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New Prop 65 Warning Requirements for Online Sales and DTC Shipments in California

Mon, 08/13/2018 - 16:15

On August 30, 2018, newly-amended Prop 65 clear and reasonable warning regulations that apply to any winery that sells and ships their products to consumers in the State of California come into effect.  The new regulations (27 CCR § 25607.3 and 27 CCR § 25607.4)  require a Prop 65 Alcohol Beverage Warning language to be displayed on winery websites, on or in packages containing direct-to-consumer orders sent to a California address and in California winery tasting rooms.

Wineries that did not opt in to the 2014 Proposition 65 Consent Judgement negotiated by Wine Institute must use the new clear and reasonable Prop 65 Alcohol Warning language that includes a hyperlink to the OEHHA website.  Wineries, however, that opted in to the Consent Judgement may continue to use the current alcohol warning after the new regulations become effective on August 30, 2018.

Wineries that produce and sell products with can, lid and/or bottle cap liners containing BPA must also post the new Point of Sale BPA warning on their website and in California winery tasting rooms, and include the new Point of Display BPA Warning in or on direct-to-consumer shipments sent to a California address. As each winery has different practices, please consult your legal counsel or compliance department to determine if any of your products contain BPA. Written certification letters from your packaging suppliers and laboratory testing and analysis are methods that may help determine if any of your winery’s products contain BPA.

The chart and summary below provide a quick reference to the clear and reasonable warning regulations for Alcohol Beverages and BPA.

 

Direct-to-Consumer Shipments

For alcohol beverages shipped to consumers in California, the Alcohol Warning is required to appear on or in the shipping container or delivery package in a type size that is no smaller than the largest type size used for other consumer information on the product. In no instance may the alcohol warning appear in a type size that is smaller than 8-point. The warning message must be readable and conspicuous to the recipient prior to consumption of the alcoholic beverages.

  • Wineries not covered by the 2014 Consent Judgement must use the new Alcohol Warning language.
  • If the product contains BPA, the new Point of Display BPA Warning must also be included.
Website and Catalogs

The Alcohol Warning must be prominently displayed on the website so that the consumer sees the warning on their website prior to completing the purchase.  OEHHA does not consider a warning to be “prominently displayed” if the consumer has to search for the warning on the business’s website. Note that wineries are not required to display a warning to consumers outside of California.

  • Wineries not covered by the 2014 Consent Judgement must use the new Alcohol Warning language.
  • If products contain BPA, the new Point of Sale BPA Warning must also be included.

For more details see the updated PROPOSITION 65 CLEAR AND REASONABLE WARNINGS QUESTIONS AND ANSWERS FOR BUSINESSES: INTERNET AND CATALOG WARNINGS on the Office of Environmental Health Hazard Assessment California Environmental Protection Agency (OEHHA) website which you may access here.

 

California Winery Tasting Rooms

The Alcohol Warning should be provided using one or more of the following methods:

  • An 8 1/2 by 11-inch sign in no smaller than 22-point type, placed at eye level so that it is readable and conspicuous to customers as they enter the area or areas where, by permit or license, alcoholic beverages are served.
  • A notice or sign no smaller than 5 by 5 inches placed at each retail point of sale or display so as to assure that it is readable and conspicuous. The warning message must be in a type size no smaller than 20-point type and be enclosed in a box.
  • For alcoholic beverages provided for consumption on the premises served by food or beverage persons, or sold through an over-the-counter service, the warning message is provided on a menu or list identifying the alcoholic beverages served on the premises. If there is no menu or list identifying the alcoholic beverages served on the premises, then the warning message is provided on the menu or list identifying the food or other beverages sold on the premises.

Wineries not covered by the 2014 Consent Judgement must use the new Alcohol Warning language. If the products offered for sale contain BPA, the new Point of Sale BPA Warning must also be displayed.

Businesses with fewer than 10 employees are exempt from ALL Prop 65 requirements. Therefore, qualified businesses are not required to provide BPA and Alcohol warning signs.

 

The post New Prop 65 Warning Requirements for Online Sales and DTC Shipments in California appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Oklahoma releases application for October DtC wine sales, craft brewers see stable mid-year sales, and a millennia-old wine jar factory found in Israel

Mon, 08/06/2018 - 16:31

It’s August, meaning the grape harvest has begun and planning for the winter season is in full swing. Why not take a quick break to read our Roundup? This week, we have a couple of in-case-you-missed-it pieces from the main ShipCompliant feed on changes for DtC shippers to Oklahoma and Pennsylvania. We also look at some court cases that have the potential to greatly expand interstate DtC shipping for retailers, big news in the world of wine reporting as Wines & Vines Magazine and Wine Business Monthly announce plans to merge, and scientists have confirmed it: water and whisky mix well.

Stay up to date with the latest trends in the DtC wine market with the Sovos/Wines & Vines 2018 DtC Report. Make sure to download your copy here!

 

LegislativeUpdate

TTB Newsletter | Top stories include Permits Online 5.0 is finally here! The new system is designed to simplify your experience in submitting new applications and managing your existing accounts. TTB

Oklahoma to Open for DtC Wine Sales Sooner Than Later – Application Now Available | On October 1, 2018, new rules permitting licensed wine manufacturers to make direct-to-consumer (DtC) shipments to Oklahoma residents will become effective. ShipCompliant by Sovos

Pennsylvania Clarifies Age Verification Rules For DtC Shippers | The PLCB recently published a supplementary advisory notice, clarifying age verification requirements that Direct Wine Shipper (DWS) licensees must fulfill as a condition of their license. ShipCompliant by Sovos

Supreme Court has Chance To Decide If States Can Discriminate Against Wine Retailer Shipping? | Are there any circumstances under which the dormant commerce clause of the U.S. Constitution protects retailer and wholesalers from discriminatory state liquor laws? NAWR

TTB Issues Guidance on Transfers of Beer between Breweries of Different Ownership |

Last week, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published a TTB Procedure governing the transfer in bond of beer between breweries of different ownership. Alcohol Law Advisor

Retailers Spar With Total Wine Over Coupons | An amendment to Massachusetts law that would allow discounts is being resisted by independent store owners. Wine-searcher.com

With 3.2 Beer Brands Likely To Disappear, Lawmakers May Have To Act Or Face A Ballot Initiative | Utah lawmakers may be forced to deal with disappearing beer brands and move heavier alcohol content brews into grocery and convenience store shelves. Fox 13 Salt Lake City

IndustryUp

Despite Smoke, Vintners Positive In Napa, Sonoma | As vines progress through veraison, reports remain positive about the coming 2018 harvest. Wines&Vines

Mid-Year Growth Pace Remains Stable For Small And Independent Brewers | Production volume for the craft segment increased five percent during the first half of 2018. Brewers Association

A Change At The Heart Of The Wine Trade 100 Years In the Making | Wine Business Monthly and Wines & Vines Magazine will be merging, with Wines & Vines Magazines being folded into Wine Business Monthly. Fermentation

Carriers Trashing Wine Shipments | UPS and FedEx are confiscating and disposing of some wines shipped from New York retail stores to customers out of state. Wine-searcher.com

10 Things Keeping Wine Executives Up At Night — And Ways To Sleep Better | The rewards and challenges of growing, making, and selling wine can be numerous for grape growers, winery owners, and executives. North Bay Business Journal

JustFun

Israeli Archaeologists Discover Massive 1,800-Year-Old Wine Jar “Factory” | The remains of around 100,000 broken or flawed jars were also discovered. VinePair

Chardonnay Voted America’s Favourite Wine | Having once been associated with Bridget Jones mid meltdown, Chardonnay has risen phoenix-like from the ashes to become the most popular wine in America. The Drinks Business

Exploring Oregon’s Tasting Room Of The Future | The tasting room of the future may include an Olympic kitchen and miles of marble counters, or it may look like an airport terminal that dropped down into an AVA. Oregon Wine Press

When The 3-Tier System Works As It’s Supposed To, It’s A Beautiful Thing | This was a great example of how it can work for everyone, and why wholesale distribution should be a benefit to a winery’s direct sales, and vice versa. Tablas Creek Blog

Chemists Say Watering Down Whisky Improves The Taste | Science has confirmed that the whisky purists are right. Cosmos Magazine

 

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 | Oklahoma releases application for October DtC wine sales, craft brewers see stable mid-year sales, and a millennia-old wine jar factory found in Israel appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Oklahoma to Open for DtC Wine Sales Sooner Than Later – Permit Now Available

Thu, 08/02/2018 - 14:01

On October 1, 2018, new rules permitting licensed wine manufacturers to make direct-to-consumer (DtC) shipments to Oklahoma residents will become effective. On that date, Oklahoma will become the 45th state (plus D.C.) to license DtC wine shipments, with only Alabama, Mississippi, Kentucky, Delaware, and Utah remaining closed to DtC wine shipping.

The application to become a licensed Direct Wine Shipper in Oklahoma is also now available (find it here). However, wineries will have to wait for October 1 to begin shipping wine DtC, even if they get a license prior to that date.

That date will have been a long time coming, as Oklahoma residents voted to permit DtC wine shipments as part of an omnibus revamp of the state’s beverage alcohol regulations back in 2016. Belying its nickname, the state delayed implementation of the law as state regulators worked to smooth out the details of how DtC wine shipping would operate.

Indeed, this delayed implementation period has been productive, as DtC wine shipping advocates have worked with the state to remove certain restrictions that would have severely hampered DtC wine shipping in the state, such as a requirement that consumers themselves had to get licensed, and a ban on shipping wine DtC that was otherwise available in the state.

There was even a rather dramatic earlier this year, when Free the Grapes! organized a last minute signature campaign to pass a bill that would have imposed likely fatal restrictions on carriers fulfilling DtC wine shipments. Due to efforts of Free the Grapes! to get hundreds of Oklahoma residents to write to the Oklahoma governor expressing their interest in the bill, DtC wine shipping should proceed a pace — proof that your efforts to support DtC advocates like Free the Grapes! and Wine Institute work.

 

What Do Wineries Need To Know About Shipping DtC When Oklahoma Opens?

Like every other state that permits DtC shipping of wine, there will be some restrictions that shippers must comply with.

