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Updated: 6 hours 43 min ago

BevAlc Roundup | TTB releases new versions of Wine Premises Operations report, the Silicon Valley Bank 2018 Wine Industry Report is released, and a primer on soju in time for the Olympics in South Korea.

Mon, 02/19/2018 - 18:41

LegislativeUpdate

TTB Newsletter | Top stories include save the dates for upcoming Trade Practice webinars and new versions of the Report of Wine Premises Operations are available. TTB

How New Alcohol Tax Laws May Affect Your Business | The “monumental” legislation is being hailed as one of the most significant changes since Prohibition. SevenFifty Daily

Bootleggers Beware – Liquor Commission Tamping Down On Illegal Alcohol Shipments | The illegal direct shipment of alcohol into the state of Illinois is something that the Illinois Liquor Control Commission takes very seriously. Chicago Sun-Times

Lawmaker Seeks To Allow Wine Sales Directly To Alabama Homes | A push is underway to allow wine shipments directly to Alabama homes. ABC 33/40 

How Much Political Clout Does $103 Million Buy? | Opponents claim the three-tier system is skewed in distributors’ favor — which may explain their generosity to legislators. Wine Searcher

IndustryUp

SVB State of the Wine Industry 2018 Report | 2018 Outlook: The U.S. wine industry is at the tail end of a 20-year growth period. Silicon Valley Bank

Preliminary Report Shows California Crushed 4 Million Tons of Wine Grapes in 2017 | Red wine grape varieties accounted for 2.2 million tons, down 1.6 percent from 2016. White grape varieties totaled 1.8 million tons, or up .7 percent more than in 2016. North Coast prices, for red varieties, rose from 8 to 11 percent. Wine Business

Liquor Sector to See More Consolidation in 2018 | The Patrón and Avión tequila purchases likely will not be the last deals this year for producers of tequila, whiskey and gin. The Street

Why Smaller Distributors Are Banding Together In a Changing Market | A quick way to scale up is just one benefit of these mergers and acquisitions. SevenFifty Daily

Denver Sake Maker Stuck Between Wine and Beer Laws | State lawmakers don’t quite know what to make of sake. And that is making life tough for a Colorado sake maker. Westword

JustFun

What’s the Deal With Soju? | Discovering the traditional South Korean spirit in honor of the Olympics. Wine Spectator

Academics Explain Terroir But Not Exactly The Way Wine Consumers May Expect | A paper makes an effort to show that rather than being indescribable or inexpressible beyond words, terroir may be a reflection of trade and politics. Forbes

Think You Know What Cider Is? You’re Probably Wrong | Defining “cider” — and creating a language to talk about it — is very much on the agenda of the U.S. Association of Cider Makers, the trade group of more than 1,000 members that puts on ­CiderCon. Washington Post

The Science of Whole-Cluster Fermentation | Added complexity is just one of the benefits of fermenting grapes on their stems. SevenFifty Daily

Weed is Impacting Wine Sales | SVB’s Rob McMillan’s impressions on the economic impact that legal marijuana is having, and will have, on the wine market. SVB on Wine

 

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

The post BevAlc Roundup | TTB releases new versions of Wine Premises Operations report, the Silicon Valley Bank 2018 Wine Industry Report is released, and a primer on soju in time for the Olympics in South Korea. appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

States are Starting to Crack Down on Direct-to-Consumer Age Verification

Fri, 02/16/2018 - 17:45

Staying compliant when making direct-to-consumer (DtC) sales of wine is no small task. From license requirements to tax calculations, there are numerous steps to check on with any given DtC order.

In recent months, though, one common compliance rule has come to the fore for several state alcohol enforcement agencies: time-of-sale age verifications. Arizona and Michigan have, in particular, demonstrated their firm intention to ensuring that wineries selling DtC are checking the age of their purchasers at the time of sale. Both states have been active in sending out notices to DtC licensees asking for proof that age checks have been happening. As states crack down on those shipping DtC, with a focus on age verifications, we decided to provide a quick review of what this rule is, and how you, the DtC shipper, can ensure your compliance with it.

 

What Are Age Verifications?

Arguably the most important regulation of alcohol in the United States is that it is illegal to provide alcohol to anyone under the age of 21. In every state, minors are prohibited from purchasing, possessing, or consuming any beverage alcohol. This restriction applies to every sale, regardless of where or how the sale occurs.

In a standard on-premises sale — at a bar, a grocery store, or a tasting room — checking the purchaser’s ID is a fairly straightforward process. But for DtC sellers making sales over the internet, who may never have face to face contact with the customer, ensuring that a sale is never made to anyone under 21 presents especial challenges.

At a base level, all states that permit DtC shipments require the delivery to be made to someone over the age of 21. The package may not be left at the recipient’s door: the recipient must be present at the delivery, they must show their valid ID proving they are of age, and they must sign for the package.

But to ensure that, from the onset, they are not selling alcohol to anyone under 21, everyone selling DtC should make conducting age checks at the time of sale their standard practice. Such age checks are a specific condition of being a DtC licensee in good standing in several states; but even in other states, it is an industry best practice to always do at-sale age checks. (Wine Institute provides such guidance on their website.)

