Direct Shipment & Compliance

BevAlc Roundup | TTB Continues Consignment Sales Investigations, Wine Exports Drop in Last Year, and How to Beat Counterfeit Wines

Ship Compliant Wine Blog - Mon, 03/18/2019 - 15:30

In the last Roundup, we predicted that the cold winter weather was finally on its way out — and then large parts of the country were hit by intense snow storms! We’ll chalk that up to a coincidence this time, and continue to extend our hopes for a warm, pleasant and imminent spring. Though as part of this week’s Roundup we have an article about how much benefit the wine industry does receive from these extended snow storms — so we can at least be happy for the moisture.

For this week’s Roundup, we also look at new rules for nutritional and informational labeling that are being considered by the TTB, what the wine industry can and should do to expand its marketing to Gen Xers (and everyone else, by the way), and whether the concept of terroir should be applied to whiskey like it is for wine.

In case you haven’t heard, the 2019 DtC Report has been published. Download your copy today here.

Thanks for reading the Roundup this week. As ever, be sure to check out the rest of the ShipCompliant blog for regular updates, and we’ll see you again in another couple weeks.

Regulatory News and Discussions

TTB Newsletter | This week’s top news includes an award presented to two of our managers in ALFD, a TTB Tip about how to use the information found on our application processing times pages, Permits Online will be down for system upgrade this weekend. TTB

TTB Slated Over Wine Labeling | Consumer advocates demand both calorie and nutritional information should be on wine labels. Wine-searcher.com

TTB Consignment Sales Investigations | What is behind the curtain of the TTB Press Releases? Booze Rules

North Carolina Brewers, Wholesalers Reach Franchise Law Reform Compromise | North Carolina craft brewers and wholesalers have reached a compromise in a contentious years-long dispute over the state’s self-distribution and franchise laws. Brewbound

Minnesota Winemakers Fight to Change Grape Laws | Two Minnesota wineries are continuing a push to change the law regarding how wine is made in the state. Fox 9

Al Gore Tells Wine Industry To Act on “Global Emergency” of Climate Change | Hundreds of wine industry representatives attended a climate change leadership conference in the city of Porto. Decanter

Industry Updates: Market Conditions and Developments

The Wine Industry Can and Should Be Doing More to Market to Gen X — And Everyone As a category of consumer packaged goods, wine is subject to how it is packaged and marketed and then to the whims of the buying public. Forbes

US Wine Exports Decline Over the Last 12 Months | U.S. wine exports have declined over the last year through December by 12 percent in volume and 5 percent in value, according to a recent report by bw166, a wine industry consulting group. Press Democrat

What We Ignore When We Toast the “Top Five” Women in Whiskey | By highlighting the success of women in whiskey, tech, politics or other male-dominated industries, Greene says, these breathless headlines risk devaluing individual achievements. VinePair

The Effects of Mandatory Wine Label Nutritional and Ingredient Information on Purchase Behavior | In recent years, there has been a lot of pressure on governments around the world to expand label requirements to alcoholic beverages, including wine. The Academic Wino

It’s Snowing in California Vineyards, and Winemakers Are Loving It | Snow is great for grapevines — as long as it doesn’t last into the spring. SF Chronicle

Digestif

Second Impressions Count | How wine delivery experiences shape customer preferences. ShipCompliant by Sovos

The Biggest Scam in Wine History | Thanks to its iconic logo that makes it immediately recognizable, the Armand de Brignac Champagne is known worldwide also under the name Ace of Spades. Forbes

A Counterfeit Expert’s Solution for Eliminating Fake Wines | How Maureen Downey is using blockchain technology to prevent fraud in the wine industry. SevenFifty Daily

Is There Terroir in Whisky? | The flavor of place, or terroir, comes up frequently in discussions of wine. But how to talk sensibly about terroir in whisky? Herald & Review

How Producers Dial in the Right Shade of Pink for Rosé | The timing of the harvest and winemaking adjustments are among the factors producers consider to achieve desired color intensity. SevenFifty Daily

 

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

The post BevAlc Roundup | TTB Continues Consignment Sales Investigations, Wine Exports Drop in Last Year, and How to Beat Counterfeit Wines appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Second Impressions Count: How Wine Delivery Experiences Shape Customer Preferences

Ship Compliant Wine Blog - Fri, 03/08/2019 - 14:26

In the world of wine, first impressions are incredibly important. Consumers’ perceptions can be swayed by a friendly greeting when they walk through the door, the layout and cleanliness of a tasting room, a website’s organization and ease of use, or the label of a bottle.

But when you consider the growing influence of ecommerce, it’s that second impression –delivery – that may ultimately make or break the customer experience. And yet, the delivery experience can feel out of your control. After a package leaves your winery or warehouse, how do you ensure delivery goes positively for your customer? A common challenge like failed delivery attempts could lead to damaged wine, for example, since temperature fluctuations can affect the product. Optimizing the delivery experience is critical.

Second-impression lessons from Amazon and Apple
Delivery challenges can be tough to solve, given that ecommerce sales show no signs of slowing. Ecommerce accounts for about 9 percent of total retail sales and is growing exponentially according to the U.S Census Bureau. Strategy&, PwC’s strategy consulting business, predicts that the number of packages delivered each year in the U.S. will grow from 11 billion in 2018 to more than 16 billion by 2020. This growth is directly affecting direct-to-consumer (DtC) wine shipments. In our 2019 Direct-to-Consumer Wine Shipping Report, we found that wineries shipped more than 6 million cases of wine in 2018, an increase of 9 percent from the previous year.

With the number of deliveries expected to increase, businesses like Amazon and Apple are redefining the delivery experience, and wineries must take note. As more and more packages are sent, wine deliveries must meet consumers’ demands to receive exactly what they want, exactly when, where and how they want it.

To ensure customers receive packages without problems, Amazon is adding secure neighborhood pick-up locations and testing delivery inside customers’ property. In addition, the company is installing lockers in more than 850,000 apartment buildings, as well as at Whole Foods and other brick-and-mortar stores, providing more flexibility around delivery times and minimizing the risk of stolen or damaged goods.

While Amazon has led the online sales revolution for everything from $1 packs of pencils and books to groceries and other necessities, high-end brands are slowly taking notice. However, these brands are taking Amazon’s efficiencies one step further by also delivering an unforgettable unboxing experience that will turn first-time buyers into loyal customers.

One company investing in the unboxing experience is Apple. The technology giant’s notable aesthetics flow from its technology products to stores and even touches its packaging. Design is so ingrained into the company that Apple even has an unboxing room where designers can experiment with packaging with the hopes of evoking the perfect emotional response from their customers. As Apple’s Jonathan Ive notes, “Packaging can be theater, it can create a story.” As such, Apple focuses its unboxing experience on getting people to the product they ordered fast – with easy open packages and putting the main product front and center – satisfying consumers need for quick gratification.

Expanding the second impression to wineries
One luxury product – wine – has more complexities around direct-to-consumer (DTC) sales, including state-specific regulatory requirements, age restrictions and fragile items that must be protected in transit. Yet the demand is growing.

