Direct-to-consumer

D.C. Mayor Proposes More Booze Reforms

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Washington, D.C.’s alcohol laws are better than many places, but the District still has its fair share of rules that hurt producers and consumers. According to DCist.com, D.C. mayor Muriel Bowser is now proposing a new slate of reforms aimed at helping the city’s growing craft alcohol scene:

Mayor Muriel Bowser has proposed several changes to make it easier for local alcohol manufacturers to sell their wares, including allowing wineries and distilleries to ship products directly to consumers and raising the allowable amount of alcohol in wine. They would be the latest in a slew of legislative changes over the past eight years that have allowed craft breweries, wineries, and distilleries to flourish in D.C. after five dry decades…

With the Manufacturer and Pub Permit Parity Amendment Act of 2019, Bowser is now proposing a series of tweaks that continue to respond to the city’s evolving craft alcohol scene, particularly its burgeoning cider scene.

For one, it would allow for higher-proof wines (cider is considered a wine under federal and local law)—raising it from 15 percent to 21 percent.

“We have several wine pubs currently that would like to make cider that’s slightly more than 15 percent alcohol by volume. We thought it made sense to bring the District in line with other jurisdictions currently,” Moosally says. Wine can be up to 24 percent alcohol under federal law, 22 percent under Maryland law, and 21 percent in Virginia, Moosally says.

The new legislation would also allow wineries and distilleries to ship their products directly to consumers (currently only breweries can do so.)…

Read the rest here.

Bourbon Left Out of Kentucky Alcohol Delivery Bill

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Kentucky may be known for bourbon, but its lawmakers may leave the state’s flagship spirit out of their latest round of alcohol reform efforts. Last year, Kentucky made news by passing legislation that allows visitors to visit Kentucky distilleries and then have booze shipped to their homes. This year, a bill allowing consumers to purchase alcohol online and have it delivered may exclude bourbon altogether, according to WAVE 3 News:

Those at the Kentucky Distillers’ Association would probably tell you a lot of things are better with bourbon, but it’s not just barbecue sauce and bourbon balls. Now, they want to see a shot of the spirit included in Senate Bill 99.

Distillers said they feel left out of a bill that would allow wineries to ship online and electronic orders straight to your door.

KDA leadership said current language doesn't allow bourbon producers to do the same thing.

President Eric Gregory said HB 400, passed last year, does allow distillers to ship if people buy on site, but if they go home and want more bourbon he said they're out of luck.

Right now, SB 99 would allow for each person to receive up to 24 cases of wine from a seller annually. Bourbon is excluded…

Read the rest here.

Will Direct-to-Consumer Shipping Expand for Distilled Spirits?

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As R Street’s Jarrett Dieterle has previously discussed, it’s very difficult for the alcohol industry—especially distilled spirits and beer—to participate in the direct-to-consumer (DtC) shipping boom. Most states restrict the ability of brewers and distillers to ship their products directly to customers, although Kentucky recently passed a DtC law that could spread to other states. An article for RaboResearch lays out the current state of play:

In a world where consumers can get anything they want, however they want, the spirits industry is at a real disadvantage. Direct-to-consumer (DtC) shipments and e-commerce have driven growth in the wine category, but spirits face restrictive rules around shipping and retail that limit distillers’ ability to operate online. As we approach the holiday season – the most important time of year for wine and spirits sales – we want to highlight the structural challenges facing spirits in a world increasingly defined by e-commerce.

In 2018, wine shipped DtC will represent 7 percent of the total US wine market – more than USD 3 bn. About 95 percent of US consumers can go online to buy and ship wine DtC across state lines. The laws for shipping spirits DtC are, however, much more restrictive: Only five states allow DtC spirits shipments, with 5 percent of the US population having access to the channel. In fact, shipping laws are so complex and the market so small that common carriers won’t even ship spirits in states that do permit distilleries to ship DtC.

If the spirits industry had the same access to consumers as wine, they could build a market worth billions of dollars. Recognizing the opportunity, distillers are pushing state legislatures to change their shipping laws, and believe it or not, they are making progress. Kentucky, perhaps aspiring to its state slogan 'unbridled spirit', passed a law to legalize DtC spirit shipping in 2018. Other states will likely follow. As Eric Gregory, president of the Kentucky Distiller’s Association, told Insider Louisville “... once other states realize Kentucky has broken the ice... we’re going to see a lot of movement with other states coming on board.”…

Read the rest here.