The standard ways for verifying the purchaser’s age are either receiving a facsimile of the purchaser’s valid ID (say an emailed scanned ID), or by using a third-party service to verify the purchaser’s age. The main third-party services for age verifications are LexisNexis and IDology. Both services use public data to corroborate that the purchaser’s name and address matches with someone over the age of 21.

The states that specifically mandate age checks for DtC sellers are Arizona, Georgia, Indiana, Kansas, Michigan, Ohio, and South Dakota (Pennsylvania will begin requiring age verifications after December 30, 2018; as will Oklahoma, when it opens to DtC sales in October). These states generally proscribe specific methods for checking ages, such as requiring use of only authorized services (but at least require “good faith efforts”).

However, even in the states that don’t specifically require time-of-sale age checks, it remains illegal to sell or provide alcohol to minors; anyone who does so, even inadvertently, can be charged. It is therefore highly recommended that everyone selling DtC makes time-of-sale age checks standard practice for sales to all states, and not just those that specifically require them.

 

How Do I Manage Age Verifications in ShipCompliant?

If you are a ShipCompliant user, it is possible to set up automatic age verifications within your account.

We must note, ShipCompliant does not itself conduct age verifications. However, we contract with both IDology and LexisNexis to provide direct access to these services for our users. ShipCompliant users, thus, can access either IDology or LexisNexis without requiring a separate account for either service outside of ShipCompliant.

After you have enabled age checks in your ShipCompliant account, we will process them through your choice of either LexisNexis or IDology for $0.45 or $0.50 per lookup, respectively. This charge will be added to your monthly ShipCompliant fee, though for our average user, the charge is often much less than purchasing a separate subscription to either service. (Such subscriptions typically run to several-thousand dollars per year.)

To set up age verifications in your account, go to “Account Settings” and navigate to the “Age Check Settings” section. There you can enable age checks and edit your age check settings, including selecting your preferred service and for which states you want age checks to happen. You may select to do age checks only in those states that specifically require them; however, as stated above, we highly recommend adding all states to which you are selling.

Once enabled, age verifications will happen when you enter orders into your account going to the states that you have selected.

You may also review when we have submitted an age verification on your behalf in the Analytics section of your account. They can be found by navigating to “Analytics,” then to “Reports,” and opening the “Compliance” tab. The reports will provide some documentation on your history of age verifications. However, these reports only indicate that we have sent requests for age checks to a third-party service, and will not state what the results of the age check were.

If you have received a notice from a state requiring the results of your age checks, you may need to contact the third-party service directly for the required documentation. And as ever, it is necessary to consult with your personal counsel if you are under an audit by a state.

If you have any questions about setting up, conducting, and receiving reports on age verifications in your ShipCompliant account, please reach out to support@shipcompliant.com.

 

See for yourself how ShipCompliant can help you tackle age verification. Start your free trial today.

The post States are Starting to Crack Down on Direct-to-Consumer Age Verification appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

4 Reasons the Direct-to-Consumer Wine Shipping Channel Topped $2 Billion in 2018

Thu, 02/08/2018 - 20:48

Last month, we released our annual report on the state of the direct-to-consumer 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 year’s report demonstrated continued explosive growth in the channel, as the total value of shipments grew 15.5 percent to top out at $2.69 billion. A significant factor in this growth is the growing number of states that allow direct wine shipping; Pennsylvania in particular can claim much of the credit.

Here are four of the more interesting data points concerning shipping to individual states:

 

1. Pennsylvania became a top-10 destination in 2017. After the state made direct-to-consumer shipping legal in 2016, Pennsylvanians took advantage of the first full year of their newfound ability to order wine through the channel, ordering 152,000 cases. While it was edged out by Georgia for the final spot in the top ten in terms of value, Pennsylvania saw a 158 percent increase in the volume of shipments and 3 percent of the total DtC shipments made, landing itself the 10 spot in that category. Our report projects further climbing of the rankings in Pennsylvania’s future.

2. Seven of the top 10 shipment destinations are also top-10 producers. Residents of California, Texas, New York, Washington, Florida, Illinois, Oregon, Colorado, Virginia and Pennsylvania were all faithful to their local wineries in 2017. It stands to reason that the largest producers would generate great receiving numbers as well, but another interesting point to note is that tourism plays a big role in DtC sales. In fact, most sales in the channel originate from tourism, and each of these seven states has a number of well-travelled tourist destinations.

3. Massachusetts and Arizona saw explosive growth. But it won’t be sustainable in the long term. Massachusetts increased its shipments by 25 percent, while Arizona increased its own by a whopping 49 percent. However, these large increases are likely due to state legislature giving the green light to direct shipping in recent years, and the markets are likely to stabilize in future years.

4. California is still the king — and it’s not even close. While many states experienced huge growth in 2017, California remained the dominant destination of shipments, owning 30 percent of the market share. The next-largest share? Texas, at 8 percent. It’s safe to say California will continue to put up numbers like these, so long as it continues to produce massive volumes of wine every year.

 

Be on the lookout for more entries in this blog series highlighting interesting or relevant pieces of data from the 2018 Direct-to-Consumer Wine Report!