Extending the white-glove treatment from the tasting room to customers’ homes can be hampered by many of the problems other retailers face. But ShipCompliant is helping wineries live up to the gold standard of delivery that Amazon and Apple have set. Our cloud-based platform enables wineries to personalize the shipping process, from proactively communicating with customers about delivery times or potential issues to allowing self-service re-routing to different locations, to partnerships with Commerce7 to make it easy to ship wine to Fed Ex Hold-at-Locations (HALs).

Wineries don’t have to suffer from a bad second impression as they expand their DTC sales. With an assist from ShipCompliant Delivery Experience tools, wineries can ensure great communications with their customers, and leverage analytics to improve delivery rates and customer satisfaction, which are vitala to generating repeat business and higher sales.

Find out how ShipCompliant by Sovos can help your business provide the luxury delivery experience that your customers want by signing up for a free demo.

 

Get your copy of the 2019 Direct-to-Consumer Wine Shipping Report today for comprehensive data and insights.

The post Second Impressions Count: How Wine Delivery Experiences Shape Customer Preferences appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Oregon Set To Impose Wine Labeling Rules, Announcing FedEx’s Hold-at-Locations Services for Wine Shipments, and Whiskey Bottles Don’t Need Corks

Ship Compliant Wine Blog - Tue, 03/05/2019 - 16:16

March is here, and spring is right around the corner — at least, hopefully. It’s been mighty cold across the country recently, with lots of snow and cold rain to remind us that it’s definitely still winter. Until the weather warms up, at least there’s the Roundup to keep things hot!

This week we look at a bill to expand direct-to-consumer shipping of wine in Kentucky and how the state’s bourbon industry feels left out, the Silicon Valley Bank’s annual direct to consumer survey is open — something we recommend everyone to respond to — and scientists say that today’s beer might be tomorrow’s cannabis products.

In case you haven’t heard, the 2019 DtC Report has been published. Download your copy here.

Thanks for reading the Roundup this week. As ever, be sure to check out the rest of the ShipCompliant blog for regular updates, and we’ll see you again in another couple weeks.

Regulatory News and Discussions

TTB Newsletter | This week’s top news includes a reminder to use the correct address when mailing excise tax returns and payment to avoid potential penalties and interest, and we’ve added five new grape varieties to the list of names granted administrative approval for use on American wine. TTB

Wine vs. Bourbon | Kentucky distillers say the direct-to-consumer shipping bill that helps wine industry isn’t fair. WDRB

Oregon May Soon Tighten Its Wine Law for Wines Produced or Bottled in Other States | The proposed bill seeks to tighten the gap and to demand more transparency in wine labeling. On Reserve

Total Wine Loses Appeal to Overturn Connecticut Minimum Pricing Laws | The U.S. second circuit ruled in favor of Connecticut’s alcohol pricing laws, saying they did not violate antitrust laws set down by the 1890 Sherman Act. The Drinks Business

Senate Leader Kills Her Own Bill in an Hour | The measure, Senate Bill 127, would have prohibited out-of-state retailers from shipping alcohol to customers in New Mexico. Santa Fe New Mexican

New Legislation Filed After Report Suggests Ways to Modernize N.C. Alcohol Management | The findings showed that if North Carolina decided to change how it controls liquor sales, major modifications would be necessary, and would also have financial implications for state and local government revenues. Daily Tar Heel

Industry Updates: Market Conditions and Developments

FedEx Hold-at-Location Option and the Wine Industry | Delivery option at point-of-purchase may benefit wine sales and consumer retention. Wine Business

The SVB Annual Direct to Consumer Survey is Open | Today more than ever, the wine industry needs to be more strategic and proactive in its direct-to-consumer strategy and execution. SVB on Wine

Wineries Need Better Customer Experience | Producers need to maximize the visitor experience if they want to woo consumers. Wine-searcher.com

Downtown California Wine Country Tasting Rooms Help Rural Vintners Get Noticed | A recent report on the health of the premium wine business raised eyebrows with survey results that suggest smaller-scale vintners that have been relying on tasting rooms and clubs to drive direct-to-consumer sales growth should rethink that strategy. North Bay Business Journal

The Changing Face of Luxury Wine | What defines a “luxury” wine? A recent study investigates the relative desirability of thousands of wines. Wine-searcher.com

How the Wine Industry Can Capture the Attention of Generation X | In opinion pieces, the wine industry is chastised for failing to capture millennials’ attention and is offered advice on how to woo them back, and from outward appearances it seems that Gen X, currently aged 38 to 53 years old, are being ignored. Forbes

Digestif

Dear Whiskey Brands, Please Stop Using Corks | A columnist’s case for why whiskey bottles should never be sealed with a cork cap. The Daily Beast

The Lucky Break That Launched a Wine Revolution | If it wasn’t for White Zinfandel, we would not have these old Zinfandel vines to make delicious wines from today. Forbes

Scientists Brew Cannabis Using Hacked Beer Yeast | Researchers modify microbe to manufacture cannabis compounds including the psychoactive chemical THC. Nature

Why Some Distillers Are Creating Foraged Spirits | Among the benefits, wild ingredients infuse products with unique flavors and a sense of place. SevenFifty Daily

 

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

The post BevAlc Roundup | Oregon Set To Impose Wine Labeling Rules, Announcing FedEx’s Hold-at-Locations Services for Wine Shipments, and Whiskey Bottles Don’t Need Corks appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Direct-to-Consumer Wine Shipping Flourishes in Oregon, Sonoma County

Ship Compliant Wine Blog - Fri, 03/01/2019 - 08:05

Last month, we released our annual report with Wines Vines Analytics, offering a deep dive into the state of the direct-to-consumer (DtC) wine shipping industry. There’s a ton of interesting highlights, data points, and trends in the report – including which regions shipped the most wine in the DtC channel last year, which regions saw the most growth, and which failed to live up to expectations.

Overview: Sonoma and Oregon drive DtC channel growth

Napa County has traditionally been the dominant force in the DtC channel, but other regions have begun to close the gap in recent years. Finally, in 2018, Sonoma County overtook Napa in terms of the volume of wine shipped direct to consumers, while seeing impressive growth in the value of wine shipped, as well. Napa’s price per bottle shipped went up last year, which can explain its continued hold on the most value shipped, but it appears as though consumers may have been somewhat turned off by the high prices in this region.

Meanwhile, Oregon built on its impressive growth across the past seven years. In fact, it significantly outperformed the entire DtC shipping channel last year, increasing both the volume and the value of its wine shipped direct to consumers. This is certainly a region to watch over the next few years, as is its neighbor, Washington, which also outperformed the overall channel – sort of. But, more on that later.

Napa continued to grow modestly, but lost its grip on the market

Historically, Napa wineries have been the most consistent growth drivers in the DtC channel. But after years of fending off Sonoma wineries, Napa was at last unseated as the undisputed king of the channel. Despite this, the region saw some growth – a 2 percent uptick in volume shipped and a 9 percent increase in value – but these numbers fell well behind the DtC channel at large, which grew 8.9 percent and 11.6 percent, respectively. This explains how Sonoma was able to surpass Napa in volume shipped. Likewise, there would appear to be a simple explanation for the rather tepid growth in this region – prices went up 7 percent, and some consumers evidently balked at the increase, opting to take their business elsewhere.

