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BevAlc Roundup | Time Running Out to Extend Reduced Federal Excise Taxes, Beer Shipments Fall to Decade Low in 2019, and Is Molasses the Secret to Good Rum

Mon, 12/09/2019 - 09:08

December 5 was the 86th anniversary of Repeal Day, the day the 21st Amendment was enacted, restoring the legal market for producing and selling alcohol in the United States. While the many decades between then and now have been very fruitful for producers, distributors, and retailers of alcohol and the satisfied consumers they serve, the industry would do well to remember that there are still efforts to denigrate and tarnish beverage alcohol, even some trying to bring back Prohibition. Therefore, let’s take this anniversary to remind ourselves of the sense of responsibility that undergirds our industry. That responsibility reinforces the notion that enjoyment and safety are not enemies. It acknowledges that alcohol is enjoyable and fun and a part of human identity going back millennia; but also that alcohol is an intoxicant and can have pernicious effects if misused. As such, it forces us to realize that the freedom to drink (like all freedoms we enjoy) requires us to always think of the effects on ourselves and others and to not abuse that freedom. So let’s all raise a glass to toast the restoration of freedoms that Repeal Day represents—responsibly.

In this week’s Roundup we look at the effects of the recent announcement by the White House to enact extreme tariffs on French wine. We then look at how the direct-to-consumer and three-tier retail channels interact, and indeed can grow together; and finally the New York Times’s wine critic looks back on his favorite wine moments of 2019.

In case you haven’t heard, the 2019 Direct-to-Consumer Wine Shipping Report is available for download. Get your copy today here.

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

Regulatory News and Discussions

TTB Newsletter | This week’s top news includes hints for speeding up your formula approval times, and notification of upcoming Permits Online maintenance. TTB 

TTB Newsletter — Time Running Out for Voluntary Disclosure of Unreported Changes in Control of ProprietorshipThis week’s top news includes the semi-annual publication of our regulatory priorities, the window is closing on making voluntary disclosures of unreported changes in control or proprietorship through Industry Circular 2019-2, and we recently accepted an offer in compromise from a California wine company. TTB

December 5 Day of Action Planned to Urge Congressional Passage of CBMTRA Before Year-End Deadline | Leaders in the beverage alcohol sector are urging industry advocates across the nation to participate in a national Day of Action on December 5 by contacting their members of Congress to urge passage of the Craft Beverage Modernization and Tax Reform Act. Wine Business

French Wine, Cheese Targeted in Latest Trump Trade Fight | Industry groups are sounding the alarm on President Trump’s proposal to hit $2.4 billion in French goods with tariffs, warning that the latest trade salvo will affect a broad array of goods and its effects fall on U.S. consumers and small businesses. The Hill

US Tariff Threat on Champagne Is Unacceptable, Says French Wine Body | It is ‘deplorable’ that the US has threatened tariffs on Champagne and other French sparkling wines by up to 100%, said one industry leader, who urged France’s government to find a solution to a dispute over the country’s digital services tax. Decanter

Taking the Direct Route to Wine | It’s the busy wine-buying season, so what exactly are the rules around buying direct from the winery? Wine-searcher.com

Industry Updates: Market Conditions and Developments

US Beer Shipments Could Reach Decade-Low in 2019 | The number of U.S. brewing companies is at an all-time high, but domestic beer production will likely hit a decade-low before the calendar flips to 2020. Forbes

Staring Down Sexism in Wine (Podcast) | The closer we look at the world of wine, the more obvious it becomes that in most ways it remains dominated by white men. VinePair

Direct-to-Consumer And Traditional Wine Retailing Are Not Rivals, Says an Expert | ShipCompliant by Sovos’s Senior Regulatory Counsel responds to a Drizly survey of wine retailers. Forbes

Distributor Behind Michigan Liquor Shortage Touts Improvements, but Complaints Persist | The company behind Michigan’s liquor shortage says it’s made big strides in recent weeks to address the state’s liquor shortage, but the state and retailers point to signs of ongoing problems going into the holidays. M Live

Craft Beer Mergers and Acquisitions | Over the past several months, 15 notable deals have taken place in the craft beer space, continuing a trend toward consolidation in the industry. Alcohol Law Advisor

Digestif

Eric Asimov’s Best Wine Moments of 2019 | The best bottles don’t necessarily meet some objective standard. Instead, they are the ones that you can’t forget, that have meaning and tell stories. New York Times