New Effort to Reform New Jersey Wine Shipping Laws

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Under New Jersey law, wineries that produce over 250,000 gallons a year are prohibited from selling directly to consumers in the Garden State. This law applies to both in-state and out-of-state wineries, and according to the Philadelphia Business Journal, New Jersey liquor store owners are the main opponents of reform:

A coalition calling itself Free the Grapes is pushing legislation that would allow major wine producers to ship bottles of their alcoholic libations directly to consumers in New Jersey.

Right now, the most prolific producers of wine are barred from shipping their products to individual buyers in the Garden State…

But the N.J. Liquor Store Alliance, which represents the retail side of the industry, is telling them to put a cork in it…

Read the whole article here.

Sales Tax Ruling May Not Affect Direct-To-Consumer Shipping

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The Supreme Court recently ruled that states have the authority to require online vendors to collect state sales tax--even if those online retailers are not physically present in a given state. This overturns the previous law, where online vendors did not need to charge sales tax if they were not brick-and-mortar retailers. Bev News Online, however, explains why this may not harm direct-to-consumer shippers as much as we think:

...we don’t think the decision will have any meaningful impact on DtC shipments.

Neither does Steve Gross, vp-state government relations at the Wine Institute.  “For the most part this will have only a limited impact on wineries making Direct-to-Consumer (DTC) shipments, as most states already are collecting sales taxes on wine DTC since those provisions were included in the DTC statutes when they were passed,” he told us.

The decision overturned two earlier decisions – the most recent being 25 years old – involving catalog sales.  Those cases held out-of-state retailers cannot be required to collect and remit sales taxes to any state in which it didn’t have a physical presence...

Read the entire article here. Chain Storage offers a similar perspective here, with some elaboration on the law's protectionist nature.

According to Wine Searcher, the Supreme Court officially confirmed that this tax will apply specifically to wine:

Wine sales have been somewhat of a laissez-faire business in the US for some decades – some retailers charged taxes on out-of-state purchases while others elected not to do so. As a result, the same bottle of wine might cost a New York consumer less online in New Jersey than at the shop down the street.

However all of that has changed as last week with the Supreme Court case of South Dakota v Wayfair Inc. In keeping with the justices' ruling, the wine retail market is going to be revamped and standardized in terms of taxes across the country. This telling case – which comes just nine months on the heels of wholesaler pressure pushing UPS and FedEx wine deliveries out of 36 states – will mandate a retail market in which taxes will be paid by retailers large and small.

Most major internet wine sales entities, such as Amazon and Wine.com, have been charging their out-of-state customers taxes all along. Until six months ago, Amazon didn't charge sales tax on sales in areas where it didn't have a brick-and-mortar presence, says Eric F. Citron, counsel of record for South Dakota in the recent Supreme Court case and a partner in the Maryland law firm Goldstein & Russell, P.C. They changed that policy six months ago, he notes. Amazon did not respond in time to comment for this story...

Read more about the taxes here.

Alaska Considering an Alcohol Law Revamp

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According to the Daily News-Miner, the Alaskan state legislature is considering a bill that would allow alcohol manufacturers to serve drinks on-site and permit out-of-state direct-to-consumer wine shipments. The bill does not, however, allow distilleries to serve cocktails on-premise, nor does it allow out-of-state shipments of any alcohol besides wine:

The Alaska State Senate passed a bill Monday that would essentially rewrite the state’s alcohol regulations. The overhaul legislation does not include any reference to the highly contentious issue of whether distilleries can serve cocktails.

Senate Bill 76, introduced by Soldotna Republican Sen. Peter Micciche, seeks to update Title IV statutes governing the Alcoholic Beverage Control in Alaska.

One of the biggest changes included in the bill is a regulation change that will now allow a manufacturer to own a retail license or beverage dispensary license, according to Rachel Hanke, a spokesperson for Micciche...

The new title update also includes a clause regulating online sales of alcohol and create a winery direct shipment license which would allow out-of-state wineries to ship directly to consumers. This would apply only to wineries...

Read more here.