Sonoma’s impressive growth culminated in its rise to the top

While the overall DtC channel saw 11.6 percent and 8.9 percent increases in volume and value, Sonoma wineries jumped up 19 percent and 18 percent in those categories. Those are impressive increases year-over-year, and they were perhaps spurred by a 1 percent decrease in price per bottle shipped. As Napa wines grew more expensive, Sonoma wines appeared to undercut them, at least to some extent. In fact, this appears to be indicative of a longer trend – since we began tracking this data in 2011, Sonoma wines have decreased in price by a whopping 17 percent.

Keep an eye on Oregon and Washington over the next few years

While they won’t pose challenges to Napa and Sonoma this year, Oregon and Washington are poised to become real players in the DtC channel in the long-term. Last year, Oregon saw its volume increase 19 percent and its value 21 percent; meanwhile, Washington saw upticks of 13 percent and 12 percent, respectively. Both states are outpacing the overall DtC market’s growth, and appear poised to keep it up over the next several years as Pinot Noir (Oregon’s top wine produced) and Rosé (a Washington specialty) remain nationally popular. In fact, Rosé shipments in Washington have doubled in share since 2011, jumping from 2 percent of the state’s shipping volume to 4 percent in 2018. As long as Rosé remains popular, Washington will continue to see growth.

 

Get your copy of the 2019 Direct-to-Consumer Wine Shipping Report today for the comprehensive data and insights.

The post Direct-to-Consumer Wine Shipping Flourishes in Oregon, Sonoma County appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Craft Beverage and Modernization Act Part Deux, the Oregon Wine Symposium is a Success, and Zinfandel’s Curious History

Ship Compliant Wine Blog - Mon, 02/25/2019 - 09:20

For the Roundup this week we look at the slate of beverage alcohol bills before the California legislature in 2019, the DtC Report confirms Nielsen data showing strong growth in Oregon wines, and what the new face of whiskey drinkers is and why it’s a welcome change.

In case you haven’t heard, the 2019 DtC Report has been published! Download your copy today here.

Thanks for reading the RoundUp this week. As ever, be sure to check out the rest of the ShipCompliant blog for regular updates, and we’ll see you again soon.

Regulatory news and discussions

TTB Newsletter | This week’s top news includes that we have reopened the comment period for the proposed establishment of the West Sonoma Coast AVA, we’ve resolved 7 trade practice cases stemming on a 2018 joint TTB/California ABC investigation, and we’re providing information about how to use the Public COLA Registry. TTB

2019 Legislative Changes for California Alcohol Producers — A Blessing or a Curse? | It wouldn’t be a new year without new changes to the California ABC Act, making compliance an elusive target for even the most diligent licensees. Booze Rules

New Craft Beverage Modernization and Tax Reform Act Bill Introduced to Make Excise Tax Cuts Permanent | A bipartisan bill was introduced Wednesday in the U.S. Senate to make the alcohol excise tax cuts approved in 2017 permanent. Wine Business

Bill Stopping Wine Shipments to New Mexico Consumers Benefits Middlemen | The National Association of Wine Retailers (NAWR) has announced its opposition to, and astonishment with, a bill moving through the New Mexico legislature that would remove consumers’ right to receive wine shipments from out-of-state wine stores. NAWR

Poll: Majority Wants End to State’s Liquor Monopoly | An Elon University Poll finds 52 percent of North Carolinians contacted support closing the state’s Alcoholic Beverage Control system. Laurinburg Exchange

Wine Win Likely at the Supreme Court | US editor W. Blake Gray mulls over how the Supreme Court will come down in a crucial decision. wine-searcher.com

Industry updates: market conditions and developments

More Than 2,000 Wine Industry Professionals Attend Oregon Wine Symposium | The purpose of the Oregon Wine Symposium is to showcase the Oregon wine industry, which currently employs over 30,000 people, and generates over $5.6 billion dollars annually. Wine Business

Nielsen and ShipCompliant Reports Confirm Exceptional Consumer Demand for Oregon Wine | Oregon wine sales grew 12.4% in 2018, revealing a trajectory eight times the growth of wine nationally. Wine Industry Advisor

US Shutdown: “Long-Term Implications” for Spirits | The government shutdown in the US has had a troubling effect on drinks producers in the country and overseas. The Spirits Business

Craft Tax Cuts Big Business a Break | Billionaires got the biggest tax break under the Trump Administration, so it stands to reason that the nation’s biggest beer brewers and wineries also scored a huge tax cut in 2017 for the “craft beverages” they produce. Wine-searcher.com

Direct Sales Winners and Losers | Different attitudes to the DtC model are splitting the industry into different markets. wine-searcher.com

Digestif

The New Face of the Average Whiskey Drinker: Young, Pierced, and Female | Whiskey used to be the purview of grumpy old men. But hip young women have a new enthusiasm for single malts. Robb Report

Discovering the Origin of Zinfandel | The pursuit of an ancient vine material provides an avenue for cultural and technological exchange in wine–from Croatia to California. SevenFifty Daily

Why Breweries Are Opening Locations in Malls | Affordable real estate and ample foot traffic are just two factors attracting brewers to shipping centers. SevenFifty Daily

The Wines You Should Buy in 2019, According to Critic Robert Parker | We’re living in a Golden Age of Wine. Let’s raise our glass to the good stuff. Robb Report

 

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

The post BevAlc Roundup | Craft Beverage and Modernization Act Part Deux, the Oregon Wine Symposium is a Success, and Zinfandel’s Curious History appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

ShipCompliant Partnership with Commerce7 Enables Wine Shipments to FedEx HALs

Ship Compliant Wine Blog - Thu, 02/21/2019 - 13:48

ShipCompliant by Sovos today announced support of what will become a new industry standard: shipping wine directly to FedEx Hold-at-Locations (HAL).

With consumers expecting speed and convenience for their deliveries, and wine having many compliance requirements, FedEx HAL is an alternative delivery option for winery customers who prefer not to have packages shipped to their home or work addresses. HAL offers wineries’ customers more than 11,000 locations nationwide from which to pick up their wine shipments any time it’s convenient for them, offering a solution to failed delivery attempts and returns that can otherwise occur. This service ultimately gives customers a better wine delivery experience, and saves time and money.  

Commerce7 and ShipCompliant by Sovos have partnered to populate HAL options at website checkout. This allows wineries to provide a new level of delivery experience for their customers with confidence that they are in compliance with the complex direct-to-consumer wine shipping regulations.

“At Commerce7, we are focused on creating better customer experiences, and FedEx Hold at Locations is one of those experiences. We are excited to work with ShipCompliant by Sovos in bringing a compliant FedEx HAL program to our clients,” said Andrew Kamphuis, president, Commerce7.

Larry Cormier, general manager at ShipCompliant by Sovos, said, “The delivery experience is key to customer retention and revenue growth for ShipCompliant’s DtC customers. Partnering with Commerce7 and FedEx to seamlessly integrate HAL into the order processes is a perfect example of our commitment to innovation and customer success.”

This functionality is open to any integrated, front-end partner of Sovos’ ShipCompliant platform.

To learn more about how FedEx HAL can transform your customer’s experience, join us for a free webinar on March 13, 2019 at 10 a.m. PT/ 1 p.m. ET. Register here.