Is the Secret to Great Rum Molasses? | How an acclaimed New England rum distiller decided to switch to using historic and traditional molasses. Daily Beast

The Stone Cold Truth About Aging Wine in Concrete | There’s a growing call for neutrality—that is, aging in non-reactive vessels that don’t impart their own flavors to the wine held within—as producers shift to concrete, often egg-shaped vats, for the maceration, fermentation, and aging of wine. Barrons

 

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The post BevAlc Roundup | Time Running Out to Extend Reduced Federal Excise Taxes, Beer Shipments Fall to Decade Low in 2019, and Is Molasses the Secret to Good Rum appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Ready to grow your winery? Invest in ecommerce

Thu, 11/21/2019 - 10:58

At the height of the “Amazon effect,” ecommerce has never been so important to the wine industry. New digital shopping patterns, customer expectations and competitive landscapes have impacted the traditional brick and mortar business model. 

Wineries may be slower to embrace this change due to the added regulatory complexities of shipping alcohol and the strong tradition of tastings and showrooms. A robust online presence and ecommerce platform are crucial to further developing your customer base and increasing sales. Small and medium wine producers can benefit from investing in ecommerce to expand brand awareness and stay relevant through content and customization in the growing market. 

Why wineries need a strong online presence

Consumer behavior, across almost all industries, has shifted to rely heavily on online shopping. Shoppers are increasing their online expectations too, preferring customization, personalization, transparency and quick deliveries. Wineries are no exception to these heightened expectations. 

When there are endless options online it’s important for your winery to stand out and deliver a seamless, easy-to-use and visually appealing ecommerce platform. But customer expectations don’t end there. A transparent, efficient and quick delivery experience is also now part of the online shopping journey. Small and medium wine producers should focus on building an exceptional ecommerce platform and delivery operation in order to see substantial growth in sales and your customer base. 

Wineries that have developed a robust ecommerce platform are seeing strong returns. According to ShipCompliant’s 2019 DtC Shipping Report, wineries in the small winery category (5,000 to 49,999 annual case production) dominated the winery shipping channel in 2018, producing 43 percent of the total cases shipped and 46 percent of the value of winery shipments. Consumers are ordering online from small and medium producing wineries, and they’re doing it frequently.

Ecommerce is cost-effective for wineries of every size

Investing in an online presence can be a cost-effective way to market your newest Pinot and find new fans for this season’s Cabernet. It is oftentimes more cost effective to run a marketing effort to drive customers to your online order platform than to staff and operate a brick and mortar location. Using this strategy can increase awareness and outreach to potential customers while yielding higher profit margins.

According to Wine Direct, direct-to-consumer (DtC) sales are still the smallest revenue channel for most wineries, but they generate the highest average per-order value, meaning consumers spend more on their total order when shopping online versus other purchasing channels. 

The DtC channel has the largest opportunity for growth, and wine clubs are a cost-effective way to capitalize on that opportunity. Wine club orders account for a third of DtC sales, Wine Direct finds. Clubs continue to grow in popularity across the industry, regardless of a winery’s size. They are a great way to address growing consumer expectations by offering more personalized recommendations or suggestions for the subscriber.

Overcoming the challenges of an ecommerce strategy

Ecommerce is a key approach to growing and staying relevant as a winery, but it does come with some challenges. With the DtC regulatory environment changing frequently, and requirements varying by state, it can quickly become complicated when trying to obtain the correct licenses and staying compliant within each state. Consumers expect a transparent and speedy delivery experience. This can add to the challenges for beverage alcohol producers.

Adapting an ecommerce strategy will have some initial costs, like adopting and maintaining a great platform and driving traffic to that platform. But without a strong online presence your winery will lose out on expanding their customer base, increasing sales, and staying relevant.

 

Learn how ShipCompliant can help your ecommerce business remain compliant. Request a demo today.

The post Ready to grow your winery? Invest in ecommerce appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Federal Alcohol Tax Reform Gains Support, Divergence in Oregon Wine Country, and How to Improve Holiday Shipping

Mon, 11/11/2019 - 10:46

The fires that threatened Sonoma County two weeks ago have thankfully been quelled; but that was not before numerous homes and buildings were destroyed, for which we at ShipCompliant extend our deepest sympathies. For everyone, though, the holiday shopping season is still fast approaching. This brings increased online sales and potential delays in shipping across the country. An article on our blog explains how you can get ahead of the holiday rush, but also look for the replay of our latest webinar where we talked with Truvi about managing holiday shipments.

