How Antiquated Alcohol Shipping Laws Prevent Innovation

Our team is constantly looking to connect with alcohol producers, bartenders, and other industry participants to hear their on-the-ground experiences (for example, we've profiled brewers and distillers in the past). Recently, we had the chance to chat with Bevv founder and CEO Travis Benoit. Bevv is looking to modernize the alcohol market by providing direct delivery of beer and spirits—both on-demand and via shipping—from alcohol producers to consumers. But they’ve faced many legal obstacles in doing so, and we talked with Travis about these constraints. Can you start us off by providing an overview of Bevv?

Travis Benoit: So, what we set out to build was an Etsy meets Shopify for the craft beer and cider marketplace. What I mean by that is we wanted to build a discovery engine that focuses on a multi-vendor component, meaning every vendor—such as a brewer, distiller, or cidermaker—that works with us gets their own storefront on our platform. Very similar to like what you would see on Etsy. Or very similar to something you would see on Amazon, where a vendor gets their own storefront.

We've also built in a number of tools, which we'll be launching soon, that allow consumers to shop directly from alcohol producers in the same fashion that’s been happening with direct-to-consumer wine for years—meaning a consumer could actually purchase directly from a brewer’s website. Ok, so this means if someone goes online, using either your platform or a brewery website, they can pick whatever beer they want and get it delivered to them directly?

Travis: That's correct.  We do that in two ways. On the carrier side, meaning long distance carrier, we have partnered with UPS. Producers package the product and then UPS picks it up and delivers it directly to the consumer. We also offer, where possible by geo-zone, a last mile, on-demand local delivery option. So for example, let's take San Diego or Los Angeles, where there's 100 plus producers in a congregated, congested area. In those places, we allow the consumer to shop locally and our on-demand delivery partners will go pick up the product and deliver it directly to the consumer within the hour or so. In the day and age where you can order almost anything on the Internet and get 2-day shipping, this would basically do the same thing for booze, right?

Travis: That's spot on. There are other companies doing online booze delivery, but they operate as what is now being called the “fourth tier”—meaning they’re an add-on after the retail level. Your model cuts out the middle men and goes straight from producer to consumer?

Travis: That's right. Those other models are called last mile on-demand delivery, where companies work solely with retailers, meaning they've gone through the three-tier network, and then based on a subscription or however they work their relationship with these retailers, they pick up the Budweiser and the Smirnoff from the retailer, and then drop it off at your house. What we do is go straight from producer to consumer. Talk about the types of legal hurdles you face.

Travis: Mostly we face interstate and intrastate shipping restrictions. For example, a state like California is an intrastate state, meaning that for craft beer producers, California allows alcohol shipments within the state but not outside of the state. And then as we start to look at other states, some states don't even have shipping laws for beer at all. It's almost like saying, ‘Wow, we have a wine shipping law, we don't have a spirits law, we don't know how to qualify cider, and we don't have a beer law.’ So now we're kind of starting from scratch and asking: can we work within that state or not? These are the conversations that we have with the ABCs in some of these states, and even they don't have answers, because they don't know. So, some states don’t have a law either way—neither one saying it's okay to ship beer into the state, nor one saying it's not okay.

Travis: Right. In states where the law doesn’t clearly come down one way or the other on whether alcohol shipments are permissible—or the law is ambiguous—is there concern that state liquor regulators could later interpret those unclear laws in a way that would restrict booze shipments? No brewer or distiller wants to start receiving cease-and-desist letters, and ABCs are notorious for creatively interpreting vague statutory language in liquor laws. Is the best bet for more states to adopt explicitly pro-alcohol-shipping laws?

Travis: Yes, we need all states to. With that being said, we're currently only operating in green areas. So, when we say green areas, that means we have a definitive beer shipping law statute and we have the true definition of interstate and intrastate shipment and where we can operate. We have made the decision not to operate in the gray areas from the get-go. We've thought about it, but because we don't want to put our vendors at risk and we don't want those cease and desist letters, we decided that we were going to operate in the green to start, prove the concept, and then work on legislation on a state by state basis. How many states currently are “green areas” for you?

Travis: For beer, we can ship out of 14 states and ship into 8. Wow, that leaves a lot of states where it’s not permissible.

Travis: On the cider side, for those states that qualify cider as wine, we can ship in and out of 43 states since wine shipping laws are more common. Now, for example, we decided not to ship into Pennsylvania, or out of Pennsylvania, because we simply can't find a definition. The ABC can't provide us a definition for cider—is it wine, is it beer? And that's another problem. Well, Travis, it’s been fascinating talking to you about the legal restrictions you face and how difficult it can be to ship alcohol into and out of certain states around the country. Thanks for chatting with us!

[R Street's Jarrett Dieterle has previously written about the many legal constraints that are preventing a true online, on-demand booze marketplace from taking off.]





Wyoming involved in lawsuit over unlicensed wine laws


As more innovative means for selling alcohol are invented, regulators often struggle to keep up. The latest example of this phenomenon comes from Wyoming and involves an online wine sales company, as reported by US News:

The Wyoming Department of Revenue Liquor Division and an out-of-state company marketing wine through at-home tastings are in a legal battle over perceived liquor sales.

The Wyoming Tribune Eagle reports Massachusetts-based Traveling Vineyard sells wine and accessories over the internet, but it markets those products through in-home tastings hosted by members.

Attorneys for the Wyoming Department of Revenue Liquor Division say the model violates state law since Traveling Vineyard "sells" wines in unlicensed establishments at the at-home tastings...

Read more here.

The Rise Of The Online Liquor Store


Online alcohol sales are still a relatively nascent phenomenon, but there continues to be evidence that boozy e-commerce could shake up the drinks industry. E.J. Schultz discusses the latest news on the topic for Ad Age:

"Moët Hennessy doesn't want to use the web to merely offer its luxury champagne, wine and liquor online. It wants to provide the mixologist, bar and glassware—and maybe a trip to Scotland to boot.

The marketer of Dom Pérignon, Veuve Clicquot and Belvedere vodka is trying to infuse its online sales with luxury experiences via a new site called Clos19, part of a broader effort among alcohol marketers to get more aggressive about e-commerce after years of trailing other categories. While 20 percent of U.S. shoppers bought groceries online last year, just 8 percent of buyers bought alcohol online, according to Nielsen data cited by e-commerce analytics firm Profitero.

Alcohol has lagged because of a complicated patchwork of post-Prohibition state laws that govern its sale and distribution. Generally, a so-called three-tier system requires most sales to flow from supplier to wholesaler to retailer. That means a beer brand, for instance, can't take an online order and ship it directly from its warehouse to the consumer.

But alcohol's online potential is now growing thanks to the rise of third-party sites that allow drinkers to order beer, wine or booze online and have it delivered from retailers like the corner liquor store. Among the most successful is Drizly, which began in 2012 and now serves 70 cities across 30 states. And of course, everyone is watching Amazon. While the e-commerce giant recently said it was closing its Amazon Wine program, it continues to expand alcohol delivery through its Prime Now service..."

Read the rest here.