 

 

The post ShipCompliant Partnership with Commerce7 Enables Wine Shipments to FedEx HALs appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

How to Expand Your Winery’s Footprint: Distribution Rules and Market Conditions

Ship Compliant Wine Blog - Wed, 02/13/2019 - 13:30

Wine consumption in the United States has skyrocketed since the 1990s, and wineries have increased their production and distribution footprints to keep up with the demand. Expanding your footprint can create logistical and regulatory challenges for any business, but this is especially true in a heavily regulated industry like the beverage alcohol space. There are many unique obstacles facing wineries as they branch out and distribute their products in new regions

However, this has not presented an insurmountable barrier to growth – last year’s State of the Wine Industry 2018 report by the Silicon Valley Bank Wine Division showed that the volume of wine consumption in the U.S. has more than doubled since 1993, growing from 370 million gallons to 770 million gallons. Clearly, there is opportunity to be seized for U.S. wineries. But is your winery fully prepared for the rigorous process of licensing, distribution, logistics and compliance with federal, state and local laws?

ShipCompliant can help you navigate the tricky regulatory landscape with our guide for wine producers: 10 Key Steps to Expanding Your Winery’s Footprint.

Understand your own ability to comply with wine distribution laws

Every state – and many local jurisdictions – have their own unique registration processes, compliance obligations and tax rates. Because of this, expanding and distributing your products compliantly can be even more complicated than it may appear on the surface.

Before you debut a new wine product or start targeting a new region, assess your internal resources. The size of your team, the knowledge you have about compliance across multiple areas, and the finances you have allocated to address it are all key components of the evaluation process.

Registering products in new jurisdictions can be expensive and time consuming. If you spend too much time or money putting out a series of fires during registration because you weren’t fully prepared to handle it, you may end up hindering your own growth. It’s important to have a fully fledged plan in place and a complete understanding of requirements in each new area you intend to sell into before you attempt to expand.

Research the market(s) where you intend to distribute wine

Ensuring you are compliant is a big first step when expanding your footprint, but it’s also crucial to have a comprehensive read on the state of the market. Trends may pop up at different times in different areas, in terms of both production and consumption. For example, Oregon wineries tend to produce a lot of Pinot Noirs – for more on that, check out our 2019 Direct-to-Consumer Wine Shipping Report – while Napa County has traditionally been known for its Cabernet Sauvignons. But Rosé has been a huge gainer in the wine market in recent years. It may be more worthwhile for your winery to explore that route, rather than trying to crack into a long-established market like Pinot Noir or Cabernet. You should also think of the ways you can diversify your wines from those that are already selling well in the areas you’re looking to enter.

 

For more tips on growing your winery’s products and reach, download our 10 Key Steps to Expanding Your Winery’s Footprint.

 

The post How to Expand Your Winery’s Footprint: Distribution Rules and Market Conditions appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Economic Nexus In the Nation’s Capital

Ship Compliant Wine Blog - Fri, 02/08/2019 - 16:13

The District of Columbia has announced it will require non-local businesses to collect and remit sales tax on sales they make to D.C. residents. The District is joining with a number of states that have established what is being called “economic nexus” following the decision by the U.S. Supreme Court last year to relax restrictions on when a tax authority can impose tax obligations on non-local businesses.

This will likely impact the direct-to-consumer (DtC) wine market, as previously, wineries making DtC sales to D.C. that did not have a physical presence there were not obligated to pay sales taxes to the District.

D.C. first announced its intention to establish economic nexus last October in a public hearing; this was later approved by the D.C. Council, and finally signed by the D.C. Mayor in January.

Under the terms of D.C.’s economic nexus rules, all remote businesses selling to D.C. residents will be required to collect and remit D.C. sales tax if they:

  1. Have annual gross revenue of sales in the District that exceed $100,000; or
  2. Make 200 or separate transactions to the District in a 12-month period.

While these rules were only signed in late January, they are being applied retroactively to all sales made after January 1, 2019. Anyone who met the sales or transactional threshold last year will need to collect and remit tax on sales after January 1.

D.C.’s filing frequency depends on how great of a tax liability a business has in a given period: for a liability of $200 or less per period, file annually; for a liability of $201-$1,200 per period, file quarterly; and if the liability is greater than $1,200 per period, monthly filings are required.

The standard sales tax rate in the District of Columbia is 6 percent, meaning any swag or merchandise you sell to a D.C. resident is properly taxed at this rate. However, the sale of off-premises alcohol (meaning alcohol sold outside of a restaurant setting) is taxed at the special rate of 10.25 percent. This special rate applies to the sale of DtC wine.

In addition, starting on April 1, 2019, any marketplace provider (think of an online bazaar, like eBay or Etsy, that facilitates retailers but does not sell products itself) will need to collect and remit sales tax on behalf of its users.

Because the District of Columbia is a federally administered region of the U.S., new rules and regulations proffered by its Council must also go through a 30-day review by the U.S. Congress before it can become effective. As such, there is the possibility Congress will reject D.C.’s economic nexus rules in the weeks to come. It is unknown how likely such a rejection would be — in fact it’s rather rare for Congress to object to D.C. policies — but it provides an interesting opportunity for different state representatives to hash out their support or objections to economic nexus rules (for instance, legislators from states like New Hampshire, which do not have sales tax, have been vocally opposed to expanding nexus obligations).

Wineries making DtC sales to D.C. residents should take note of this rule change and review the amount of sales they are making to the District. If they exceed either of the thresholds above, they will need to begin collecting and remitting sales tax. Wineries should also note that D.C. applies a tax rate of 10.25 percent for all sales of off-premises consumption alcohol, rather than the standard 6 percent rate for general merchandise. Since DtC sales of wine would be considered off-premises sales, the 10.25 percent rate would apply.

ShipCompliant users will be able to receive the proper tax rates for both their wine sales and any general merchandise they sell to D.C., along with the necessary tax returns.

With D.C. adding economic nexus rules, the number of states where DtC wine shippers do not have a sales tax obligation is dwindling. Currently, only a handful of states either do not require DtC licensees to become sales tax collectors or have economic nexus rules. However, it is likely these states will follow what is happening across the country and add economic nexus rules in the future. As such developments happen, we will keep you informed.

 

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

The post Economic Nexus In the Nation’s Capital appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Release The 2019 DtC Report! California’s New Rules for Social Media and Bev Alc, Where DtC Shipping Is Still Limited, and What Emerging Wine Regions Need to Overcome

Ship Compliant Wine Blog - Mon, 02/04/2019 - 10:11

In case you missed it, the 2019 Direct-to-Consumer Wine Shipping Report was released this last week! This annual report is the most comprehensive look at the DtC wine shipping industry, and provides valuable insights on how the industry succeeds and where future growth can come from. The headline number is that the market reached the $3 billion mark in 2018 for the first time — and while growth may have slowed from previous years, this is still undoubtedly an active and exciting market to be in.

Download your copy today here! Read more below on what the industry is finding in the report.

And after you’re done reading the Report, there’s plenty more of the RoundUp to check out, where we review the fallout from the Federal Government Shutdown on the TTB and the beverage alcohol industry; then we hear from Rob McMillan on whether consumers will still drink wine in years to come, and from Tom Wark on why that panic may be overblown; and finally, a look at why glass bottle recycling isn’t more common.

Thanks for reading the RoundUp this week. As ever, be sure to check out the rest of the ShipCompliant blog for regular updates, and we’ll see you again in another couple weeks!