This week in the Roundup, the TTB announces waivers of tax penalties for businesses affected by the California wildfires; then we look at new regulations coming into effect soon for alcohol servers in California, Coors moves business operations to Chicago, and the New York Times wine critic reviews the effects of climate change on the wine industry.

In case you haven’t heard, the 2019 Direct-to-Consumer Wine Shipping Report is available for download. Get your copy today here.

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

Regulatory News and Discussions

TTB Newsletter | As part of our ongoing effort to provide on-demand educational information we are announcing two new offerings – a video series on the basics of trade practices and new and improved wine labeling pages. TTB

TTB Newsletter — Waiver of Excise Tax Penalties for Businesses Affected By California Wildfires | This week’s top news includes how industry members impacted by the recent wildfires in California may obtain a waiver of penalties for not timely filing or paying excise taxes, and tips for using the smart form version of the TTB excise tax return. TTB

Importers in the DtC Landscape: It’s Complicated | When it comes to businesses licensed solely as importers, the map for DtC shipping of wine is rather small. ShipCompliant by Sovos

If Your Business Serves Alcoholic Beverages in California You Need to Read This and Take Action! | Proposed regulations will affect EVERY person who serves alcohol throughout the state whether in a restaurant, hotel, bar, tasting room, stadium, concert, wedding, tourist park, or even at a charitable event. Booze Rules

Congressional Support for Craft Beverage Modernization and Tax Reform | New record of co-sponsors follows industry “day of action. Wine Business

Would Liquor Access Expansion in Pennsylvania Cost Jobs? | Pennsylvania lawmakers are discussing how expanding the privatization of alcohol sales in the state would improve access and possibly affect jobs. Marietta Daily Journal

State Supreme Court Hears Arguments on Liquor Distribution Law That Some Claim is Unconstitutional | The Oklahoma Supreme Court heard oral arguments Tuesday on the appeal of Oklahoma County District Judge Thomas Prince’s August ruling that Senate Bill 608 is unconstitutional. Tulsa World

Industry Updates: Market Conditions and Developments

Wineries Back to Business After Kincade Fire and Encouraging Visitors to #GatherInSonoma and #SipSonoma | Sonoma County wine country has been hit twice by massive fires in the space of three years. Wine Industry Advisor

Coors Family Silent About Chicago Move, but You Can Bet They’re Not Happy | Last week, Molson Coors shocked Colorado by announcing that it would close its central offices in Denver, lay off hundreds of employees here, and relocate everything to its existing space in Chicago as part of a massive restructuring and name change aimed at keeping the corporation competitive. Westword

Oregon Wine’s Civil Civil War | As winegrower interests diverge, a split has arisen among the state’s wine representatives. Wine-searcher.com

How Black Women in Wine–and Their Allies–Are Banding Together to Achieve Better Representation | Wine consumption in the U.S. is higher than ever, but despite efforts to promote inclusivity among consumers, the needle hasn’t moved much at all for black women working in the wine world. Forbes

Digestif

How Planning Can Improve Operations During the Busy Wine Shipping Season | With the holiday season approaching, people start thinking about gift-giving and holiday parties, and with a bottle of wine appealing to the masses, wine orders increase drastically. ShipCompliant by Sovos

Our Wine Critic Reviews Climate Change’s Impact on an Industry | Eric Asimov says we have to rethink every element of wine, from where we farm it to how we buy it. NY Times

Is Wine Premiumisation a Doom Loop? | Damien Wilson, of Sonoma State University, has a warning for the US wine industry: wine premiumisation can be a path to ruin. Wine Business International

Is the Future of Whiskey in China? | The Chinese spirits and wine market has long been coveted by, and lucrative for, international producers. Barron’s

 

Request a demo of ShipCompliant.

The post BevAlc Roundup | Federal Alcohol Tax Reform Gains Support, Divergence in Oregon Wine Country, and How to Improve Holiday Shipping appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Importers in the DtC Landscape: It’s Complicated

Fri, 11/08/2019 - 14:25

To paraphrase, all of the beverage alcohol industry has to deal with complicated regulations; each member of the beverage alcohol market has to deal with regulations that are complicated in their own way. That is a long-winded way of saying that you may face unique restrictions and complications that other, seemingly similarly placed (i.e., same products, same relative tier) can avoid.

This is particularly true of importers, who generally seem to be on the same footing as other members of the “supplier” tier (like wineries and breweries), but in fact are often treated quite distinctly in federal and state regulations. 

