WASHINGTON — A furious fight over champagne labels is splitting domestic wine producers and subjecting federal regulators to intense lobbying by high-powered lawyers, a well-placed congressman and a former secretary of defense.
At issue is a 56-year-old regulation requiring that labels on American champagne clearly distinguish between bubbly fermented in the traditional, champenoise way--in the bottle--and less-expensive wine that is carbonated in bulk tanks before being poured into bottles.
U.S. \o7 champenoise\f7 producers, joined by importers of similarly made French champagne, have accused bulk processors of using misleading, forbidden labels and seeking to pass off bad champagne as good champagne in a grab for more of the lucrative sparkling wine market.
The traditionalists are pressing the Treasury Department to carry out a 1990 threat to enforce labeling restrictions against E&J Gallo Winery and other bulk-process vintners.
But Modesto-based Gallo not only is resisting the Treasury crackdown, it is pushing for repeal of the label rule on the grounds that it is outmoded and discriminatory.
The dispute, confined until now to free-swinging, even effervescent legal briefs by prestigious lawyers, is getting political as it comes to a head.
The Treasury Department is expected to decide whether to enforce, drop or modify the regulation soon after a Feb. 19 meeting between Gallo representatives and Deputy Treasury Secretary John E. Robson.
The meeting was set up and will be attended by a key congressman recruited by a Gallo lobbyist: Rep. Edward R. Roybal (D-Los Angeles), chairman of a House Appropriations subcommittee that has jurisdiction over the Treasury Department's budget.
Trying to trump Roybal's clout, \o7 champenoise\f7 makers have enlisted another Californian, former Defense Secretary Caspar W. Weinberger, to plead their case in a personal note to an old friend and Robson's boss, Treasury Secretary Nicholas F. Brady.
The\o7 champenoise\f7 producers have singled out Gallo in their complaints. They note, for example, that Gallo's Andre brand, priced at about $4 a bottle, carries a label that lacks two required qualifiers surrounding the words \o7 champagne\f7 ,\o7 California \f7 and \o7 bulk process.\f7
The two words appear below in much smaller type instead of the same size, as required by a 1936 regulation revised in 1958. Critics say that consumers thus are led to believe that they are getting champagne as good as that made by the \o7 champenoise\f7 method, which sells for $13 to $30 a bottle, takes months more to make and has traditionally been considered superior to the bulk-process drink.
Domestic \o7 champenoise\f7 makers merely have to identify their champagne's origin, such as "American" or "California."
"Gutting these labels would result in a severe threat to 115 small makers of \o7 champenoise\f7 in 20 states to the benefit of industry giants like Gallo," Robert Neuman, a lobbyist for the \o7 champenoise\f7 producers and importers, charged Wednesday.
But Gallo is pressing to repeal the label restrictions on the grounds that they have been overtaken by modern technology and consumer understanding, thus unfairly forcing bulk processors to use "demeaning and degrading labeling terms."
"In today's marketplace, the vast majority of Americans ask for and buy 'champagne,' unconcerned about production technique or country of origin," Gallo spokesman Daniel J. Solomon said in a statement. "Today, \o7 charmat \f7 (bulk-process) champagne accounts for 75% of U.S. production and well over half of U.S. consumption."
Gallo contends that \o7 champenoise \f7 producers are using the same huge stainless steel tanks and bottle-handling machines used by bulk processors for much of their champagne production. Thus, label distinctions are increasingly meaningless, they say.
But \o7 champenoise\f7 producers respond that they still employ the 300-year-old French method of conducting second-stage fermentation in individual bottles for as long as six years. This, they say, creates special bubbles and taste never achieved in all-bulk-tank production.
Eugene T. Rossides, a former assistant secretary of the treasury who works for a prominent law firm here, puts it this way in a 37-page brief on behalf of \o7 champenoise \f7 producers and importers:
"Bulk process wines will bubble, but not foam, when poured into a glass. Traditional method wines will both bubble and foam. Although the visual impact of bubbles is a part of how sparkling wines are perceived, the real difference is in how the two wines are felt in the mouth. Bulk process wines are perceived in the mouth as having a popping feel, like soda pop or carbonated water. Traditional method wines have a creamy, foaming feeling."
In a 53-page retort, lawyers on behalf of Gallo and three other wineries scoff that there is uncertainty in the claim that longer aging produces champagne with "more desirable retention properties and a more stable foam."