For shipping DtC to Oklahoma residents, shippers will have to:

  • Be licensed as a wine producer by their home state and hold a federal Basic Permit for the production of wine issued by the TTB.
  • Hold a Direct Wine Shipper license issued by the Oklahoma Alcohol Beverage Laws Enforcement Commission (ABLE Commission).
    • The application form is now available from the ABLE Commission (find it here). Wineries will need to provide a copy of their home state wine production license, along with extensive information on their corporate structure; financing sources (if applicable); and individual personal history for partners, corporate officers, directors, stockholders, LLC officers, trustees, and other individuals involved in the winery. This could be a lengthy application process so wineries looking to start shipping wine DtC to Oklahoma residents right away on October 1 should begin soon.
    • The Direct Wine Shipper license costs $300, and must be renewed annually for a cost of $150.
  • Not ship more than 6 9-liter cases of wine to any one person in Oklahoma per year.
  • Ship wine only in packages clearly labeled with the words, “CONTAINS ALCOHOL: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED FOR DELIVERY.”
  • Use only delivery services that will obtain the signature of a person aged 21 or older at the time of delivery.
  • File an annual report with the ABLE Commission detailing (in a manner to be determined by the ABLE Commission at a later date — we will provide details when we know them) the total amount of wine they shipped into Oklahoma in the previous year.
  • Collect and remit both excise and sales tax on all their DtC sales to Oklahoma residents. These taxes must be calculated as if the sale occurred in the state (meaning both state and local sales taxes will apply). These taxes must be remitted to the state annually.
    • Oklahoma imposes an excise tax on wine of $0.72 per gallon.
    • Oklahoma has a state sales/use tax rate of 4.5%, with additional local rates ranging from 0-7%.
  • Maintain records of their DtC shipments to Oklahoma, in case of an audit from the ABLE Commission.

ShipCompliant by Sovos will be updating its system in time for the October 1 date. Current users can expect these updates to appear in the system in the weeks leading up to the effective date. However, shipments of wine to Oklahoma will not be cleared for compliance until October 1. ShipCompliant users will thereafter be able to track their DtC wine shipments to Oklahoma, check them for compliance, lookup address-specific tax rates, and receive populated tax and shipping returns as required by the ABLE Commission.

 

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

The post Oklahoma to Open for DtC Wine Sales Sooner Than Later – Permit Now Available appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Pennsylvania Clarifies Age Verification Rules for DtC Shippers

Wed, 07/25/2018 - 16:45

The Pennsylvania Liquor Control Board (PLCB) recently published a supplementary advisory notice, clarifying age verification requirements that Direct Wine Shipper (DWS) licensees must fulfill as a condition of their license.

According to the notice, DWS licensees must meet two requirements regarding verifying the ages of their Pennsylvania customers:

  • Use only delivery services that will verify the age of the package recipient at the point of delivery and will refuse to deliver to anyone under the age of 21. This requirement is effective immediately.
  • Establish an “age gate” on their website that requires everyone visiting the site to affirm that they are 21 years of age or older. The PLCB recommends this gate is in place when a visitor seeks to initially access the site, but will permit the age gate to be in place at checkout. Further, the PLCB requires DWS licensees to have all Pennsylvania purchasers ordering by phone to affirm their age and identities when making an order. DWS licensees must meet this requirement by January 1, 2019.

These requirements replace earlier statements by the PLCB that it would have required DWS licensees to use online age verification services by January 1, 2019. That process can be complicated and expensive, so these new, easier-to-meet requirements are welcome news.

Indeed, both requirements are already standard in the direct-to-consumer wine market.

Both FedEx and UPS have protocols in place that require that delivery of wine can only be made to someone who is present at the time of delivery, who will sign for the package, and who will present identification verifying they are of legal age to possess alcohol.

The PLCB notice also addresses reporting requirements for DWS license holders, and a prohibition on DWS licensees selling any wines that they do not produce. However, this supplement does not change the PLCB’s previous statements on these issues. You can read about the reporting requirements here.

The PLCB notice does restate that the PLCB will evaluate how well any DWS licensee is complying with all their requirements when renewing those licenses. As such, all DWS licensees should pay close attention to what the PLCB is requiring. If you are concerned about your own compliance needs, contact ShipCompliant by Sovos today to see how we can help you.

 

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

The post Pennsylvania Clarifies Age Verification Rules for DtC Shippers appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | WSWA announces its position on marijuana, tasting room sales support sales in wine stores, and hybrid grapes are a growing trend

Mon, 07/23/2018 - 16:01

Summer is now in full swing and things are getting quite hot! So why not cool down a bit with the BevAlc Roundup? This week we look at an interesting recent First Amendment case out of Missouri and what its impact on other challenges to beverage alcohol regulations could be, Tom Wark cautions wineries to be careful around offers that sound a bit too good, we get an early preview of what’s looking to be a banner California harvest, and some recent discoveries show that rum may have had its start in the East Indies before moving to the West.

Stay up to date with the latest trends in the DtC wine market with the Sovos/Wines & Vines 2018 DtC Report. Make sure to download your copy here!

 

LegislativeUpdate

TTB Newsletter | Top stories include new CMBTRA guidances for transfers between breweries and Permits Online will be closed July 26-30. TTB

A New Virginia License Signal Potential Advancement for Online Beer Sales | Virginia’s new Internet Beer Retailer license opens up the chance for retailers without store fronts to sell to customers in the state. ShipCompliant by Sovos

Federal Court Rules Against State Liquor Statutes And Regulations Without A 21st Amendment Analysis | In a potentially groundbreaking case a federal district overturned a state’s regulations and statute that restricted alcohol advertising practices. Irish Liquor Lawyer

Whiskey Summit Planned In Hopes Of Defusing Trade Conflicts | Concerned that global trade disputes could escalate – with Kentucky bourbon makers caught in the crosshairs – the industry has invited whiskey associations from across the world to discuss ways to defuse the conflicts. Washington Times

Why Wine And Spirits Wholesalers Are Speaking Out About Marijuana Legalization | The links between alcoholic beverages and marijuana are not new, with wine publications writing about cannabis sommeliers, experts offering suggestions for weed and wine pairings, and some wineries even producing legal “weed wine,” a product that infuses marijuana into alcohol-free wine. Forbes

TTB Labeling (A Brief History) | The TTB has struggled over the years to provide consumers with useful information while balancing the needs of beverage producers. Spirited

IndustryUp

Scams and Frauds In the Wine Business — Be Watchful | Scams that are much more difficult to get to the bottom of are those are undertaken by a real person you are working with; a person who appears to have the knowledge and contacts and ideas that represent them well and will help you and your business. Fermentation

Early Reports Put 2018 Harvest At Above Average | California wine industry maintains an optimistic view, larger wineries sitting on full inventories. Wines and Vines

Do Tasting Rooms Steal Sales from the Wholesaler? | If you and your wholesaler have an enlightened view, you will view each as integral to success and in that reasoned world where we all get along, you will want to offer some wines that are in distribution. SVB on Wine

How Do Wineries Beat The Amazon Effect — Customer Centric Shipping | For too long fulfillment has been seen as an operational cost versus a marketing activity. Medium

Oregon Wineries Step Up, Outside Players Move In | Mergers and acquisitions, plus explosive growth of brands, transform the state’s industry. Wines and Vines

JustFun

In Wine and Critics, Populists Find an Easy Target | Studies keep drawing the conclusion that people like cheap wines best and should not trust experts. But the findings say more about fears than tastes. New York Times

Forget the Caribbean: Was Rum Invented In India? | Newly discovered evidence suggest that rum production predates the Caribbean by at least 1,000 years and may have actually started in South East Asia. The Daily Beast

The Emergence of Non-Vinifera Wines | A pioneering group of American winemakers are demonstrating the potential of hybrids. SevenFifty Daily

What Is Carbonic Maceration, and Why Does It Taste So Damn Fun? | This fermentation technique makes zippy, juicy wines that we can’t stop drinking. Bon Appetit

 

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 | WSWA announces its position on marijuana, tasting room sales support sales in wine stores, and hybrid grapes are a growing trend appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Sovos Announces Resource to Track Direct-to-Consumer Wine Shipping Rules

Mon, 07/16/2018 - 16:17

Sovos is excited to announce the launch of our new ShipCompliant Direct-to-Consumer (DtC) Wine Shipping Rules resource center. Wineries can use this tool to track the compliance obligations they have in any state where they currently sell their products. They can also review the requirements in any new state they hope to enter.

The DtC market has seen tremendous growth in the last ten years, topping $2.6 billion in sales in 2017, as was reported in the annual Direct-to-Consumer Wine Shipping Report. This growth seems poised to continue as states, wineries, and consumers embrace this channel. For example, Pennsylvania legalized DtC wine shipping only in 2016, but it has already catapulted into the top 10 destinations for shipments.

Despite this surge, DtC wine shipping is still not accepted in every state. A handful states do not permit it outright, while a few others take the middle road and only allow DtC shipping only when consumers have made their purchases while on-site at a winery’s tasting room.

These varying – and often complex – rules create a complicated landscape for wineries looking to sell through the DtC channel. The goal of the ShipCompliant DtC Wine Shipping Rules resource center is to enable wineries to ship wine direct-to-consumer with the confidence they are in compliance by arming them with the right information and resources.

The DtC Wine Shipping Rules page allows users to select states using an interactive map. Each state page offers an authoritative look at what wineries can expect when they sell wine DtC to those areas, for instance, which licenses they will need to apply for, which taxes they will need to charge, and any restrictions on the products that can be shipped DtC.

 

About ShipCompliant by Sovos

Sovos offers a nimble software solution tailored to the unique compliance obligations faced by beverage alcohol businesses. As part of the Sovos suite of solutions, ShipCompliant users have access to constantly updated, accurate regulatory information for each of the jurisdictions in which they have compliance obligations.

Sovos’ ShipCompliant platform is the leading compliance and technology platform, automating registrations, tax calculations and reporting in the heavily regulated beverage alcohol industry. With ShipCompliant by Sovos, wineries, breweries, distilleries and other beverage alcohol companies can stay ahead of the latest regulatory changes impacting their business models. Learn more at http://sovos.com/shipcompliant.

The post Sovos Announces Resource to Track Direct-to-Consumer Wine Shipping Rules appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

State Spotlight: A New Virginia License Signals Potential Advancement for Online Beer Sales

Thu, 07/12/2018 - 11:14

July 1, 2018 was a rather busy day for alcohol beverage regulations in the state of Virginia. Over a dozen different provisions were set to come into effect for the second half of 2018. Of these new and amended rules, several affect beer, wine, and spirits suppliers directly, such as:

  • An increase in the initial fee for an application from $65 to $195; along with an increase in the annual fee for Direct Wine and Beer Shippers from $95 to $230.
  • A requirement that all beer and wine being delivered to instate retailers for sale to consumers must now first come to rest at a Virginia wholesaler’s location for no less than four hours.
  • A new limit on breweries selling beer for on-premises consumption; going forward, no less than 20% of such sales in a year must come from beer produced on the licensed premises. (This rule doesn’t come into effect until January 1, 2019.)

Among these bills, one really stood out for its relative novelty, though it remains to be seen how much impact the rule change will really have. This new law was Senate Bill 695, which creates a new type of license for Virginia, an Internet Beer Retailer. Under the rules of SB 695 (now entered as Section 4.1-208(10) of the Virginia Code), licensed Internet Beer Retailers may now ship beer products directly to Virginia consumers.