Now, there is a lot that goes into being an importer, which will not be discussed here. (For more background, we recommend this recent article detailing the complications of bringing in new brands to the U.S.) Instead, this post will focus on the direct-to-consumer (DtC) wine shipping market, and whether and where importers can directly engage in that space.

Where Can Importers Ship Wine Direct?

When it comes to businesses licensed solely as importers (so holding only an Importer’s Basic Permit from the TTB, and no state-issued production/manufacturing licenses), the map for DtC shipping of wine is rather small. This is all due to how DtC shipping laws are written. 

Let’s look at Colorado’s law for wine shipments (C.R.S. 44-3-104, for those following along at home), which readily demonstrates the two key barriers standing in the way of importers shipping wine DtC. 

As enacted, the law provides that holders of a “winery direct shipper’s permit may sell and deliver wine that is produced or bottled by the permittee.” Further, the law states that the permit is only available to persons who “operate…a winery located in the United States and holds all state and federal licenses, permits, or both, necessary to operate the winery, including the federal winemaker’s and blender’s basic permit.”

A plain reading of the statute shows the problem and why importers cannot ship wine DtC to Colorado. They (generally) would not operate a winery in the U.S. nor hold the federal and state licenses needed to operate a winery—and so right off the bat would be unable to get the necessary license. However, even if they were able to get a DtC shipping license (perhaps they are a U.S. winery that doubly operates as an importer; they might even be part of a wine conglomerate and are importing their sister winery’s products), those imported wines would not be “produced or bottled” by them, but by the foreign winery who, again, cannot themselves hold the permit (lacking the necessary U.S. licenses). These laws effectively shut off Colorado residents from receiving foreign wine through a DtC shipment. 

This is as compared to New Hampshire’s law (NHRS 178:27), which reads, “any person currently licensed in its state of domicile as a wine manufacturer, beverage manufacturer, importer, wholesaler, or retailer shall apply for a direct shipper permit” (emphasis added). That little additional word makes a world of difference, as it clearly states that importers can also apply for the necessary license to ship wine DtC to New Hampshire residents. New Hampshire also does not have the same kind of “produced or bottled” law, meaning a DtC shipper can ship DtC any wines they are otherwise authorized to sell.

Unfortunately for importers, though, only New Hampshire and Wyoming have this explicit allowance for licensed importers to get the necessary DtC shipping license. Without other states changing their DtC shipping laws in a similar manner, importers face an extremely truncated map.

Is There Any Other Way?

One possible workaround for importers is to work in conjunction with a licensed wine producer. As alluded to above, production wineries can often also get licenses to act as importers of foreign wine. Under that arrangement, they can receive DtC licenses from the broadest swath of states (as licensed wine producers) and then DtC ship the wines that they personally import and distribute in the United States. 

However, also as noted above, they will have to contend with various states’ prohibitions on shipping wine DtC that they do not bottle or produce. Not all states have these laws, and even some states that do have those rules allow the DtC shipper to ship wines “they own” (i.e., have a COLA for); but they will still be an impediment to shipping to all 45 states that currently allow DtC shipping of wine.

The other solution available to importers is to also become licensed as retailers in the state they operate in and ship DtC to the states that permit it for retailers. For more information on where retailers are currently permitted to ship wine DtC, read this post.

However, trade practice restrictions make this unavailable in all states. For instance, importers in New York are required to be licensed as in-state wholesalers; however, the state’s trade practice laws prohibit holders of wholesale licenses from also being licensed as retailers. This is as opposed to California where holders of the Type 9 Importer license are able to also hold the Type 20 Retail license, and therefore can get the appropriate DtC shipping licenses in the 15 states that permit it.

Operating as a retailer is not just a matter of getting a license—in most states you are required to actually open a physical shop and offer all of your inventory to walk-in customers. Therefore relying on the retail DtC shipping model may be more burdensome than it’s worth, though it is an option for importers to explore.

As DtC shipping of wine has blossomed over the years, many various parties have looked to join the market. In recent years, retailers and distillers have made increasing efforts to gain the  same permissions that wine producers have been enjoying. Importers may also look to expand their ability to ship wine DtC across the country. But until the laws are amended, importers will face a severely truncated DtC shipping map and will need to find alternative arrangements where available.

 

 Request a demo of ShipCompliant today. 

The post Importers in the DtC Landscape: It’s Complicated appeared first on ShipCompliant | The software leader of the beverage alcohol industry.