The Trade

Marterella wines for your restaurant or business order at Virginia Wine Distribution Company.

Virginia Winery Distribution Company

Established in 2008, the Virginia Winery Distribution Company (VWDC) is a non-profit, non-stock corporation created by the Virginia Department of Agriculture and Consumer Services (VDACS) to provide wholesale wine distribution services for Virginia farm wineries. Many wineries in the Commonwealth use VWDC to distribute and personally deliver their wines to local retailers. The VWDC Board is composed of two representatives nominated by the Virginia wine wholesale industry, two representatives nominated by the Virginia wine industry, plus the VDACS Commissioner.

The mandatory use of a wholesale distributor in the Commonwealth had been in place since the end of Prohibition. In 1980, the General Assembly exempted farm wineries from the three-tier system of distribution and allowed them to sell directly to ABC licensees. However, on July 1, 2006, a U.S. district court invalidated Virginias distribution laws, and farm wineries were then required to use the three-tier distribution system to sell their wines. The financial impact of this decision was felt by many of the wineries. They were either too small for a wholesale distributor to consider, or the costs were too high. Then, in 2007, the General Assembly approved legislation allowing small farm wineries to distribute as many as 3,000 cases of their own wine each year to stores and restaurants through the state agriculture department. Thus, the VWDC was born and brought wholesale distribution back to the farm wineries. Today, more than 150 farm wineries in the Commonwealth of Virginia are signed on with VWDC and utilize the service monthly.

Every winery entering into an agreement for distribution with any wholesaler must notify ABC of which Virginia cities and/or counties are designated as that wholesalers sales territory (Virginia cities are NOT part of surrounding counties, but are independent, municipal corporations). Please note that a winery is granting a wholesaler a primary area of responsibility, not an exclusive area of responsibility. In making this designation, wineries should consider the need for other independent wholesalers in the future, in addition to or instead of virtually self- distributing through VWDC. A winery with no existing wholesaler may make a different decision about a sales territory for VWDC than a winery already using a wholesaler.

A winery with only one wholesaler (VWDC in this case) could grant that wholesaler the entire state. However, because the Wine Franchise Act makes it more difficult to pull back sales territory from a wholesaler than to grant it, in practice, most wineries have opted to designate only one or two remote localities with few ABC licensees per wholesaler. In this situation, the wholesaler is permitted to serve the designated territory as its primary area of responsibility, as well as other parts of the state. The law states that it shall not be construed as restricting sales or sales efforts by a wine wholesaler exclusively to retailers located within the designated sales territory. In short, the Franchise Act permits poaching into a wholesalers designated sales territory by another wholesaler, but it does not generally permit the winery to take steps to restrict either wholesalers sales/actions within that sales territory. The sales territory can be one designated by the winery with ABC or determined based on the prior course of conduct between the winery and the wholesaler.

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