By: Allan Amburn, Staff Member

With a seemingly Dionysian blessing, Kentucky has once again become a wine producing state. Prior to Prohibition, “Kentucky was the third largest grape and wine producing state in the nation.”1 Prohibition, which placed a cork in this production, deeply hurt Kentucky wineries with the resurgence of Kentucky wineries occurring only in the past two decades.2 “‘Ten years ago, Kentucky had only two or three wineries….”3 Now, over sixty wineries and vineyards thrive in Kentucky.4

This growth can be observed in the monthly statistical reports of the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury. These reports disclose the amount of wine produced by each state.5 The Bureau first reported Kentucky’s wine production in August 1995.6 With a yield of 2,241,527 gallons of wine in 2013, Kentucky had become the eighth largest producer of wine in the U.S.7 This growth has definitely resulted from Kentucky’s blend of a “mild climate and limestone soil.”8

But another factor has fortified this organic growth: the Kentucky Grape and Wine Council. The Kentucky Grape and Wine Council seeks to “promote and facilitate the development of a Kentucky-based grape industry in the Commonwealth of Kentucky.”9 This Council was explicitly created in 2002 under the jurisdiction of Kentucky’s Department of Agriculture.10 To facilitate the development of wineries in Kentucky, this Council is empowered to “promote the sale of…wine for the purpose of maintaining and expanding present markets and creating new markets for Kentucky…wine for the maximum economic impact on the agricultural economy of Kentucky….”11

In pursuit of this goal, the Kentucky Grape and Wine Council has implemented two different grant programs: the Marketing Cost-Share Program and the Wholesaler Reimbursement Program.12 These grants are available only to small farm wineries within Kentucky.13

The Marketing Cost-Share Program, established by 302 KAR 39:020, provides reimbursements to small farm wineries for eligible marketing expenditures.14 These reimbursements are capped at fifty percent of its eligible marketing expenditures.15 These eligible expenditures require a clear display of the small farm winery’s logo or name to be on some marketing medium.16 Such marketing mediums include: advertisements, promotional items, billboards, uniforms, logo designs, booths, and off-site retail stores items.17

The Wholesale Reimbursement Program, also created through 302 KAR 39.020, pours out a reimbursement to wholesalers of twenty dollars per case of wine produced by a small farm winery within Kentucky.18 In order to be reimbursed, the wholesaler must: sell the wine at the same price it was purchased, deliver the wine before filing a reimbursement request, and file such a request within ninety days of wine delivery.19

Both of these grants are funded by KRS 260.175.20 The Kentucky Grape and Wine Council receives $400,000 a year from the general fund.21 Of this amount, $100,000 is apportioned to the Marketing Cost-Share Program, 22 and $75,000 is designated for the Wholesale Reimbursement Program.23 In both of these programs, the funds are split equally into two biannual program periods.24

Having had time to breathe since Prohibition, Kentucky has once again become a wine producing state. This growth has been supported by the Kentucky Grape and Wine Council’s grant programs. With these grants still supporting small farm wineries, Kentucky’s wine production should increase, making the future of Kentucky’s wine-making to be a bright one.

1 Grape and Wine Program, Kentucky Department of Agriculture (2014), http://www.kyagr.com/marketing/grape-wine.html.

2 See Cathy Lockman, Kentucky’s Wine Industry Grows As New Commercial Vineyards Open, Farm Flavor, http://farmflavor.com/us-ag/kentucky/local-food-beverages-kentucky/grape-expectations-for-kentuckys-wine-industry/ (last visited Sept. 23, 2014).

3 Id.

4 See Wineries List, Kentucky Wine (2013), http://www.kentuckywine.com/wineries-vineyards/wineries-list/; Grape and Wine Program, Kentucky Department of Agriculture (2014), http://www.kyagr.com/marketing/grape-wine.html.

5 See Wine Industry: Monthly Wine Statistics, Alcohol and Tobacco Tax and Trade Bureau, U.S. Dep’t of the Treasury (last updated Sept. 9, 2014), http://www.ttb.gov/wine/.

6 See U.S. Dep’t of the Treasury, ATF A:15120-3 (10-83), Bureau of Alcohol, Tobacco and Firearms: Monthly Statistical Report – Wines 3 (August 1995).

7 See U.S. Dep’t of the Treasury, TTB S 5120-1-12-2013, Alcohol and Tobacco Tax and Trade Bureau: Statistical Report by State—Wine 3 (2013).

8 Cathy Lockman, Kentucky’s Wine Industry Grows As New Commercial Vineyards Open, Farm Flavor, http://farmflavor.com/us-ag/kentucky/local-food-beverages-kentucky/grape-expectations-for-kentuckys-wine-industry/ (last visited Sept. 23, 2014).

9 Ky. Rev. Stat. Ann. § 260.165(1) (West 2009).

10 See Ky. Rev. Stat. Ann. § 260.165(1) (West 2009); 2002 Ky. Act c 315 § 4.

11 See Ky. Rev. Stat. Ann. § 260. 166(2)(a) (West 2007).

12 See Winery Cost-Share & Wholesaler Reimbursement Program, Kentucky Department of Agriculture (2014), http://www.kyagr.com/marketing/winery-grants.html.

13 Id.

14 See 302 Ky. Admin. Regs. 39:020(section 4) (2007).

15 Id.

16 Id.

17 See 302 Ky. Admin. Regs. 39:020(section 4)(4) (2007).

18 See 302 Ky. Admin. Regs. 39:020(section 3) (2007).

19 See 302 Ky. Admin. Regs. 39:020(section 3) (2007); Winery Cost-Share & Wholesaler Reimbursement Program, Kentucky Department of Agriculture (2014), http://www.kyagr.com/marketing/winery-grants.html.

20 See Winery Cost-Share & Wholesaler Reimbursement Program, Kentucky Department of Agriculture (2014), http://www.kyagr.com/marketing/winery-grants.html; Ky. Rev. Stat. Ann. § 260.165(2) (West 2010).

21 See Ky. Rev. Stat. Ann. § 260.175(2) (West 2010).

22 See Ky. Rev. Stat. Ann. § 260.175(2)(b) (West 2010).

23 See 302 Ky. Admin. Regs. 39:020(section 1)(5) (2007); Ky. Rev. Stat. Ann. § 260.175(2)(d) (West 2010).

24 See 302 Ky. Admin. Regs. 39:020(section 3)(4) (2007); 302 Ky. Admin. Regs. 39:020(section 4)(6) (2007).