Community Columns

New privacy law puts California wineries at a competitive disadvantage

John Kautz
John Kautz

I’ve been farming in California since 1952. After years of producing vegetables, I realized my dream to become a vintner and opened the doors to Ironstone Vineyards in 1990. Ironstone has built our business with effective direct marketing programs that help us reach our customers and connect them with the wines and other company products that best suit their tastes and needs.

I’m concerned that the state’s new privacy law will negatively impact my wine business and other family-owned wineries.

The California Consumer Privacy Act is intended to help consumers safeguard their online identities and sensitive information. In e-commerce, where many digital platforms are funded through personalized ads, there should be greater transparency in how data is used, and greater protection of sensitive consumer information.

Unfortunately, the CCPA was passed without necessary attention to impacts to not only consumers and social media platforms, but to all California businesses, like family wineries. Therein lies a problem that must be fixed before the new law takes effect next January.

The heart of the CCPA is the consumer’s right to know what information is being collected and the right to have that information deleted. Under the law, data collection obligations fall squarely on businesses that use the internet for operations or sales — even if they have nothing to do with collecting or selling data — and applies equally to businesses like mine as for the state’s largest technology companies.

This makes little sense. We do not “collect” data; we share customized information with wine consumers, track our customers’ preferences, and digitally market to new customers. The cost for us to comply with the CCPA’s data collection requirements, in terms of staff, lawyers and technology consultants, could impact our business operations. We want wine club members, we want restaurants and other regular customers, and we want to get our wines in front of people visiting the area or searching the internet for wines. This new law is so confusing that I’m not sure what I am required to do with the information I have collected about customers, or whether my marketing and advertising strategy will still work.

For example, consumers who “opt out” of sharing data to get products might find the purchase of wine like mine harder to find, while larger online wine retailers will have the ability to reach customers by saturating the food and wine marketplace with ads.

Ironically, the CCPA may eliminate the most personal form of distribution: wine club services. According to Wine Business Monthly, wine clubs represent up to one third of sales, helping to solidify repeat customers and helping customers enjoy private offerings at a discount. But the CCPA’s prohibition on discriminating against a consumer who “opts out” means that we may not be able to reward our loyal customers who share their information, through discounted prices or special services.

The CCPA’s burdens could spell trouble for small wineries in the Coast region and throughout California. The state’s 4,800 wineries are mainly family-owned businesses, many multigenerational. In an industry that yields $57.6 billion in state economic impact, the state should not put our industry at a competitive disadvantage to other states and countries.

The Legislature is considering several bills that will provide businesses like mine some relief. Senate Bill 753 would allow small businesses to continue to rely on low-cost advertising, but limits the use of information to advertising purposes. Assembly Bill 846 would allow a consumer to enter an incentive program, therefore preserving the ability of a business to offer loyalty or rewards programs like a wine club.

Passing measures that address problems in the CCPA is critical to the well-being of businesses like mine. We hope that our state legislators, whether they represent my area, Napa and Sonoma, the Central Coast or the Temecula area, consider the impact and think of the jobs and economic benefits tied to wineries and tourism. They voted for new privacy rules but now they need to vote to bring balance to the privacy law. In these months before the CCPA takes effect, we trust that “in vino veritas” — in wine, there’s truth.

John Kautz is chairman of Ironstone Winery and owner of Kautz Farms, in the Lodi and Murphys areas. He wrote this for The Modesto Bee.

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