This begs the question, though: What is an Internet Beer Retailer?

Thankfully, SB 695 included a new definition for this licensee, which is someone who maintains a place of business (1) that has adequate storage space, (2) where they can receive orders and payment by internet or phone, and (3) that is “not a retail store open to the public.” Essentially, this is only available to people who operate warehouses from which beer can be shipped from, which are not otherwise open to the general public.

 

What Makes the Internet Beer Retailer License Different?

It might help to have a little background to understand the novelty of this license. Despite the great strides that have created the modern eCommerce world, the realm of direct to consumer (DtC) sales of alcohol is still rather limited by regulatory restrictions. (For context, by “DtC” we mean when a customer is able to directly order alcohol for personal use from a seller, either while on the seller’s premises or remotely, which the seller is permitted to have delivered to the customer’s residence or place of business by a common carrier.)

Currently, six states outright prohibit or severely restrict DtC sales (Alabama, Delaware, Kentucky, Oklahoma, Mississippi, and Utah; though Oklahoma will open up in October 2018). Of the remaining states, most only permit wine manufacturers to ship wine. Ten states will license retailers, both in-state and out-of-state, to make DtC orders to their customers, though mostly only for wine. Only seven states (and D.C.) permit DtC sales of beer, and only three of those permit DtC sales of spirits (Nebraska, North Dakota, and New Hampshire — Kentucky enacted its own attempt to expand DtC sales of spirits earlier this year, but its effect is, as yet, limited).

Virginia is already ahead of most other states in that it permits both retailers and breweries to engage in the DtC market. The Internet Beer Retailer license takes this a step further to enable businesses that are essentially only operating in the eCommerce market.

Now, this type of license is not without precedent. The Internet Beer Retail license follows closely in the steps of an existing Virginia license, the Internet Wine Retail license, which has been available for nearly a decade. And Virginia is not alone in having such licenses (it is still a lonely crowd of states). The California Type 85 “Limited Off-Site Wine Retail” license grants essentially the same permissions, though it only applies to sales of wine and is only available to businesses with a location in California.

Where the Internet Beer Retail license does seem to be forging new grounds, is in granting such permission to sales of beer. It also, helpfully, follows the Virginia Internet Wine Retail license by extending such permission to out-of-state entities, avoiding potential legal challenges under Granholm that the Type 85 license might be open to.

But extending permission to out-of-state entities does present an interesting question: how will they operate in their home state? Presumably, an Internet Beer Retailer operating from outside of Virginia would need some sort of license from their home state, something that would enable them to legally purchase alcohol from suppliers or wholesalers for resale without also requiring the holder to have a storefront open to the public — which is expressly forbidden by the rules of the Internet Beer Retailer license. Few states seem to have licenses that enable the holders to operate purely as remote retailers.

These limitations may inhibit the popularity of the Internet Beer Retailer license. Indeed, the Internet Wine Retail license may hint at a moderately tepid future market for the license: on the Virginia ABC’s license search tool, there are only around twenty active Internet Wine Retail licensees, all of them in-state (two out-of-state licenses are “pending”). This compares to over 1,100 active Wine Shipper licenses (the more standard DtC license available in Virginia).

Nevertheless, the Internet Beer Retail license is now available. It brings the potential for Virginia residents to purchase beer from more varied sources, and to seek out brands that may not be offered by their local brick-and-mortar beer retailers. Expanding the ability for consumers to engage in the wider alcohol market and have a greater availability of brands is a positive, which should make the entire industry stronger.

 

What to Know About Staying Compliant as an Internet Beer Retailer

Anyone looking to become licensed as an Internet Beer Retailer should be aware of the compliance requirements that this entails:

  • First and foremost, you must get licensed. The appropriate license, now available, is the Internet Beer Retailer, which costs $150 annually, plus the initial application fee of $195.
  • All applicants for Shipper permits must indicate at the time of application all brands that they intend to sell DtC — if the applicant does not own or have the rights to control the distribution of such brands, they must also file expressed written consent from the brand owner or other party who does control the distribution rights authorizing the applicant to sell those brands DtC.
  • Direct shippers may ship no more than 2 cases (288 ounces) of beer to an individual resident in Virginia per month.
  • Direct shippers must pay all applicable state taxes on their shipments to Virginia. These include both state and local sales taxes, as well as the state’s excise tax of $0.2565 per gallon. Accepting a sales tax obligation in Virginia is a requirement for getting licensed, even for out-of-state applicants.
  • Direct shippers must file a monthly report to the ABC summarizing each order made, including information on the recipient and purchaser, and the contents of the package shipped.
  • All packages containing alcohol must be labeled to indicate that they contain alcohol. Every delivery must be made to someone over the age of 21, who is available to sign for the package at the time of delivery. (It is important here to use qualified delivery partners who will ensure that this requirement is met.)

Each state has its own unique beer regulations. Make sure you know the rules everywhere you sell with our Brewer’s Guide to Compliance.

 

The post State Spotlight: A New Virginia License Signals Potential Advancement for Online Beer Sales appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Tariffs on whiskey come into effect, big beer loses market share, and why you should cheers the 4th with a glass of Madeira.

Mon, 07/09/2018 - 16:24

We all hope you enjoyed a fun and safe Fourth of July holiday last week! These hot summer days are typically a quieter time, but this week’s Roundup is rather busy, looking at the ill-effects a hotting up trade war will have on the beverage alcohol industry, why now is the best time to revamp your DtC wine sales programs, and, while major beer brands may be losing market share, American craft beer is increasingly capturing the rest of the world’s attention.

Stay up to date with the latest trends in the DtC wine market with the Sovos/Wines & Vines 2018 DtC Report. Make sure to download your copy here!

 

LegislativeUpdate

TTB Newsletter | Top stories include a renewed promise to launch Permits Online v. 5 later this month. TTB

Caught In Tariff War, U.S. Distillers Fear Losing Out On Global Whiskey Boom | Distillers fear that a long boom in U.S. whiskey exports could be coming to an end. NPR

Trade War Worries For Winemakers | Could wine be the next victim in the brewing trade war? wine-searcher.com

Missouri Law Banning Truthful Advertising On Alcohol Prices Is Found Unconstitutional | Last week, U.S. District Judge Douglas Harpool issued a ruling agreeing that the state’s longtime ban on truthful advertising of alcohol prices is unconstitutional. River Front Times

Son Of Granholm Inches Closer | In the years since Granholm, lower federal courts have wrestled with the question of whether or not the Commerce Clause’s non-discrimination principle is limited to state laws imposing different rules on in-state versus out-of-state producers and products. Alcohol Law Advisor

IndustryUp

People Aren’t Super Excited About Beer Right Now | And wine sales are catching up! Food and Wine

What’s Killing Big American Beer? | More Americans are putting down Buds and Coors, instead grabbing wine, liquor, Corona, and Michelob. CNN Money

Flexibility And Confidence Key For Advancing Women In Wine | Offering flexibility and encouragement, and supporting women-owned business were key to advancing women in the wine industry, the Women of the Vine & Spirits’ inaugural London symposium revealed. Harpers UK

Slow Season For Your DtC Wine Club? Not Really: Summer Is For Strategy | Just because things move more slowly in summer, that doesn’t mean this isn’t a critically important period for wine clubs. Wine Industry Network

Direct Wine Sales: It’s Time To Rethink Loyalty Programs | As an industry, winery teams have continued to focus on club membership conversion as the number one direct customer acquisition path and it’s time to rethink this sales strategy. DTC Wine Workshops

The World’s Wine Industry Is Adapting To Climate Change | Climate change and its effects have led winemakers to explore new areas for vineyards and wineries, including Oregon’s Van Duzzer Corridor. CNBC

JustFun

A Toast To The Founding Fathers Should Include Their Favorite Drink | “It always amazed me that Americans had no idea their Founding Fathers drank more Madeira than any other wine,” says Broadbent, founder of Broadbent Selections, based in Richmond. Washington Post

Here’s Why Wine Makers Are Ageing Their Bottles Under The Sea | The underwater conditions — total darkness and constant temperature — are thought to accelerate the ageing process, adding complexity to the wine. Hindustan Times

We Asked 9 Somms: Is Natural Wine Overrated? | Fewer chemicals, less intervention, more environmentally friendly — nebulously defined “natural wines” hit a lt of touchstones for modern drinkers, especially sommeliers. VinePair

Not Just For Vikings: Mead Is Making A Worldwide Comeback | Far from being just a drink from the past, mead is becoming a “drink of the future” in the premium alcoholic beverages category, according to a report by GlobalData. Beverage Daily

Starting A Spirit Brand Without A Distillery | A drinks lawyer discusses product development, legal compliance, and getting to the market. SevenFifty Daily

America’s Craft Beer Diplomacy | Even in an era of “America First,” our beer isn’t enjoyed just in our backyards. It is a tireless and affable diplomat, beloved abroad no matter the conditions back home. New York Times

 

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 | Tariffs on whiskey come into effect, big beer loses market share, and why you should cheers the 4th with a glass of Madeira. appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

New eCommerce Platform Joins ShipCompliant’s Certified Partner Program

Mon, 07/02/2018 - 14:30

Sovos is pleased to announce its newest certified partner, Commerce7, a leading eCommerce platform in the beverage alcohol industry. Commerce7’s integration with Sovos’ ShipCompliant platform will allow wineries to ship wine direct-to-consumer with the confidence they are in compliance in a new, customer centric platform.

Larry Cormier, General Manager of ShipCompliant by Sovos, said, “We are excited about Commerce7 joining our certified partner program, as their solution is rightly focused on how to not just assist the winery, but also the winery’s clients through a user-focused platform. With more focus on eCommerce and wine club sales across the industry, it is important for us to add partners that will help grow this channel in a compliant manner. We are thrilled to be offering real-time compliance checks and the most granular alcohol-specific tax rates for every state and local jurisdiction to Commerce7 and their client base.”

Complex state requirements create a challenging environment for both regulatory bodies and wine sellers, culminating in compliance checks, which Sovos’ ShipCompliant platform automates for wineries shipping direct-to-consumer. To help businesses remain in compliance, ShipCompliant by Sovos has an extensive library of constantly updated, “rooftop level” accurate alcohol tax rates that pull in state and local tax rates for each customer, and forms required by each state and local regulatory agency. ShipCompliant by Sovos’ real-time tax rates and compliance checks via certified, integrated partners allow these wineries to grow uninhibited by compliance obstacles.

Commerce7 founder Andrew Kamphuis said, “We are excited about our partnership with ShipCompliant by Sovos. The ability to offer real-time compliance and alcohol-specific tax rates through the ShipCompliant platform saves time and reduces risk for our clients.”

