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Gallo wine-tasting rooms get thumbs up from SC lawmakers, governor expected to sign

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South Carolina lawmakers voted in favor of legislation meant to lure a $400 million E.J. Gallo wine bottling and distribution facility to Fort Lawn near Lancaster. File/Warren L. Wise/Staff

COLUMBIA — South Carolina lawmakers gave the nod to wine-tasting rooms to help secure a $400 million investment by California winemaker E.J. Gallo in Chester County.

The full House voted in favor of the bill May 4. Following a final vote, which is expected May 5, the bill will go to Gov. Henry McMaster, who has already voiced his support and urged lawmakers in a letter to pass the bill.

"The governor is thrilled with the progress that's been made and looks forward to signing it into law," said Brian Symmes, a spokesman for the governor's office.

The winemaker has said it wants to open a bottling and distribution site in Chester County that would be its East Coast hub. It promised to hire up to 500 workers in the first phase of development and could eventually employ more than 1,000.

As part of the deal, Gallo asked to be allowed to open three tasting rooms in population centers around the state. The rooms must close by 5:30 p.m. and the number of bottles of wine the rooms can sell is limited to six per person.

In addition, Chester County Council has given initial approvals to enter into a deal for tax incentives with Gallo, though the specifics of what those tax breaks will be are still being discussed, and a full agreement has yet to be drafted, said county attorney Joan Winters.

The amount and duration of the incentives will be decided when the agreement is given a final vote, which is expected to take place June 16, Winters said.

And the winemaker will likely be eligible for state tax credits for jobs created at a rate of $25,000 per position annually, for up to five years.

Ron Donoho, a vice president for Gallo, told lawmakers the company picked South Carolina over Georgia and North Carolina for its East Coast operations, a move that's meant to cut costs as nearly two-thirds of its customers live in the eastern half of the country.

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The rooms are expected to be placed in tourist heavy areas and allow a group of roughly 10 people to gather for a paid tasting. 

Opponents have argued the change dismantles the state's three-tier system meant to curb unfair competition between retailers, wholesalers and manufacturers. But others called South Carolina's a "piecemeal system” cobbled together over decades, where each sector is highly protective of their own interests.

"Over in the Senate they did a lot of work to narrowly tailor this bill," said Rep. Micah Caskey, a Republican from West Columbia, in announcing the bill to the full House.

To appease wholesalers, lawmakers required Gallo to buy their own bottles from wholesalers to stock the tasting rooms. And the 5:30 p.m. closing time is a concession to restaurants that were worried about competing for customers.

Liquor stores are still against the bill because they don't want Gallo to be able to sell wine directly, saying the company's size gives it an unfair advantage. 

An effort in the Senate to eliminate the retail portion of the tasting rooms failed.

"We want to see them come here," said Lock Reddic, president of Green’s Beverages, a wine, beer and liquor retailer in the Columbia area. "But we just can't have the biggest, most powerful supplier in the world come in and ask to change our laws. They’re a $5 billion-a-year company."

Four of every 10 bottles of wine sold in South Carolina are owned by Gallo Wines, Reddic said.

As added protection, the tasting rooms cannot be constructed until after Gallo has met its promised investment and jobs numbers, Caskey said.

Reach Jessica Holdman at Follow her @jmholdman on Twitter.

Jessica Holdman is a business reporter for The Post & Courier covering Columbia. Prior to moving to South Carolina, she reported on business in North Dakota for The Bismarck Tribune and has previously written for The Spokesman-Review in Spokane, Wash.

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