 

The 2019 DtC Report Is Available — Here’s the Scuttlebutt

Wine Shipments to Consumers Hit Record $3 Billion in 2018 | 2019 Direct-to-Consumer Wine Shipping Report highlights growth in prices, leading to 50% growth in value in three years. ShipCompliant by Sovos

10% of U.S. Wine Retail Sales Shipped Direct to Consumers in 2018 | At $3 billion, DtC was up almost 12% over 2017 — 53% since 2015 and 6 times larger than 2011. Forbes

Direct Sales Alter US Wine Market | Direct to consumer sales up to $3 billion, spelling big change for the US wine industry model. Wine-searcher.com

DTC Channel Is Reaching Maturity for Wine | Larry Cormier, General Manager, ShipCompliant by Sovos, presented the topline results from their annual Direct to Consumer Wine Shipping Report based on the 8 million transactions a year filtered through ShipCompliant by Sovos at the DTC Wine Symposium Wednesday. Wine Industry Advisor

The Oregon Wine Industry’s Direct Shipping Success Story | Overall in 2018, all American wineries increased the volume and value of their DTC shipments by 8.9% and 11.6 percent, respectively. Oregon wineries increased their volume and value of shipments by 19% and 21%. Fermentation

 

Regulatory News and Discussions

TTB Message to Industry and Others Affected By the Shutdown | We have received a number of questions regarding how we plan to address the significant backlog of applications and other work items we now have following the shutdown, including how long it will take us to resume normal operations. TTB

The Government Shutdown Is Over (For Now), but the Hits Keep Coming | The TTB’s closure will cost the drink industry millions in the months to come. SevenFifty Daily

A Picture (On Instagram) Is Worth A Thousand Words | California’s new events-based tied house exception and why everyone is so excited. Booze Rules

Montgomery County Liquor Exec Fires Back at Group’s Call to Exit Alcohol Business | Monopoly on distribution and sales has been debated for decades. Bethesda Magazine

 

Industry Updates: Market Conditions and Developments

DTC Report Card: Progress Continues but State Laws Still Limit Consumer Access | “It’s baby steps sometimes,” Steve Gross, vice president, State Relations for Wine Institute, said Thursday at the 2019 Direct to Consumer Wine Symposium in Concord. Wine Business

The Lost Wine Consumer of 2019 | The industry isn’t only at a crossroads, we stand a chance of losing the wine consumer altogether. SVB on Wine

How to Fix the Problem With Millennials and Wine | The narrative surrounding Millennials and wine has changed, and now appears to present an existential threat to the American wine industry’s profits. Fermentation

The Top 10 Wine Trends of 2018 | From emerging wine regions to canned wines taking off, here are the top trends and news stories that most impacted the industry in 2018. Wine Enthusiast

Unified Symposium Tech Talk | Understanding and leveraging data within the wine industry. Wine Business

 

Digestif

Why Don’t We Recycle More Wine Bottles? | Wine bottles are a major source of domestic glass trash, why don’t we recycle them? Go San Angelo

Whiskey Searches Catch Up to Wine | A delve into our states for the most searched for wines reveals some surprising interlopers. Wine-searcher.com

Obstacles Emerging Wine Regions Must Overcome | Market perception is only one f the obstacles faced by winemakers in an emerging region: there are also issues posed by terroir, regulation, infrastructure, and more. Forbes

How an Enslaved Distiller Was Written Out of Jack Daniel’s History | Uncovering the true story of a legendary American brand. The Atlantic

 

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

The post BevAlc Roundup | Release The 2019 DtC Report! California’s New Rules for Social Media and Bev Alc, Where DtC Shipping Is Still Limited, and What Emerging Wine Regions Need to Overcome appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

The Highlights and Methodology of the 2019 Direct-to-Consumer Wine Shipping Report

Ship Compliant Wine Blog - Wed, 01/30/2019 - 11:07

Last week, we released the 2019 Direct-to-Consumer (DtC) Wine Shipping Report with our partners over at Wines Vines Analytics. This is the ninth edition of the annual DtC report, which features exclusive data and insights on the state of the industry, and has been a trusted source for wineries looking to ship their products DtC.

The current report looks at data aggregated in 2018, and provides the most accurate look at the state of the market – including varietal trends, hot shipping destinations, production by region, and more. In last year’s report, we correctly predicted that the DtC channel would top $3 billion in 2018 and that Sonoma County would overtake Napa County as the largest source of DtC wine shipments.

 

How is the report created?

Wines Vines Analytics created a custom, proprietary algorithm that uses its database of U.S. wineries. Their database comprises 9,997 wineries, some holding multiple licenses. This algorithm has been trusted by the industry for nearly a decade to provide the most accurate DTC data available.

The algorithm extrapolates DtC shipments from all transactions filtered through the ShipCompliant by Sovos system in a given year. The ShipCompliant by Sovos platform processes nearly 80% of the volume of the DtC channel, or roughly 8 million individual transactions. Our report includes data for shipments to all 45 states that allowed some kind of shipping of wine in 2018. These include even states like Arkansas and Rhode Island whose DtC regulations may not yet meet the ideal system that most other states have adopted.

 

Highlights from the report

The DtC report has lots of important data to unpack, and you can look forward to a number of blogs doing exactly that over the next several months. The following are some of the more notable takeaways from a broad industry viewpoint.

  • Consumers are splurging on wine: Wine drinkers apparently decided to treat themselves in 2018, as the average price per bottle shipped increased by the largest margin since we began producing the report. In addition, people bought more high-end wines in the DtC channel, with wines priced at $100 or more increasing 18 percent in volume.
  • Oregon outpaced the market yet again: Oregon wineries have increased their DtC shipments dramatically since we began tracking this data, and 2018 was no exception. For the seventh straight year, Oregon wineries outpaced the rest of the market in terms of volume growth, with an uptick of 19 percent compared to 8.9 percent overall.
  • Rosé on the risé: When we began producing the DtC report, Rosé was the least popular wine we tracked. What a difference (nearly) a decade makes! As a result of continuous year-over-year growth, Rosé has skyrocketed up to eighth, and saw a 24 percent increase in volume coupled with a 29 percent increase in value last year.
  • Napa’s prices limit its growth: Long the leader of wine production, Napa County hit a bit of a stumbling block in the DtC channel in 2018. While still seeing some modest growth – a 1.6 uptick in volume of shipments – the region trailed the rest of the channel’s growth. On the flip side, the price per bottle shipped in Napa jumped up 23 percent. These price increases could prove to be a reason why Napa underperformed relative to the market.
  • DtC shipments maintained their market share: Winery direct shipments accounted for 10 percent of all off-premise domestic wine retail sales, which equaled the 2017 share. Overall, total domestic off-premise wine sales reached $29.7 billion in 2018.

Be on the lookout for more blogs detailing the data and trends we identified in this year’s report. And make sure to download your copy of the 2019 Direct-to-Consumer Wine Shipping report.

 

 

Learn more about the state of the DtC wine shipping channel by downloading the full report.