Commerce7’s integration with Sovos’ ShipCompliant platform will give clients the ability to build their online presences focused on the end consumer. ShipCompliant by Sovos’ accurate and constantly updated tax rates allow wineries to remain compliant while growing their direct-to-consumer and wine club sales.

 

See how Commerce7 integrates with ShipCompliant. Request a Demo today!

 

About Sovos
Sovos offers a nimble software solution tailored to the unique compliance obligations faced by beverage alcohol businesses – ShipCompliant. Sovos’ ShipCompliant platform is the leading compliance and technology platform, automating registrations, tax calculations and reporting in the heavily regulated beverage alcohol industry. With ShipCompliant by Sovos, wineries, breweries, distilleries and other beverage alcohol companies can stay ahead of the latest regulatory changes impacting their business models. Learn more at http://sovos.com/shipcompliant.

About Commerce7
Commerce7 is a customer centric commerce for the alcohol industry. It is an eCommerce, Wine Club, and Customer Relationship Management (CRM) platform for DtC wine sales. Learn more at https://commerce7.com/.

The post New eCommerce Platform Joins ShipCompliant’s Certified Partner Program appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | The impact of South Dakota v. Wayfair on DtC wine shipping, Pabst sues MillerCoors, and how to store wine bottles

Tue, 06/26/2018 - 10:39

It’s been a busy couple of weeks regarding regulatory issues, with both a major case coming from the Supreme Court that will impact all of eCommerce, and tariffs coming into effect against U.S. whiskey. On top of this, we also look at the fallout from the vote on Napa’s Measure C, a panel at the Vineyards Economics Symposium asks if it’s better to buy the whole vineyard or just the grapes, and Texas innovators look to bring regional-specific corn stock to whiskey producers.

Stay up to date with the latest trends in the DtC wine market with the Sovos/Wines & Vines 2018 DtC Report. Make sure to download your copy here!

 

ShipCompliant Events

Sovos’ Technology Partner Manager, Curry Wilson, will be speaking at two events at the end of June on compliance issues and how you can use technology to create best practices for your winery wine expanding your DtC footprints. Other industry experts will also be presenting, so there is sure to be much for everyone to learn.

If you’re in the region, please consider attending. For more information, click below:

June 27th: Santa Barbara at Bridlewood Estate Winery

June 28th: Paso Roblas at Paso Robles Inn

 

LegislativeUpdate

TTB Newsletter | Top stories include the 2018 Satisfaction Survey opening — here’s your chance to give the TTB feedback. TTB

Supreme Court Rules That States May Tax eCommerce: What Does This Mean For DtC Wine Sales? | In a highly anticipated decision, the U.S. Supreme Court ruled yesterday that states may require online sellers to collect and remit sales tax regardless of where the seller is based. ShipCompliant

American Whiskey Makers Face Dreaded Reality: Tariffs | American distilleries large and small have watched warily as the threat of tariffs from Europe ratcheted up in recent weeks. CBS News

Uncorking the Cap: Law Would Make It Easier For New Jersey Drinkers to Buy Wine | Coalition of wineries, consumers and retailers cheer plan to get rid of current cap on amount of wine that can be shipped but liquor store alliance opposes the change. NJ Spotlight

The Alcohol Industry Gathers In Hawaii To Figure Out How To Enforce the US “Highly Archaic Regulatory Scheme” | Hawaii, with its surreal landscape, is a very fitting meeting place for NCSLA because the United States system of alcohol regulation is also undergoing geologic change and facing its own elves versus orcs moments. Booze Rules Blog

Examining The Fallout From Napa’s Measure C | After a tough battle, Liza B. Zimmerman looks at why Napa Valley’s agricultural bill didn’t pass. Wine-searcher.com

IndustryUp

Should Wineries Acquire Vineyards Instead Of Buying Fruit On the Open Market? | Speakers address trends during Vineyard Economics Symposium; Jan Krupp speaks on the sales of Stagecoach. Wine Business

MillerCoors and Pabst Brewing’s Bitter Legal Battle Is Headed To Trial In November | The center of the dispute is a decades-old agreement under which Miller Coords brewers all of Pabst’s legacy beers, including Pabst Blue Ribbon. CNBC

Wine Distributors Not Protected By Fair Dealership Law | In an unusual certification from the U.S. Court of Appeals for the Seventh Circuit, the Wisconsin Supreme Court has ruled (4-3) that “dealerships” with wine distributors are not protected by the Wisconsin Fair Dealership Law. Wisconsin Bar

Women Represent Big Opportunity For Beer Industry | Beer companies haven’t effectively marketed to women, and they’re leaving a lot of opportunity for increased sales on the table, according to Bridget Brennan, CEO of Chicago-based consulting group the Female Factor. Brewbound

JustFun

Examining America’s Emerging Wine Regions |  From the midwest to the southwest, winemakers are experimenting in new terroirs. SevenFifty Daily

Field Of Dreams: Texas Project Seeks New Corn Strains For Whiskey | A master distiller and a crop scientist who specialities in corn breeding are working on a project they hope one day will help bring local identities to American whiskeys. Reuters

“It’s Hip To Love Hops!” | Five consumer trends in craft beer. Beverage Daily

Rethinking the Role Of Wine Festivals In The Age Of Yelp And Instagram | Whether we sell them much wine this time around or not, festivals are part of the marketing of our region, and that investment is a long-term play. Tablas Creek Blog

Storing Wine On Its Side Is Nonsense, Says Scientist | Storing wine on its side won’t prevent corks drying out, and may even accelerate their degeneration, according to Amorim’s director of R&D, Dr. Miguel Cabral. Drinks Business

 

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 | The impact of South Dakota v. Wayfair on DtC wine shipping, Pabst sues MillerCoors, and how to store wine bottles appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Supreme Court Rules That States May Tax eCommerce: What Does This Mean for DtC Wine Sales?

Fri, 06/22/2018 - 11:22

In a highly anticipated decision, the U.S. Supreme Court ruled yesterday that states may require online sellers to collect and remit sales tax regardless of where the seller is based. While the immediate case, South Dakota v. Wayfair, only validates a rule passed by South Dakota in 2017, it will certainly have a major impact on all of eCommerce moving forward.

This case has major implications for eCommerce, and there is a lot to unpack in the Court’s opinion. For a fuller review of the impacts of Wayfair, we will be posting more information on the main Sovos feed, which you can access here. But many wineries selling direct-to-consumer (DtC) are concerned with how this could impact them, which we want to quickly address here.

 

How will Wayfair affect wineries?

In the immediate future, Wayfair will not have an adverse effect on DtC wineries. The Court’s decision only relates to the specific South Dakota law, which states that any seller making more than $100,000 in revenue or more than 200 separate transactions in a year must begin collecting and remitting sales tax on their sales to South Dakota.

However, DtC wineries are already required to collect and remit sales tax on their DtC sales to the state as a condition of getting their DtC license in the state. Essentially, these wineries were ahead of the game when it came to remote sales tax collections; going forward, other online sellers will need to do what DtC wineries have been doing since the state opened to DtC sales in 2016.

We can expect that many other states will soon follow South Dakota and enact their own economic nexus tax laws (as opposed to the “physical presence” nexus rules, which the Court deemed invalid). But here again, DtC wineries are already required to collect sales tax in most states where they can make DtC sales into.

There are a few states where the Wayfair decision could have an impact, however. States such as Colorado, Minnesota, Florida, and Missouri currently do not require DtC wineries to collect sales tax on their DtC orders, and so wineries would be in the same boat as other eCommerce sellers in these states. None of these states has as of yet passed a law similar to South Dakota, but once they do (and again, we have every reason to expect that to happen), then wineries would be impacted just like everyone else.

The Wayfair decision is still very fresh, and its full impact won’t be revealed for many months. Even when other states pass their own economic nexus rules, we can expect further litigation to hammer out what are the appropriate thresholds. Plus, there is always the possibility that Congress could act and again introduce its own standards.

As we learn more about the aftermath of Wayfair and how it is impacting the DtC wine market, we will make sure to keep you informed. We encourage you to subscribe to this blog for future posts and look at our sister blogs from Sovos, which will provide more background and details.

 

Want to know more about Wayfair? Get all your questions answered, as Sovos regulatory experts Chuck Maniace and Alex Koral host a live Q&A on June 27. Register today.

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BevAlc Roundup | Tariffs affect the industry, TTB levies its heaviest fine ever, and are regulations hampering the adoption of new technology?

Mon, 06/11/2018 - 18:25

We held our annual Wine Summit event on May 31, at the Napa Valley Marriott. The Summit was once again a fabulous occasion, full of regulatory updates, looks at market trends, and tips and tricks to improve DtC and three-tier sales. If you missed it, or just want to refresh your memory, read our follow-up post.

For this week’s Roundup, we have a special section looking into some foreign trade issues, including the latest on how tariffs are harming the industry. We then look at how efforts to open Delaware up to DtC sales are progressing, global trends in the sale of beer, and why weird, archaic, and super-local wine varietals are poised for a resurgence.

Stay up to date with the latest trends in the DtC wine market with the Sovos/Wines & Vines 2018 DtC Report. Make sure to download your copy here!

ShipCompliant Events

Sovos’ Technology Partner Manager, Curry Wilson, will be speaking at two events at the end of June on compliance issues and how you can use technology to create best practices for your winery wine expanding your DtC footprints. Other industry experts will also be presenting, so there is sure to be much for everyone to learn.