Alabama Lawmaker Seeks to Allow Direct Wine Shipments

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The Alabama legislator is currently considering a bill that would legalize direct shipments from wineries to consumers in the state. The proposal is likely to face resistance, reports ABC 33/40:

"A push is underway to allow wine shipments directly to Alabama homes.

Forty-four states and the District of Columbia already allow this option to consumers, according to The Wine Institute.

At Ozan Winery in Calera, Chris Smith sells the vineyard’s award winning wine to people across the county. But he faces a problem when Alabamians want wine shipped directly to their homes...

Wednesday, a Senate committee meeting was scheduled to have a public hearing on a bill by Sen. Bill Holzclaw (R- Madison) that would allow the direct wine shipments.

Committee chairman, Sen. Phil Williams (R- Rainbow City) says Holtzclaw asked lawmakers to wait a little longer, probably so he could work out some issues on the bill before the vote.

There was a list of opponents ready to speak, including Joe Godfrey who represents a group of churches..."

Read the rest here.

 

 

Mississippi Legislature Kills Bill Allowing Direct Wine Shipments

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A state legislator in Mississippi recently introduced a bill that would have legalized direct wine shipments from wineries and retailers to Mississippians. Apparently, the bill has already died, according to The Northside Sun:

"House Bill 98, which would allow direct sales and shipments of wine to state residents, died in committee on January 30.

But, author of the bill, District 111 Rep. Charles Busby, says he’s fighting to bring the bill back for the 2019 legislative session. The idea came to Busby after he and his wife travelled out of town. They found a wine they loved and couldn’t ship it to their home in Gulfport...

Busby said he believes HB 98 didn’t pass because of a liquor store lobby, which is against wine and liquor sales bypassing local shops..."

Read more here.

Indiana's Unique "Winery Lockout" Law

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Indiana is one of many states that permits wineries to ship their wine directly to consumers, but there's a big caveat: You have to choose between direct wine shipments or working with a wholesaler. As the Wine Industry Advisor points out, this puts Hoosier State wineries in a tough position:

"While Indiana is one of 44 states that allow legal direct to consumer shipments from wineries, the Hoosier State stands out from the other 43 states in one important and anti-competitive way: Indiana is the only state that prohibits wineries from carrying both a legal direct shipping license and a relationship with a wholesaler. The wholesaler-winery relationship is an important one as it is the only way a winery can sell their wines to Indiana’s restaurants and liquor stores.

Presented with an “either/or” dilemma, wineries must elect to either sell their wines through wholesaler middlemen, or directly to consumers, but not both. Regardless of how a winery chooses to sell their wine in the state, in the end, it is Indiana’s wine lovers who are the ultimate losers..."

Read the rest here.

A new self-distributing platform for craft beer?

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As discussed extensively on DrinksReform.org, the three-tiered system of alcohol distribution often blocks or limits the ability of breweries and other alcohol producers to self-distribute their products directly to consumers or retailers. Instead, brewers are often forced to work through a legally-mandated middleman--known as a wholesaler. But according to Sociable, a new online platform is trying to disrupt this market:

Your local bar comes up with a special Friday beer, a new beer from a small brewery with a strange name. It’s a few dollars more but, hey! you take the bet.

You take a sip and the magic happens. Its malty aromas and fruity touches blow you away. A glow of alcohol warms your tongue and palate. Hints of green apples, apricots and banana appear and sparkle. The taste lingers full in your mouth with plenty of body and a long finish of dry and fresh bitters.

Next Friday, after a challenging working week, you’re ready for more of the same delight. But alas! the craft jewel is long gone.

The bartender shrugs his shoulder when you ask for more information. He mentions the distributor; the one in charge...

Bevv, a California-based startup wants to offer alternatives to the ‘three-tier system’. Working within the legal landscape, it offers a self-distributing model, where more parties can benefit from the many independent producers in the growing US-market.

Its platform for craft beer aims to increase profit margins. Smaller breweries that couldn’t retail otherwise have their beers stay on tap. Retailers can reduce costs and offer a wider and more flexible selection. And consumers have a more affordable access to more tastes of craft beers..."

More here.

So far, however, it appears that Bevv will be limited to certain states that permit self-distribution and direct-to-consumer alcohol shipments. R Street's Jarrett Dieterle has written before about the many barriers in place that are currently blocking a true online booze marketplace from taking off.