 

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Wine Shipments to Consumers Hit Record $3 Billion in 2018

Ship Compliant Wine Blog - Wed, 01/23/2019 - 16:56

2019 Direct-to-Consumer Wine Shipping Report highlights historic growth in prices, leading to 50% growth in value in three years

(BOSTON) January 23, 2019 – Wineries shipped a record $3 billion worth of wine directly to consumers in 2018, according to the 2019 Direct-to-Consumer (DtC) Wine Shipping Report from Sovos and Wines Vines Analytics. The annual report analyzes shipment trends from wineries to consumers in the United States. Fueling this growth, the average price per bottle increased 2.4 percent, the most significant one-year price spike since 2011.

Despite these healthy increases, the growth of the direct-to-consumer channel was slower than seven-year averages. In previous years, states have loosened their restrictions allowing wine shipments to drive growth. However, Oklahoma was the only new shipping destination for wine in 2018, leaving few states remaining yet to open for winery-to-consumer shipments.

“The direct shipping channel has matured into a mainstream option for wineries to meet growing consumer demand,” said Larry Cormier, general manager, ShipCompliant by Sovos. “As buyers continue to prefer direct shipping of all the products they buy, this channel must rely on organic growth, not new states opening for shipments. As a result, we anticipate strong but slower growth in the years to come.”

Sonoma County was the standout among regions analyzed, propelling ahead of Napa County, the historic leader in the DtC channel. Sonoma’s total volume of shipments increased by 19 percent and the value of shipments by 18 percent, marking a 200 percent increase since 2011.

On the other hand, both the volume and value of shipments from Napa County wineries lagged considerably behind other regions. Napa County’s wine shipments increased a mere 1.6 percent, a response to the 7.1 percent increase in average price-per-bottle shipped.

“Napa County seemingly priced itself out of the market in 2018,” said Chet Klingensmith, publisher and president at Wines Vines Analytics. “This may be an early indicator of what’s to come for the whole channel in 2019, as price increases have historically been followed by flat or declining prices the following year. With competition from independent wine clubs and online liquor stores increasing, wineries must stay cognizant of how pricing affects consumer demand.”

Other notable trends in the 2019 Direct-to-Consumer Wine Shipping Report include:

  • The Moscato fad faded. Moscato shipments plummeted in 2018, with the average price of a bottle at $7.30, down 50 percent from its high in 2016.
  • Oregon outpaced the DtC channel. For the seventh consecutive year, Oregon wineries outpaced the overall market. Despite a 1.4 percent increase in the average price per bottle, wine shipments from Oregon increased 19 percent in volume.
  • Rosé shipments continued to skyrocket. Rosé is now the eighth most commonly shipped wine by American wineries, moving up from the bottom of the list less than a decade ago.
  • Consumers opened their wallets. Shipments of wines priced at $100 or more increased by 18 percent in volume compared to the previous year.

The Direct-to-Consumer Wine Shipping Report is an annual collaboration between Sovos and Wines Vines Analytics, examining shipment trends from wineries to U.S. consumers. The proprietary data included is comprised from an algorithm measuring total DtC shipments based on millions of anonymous direct shipping transactions filtered through the ShipCompliant by Sovos system and paired with Wines Vines Analytics’ comprehensive data on U.S. wineries.

To download the full 2019 Direct-to-Consumer Wine Shipping Report and to see more insights and DtC trends, visit http://www.shipcompliant.com/dtcreport19/.

About Sovos

Sovos is a leading global provider of software that safeguards businesses from the burden and risk of modern tax. As governments and businesses go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud is the first complete solution for modern tax, giving businesses a global solution for tax determination, e-invoicing compliance and tax reporting. Sovos supports 5,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. The company has offices throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit www.sovos.com and follow us on LinkedIn and Twitter.

About Wines Vines Analytics

The Wines Vines Analytics team maintains the wine industry’s most accurate databases and provides data-driven analysis, data, insights and reports to help our clients grow and manage their businesses. For more information visit www.winesvinesanalytics.com.

The post Wine Shipments to Consumers Hit Record $3 Billion in 2018 appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Oral Arguments in Tennessee Residency Case, Economic Nexus in Wyoming Affects DtC Shippers, Bev Alc Market Grows to $253B, and 100 Years Since Prohibition Began

Ship Compliant Wine Blog - Tue, 01/22/2019 - 12:06

This has been a rather busy week for the beverage alcohol industry! As happens every January, the annual reports and industry checkups are coming out, which are always big news. But this week there was also oral arguments before the Supreme Court on beverage alcohol issues — the last time that happened, nearly 15 years ago, the result was the modern direct-to-consumer market! While we don’t necessarily expect such big results this time around, it’s still big news.

As such, we’ve devoted an additional section of the Roundup to looking at reactions to the oral arguments, including our very our own take. We then look at more standard regulatory updates, including a couple changes in Wyoming and Texas that could affect DtC shippers we’ve reported on in the last week; those and a look at new rules permitting distillation on tribal lands. Then we review the industry reports that have come out this week, including the preeminent Silicon Valley Bank Report on the Wine Industry. Finally, we calm things down a bit and look at ways to use samples to improve your sales to distributors and retailers.

But that’s not all folks! Indeed, this week we have our very own report coming out. That’s right, we are poised to release the 2019 Direct-to-Consumer Wine Shipping Report — check out highlight previews and sign up to get notice when the report is released. And if you’re going to be at the DtC Wine Symposium in Concord on the 23rd, make sure to hear directly from Larry Cormier, General Manager of ShipCompliant, as he presents on the key highlights from this year’s report.

Before the Court — TWSRA v. Blair reviews

Tennessee’s Weird Liquor Law Should Be Struck Down. But Expect More Wine Cases to Come | Undoubtedly, Tennessee’s is a dubious law, but the problem for its opponents is precisely that the 21st Amendment returned liquor-control power to the states. Washington Post

Justices Weigh Text and History of 21st Amendment In Challenge to State Residency Requirement for Liquor Licenses | At today’s oral argument in Tennessee Wine and Spirits Retailers Association v. Blair, the justices considered exactly how expansive that regulatory power is. SCOTUS Blog

Justices Slam “Economic Protectionism” in Supreme Court Liquor Case, 100 Years After Prohibition | Exactly 100 years after the nation ratified the Eighteenth Amendment and began Prohibition, on Wednesday, the U.S. Supreme Court considered a case that could set a major precedent for how states can regulate the wine and liquor industry. Forbes

Tennessee’s Weird Liquor Law Should Be Struck Down. But Expect More Wine Cases to Come | Undoubtedly, Tennessee’s is a dubious law, but the problem for its opponents is precisely that the 21st Amendment returned liquor-control power to the states. Washington Post

Regulatory News and Discussions

Wyoming’s New Economic Nexus Rules May Affect DtC Wine Shippers | Wineries shipping direct to Wyoming consumers will need to comply with new sales tax nexus rules, if they exceed threshold sales. ShipCompliant by Sovos

Distilling on Tribal Lands Is Now Legal in the U.S. | The recent repeal of an early-19th century federal law creates new business opportunities for Native American spirits producers. SevenFifty Daily

Texas Introduces New Filing Frequencies for DtC Wine Shippers | Direct shippers will going forward need to file more frequent reports to Texas regarding their direct sales to Texas residents. ShipCompliant by Sovos

Wine Institute Q&A on TTB Shutdown | Nine out of 15 federal government departments are currently closed and will remain closed until the President and Congress can reach agreement and enact funding legislation to reopen these departments. Wine Institute

