(Wines&Vines) - A measure that would drastically inhibit opportunities for wineries and retailers to provide discounts to consumers is moving quickly through California’s legislature. SB 1032 won unanimous approval when it passed from committee to the Senate floor.

Among its provisions, the legislation would ban paper coupons and electronic “scan-backs” for in-store purchases and bar retroactive rebates from wineries for products that don’t sell fast enough. Mail-in rebates would still be allowed.

California’s Wine Institute (WI) co-sponsored the bill, which was authored by state Sen. Cathleen Galgiani of Stockton. In a statement sent to Wines & Vines on Tuesday, WI said the bill would prohibit winery-funded instant redeemable coupons (IRCs) on wine and cross-merchandizing product purchases.

“Current couponing practices have the potential to create competitive imbalances between large and small wineries and between large grocery chains and smaller independent retailers. Additionally, IRCs often involve deep discounting, which can reduce the brand equity that our wineries work so hard to create and maintain. 

“The legislation does not prohibit winery-funded, mail-in rebates and retailer-funded IRCs and other discounts. SB 1032 is consistent with our position to encourage and support practices that expand opportunities for all three tiers and all California wineries to sell wines responsibly and effectively.”

On the other hand, grocery chains oppose the passage, according to Curtis Mann, director of wine, beer and spirits for Raley’s, the fourth-largest chain in the California market. Mann is adamant that SB 1032 would have unexpected (and unpleasant) consequences for winery/retail relations if passed into law.

“I am concerned when flexibility in pricing is removed from a market. There are a lot of unintended consequences of tying one’s hands behind one’s back,” he said. Mann noted that a similar law passed in 2015 to regulate beer sales “had some pretty dramatic consequences like a shift in pricing power to the distributors instead of breweries. This resulted in a 7%-10% increase in price to consumers.”