If you’re in the region, please consider attending. For more information, click below:

Special Section: Trade and Exports News

Tariffs on Aluminum Are A Tax On Beer | This aluminum tariff will dramatically increase the manufacturing costs of American brewers and beer importers. Beer Institute

New Tariffs Risk Turning U.S. Whiskey Sour | An escalating international trade spat is driving up equipment costs and threatens to cut into profits from bottles exported to Europe, just as business is booming. Reuters

Trump Administration Seeks WTO Panel To Resolve Wine Dispute with Canada | The administration wants the WTO to set up a dispute panel to rule on its claim of Canada’s “discriminatory” practices in the province of British Columbia. CNBC

LegislativeUpdate

TTB Newsletter | Top stories include the release of the 2018 TTB Satisfaction Survey and an alternate procedure regarding the storage of tax-determined and non-tax-determined products. TTB

Retailers Fear Amazon Effect With Direct Wine Shipments | Wineries are major tourist attractions across the country. But vacationing Delawareans are in for a rude awakening if they decide to ship a case back home. Delaware Business Times

TTB Levies Largest Fine Ever | It’s been a big year already for federal agencies when it comes to dishing out fines — and a painful one for the recipients. Wine-searcher.com

Work To Open More States To DTC Wine Shipments Continues | State regulators zero in on illegal shipments. Wine Business

Why Can’t Native Americans Make Whiskey? | Outdated, paternalistic laws prevent tribes from taking part in the craft-spirits boom. The New York Times
IndustryUp

The Key Trend In The Global Beer Industry? “Drinking Less, But Drinking Better” | Beer drinkers are seeking quality or quantity, evidence by continued growth in premium, super-premium and craft categories. Beverage Daily

California Domestic Wine Revenue Successfully Endured A Decade Of Retail Flatness | It appears that California wine lost 3% of domestic market share to imports over the past decade, but in hard cash, its domestic wine revenue increased. Forbes

Growing DTC Wine Sales Locally and Digitally | An interview with Sandra Hess, Founder of DTC Wine Workshops Consulting Agency. Copper Peak Logistics

Secrets For Growing Direct-to-Consumer Wines Sales 2018 Videocast | On May 16, 2018, SVB’s Wine Division hosted a live videocast discussion of trends in direct-to-consumer wine sales based upon findings from a survey of more than 800 responses. SVB

JustFun

The Secret Trigger That Makes You Reach For Your Favorite Bottle Of Wine | As wine sales continue to climb in the U.S., vintners are incorporating augmented reality and other innovations in wine label design. CNBC

Why You Should Be Drinking Weird Wines | For years, the global wine industry had been devolving toward a monoculture, with local grape varieties ripped out in favor of more immediately profitable, mass-market types. The New York Times

The Slow Adoption of Technology In Wine Is Political | The single greatest deterrent to the wine industry becoming a full-fledged adopted of new economy tools isn’t a luddite’s aversion to the expanding digital toolbox. It is the anti-competitive, anti-consumer, and market-disabling state laws that champion barriers to trade. Fermentation

 

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 | Tariffs affect the industry, TTB levies its heaviest fine ever, and are regulations hampering the adoption of new technology? appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

ShipCompliant Wine Summit: Impressions and Lessons

Wed, 06/06/2018 - 18:38

ShipCompliant by Sovos hosted its annual users conference — rebranded as the ShipCompliant Wine Summit, a part of Sovos’ Global Compliance Series of events — last week at the Napa Valley Marriott. ShipCompliant users gathered for a day of training before hearing from officials and experts to learn about the regulatory and market forces that are shaping the industry.

The annual event, now in its 13th year, is always an exciting time for our team. We enjoy getting together with our clients and so many other wonderful people all working to make this market successful.

This year coincided with the release of our latest tool, which enables efficient, effective compliance with beverage alcohol regulations: Market Ready. As such, we took the opportunity in the conference to expand our focus beyond just the Direct-to-Consumer (DtC) market, to how wineries can better operate in the three-tier channel.

Of course, DtC was still a major topic at the Wine Summit; but, back in Napa after a two-year sojourn and rebrand, we wanted to underscore the gestalt nature of the wine market: from grapes to glass, there are any number of ways for wineries to succeed, but you have to look at the whole system itself to best understand how you can achieve that success.

For those of you who were able to attend, we again want to extend our deepest appreciation for you and your continued support. For those who unfortunately missed the event, we’ve summarized it below. (And be sure to keep an eye out on our blog for more in-depth summaries of some of the panels we hosted in the coming weeks.)

 

The Sovosian Model of Compliance

Pawel Smolarkiewicz, Chief Product Officer for Sovos, kicked off the event, speaking on how government regulation of businesses are changing and Sovos’s role in making compliance possible. With our global reach experience in all manners of facilitating business to government compliance reporting, Sovos is deeply enmeshed in the latest in overall business compliance needs, not just the unique challenges that the wine industry faces.

Pawel explained how the technology services that are helping businesses scale their compliance needs are a bit of a double-edged sword as it also enables government greater ability to scrutinize these records. Overall, his message was positive, though, seeing more opportunity for both governments and businesses to improve their processes with better technology to create a virtuous cycle of supporting each other’s development. As Pawel remarked, the wine industry is well positioned to handle this changing regulatory environment, as for the past decade they have been handling such compliance requirements. In effect, wineries have already adopted the new processes and tools that other businesses are only beginning to grapple with.

Larry Cormier, General Manager of ShipCompliant by Sovos, spoke next, narrowing Pawel’s message of global compliance to the beverage alcohol experience. He sought to demonstrate Sovos’ deep-seeded commitment to supporting the wine industry’s compliance needs. A reaffirmation of our pledge to provide top-rate performance and customer support, along with enabling our clients’ growth, will shape the immediate and long-term future of ShipCompliant by Sovos. Lexie Schaefer, Product Manager for ShipCompliant by Sovos, also spoke on these commitments detailing how exactly we will meet the challenge.

 

Updates on the Wine Market

The morning continued with a panel of our partners hosted by Andrew Adams, of Wines & Vines. Also speaking were Jennifer Goodrich of Wineshipping, Paul Thienes of eCellar, and Jerry van Sickle of FedEx. Pawel Smolarkiewicz also returned to the stage to provide the compliance perspective. They spoke on what the consumer experience looks like these days, and what wineries can do to make that experience successful for everyone.

As always, fulfilling customer needs is central to selling wine. But these days, creating a good overall experience for the customer is the key to fulfilling those needs. Customers no longer are satisfied with just a quality product, they want to feel like they’re catered to at every step from when they first think to buy a bottle of wine until they’re actually drinking it.

Good use of data and other technology services can enable wineries to meet these demands. Enabling customers to customize their own experience is also a great way to ensure they can have their unique needs met. Naturally, regulatory issues were discussed, with the overall message being technology can help here too; by enabling all of your systems to talk to each other, from sales to shipping to accounting, minimizing the stress that compliance can bring. Compliance is an inherent part of the wine industry (and in particular DtC sales); by facing regulatory challenges head on, you can ensure that it won’t drag down the rest of your business.

Larry Cormier then took back the stage, joined by Danny Brager of Nielsen, to talk about what the data are showing about wine sales. Though it’s not really news, Danny showed how important eCommerce has become to the entire U.S. retail market, with fast moving goods, like groceries and alcohol, being on the leading end of growth in eCommerce.

The boom in remote selling, along with greater consolidation in the distributor and retailer tiers, means that DtC must become an even greater part of every winery’s business models. And things are looking rather cheery for the DtC wine market; 2017 was another record year in sales, and every indication so far is that 2018 will be even bigger. Larry noted that it was not at all unlikely that we’ll surpass the $3 billion mark this year, up from $2.65 billion in 2017.

Meanwhile, in the broader wine market, there were a few points that Danny stressed. Notably certain things we thought may have just been fads — rosé and wine in cans — are turning into trends. These areas have been trending up so much and so sustainably, that we cannot think they’ll go away.

The ultimate message that Larry and Danny wanted to impart was the importance of using these data points. By understanding what your customers want, and by understanding how well you’re meeting those demands, you can make their experience better and more likely to repeat.

 

A Deeper Dive Into Compliance Issues

After lunch, we hosted breakout panels delving more deeply into certain issues affecting the wine industry. These were divided into two concurrent tracks looking at the DtC and three-tier markets, respectively.

Starting the afternoon were regulatory-focused sessions. Our Industry Outreach Advisor, Alex Koral, hosted a panel on staying compliant within the increasingly-scrutinized DtC market. He was joined by Matt Botting, Chief Counsel for the California Alcohol Beverage Commission, Alex Heckathorn of Compliance Service of America, and Carole Peterson from Wente Vineyards.

They discussed some of the leading compliance issues in the DtC market, such as the importance of conducting age verifications, dealing with trade practice restrictions on wineries advertising their products, and how the taxman may actually be the biggest risk for enforcement action. The main message, speaking of enforcement actions, was how important it is to have an active compliance support team and to respond to any state communications you may receive. The point is one we note often: complacence is not compliance.

The following panel looked more at how wineries can improve their online markets in order to generate more DtC sales. This panel was hosted by our Technology Partner Manager, Curry Wilson, who spoke with Andrea Gonzalez of Treasury Wine Estates, Sandra Hess of DTC Wine Workshops, and Jason Moore from Modus Operandi Cellars.

They explained how necessary it is for wineries to utilize all available digital marketing solutions, such as augmented reality, video tours of the winery, personal email campaigns, and social media analytics. When you’re trying to stand out in a crowded marketplace, it’s necessary to engage your audience with a compelling story of why you’re different. By extending your tasting room into a digital marketplace, you can get ahead of the game.

At the same time, two other panels looked at regulatory and market issues affecting wineries’ three-tier sales. First off, our Regulatory Counsel, Lauren Whitney, hosted Jillyan Ramos of Delicato Family Vineyards and Sara Schorske from Compliance Service of America, in a discussion of how regulatory conditions affect how wineries get their products into new markets. By understanding and getting ahead of complex licensing and registration processes, wineries can ensure their products get onto store shelves faster and more efficiently, and avoid unnecessary delays to their distribution plans.

This panel was followed by a more market-focused discussion on how wineries can expand their three-tier footprints, hosted by our Client Success Advisor, Liz Yount. She spoke with John Hinman from Hinman & Carmichael, David Von Stroh from Zepponi & Company, and Gordon Waggoner form Acumen Wine. They discussed best practices for wineries to manage their sales in the three-tier channel, including how to engage with distributors and strategies for identifying future markets. A notable lesson from this panel was how having a successful DtC sales line can positively influence a winery’s three-tier sales by providing clear proof that that winery’s products are already selling well.

 

State of the Wine Industry

It wouldn’t have been the ShipCompliant Wine Summit without an annual regulatory update from the inimitable Steve Gross, Vice President, State Relations for Wine Institute. He presented on what states have been up to in 2017 and 2018 regarding regulating DtC wine sales.

The overall theme of Steve’s presentation focused on the surge in enforcement actions that states have been taking within the DtC market. 2017 saw the most enforcement notices ever, with many unlicensed and improper entities being told they cannot continue making DtC sales. This has had knock-on effects for legitimate DtC sellers, especially as many states are also pressuring common carriers to better prevent illegal DtC sales from happening. Steve predicted that more states will add rules requiring reports from common carriers and fulfillment centers to better track DtC sales, following Illinois’s lead.

Steve previewed the next state slated to open to DtC wine sales, Oklahoma, whose DtC law will become effective October 1, 2018. Wine Institute worked hard since the law was first passed in 2016 to correct several regulations that would have severely hampered the DtC market in the state. Currently, Oklahoma seems set to become a DtC state more or less like any other (we will be writing a thorough preview post as the effective date nears, going over all the regulations that wineries should be aware of when entering Oklahoma).

This was in contrast to Kentucky, which passed an interesting DtC bill earlier this year. There are many unresolved questions and unfortunate restrictions, which seem to make the law largely unworkable for wineries. While Steve was optimistic that some of these issues could be worked out in a positive manner, he urged wineries to be cautious when it comes to DtC sales in Kentucky and not to enter that market until things have been worked out.