Industry Updates: Market Conditions and Developments

U.S. Beverage Alcohol Spending Hits $253.8 Billion in 2018, +5.1% Versus 2017 | Consumers continued to increase spending in the beverage alcohol category. Bw166

State of the Wine Industry Report 2019 | Rob McMillan of Silicon Valley Bank predicts that the U.S. wine industry will be challenged over the next 5 years. Silicon Valley Bank

The Wine Industry Needs to Evolve – SVB Report | The 18th annual State of the Wine Industry Report, required reading for pretty much anyone involved with the U.S. wine industry, indicates long-term trends have taken the business to a transition point. Wine Business

Total U.S. Wine Market Tops $70 Billion | Findings are part of New Wine Analytics report. Wine Business

A New #FlagshipFebruary Campaign Aims to Save Core Beer Brands Before They Disappear | The nation’s most pioneering and influential old craft breweries, all of which built their businesses on a flagship or two, are struggling mightily – and not so successfully — to compete in a world where a decent number of upstarts don’t even craft a core beer. Forbes

Digestif

On This Day 1919 . . . Prohibition is Ratified | One hundred years ago, on 16 January 1919, the United States Congress ratified the 18th Amendment leading ot the complete prohibition of “intoxicating liquors” in the country. Drink Business

6 Ways to Get More Out of Your Samples | Importers and distributors on how to make the most of sample bottles and time with buyers. SevenFifty Daily

The Restaurant Wine List Is Dead. Long Live the Wine List | A trend in “micro lists” is a boon for wine lovers. Bloomberg

The Prohibition-era Origins of the Modern Craft Cocktail Movement | Prohibition may be long dead, but the speakeasies and cocktails it spawned are still with us. Napa Valley Register

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

The post BevAlc Roundup | Oral Arguments in Tennessee Residency Case, Economic Nexus in Wyoming Affects DtC Shippers, Bev Alc Market Grows to $253B, and 100 Years Since Prohibition Began appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Supreme Court Hears Oral Arguments in Tennessee Residency Case

Ship Compliant Wine Blog - Fri, 01/18/2019 - 12:45

Ever since the U.S. Supreme Court agreed last fall to review Tennessee Wine & Spirits Retailers Association v. Blair (originally v. Byrd, but personnel adjustments in Tennessee have resulted in a name change), speculation on its implications has taken over the beverage alcohol industry. To be sure, any time the highest court hears a case, there is a lot to speculate on, but some of the speculation (say, that it would lead to the end of the three-tier system) seemed a bit premature.

With oral arguments having been made on January 16, 2019, we now at least have something more to base our speculations on. A transcript is available here, for anyone with the inclination to take a crack at.

I’ve said it before and will say it again: predicting how the Court will rule is a fool’s errand. And so we will not be trying to second guess what the result will be. Nonetheless, here are some of the highlights that came through from the arguments.

But first, a brief review:

The case arose from a rule in Tennessee requiring all applicants for an off-premises liquor license to meet certain durational residency requirements: 1) all new applicants must have lived in the state for at least 2 years; 2) all renewal applicants have lived in the state for at least 10 years; and 3) these requirements apply to all owners, directors, shareholders, managers, etc. of a corporation.

Several years ago, the Tennessee Alcoholic Beverage Commission (ABC) sought a ruling from the state attorney general on the legitimacy of these requirements. When the AG was unable to provide justification, the ABC determined not to enforce them. This decision empowered the retail giant Total Wine & More (“Total Wine”) to get licensed in the state and open up a couple stores.

However, Total Wine’s actions were met with resistance from the state’s retailers, who initiated a lawsuit against Tennessee to get it to enforce the durational residency requirements, which would result in Total Wine having to shut its operations. (Though Total Wine would not be the only party whose interests would suffer.)

The case proceeded to the 6th Circuit Court of Appeals, which ruled last February that Tennessee’s durational residency rules were in fact improper discrimination against out-of-state parties, and were not justified by the state’s 21st Amendment rights to control its internal alcohol market. Notably, the 6th Circuit applied the finding from the Supreme Court in the 2005 Granholm decision to the retailer tier. (This was the source of a lot of speculation that the Court would be poised in Tennessee Wine to open up interstate direct-to-consumer shipping of alcohol by retailers, as it had for producers.)

The Tennessee Retailers Association then appealed the 6th Circuit ruling, which the Supreme Court agreed to take up.

What came out through oral arguments?

The Court is notoriously hard to predict, with the Justices generally playing the cards close to the chest. As such, it’s not our place to say how the Court will rule (though it might be ventured that perhaps a more limited ruling is to be expected than a broad-ranging decision that upends current regulatory policies). Instead, we will limit ourselves to merely pointing out some of the more interesting and salient issues that were brought up.

History matters — but what history is uncertain.

The oral arguments — particularly that of the petitioner (that is, Tennessee Wine and Spirits Retailers Association, and their amici) — spent a lot of time delving into the history of beverage alcohol regulation.

A leading argument made by the petitioner was that when enacted, the 21st Amendment sought to restore to states the power they had over the alcohol industry that they had enjoyed pre-Prohibition. Per this argument, those powers, originally set out in the turn-of-the-century Wilson and Webb-Kenyon Acts, set down a total abrogation of the Dormant Commerce Clause when it comes to sales of alcohol.

The Dormant Commerce Clause is a Constitutional principle that prohibits states from discriminating against out-of-state interests in favor of in-state parties in commerce. As the petitioner stated, under the 21st Amendment, states were excused from Dormant Commerce Clause issues, with no exception for any form of economic protectionism that a state might enable.

Notably, the petitioner’s attorney stated that this was the only Constitutional exception set out by the 21st Amendment, and other Constitutional exceptions — like the First Amendment — were not allowed under the 21st Amendment. This might be a surprising claim for anyone who has had to contend with the many restrictions on advertising by alcohol retailers and producers that exist among state regulations.

The respondent also discussed the historical legacy of alcohol regulation and pre-Prohibition restrictions. However, they used this history more to point out the public health and safety concerns that underscored the 19th-Century Temperance Movement. As they noted, because public policy over health and safety played such a vital role early in alcohol regulations, modern regulations should continue to reflect that policy, and as such a state law would need to be justified by more than the “it’s economic protectionism, which states have near virtual authority to impose under the 21st Amendment” argument put forth by the petitioners. (And since Tennessee did not have any health and safety justifications for the durational residency requirements, they should be found invalid.)

The respondent further posited that the legacy of the Wilson and Webb-Kenyon Acts, along with the 21st Amendment, was merely to permit states to be dry and then prohibit all importation of alcohol from out-of-state, which otherwise would be impermissible under the Dormant Commerce Clause. This more limited view would mean that states do not have the “virtually complete authority” to control sales of alcohol that the petitioner claimed they had.

Granholm clearly applies — just how it does isn’t clear.

Both petitioner and respondent made clear that they considered the 2005 Granholm case to be controlling in this case. But just as with the historical legacy, their opinions on what Granholm meant differed.

The petitioner asserted that Granholm set out the standard that, when reviewing beverage alcohol regulations under the 21st Amendment, a court needed to look at the historical powers granted to states pre-Prohibition. This set up their argument that any economic protectionist policies enacted would be valid, as per their view of the history, pre-Prohibition laws allowed states “virtually complete authority” over the sale of alcohol.