 

Want to see more data from 2017? Download the free 2018 Direct-to-Consumer Wine Shipping Report to learn about consumer taste preferences, volume and order values by state and winery size, and more.

The post 4 Reasons the Direct-to-Consumer Wine Shipping Channel Topped $2 Billion in 2018 appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Reminder: Filing Deadline for Arizona DtC Reporting was Jan. 31

Wed, 02/07/2018 - 16:19

Wineries that hold an Arizona Direct-to-Consumer (DTC) Wine Shipment (series 17W) License are reminded that their 2017 Annual Shipment Report was due at the end of January. Any DTC Wine Shipment Licensee that has not filed the 2017 Shipment Report with the Arizona Department of Liquor Licenses and Control should do so immediately. The Annual Shipment Report should be submitted electronically through the “Direct-to-Consumer Wine Shipment Portal” on the DLLC website.

All DTC Wine Shipment licensees, without exception, are required to file a report detailing wine shipped to AZ consumers during a calendar year no later than January 31st of the following year. Failure to submit the Annual Shipment Report will prevent renewal of your Direct-to-Consumer Wine Shipment license. The deadline for the Arizona Department of Liquor to receive your 2018 renewal and payment is February 28, 2018.

For more information contact the DLLC directly.

The post Reminder: Filing Deadline for Arizona DtC Reporting was Jan. 31 appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Further TTB guidance on the recent tax bill, a bevy of reports on 2017 sales and predictions for 2018, including the Sovos/Wines & Vines DtC report, and how well can Amazon’s Alexa recommend a bottle of wine?

Tue, 02/06/2018 - 16:09

With 2018 firmly underway, now is the time to review the previous year, and make predictions for the future. A number of reports have come out this week, which we’ve compiled for this Roundup. Other articles of interest include a discussion on proposed rules limiting the use of out-of-state AVAs and a fond sendoff to one of the original pillars of the craft beer industry.

The Sovos/Wines & Vines 2018 DtC Report is now available! Make sure to download your copy here.

LegislativeUpdate

TTB Newsletter | Top stories include additional guidance on the Craft Beverage and Modernization Act and tips on staying compliant with TTB regulations. TTB

Should Out-of-State AVA Use Be Legal? | When the TTB published proposed regulation 160B, which would close a loophole that allows wineries to use AVA names on wines made using grapes from other states, the bureau was inundated with comments on both sides of the issue. Wines & Vines

Free The Grapes Indiana: Wines Out of Reach For Indiana Consumers In Winery Lockout | Indiana is the only state that prohibits wineries from carrying both a legal direct shipping license and a relationship with a wholesaler. Business Wire

Concerned About Craft Beer Bill, Distributors Bring Their Own | South Dakota beer distributors said this week a proposal aimed at letting craft brewers sell their beer directly to stores and restaurants gives them unfair advantages over other players in the beer industry. But the alternate proposal isn’t a compromise, craft brewers said. Argus Leader

Virginia Distillers Push “Booze Equality” Legislation To Loosen State Rules On Liquor Tasting Rooms | As they’ve watched Virginia’s brewery and wine industries boom, craft distillers have begun to feel the state is unfairly harsh on businesses that make the stronger stuff. Richmond Times-Dispatch

Want To Order Wine Online? Not Unless You Want To Break The Law | In Mississippi, alcohol shipment to an individual or business are illegal if the purchase is not made directly through the ABC. Clarion Ledger

IndustryUp

2018 Ushers In Favorable Wine Trends | Tonnage approaching balanced supply as premiumization and deals continue, according to experts at Unified Symposium. Wines & Vines

2018 SVB Wine Report Videocast Replay | The 2018 Annual SVB Wine Industry Videocast was presented on January 17th to a record audience both domestically and across the globe. You are welcome to replay and review the session.

Expect a Rise in Wine Sales And Prices in 2018 | According to the Wine Market Council, Nielsen and Rabobank, the wine industry is in better shape than many expected. Beverage Industry Enthusiast

U.S. Beer Makers Shipped 3.8 Million Fewer Barrels in 2017 | 2017 was historically bad for U.S. brewers, who shipped 3.8 million fewer barrels of beer than the previous year. Brewbound

Brewpubs Are Gaining Popularity, But Their Patrons Don’t Always Drink The Beer | According to Nielsen, a full 50% of patrons sometimes order wine while 43% have ordered a cocktail at least once. Just two-thirds have exclusively ordered beer. Forbes

Craft Brewers Don’t Need To “Sell Out” To Survive, But Partnerships and Investments Are A Must | The beer industry’s first round of consolidation is largely over as macro US brewers have slowed their pace of craft brewery acquisitions, making way for other types of deals that offer small brewers new paths forward, says Rabobank. Beverage Daily

Consumers Turning To Private Label Wine More Often Thanks To Supermarkets | Private label wine is building momentum in the US, thanks to national supermarket chains such as Aldi, Trader Joe’s, Costco, and Whole Foods taking on the identity as trusted wine vendors. Beverage Daily

JustFun

Brewers Association Announces Exit of Charlie Papazian | