo and Zinfandel are genetically similar grapes and wines produced through similar techniques, there is no violation, as geographical protection is only available under the TRIPS agreement if the region in question has a unique quality or characteristic that cannot be found elsewhere, which California does not. In this particular case, California winegrowers stand to lose more than the Italians. Italian winemakers who have established themselves with the name Primitivo can continue usage, while those who wish to corner a different market or change their image are welcome to use the Zinfandel name. Because relatively little Italian wine is imported to the United States in relation to the amount exported, there is some, but not much cause for concern for the U.S. domestic market, where the wine market is fairly stable and the larger American wineries have established names for themselves. The largest fighting ground will be the world market, most especially the European Union, where it is easiest for Italian Zinfandel to enter.

 

Table 3: FAS Value for Zinfandel by HTS Number and FAS Value

 

 

As seen in Table 2, which combines the two HTS classifications, the top eight countries that import to the United States are Portugal, Italy, Chile, France, Spain, Greece, Australia and Japan. Of these ten, Portugal and Italy are by far the leading exporters to the United States; they brought in $613,000 and $560,000 worth of goods in 2000 respectively, accounting for 89.13% of the total imports for consumption among the top eight (the only eight importers who imported goods for consumption over $1,000 in the year 2000). In Table 3 combining the two exportable HTS classifications, the top ten countries to export to from the United States were Canada, Japan, United Kingdom, Belgium, France, the Bahamas, the Cayman Islands, Belize, Venezuela and Switzerland. The leading country to export to in 2000 was Canada, which accounted for 48.56% of the top ten; the second country, Japan, accounted for only 13.02% and the three European Union countries (the United Kingdom, Belgium and France) accounted for 17.1% of these exports; grouped as a trading bloc, the European Union would place second among the top ten places to export these HTS classifications.

17. Impact of Trade Restriction: Low

18. Industry Sector: Food

19. Exporters and Importers: Italy and the United States

V. Environment Clusters

20. Environmental Problem Type: Culture

The largest issue in the Zinfandel debate is historical and economic, rather than environmental; it is a fight over the name. Genetic coding by University of California - Davis professor Carole Meredith has shown that the Zinfandel and Primitivo vines and grapes are identical. As noted before, there are certain aspects of the tastes that differ. The Italians argue that because the vines are the same, the wine is the same, and they are well within their rights to promote Italian Primitivo wine as Zinfandel under the definition of Zinfandel. California wine producers argue that Zinfandel is a historic name for a specific wine produced only in California, much as the Mexicans have for the name Tequila. However, the Mexicans can argue that the blue agave, native only to Mexico, differentiates Mexican tequila; the California wine producers cannot argue this. Therefore, the main question is environmental only tangentially: does genetics justify name usage, or history?

In addition, beginning in 1989, the Heritage Vineyard project, created by University of California - Davis professor James Wolpert in conjunction with UC Extension Viticulturist Emeritus Armand Kasimatis and UC Extension Farm Advisors Ed Weber and Rhonda Smith, began collecting clippings from vineyards that existed in California prior to 1930. For aesthetic reasons, they tried to choose only those wines that came from reputable vineyards. The scientists have not only been growing the clippings into produced wine, but have also been experimenting on the clippings to seek out better ways to deal with pests and wine diseases such as phylloxera.

Another purpose of the vineyard is to make a case for the historical American Zinfandel. Though genetic proofing at the vineyard did not give evidence that Zinfandel and Primitivo are two separate wines, the Heritage Vineyard has taken a two-prong attack to the Zinfandel-Primitivo question. First, they have collected histories along with vines in trying to piece together a firm historical case for American Zinfandel. Though every winery has its myths of origin, researchers from UC Davis have been trying to uncover historical evidence of the origins of California Zinfandel and have so far discovered that the vine originated not in Italy, but in Croatia, which has hurt the Italian argument for name usage under point of origin. Secondly, they have been trying to improve upon the now-known Zinfandel through cloning techniques and virus research, in order to (ostensibly) separate the Zinfandel from the Primitivo in terms of quality.

21. Name, Type, and Diversity of Species

Name: Vitis Vitifera

Type: Zinfandel/Primitivo

Diversity: Unknown

22. Resource Impact and Effect: Low, Product

23. Urgency and Lifetime: Low, Hundreds of Years

24. Substitutes: Like Products

VI. Other Factors

25. Culture: Yes (From www.zinfadel.org)

Zinfandel has a unique spot in American cultural history as well as American viticulture. There are a number of aspects to this: for example, Zinfandel is the only wine grape varietal considered to be unique to the US by the ATF It once was the most widely planted varietal in California. Zinfandel is possibly the most stylistically diverse wine made in the US

Facts Point to Multiple Sources of "Zinfandel Similar" Vines in America:

1822-1829: Gibbs imports vine cuttings from Imperial Collection in Vienna.

1832: Boston nursery owner, Samuel Perkins advertises, "Zinfandel for Sale."

1852-1857: Macondary introduces Zinfandel vines to California. Osborn & Boggs Nursery introduces Zinfandel to Sonoma and Napa Counties.

First Use of Zinfandel Brand Name Is Clearly American:

1852-1857: Zinfandel becomes popular table grape in Northeast United States (grown under glass).

1878-1889: Zinfandel is the most widely planted variety in California's first "wine boom!"

1998: Zinfandel vineyards in California exceed 50,000 acres, once again establishing itself as the Number One red wine variety.

26. Trans-Boundary Issues: No

27. Rights: No

28. Relevant Literature

American and Italian flags courtesy of Animation Factory

www.zinfandel.org -- official website of the Zinfandel Advocates and Producers

www.wineinstitute.org -- helpful, searchable website all about wine

Bloomberg News. " 'Zinfandel' colors wine dispute," The Arizona Republic. Phoenix, July 6, 2000, p. D17.

Rose, Anthony. "You say Zinfandel, I say Primitivo," The Independent. London, July 15, 2000, Features, p. 17.

1/2001