Steve also discussed other DtC bills, which failed to pass through their respective states’ legislatures this year. These included bills to open up Mississippi and Alabama (though it was notable how far these bills did go this year), and bills to add proper licensing and tax rules for DtC sales in Alaska and Minnesota (in these states, then, the status quo prevails). But a bill to open up Delaware, and one to remove the production cap for wineries selling DtC to New Jersey, are still alive, which Steve mentioned with a note of cautious optimism.

In all, the changes that we see happening with the regulation of DtC sales largely mirrors those highlighted by Pawel at the beginning of the day, with technology becoming ever more central to how governments can regulate businesses. But this should be seen in a positive light, as technology also makes it easier for business to comply with those regulations. By bridging the gaps between government and business and automating compliance needs, technology can smooth those barriers that could so often be a roadblock to a business’s growth.

We again want to thank all the fantastic panelists who participated this year, and all of you wonderful clients, friends, and partners who attended. We’re already looking forward to next year’s event, and hope you will be there!

 

Find out how ShipCompliant by Sovos newest tool, Market Ready, can help your business stay on top of compliance in every state by signing up for a free demo.

The post ShipCompliant Wine Summit: Impressions and Lessons appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Sovos Announces Solution to Automate Beverage Alcohol Compliance for Brand Label Registrations

Thu, 05/31/2018 - 10:00
Market Ready enables suppliers to get products to market more efficiently across different states.

 

May 31, 2018, Napa, Calif. [Sovos GCS ShipCompliant Wine Summit] — Today, at its annual ShipCompliant Wine Summit, Sovos announced the release of Market Ready, a solution that automates compliance tasks and enables beverage alcohol suppliers to get products to market more efficiently.

Market Ready, available immediately, is an accurate and flexible tool for completing the various brand label registration requirements in different states.  With Market Ready, users select which products to register in which states, and the solution instantly populates forms and cover letters, pulls COLAs from the TTB database and collates the documents into one complete package.

The new solution:

  • Simplifies complex state-specific processes by providing a single, consistent workflow
  • Saves time by generating cover letters, auto-populating state forms, attaching required documents and providing a clear view of what is approved and ready to sell
  • Reduces rejections and back-and-forth with regulators by ensuring all necessary components are included before brand label registrations are submitted
  • Features requirements and forms maintained by Sovos, so suppliers no longer need to spend time and energy looking up individual state requirements

“With product registration processes and regulations varying so widely among states, suppliers can get bogged down in trying to stay compliant through manual processes,” said Larry Cormier, General Manager of ShipCompliant by Sovos. “When suppliers use Market Ready to automate compliance processes, they can keep up with massive workloads and drastically reduce the time required to stay in compliance. As a result, suppliers are better able to serve their customers by getting products to market on time.”

About Sovos

Sovos is a global leader in tax compliance and business-to-government reporting software, safeguarding businesses from the burden and risk of compliance around the world. As governments go digital, businesses face increased risk and complexity. The Sovos Intelligent Compliance Cloud combines world-class regulatory analysis with a global cloud software platform to create an adaptable, connected and global compliance solution that keeps businesses ahead of the ever-changing regulatory environment. Sovos supports 4,500 companies, including half of the Fortune 500, and integrates with a wide variety of business applications. Based in Boston, Sovos has offices throughout North America, Latin America and Europe. For more information visit www.sovos.com and follow us on LinkedIn and Twitter.

The post Sovos Announces Solution to Automate Beverage Alcohol Compliance for Brand Label Registrations appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | TTB provides excise tax reporting fixes for wineries, our review of this year’s Craft Brewers Conference, and how to succeed with canned wine

Tue, 05/29/2018 - 05:15

This is it! It’s the week of the annual GCS: Wine Summit! If you’re going to be in the Napa area on May 31, time’s almost up to register! If you can’t make it, rest assured that we’ll be writing extensively about all the great insights and stories that came up in the panels, which will show up soon on the Roundup.

For this week’s Roundup, the TTB has published important information for beverage alcohol producers around the use of hemp in their products along with a new circular on fixes to the Craft Beverage Modernization and Tax Reform Act for wineries storing their untaxpaid wine off of their premises. We then have the U.S. taking action against Canada in the WTO, new menu labeling rules that affect the bev alc industry, Silicon Valley Bank recently held a videocast with amazing insights into the DtC wine market, and why hybrid craft breweries and distilleries are more and more common.

Stay up to date with the latest trends in the DtC wine market with the ShipCompliant/Wines & Vines 2018 DtC Report. Make sure to download your copy here!

 

ShipCompliant Events

GCS: Wine Summit, our annual wine industry conference is happening this week! This year, we’ll be hosting the event at the Napa Valley Marriott on May 31, with panels on the state of DtC wine sales and how to expand your three-tier distribution footprint. Sign up here!

GCS: Wine Summit: Speakers, Sessions, and Keynotes | A preview of what you can anticipate at the upcoming GCS: Wine Summit. Register today!

LegislativeUpdate

TTB Newsletter | Top stories include a new FAQ regarding TTB’s policy around use of hemp and updated FAQs related to fixes to the CBMTRA for wineries. TTB

IMPORTANT: TTB Industry Circular: 2018-1A | Alternate procedure for a wine producer to tax determine and tax pay wine of its production that is stored untaxpaid at a Bonded Wine Cellar. TTB

Wine Institute Commends U.S. Government’s Efforts To Improve Market Access In Canada | Wine Institute applauds today’s announcement that the U.S. government has required a formal World Trade Organization dispute settlement panel against Canada to ensure that U.S. wines have equal access to British Columbia grocery stores shelves. Wine Institute

How New FDA Menu Labeling Rules May Affect Beverage Alcohol Suppliers | Starting May 7, 2018, certain restaurants and similar food service providers need to comply with new menu labeling requirements designed to provide nutritional information to customers. ShipCompliant

Direct Shipping Shenanigans, Delaware Edition | HB 165 could open Delaware up to DtC sales, that is, unless a clause prohibiting DtC sales of wines already sold by retailers in the state doesn’t stymie things. Tablas Creek Blog

Lessons From The New Hampshire Wine Shipping Debacle | A few interesting things came out in the course of all the flurry and action over the Commission’s attempt to end retailer shipping. NAWR

IndustryUp

Opportunities and Challenges Stand Out At This Year’s Craft Brewers Conference | Nearly 15,000 brewers, their suppliers, and other industry members got together amid honky tonks and BBQ joints to talk beer and learn more about what challenges the craft beer industry face. ShipCompliant

Secrets For Growing Direct-to-Consumer Wines Sales 2018 Videocast | On May 16, 2018, SVB’s Wine Division hosted a live videocast discussion of trends in direct-to-consumer wine sales based upon findings from a survey of more than 800 responses. SVB

Can Do Attitude: Avoiding Pitfalls With Canned Wine | Winemakers discuss tips and best practices for packaging wine in the new format.

Grape And Wine Council Gets Expanded Mission | New name reflects addition of craft beverages. Traverse City Record Eagle

JustFun

The Millennial Wine Smell Test: Do Grapes Matter | Young drinkers may not care what varieties are in their beverage. Wine Spectator

The Rise of Brewery-Distillery Hybrids | As craft distilling continues to surge, some breweries are looking to spirits to boost their bottom line. SevenFifty Daily

The World’s Most Wanted Napa Wines | Think you know Napa’s most sought-after wines? Actually, you probably do. Wine-searcher.com

Is It Whisky Or Whiskey And Why It Matters | There are any number of theories to explain the alternative spelling of whiskies. The reality, however, is far more complex. Forbes

 

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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State Spotlight: DtC Sellers Face Unique Challenges in Louisiana

Thu, 05/24/2018 - 20:42

When most people think of Louisiana and alcohol, they likely get visions of a Mardi Gras parade down Bourbon Street. Being steeped in the world of alcohol compliance, however, our thoughts tend more towards what are the unique regulations that affect beverage alcohol suppliers looking to sell there. And Louisiana has some pretty unique rules.

Actually, when it comes to standard three-tier distributions and sales (supplier sells to distributor sells to retailers sell to consumers), Louisiana is mostly normal. Sure there are somethings about the Pelican State that stand out — such as the famous/notorious open container laws that make those Mardi Gras parades so notable, or a bill proposed earlier this year that would have allowed people under 21 to purchase alcohol in certain situations (it was defeated in the legislature) — but for the most part, the rules regarding licensing, product registration, taxes, and trade practice restrictions are in line with most other states’ rules.

Where Louisiana gets unique — and complex — is in its regulations of direct-to-consumer (DtC) sales of wine, where a Louisiana resident makes an order that is then delivered by the seller to the resident through a common carrier. Since this is a tricky subject, we figured it would make sense to outline what are the rules, restrictions, and compliance issues that can trip up DtC sellers in Louisiana.

 

Selling DtC in Louisiana: Who, What, and How

The Who: Louisiana, like most other states, only permits the DtC sale of wine. Unlike most other states, however, Louisiana also permits out-of-state retailers to make DtC sales, not just wine producers. (Currently, only 13 states grant out-of-state retailers DtC permission).

In order to become a DtC seller, the winery or retailer must get two separate permits from the state. First, they must apply to the Louisiana Department of Revenue (DOR) for an Authority to Make Direct Shipment of Wine to Louisiana Residents (Authority). The Authority costs $150 ($1000 for retailers), and must be renewed annually by June 30th.

With the Authority in hand, the winery or retailer can then apply to the Alcohol and Tobacco Commission (ATC) for a Direct Wine Shipper Permit (DWSP). This permit costs an additional $250 ($1000 for retailers), and must be renewed annually by December 31st.

While it’s near universal for a state to require DtC sellers to register with the local DOR in order to pay taxes, Louisiana is fairly unique in turning that process into a whole separate license specifically for DtC sellers. This is the result of a 2016 rule change, in which the state determined to give the ATC greater authority over DtC sellers by granting it licensing power, but also decided to not have this new permit replace the previous DOR permit.

Anyone looking to enter the Louisiana DtC market should be aware of these required licenses.

The What: Like many other states, Louisiana requires wineries to register the brand labels of wines being sold into the state (each unique COLA attached to products that will be sold must be registered). However, under Louisiana’s DtC rules, how the brand label is registered can affect how it can be sold.

The rule is that a wine producer may not sell any wines DtC that it has already assigned for distribution through a Louisiana wholesaler. This means that wine producers must make a decision for each and every separate brand label they want to sell in Louisiana whether to do so through the state’s three-tier system or by DtC.

There is an added risk, then, for wineries who sell a lot of mixed packs of wines DtC: they must ensure that, when it comes to selling into Louisiana, each brand label in the mixed pack is not already being distributed through wholesalers in the state.

Notably, this rule does not apply to out-of-state retailers selling DtC, nor to any wines sold onsite by a wine producer (i.e. at the winery’s tasting room for delivery back to Louisiana).