Interestingly, at one point the petitioner stated that Granholm was concerned with disparate taxation of out-of-state products compared with in-state products. Speaking before the Court can be an incredibly stressful experience, and the statement included a mention of a separate case, Bacchus, which did deal with different taxation of in-state and out-of-state products, so perhaps we can excuse the error.

The respondent, instead, used Granholm to support their argument that state regulations of alcohol that discriminate against out-of-state interests (and notably, not just out-of-state products, which was the petitioner’s position) are invalid if they are purely protectionist and not justified by any other public policy.

Since Tennessee did not provide any other justification for the durational residency requirements, the respondent asserted that they should be invalidated. This argument seems to be a bit more in line with a historical reading of Granholm, and so might help sway the opinions.

Really, that Tennessee refrained from joining the case at all was in itself rather notably, and could skew the Justices’ sense of the necessity of maintaining the laws as written.

How will this case affect future Litigation?

While the Court as a whole seemed largely skeptical of both the petitioner’s position that Tennessee had an interest in maintaining the durational residency requirements (again, not something that Tennessee itself bothered to argue) and that the 21st Amendment completely overrode any Dormant Commerce Clause issues, Justices Kagan and Gorsuch were vocal in their concern that ruling for the respondents would usher in a massive wave of litigation to overturn all kinds of beverage alcohol regulations.

The respondent attempted to allay those fears by stating that this case merely had to do with the immediate issue of equal access to Tennessee licenses for brick-and-mortar stores, and would not in itself enable an “Amazon of liquor.” (Notably, no one mentioned that Amazon is currently in the alcohol business, through its ownership of Whole Foods — and had to shut down its online marketplace for wine because of the apparent conflicts of interest.)

However, the respondent’s focus on the immediate issue did not seem to placate the Justices’ concerns about future litigation and whether their decision today might lead to the repeal of state authority in alcohol regulation tomorrow. As such, it seems likely that, if the Court rules in favor of the respondents, it will seek a rather narrow finding that just touches on the durational residency requirements without otherwise invalidating the states’ authority.

What does this all mean?

An opinion is expected from the Court in the coming months — perhaps as early as April, but at least no later than June. Until then, expect a second wave of speculation as court watchers and beverage alcohol experts throw bones and read tea leaves.

The reliance that both sides put on Granholm seems to be a relief — there was some wild-haired concern that the Court might do something rash and reverse its ruling in that case (finding that, indeed, states have total authority in the control of sales of alcohol, and as such could prohibit out-of-state shipping while permitting it in-state). But those concerns seem to be put to rest now.

The fears that the Justices presented for future litigation do seem to point to them trying to find a narrow opinion here that maybe just invalidates the inane and unsupported-by-the-state parts of the Tennessee durational residency requirements (such as the 10-year renewal and the 100 percent in-state presence requirements), while still supporting a state’s authority to control its internal beverage alcohol market.

While this would not in itself forestall future litigation, it could perhaps set out more of a standard for lower courts when evaluating the legitimacy of a state rule that would be completely invalid if it regulated anything besides alcohol.

Notably, such an opinion also likely would not settle the brewing issue of interstate direct-to-consumer shipping by retailers. Several lower courts have recently issued rulings on this issue, providing mixed opinions. If the Supreme Court cannot find a way to address that issue in its opinion in Tennessee Wine, it could be setting itself up to hear another beverage alcohol case sooner than later.

For now, though, there is not much for us in the beverage alcohol regulation business to do but wait for the Court’s opinion. On our part, we are looking into the possibility of hosting a webinar on this case, or posting further analyses of the arguments. Make sure to stay tuned to this blog for more updates on Tennessee Wine and many other regulatory issues affecting the beverage alcohol industry.

The post Supreme Court Hears Oral Arguments in Tennessee Residency Case appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Get Ready for the 2019 Direct-to-Consumer Wine Shipping Report

Ship Compliant Wine Blog - Fri, 01/18/2019 - 10:55

January is an exciting time in the world of wine, as ShipCompliant by Sovos is set to release the annual Direct-to-Consumer Wine Shipping Report with our partners Wines Vines Analytics. We’re also sponsoring and presenting an exclusive first look at the report during next week’s Direct to Consumer Wine Symposium, as well as exhibiting at the Unified Wine & Grape Symposium the following week.

Here’s what you need to know about the report, a look back at some key trends from last year’s edition, and a breakdown of what we’re looking forward to at each of the big industry events this month.

About the 2019 Direct-to-Consumer Wine Shipping Report

ShipCompliant and Wines Vines Analytics have been collaborating since 2011on the direct-to-consumer (DtC) channel’s only major state-of-the-industry report. The report offers detailed insights on wine shipments made from wineries to consumers in the United States.

The Wines Vines Analytics team created an algorithm that uses its database of more than 10,000 U.S. wineries to extrapolate all DtC shipments from millions of anonymous transactions filtered through the ShipCompliant by Sovos system in 2018. The model tracks sales by winery region, annual winery production, destination of shipments, wine type (varietal) and price points. The result is the most accurate projection of the American DtC shipping channel.

Highlights from last year’s Direct-to-Consumer Wine Shipping Report

2017 was a big year for DtC shipping, as the channel saw 15.5 percent growth year-over-year and accounted for an unprecedented $2.69 billion of wine shipped despite wildfires that ravaged the heart of Wine Country for much of the fall. As a result of this growth, we predicted DtC shipping would top $3 billion in value in 2018. Another development we noted in last year’s report was the surge of Sonoma County wines. Sonoma vineyards shipped 26 percent more wine in 2017 than in 2016, leading us to project it will eventually overtake Napa shipments. 

We’ll have updates on these and other trends in the 2019 Direct-to-Consumer Wine Shipping Report, scheduled for release on January 23rd. In the meantime, you can take a look back at how the DtC channel performed in 2017 by download last year’s Direct-to-Consumer Wine Shipping Report.

About the DTCWS and the Unified Wine & Grape Symposium

The DtC report isn’t the only thing we’re anticipating this month. The annual Direct To Consumer Wine Symposium takes place in Concord, California on January 23 and 24 at the Hilton Concord Hotel. As always, you can expect a great assortment of keynote speakers from the industry, town hall discussions, round tables, and, of course, plenty of time to network and catch up with your peers.

ShipCompliant by Sovos General Manager Larry Cormier will speak at the DtC Wine Symposium at 9:00 a.m. on Day 1 – so make sure to arrive on time. Larry will share highlights from the 2019 Direct-to-Consumer Wine Shipping Report for the first time, as well as break down how wineries can most effectively use the data from the report to increase their DtC sales this year. Learn which states are buying the most wine, which varietals and regions saw the most growth last year, and what you can expect from the channel in 2019.

The following week, the ShipCompliant team will head to the Unified Wine & Grape Symposium in Sacramento, January 29 to 31. Unified is a staple of the wine industry, as it reaches its 25th anniversary, and it has a range of sessions, speakers and events covering hot topics from all over the wine scene. ShipCompliant will be in booth #1626 on the first floor in exhibit halls A-E. If you’re planning to attend Unified, make sure to stop by and chat with our team.

Find out how ShipCompliant by Sovos can help your business stay on top of compliance by signing up for a free demo.

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