For phone or internet orders, or wine club packages, this rule is very much in effect and wineries must be aware of the limit so they do not inadvertently sell a wine DtC that is also being distributed wholesale in Louisiana. This rule is mostly unique to Louisiana (Indiana prohibits DtC sellers from having any concurrent relationship with an Indiana wholesaler, and Wyoming bans the DtC sale of any wine listed with the state’s control board), and can easily catch up a wine producer with a cavalier attitude towards compliance.

The How: Once a winery or retailer is set up to begin making DtC sales to Louisiana residents (that is, they’re licensed and their wine labels have been properly registered with the state), there are further rules to follow. These rules, though, should be more familiar to wineries selling DtC in other states.

There is an annual volume limit on how much a DtC seller can ship to Louisiana residents. As written, the limit is 12 cases of 750 mL bottles per adult person per household per year. While these volume limits are fairly common, the way Louisiana structured this provision can be confusing. In practice this comes down to there being a limit of 108 liters (i.e. 12 cases of 750 mL bottles) that an individual can receive in a calendar year. Despite the “per household” phrase, each person in a household can separately purchase an amount of wine up to the annual 108 liter limit.

When making the delivery, DtC sellers must ensure they use only licensed transporters (both UPS and FedEx are properly certified by the state) who will ensure that someone over 21 years of age personally receives any package containing alcohol and presents an ID proving they are of age.

Any package containing alcohol must also be labeled to state that it contains alcohol and that someone over the age of 21 must receive it. In 2017, Louisiana changed a DtC provision to no longer require the package label to list the DtC seller’s license numbers. The DtC seller’s license numbers must still appear on the invoice included in the package, but it does not need to appear on the exterior of the package.

DtC sellers must also follow up with their DtC sales by monthly remitting both excise and sales taxes. With their excise tax filing (on the R-5696-L form), the DtC seller must include a detailed summary of each DtC order in the previous month, including the amount shipped, the brands included in each shipment, and the sizes of bottles shipped.

In addition, DtC sellers are required as a condition of their licenses to collect and remit state sales and use tax for all of their sales in Louisiana. DtC sellers with nexus in Louisiana (that is, if they have “physical presence” in the state, such as owning property or having Louisiana-based employees) will also need to collect local sales tax. (Louisiana can be a difficult state for sales tax — read this piece from ShipCompliant’s sister service, Taxify, on generally applicable sales tax regulations in Louisiana).

As in pretty much every other state that allows DtC sales, there are a number of hurdles that Louisiana requires DtC sellers to follow. Many of these are fairly standard — such as paying taxes and getting licensed. But Louisiana does also present some unique challenges, mostly when it comes to which products a wine producer can actually sell DtC.

Understanding the state’s rules can be tricky enough; having to actually comply with them can make the prospect of making DtC sales there extra daunting. If you’re facing this challenge, ask us how ShipCompliant by Sovos can help you succeed in the DtC market by staying compliant.

 

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

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How New FDA Menu Labeling Rules May Affect Beverage Alcohol Suppliers

Mon, 05/21/2018 - 17:25

Starting May 7, 2018, certain restaurants and similar food service providers need to comply with new menu labeling requirements designed to provide nutritional information to customers.

These requirements first came up as part of the 2010 Affordable Care Act, which included measures focused on improving Americans’ overall health, not just access to insurance. But implementation has been repeatedly delayed, providing time for the Food and Drug Administration (FDA) to develop the regulatory framework and for industry members to prepare and offer their own comments.

Under these regulations, restaurants and similar retail food establishments that are part of a chain with 20 or more locations will need to display calorie information on their menus and also be able to provide an array of nutritional information to customers upon request. These rules will apply regardless of the chain’s ownership structure, as long as the locations all operate under the same trade name. Affected food establishments include obvious locations, like chain restaurants and fast food services, but also places like coffee shops, entertainment parks that serve food, and grocery stores.

 

What Does This Mean for Beverage Alcohol Suppliers?

These regulations are unlikely to have a direct impact on most members of the beverage alcohol supplier tier. Only actual restaurant-style facilities are required to comply with these rules, and then only if they are part of a chain with 20 or more active locations.

However, suppliers should be aware of what these menu requirements are, as this offers suppliers with the opportunity to better direct the nutritional information that will be provided. As described below, restaurants can use generic tables as their source for nutritional information.

This could unfairly bias the customer when they see no difference in nutritional content between, say, a low-sugar pinot grigio and a generic “wine.” Suppliers, then, are encouraged to control their own messaging, by providing their own, more favorable nutritional contents, rather than relying on the restaurant to plug
in any old numbers.

 

What Information Needs to be Available?

Nutritional data will need to be provided in two forms: first, the caloric content of all standard food items (i.e. food that is listed on menus for 60 or more days per year) must be clearly displayed; in addition, a full suite of nutritional information for these standard foods must be made available if a customer asks for it. These food items do include beverages.

This fuller suite must include data on such things as the total fat, trans fat, sodium, cholesterol, fiber, sugar, and protein contents of the food items.

However, as provided in the regulations, standard food items that contain an insignificant amount of 6 or more of these nutrients can use a simplified format to display the nutritional content. The simplified format must at least provide a list or table of the item’s 1) total calories, 2) total fat, 3) total carbohydrates, 4) protein, 5) sugars, and 6) calories from fat, along with any of the otherwise required nutrients that are present in more than insignificant amounts.

For beverage alcohol products, which were cited by the FDA as the paramount example of a food stuff where a simplified format is permitted, the list can be pared back even further. This may vary among products, but, for instance, wine products can get away just listing 1) calories, 2) carbohydrates, 3) sugar, and 4) sodium. Any such reduced list, though, must also be accompanied by a statement such as, “Not a significant source of Total Fat, Calories from Fat, Trans Fat, Cholesterol, Dietary Fiber, or Protein,” depending on which items were left off.

 

How do I Determine the Nutrient Content?

Under the regulations, a restaurant must have a “reasonable basis” for the nutritional information it provides, which is admittedly a pretty loose standard. In effect, this means that, when pressed, the restaurant must be able to show that it can justify arriving at those nutritional data, that they are not made up from whole cloth. The suggested means of establishing the reasonable basis includes using nutrient databases or laboratory analyses, which each come with pros and cons.

For some, using nutrient databases can be a cheap and effective means of providing the necessary data. Indeed, the USDA maintains a free, public database of nutritional data, with a wide variety of generic and branded foods, including 35 different wine varietals. In addition, members of Wine Institute can access a new nutritional calculator, available on their Members-only site. Other industry databases may be available, and it is recommended that suppliers use them when available.

Relying on a database, however, could be too unspecific for some. A database can only provide general data on what one might expect for that food item. If your product is, say, particularly light on carbohydrates, you may end up misrepresenting yourself to potential customers. Further, the database may not include the particular alcoholic beverage you’re looking for. This could be the case for the beer market; the USDA database only has only a handful of listings for generic beers.

A laboratory analysis might then be the preferred method for someone with specialized and unique products. This would provide the most specific data available, though it could be quite costly to perform: on average $350 per analysis. Either way would require a showing of the methodology used if the restaurant were to be audited by the FDA, including a listing of the lab or database used and signed statements affirming that the information is accurate.

Ultimately, it is the duty of the restaurant to ensure that it can provide nutritional information that it has a reasonable basis for believing is accurate. But presumably, restaurants will be looking for their vendors to make this information readily available, particularly for prepared items like beverage alcohol. Certainly, a supplier who has such data on hand will be appreciated by restaurants. But more so, being able to direct the nutritional data that describes their products is a much more favorable position for most suppliers to be in.

 

What’s the broader impact here?

The FDA menu labeling rules comes amid a wider movement to provide clear and accurate nutritional information on all manner of foodstuffs. For many good reasons, people are becoming more concerned with their health and the content and quality of the food they consume. Within beverage alcohol, industry groups have by and large supported such efforts to provide consumers with clear, accurate information that can better inform those consumers’ decisions, at least when those disclosures come from sound, rational public policy reasons and not out of fear mongering.

Certainly, it is preferable for the public to know what they are consuming; greater transparency should lead to improved choices. Whether these programs will actually change American consumption habits, though, will only be revealed in time.

 

Find out how ShipCompliant by Sovos can help your brewery, winery, or distillery stay on top of compliance by requesting a free demo.

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Opportunities and Challenges Stand Out At This Year’s Craft Brewers Conference

Wed, 05/16/2018 - 15:55

It takes a pretty big event to stand out in a lively place like Nashville, but from April 30 to May 3 this year, the Craft Brewers Conference (CBC) took over Music City. Nearly 15,000 brewers, their suppliers, and other industry members got together amid honky tonks and BBQ joints to talk beer and learn more about what challenges the craft beer industry face.

Now in its 35th year, CBC is the single largest collection of people and businesses involved in the craft beer industry. The event is hosted by the Brewers Association (BA), and conjuncts every other year with the World Beer Cup (2018 was a competition year).

For about a week (including all the brewery tours and shows on the side), CBC provides a fantastic opportunity for the industry to come together. New entrants get to meet with the old hands who pioneered the homebrew and craft beer industries; trends and recipes get hashed over; manufacturing equipment and compliance management tools are showcased; all, generally, over a beer or three.

If there is any watchword for CBC, it is the spirit of cooperation and innovation that has carried the craft beer industry from basements and garages to the multi-billion dollar market that exists today.

 

Changing of the Guard

Back in January, Charlie Papazian, the founder of the American Homebrewers Association and a founder and past president of the BA, announced his intention to retire from the BA in 2019.

He was still an outsized presence at CBC, featured in the general session on the state of the industry, but when his upcoming retirement was mentioned, there was a sense of melancholy in the crowd. Everyone was happy for Charlie — he certainly deserves the chance to rest on his laurels — but his departure serves as a signal reminder that the craft beer market faces a moment of flux.

As a market, craft beer is still in fine form. In 2017, nearly 25 million barrels of craft beer was sold for over $26 billion, representing 12.7% and 23.4% of the total volume and value, respectively, of the entire American beer market. In a year when beer over all declined by 1.2% of volume sales, craft grew by 5%.

But this comes after years of double digit growth. This slowing down has lead to many fretful headlines predicting the end of craft beer. While merely attending CBC presented ample signs that such predictions are absurd on their face, it is apparent that the future brings challenges.

 

Growing Through Challenges

A major challenge that craft brewers face is the increasingly crowded market. With over 9,000 active Brewers Permits issued by the TTB, room for new brewers is increasingly dear — especially in mature markets like Oregon, Colorado, and Southern California. To really breakthrough, and become a larger regional brewery as many startups once dreamed of, is even more difficult.

In this regard, the future of craft beer is seemingly a victim of its past success. The early days of double-digit growth led to more entrants to the market. But now we’re seeing the results of this saturation as new breweries struggle to achieve the same growth that seemingly came so easy in decades past, particularly for those trying to sell at the regional level.

But such fears are easy to blow out of proportion. While it is true that brewery closings were up dramatically in 2017, there were still nearly 1,000 breweries that opened; there are still plenty of untapped markets to grow in; and, as Bart Watson, Chief Economist for the BA noted, focusing on the fact that 5% is a rather smaller number than 17% misses the larger point that that 5% growth happened in a much larger market than those past heady days (that is, the pie may be growing slower, but it’s a much bigger pie, so what growth there was was actually much greater volume than when the growth rate was higher).

Rather, the biggest concern that kept coming up through CBC was, how to combat the ever present challenge from Big Beer.

Following the principle that success breeds competition, large-sized, multinational brewers have been increasingly active in the last few years in approaching the craft market. This has manifested itself in several forms including acquisitions (such as Anheuser-Busch’s spree of purchases, like Breckenridge Brewery and Goose Island Brewery) and imitation (including brands like Blue Moon, which banks on a craft image while being owned by MillerCoors).

This has sparked consternation among craft brewers, who, having developed an image that sells, fear being crowded out by imitators. In response, the BA came out with an industry mark last year, which, when used on a bottle, can, other packaging or in the taproom, signals that the producer meets the BA’s definition of a craft brewer. The independent seal was nearly ubiquitous at CBC, with the BA encouraging its use as a means to stand apart to consumers in the ever-growing crowded beer market.

While these challenges signal that the “easy” days of craft beer may be going away, they also present a different picture: the craft beer market is facing a moment of maturity. It’s no longer a small collection of die hards, working from a devoted urge to make American beer great, but a proper industry now having to deal with the consequences of its own success.

 

Wither Craft Beer?

The crowds at this year’s CBC quickly disabuse any notion that the craft beer market is at any real risk of going away. It is abundantly clear that people want great beer, and that great beer can be made profitably. While the past days of rocketing growth may be gone, the craft market continues to grow at a clip that other industries would do terrible things for. The rise of acquisitions and imitations speaks to that success.

This is not to say that the craft market of the future will be much like what it was in years past — or even as it is today. As with everything, the only constant is change. Positively the craft market seems well aware that change is in the air, and is doing all it can to prepare for that change. This could mean thousands of small brewers focused only on local markets; or possibly, large, nationwide coalitions of brewers (think CANarchy) banding together to sell each others’ beers. Both models were discussed at length at CBC. But, then, of course, some third way could always develop in the next few years.

In the end, among all the consternation and speculating, perhaps the best advice from CBC is Charlie Papazian’s own catch phrase, “Relax. Don’t worry. Have a homebrew.”

 

Find out how ShipCompliant by Sovos can help your brewery stay on top of compliance by requesting a free demo.

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BevAlc Roundup | New Hampshire denies retailers DtC licenses, label statement accuracy matters, and don’t overlook Colorado wine

Mon, 05/14/2018 - 11:22

We’re now only a couple weeks away from the annual GCS: Wine Summit (which many of you may have known as the DIRECT conference); checkout the fantastic lineup of speakers and presentations we have in store below, and if you haven’t registered do so now! For the rest of this week’s roundup, a bill containing new DtC rules (along with a lot else) fails to pass in Alaska, why Gen Xers, not Millennials, should get the marketing love, and fermented tree bark could be a thing soon.

Stay up to date with the latest trends in the DtC wine market with the ShipCompliant/Wines & Vines 2018 DtC Report. Make sure to download your copy here!

 

ShipCompliant Events

GCS: Wine Summit, our annual wine industry conference is coming up! This year, we’ll be hosting the event at the Napa Valley Marriott on May 31, with panels on the state of DtC wine sales and how to expand your three-tier distribution footprint. Sign up here!

GCS: Wine Summit: Speakers, Sessions, and Keynotes A preview of what you can anticipate at the upcoming GCS: Wine Summit. Register today!

LegislativeUpdate

TTB Newsletter | Top stories include Brewers Bootcamp from the Craft Brewers Conference have been posted and a preview of Formulas Online 2.7. TTB

Liquor Commission Decried By Group For “Gangster Tactics” Over Barring Mail-Order Wine Shipments to NH Customers | Citing a statutory ability to “protect its revenue,” the New Hampshire Liquor COmmission has denied permits for brick-and-mortar retailers shipping wine to customers in New Hampshire, a move the National Association of Wine Retailers calls “gangster tactics.” Union Leader

Small Wineries Hoping For Tax Cuts Face Massive Tax Hikes Instead | Last year’s big tax bill included excise-tax cuts for American wineries, but an error means many now face a potential tax hike. Wine Spectator

Bill To Revise Alaska Alcohol Laws Dies In Dispute Between Bars, Brewers | A wide-ranging overhaul of the state’s alcohol laws essentially died Thursday when its author withdrew it from committee following public outcry over a House amendment that would have cut brewery and distillery serving sized by one-third. News Miner

Understanding The Legal Issues Around Cannabis-Infused Alcoholic Drinks | An industry lawyer discusses what brands need to know about using cannabis, CBD, THC, and hemp derivatives. SevenFifty Daily

IndustryUp

The Experts Say Wine Marketing Should Focus On Generation X | The real prize for wine may be the generation in between, so-called Generation X, those in their 40s and 50s. Forbes

Concern Over Accurate Labeling Grows | US trade agencies and marketers says consumer education depends on more precise labels. Wine-Searcher.com

Wine Experts Warn Of Growing Anti-Alcohol Sentiment And Aging Boomers | Concerns for the future marked industry insights coming from the North Bay Business Journal’s 18th annual Wine Industry Conference. North Bay Business Journal

Wait For It | When done right, limited releases can lead to an enthusiastic line outside your door — but there are pitfalls. Spirited

JustFun

Four Design-Driven Trends Sweeping The Adult Beverage Category | In an environment with an ever growing roster of choice, alcoholic beverage manufacturers are steadily being reminded that appearances matter. Nielsen

Colorado Is Home To Some Of The Country’s Best Wines | Parts of the terrain are even said to resemble Provence. Westword

The Bottle That Changed My Life | Somms and beverage directors share their most revelatory wine moments. SevenFifty Daily

Japanese Scientists Can Make Alcohol From Wood | With an alcoholic strength similar to the popular rice-wine sake, the wood-based booze could hit shelves within three years. Sky News

Exploring The Diverse Range Of New Gins | Distillers discuss their growing portfolios–and their motivations for producing multiple styles. SevenFifty Daily

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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Direct-to-Consumer Wine Shipping: Zinfandel and Rosé on the rise, while Red Blends underperform their peers

Mon, 05/07/2018 - 17:45

In January, we released the 2018 Direct-to-Consumer Wine Shipping Report, which offers an exclusive deep dive into the direct-to-consumer (DtC) wine shipping channel with our partners Wines & Vines. The report is produced using Wines & Vines’ algorithm, which extrapolates data from the extensive ShipCompliant by Sovos transaction library.

This article will focus on key trends we found in analyzing DtC wine shipping data by wine type, or varietal. We’ll run through the numbers for each of the following varietals: Cabernet Sauvignon, Pinot Noir, Red Blends, Chardonnay, Zinfandel, Rosé, and Syrah.

Cabernet and Pinot remain the dominant forces

Cabernet Sauvignon has historically dominated the DtC wine shipping channel, and 2017 was no exception. Cabernets accounted for 29.3 percent of the value of all DtC wine shipments, despite only making up 16 percent of the off-premise retail market. However, the big news last year was that Pinot Noir overtook Red Blends as the second-most valuable wine in the DtC sector, at a healthy 16.2 percent. This is likely a result of the 15.6 percent growth in Pinot shipments, which, while healthy, is perhaps not as noteworthy as another rising varietal. But more on that later.

Cabernet was also saw growth last year, with a 17.9 percent increase in shipment volume. This is the second-largest increase of any varietal in 2017, and it only served to further distance this seemingly omni-popular wine from its already-trailing peers. There are three certainties in life: Death, taxes, and cabernet domination of the DtC wine shipping channel.

 

Zinfandel stole the show in 2017

Scratch that last statement in the previous paragraph. Cabernet has a new challenger for the DtC crown!

…well, maybe that’s a little premature. Zinfandel exploded in the DtC market last year, and while we don’t yet know if the growth is sustainable, we do know this: It’s downright impressive. Zinfandel shipments increased by 29.4 percent and now accounts for 6.3 percent of the total DtC market despite not making the top five in off-premise retail shipments. For some reason or another, Zinfandel producers have managed to effectively gain ground on the market via the DtC channel, and we applaud their efforts. Accordingly, the value of all Zinfandel shipments is up 34.5 percent year-over-year.

Zinfandels may not challenge Cabernet for the top spot in this category any time soon, but they certainly appear to be on the rise and ready to overtake some of the other more popular varietals, like Chardonnay.

 

Red Blends are seemingly losing some steam

On a slightly more dour note, ever-popular Red Blends may be losing some of their popularity. Remember when we said Pinot Noir had overtaken Red Blends in the DtC channel? That’s because Red Blends saw the least growth of any of the most popular wines, at 7.22 percent. Even modest growth can only be viewed as positive, but producers of Red Blends may find themselves discouraged that their products are not growing as quickly as others in the DtC space, like Zinfandel, Pinot Noir, and, of course, Cabernet.

With all that said, Red Blends still accounted for 14.4 percent of all shipments in the market, as well as 15.6 percent of the total value of the channel. These are by no means insignificant figures, and indicate that Red Blend producers have little to fear as far as overall stability is concerned. A strong rebound in 2018 would likely quell any remaining concerns.

 

Rosé has seen impressive organic growth

Everyone’s favorite pink drink is officially on the rise! Rosé shipments increased by an astounding 57.8 percent last year, but what’s possibly even more impressive is that there was no corresponding dip in value, as we often see when larger quantities of wine are shipped. Instead, Rosé’s value actually increased even more than its volume of shipments, at 58.9 percent. So, should we begin genuflecting before our new Rosé overlords?

The short answer: Probably not. Despite all this incredible growth, Rosé wines only account for 3.1 percent of all DtC shipments and a mere 1.5 percent of the total value. This is definitely a varietal to monitor in the coming years, but it is not likely to displace any of the firmly-entrenched market leaders in the foreseeable future.

 

Keep an eye on Syrah

Another historically overlooked wine quietly put together a very strong performance in 2017. Syrah shipments increased 18.7 percent, while the value grew a more modest but still respectable 11.7 percent. Like Rosé, this varietal accounts for a small portion of all shipments (3 percent) and overall value (2.5 percent) in the DtC wine shipping channel. However, Syrah is clearly growing in popularity and its producers deserve to have their efforts recognized. Well done, everyone!

 

Want to learn more about trends in the direct-to-consumer shipping channel? Download the full 2018 Direct-to-Consumer Wine Shipping Report.

 

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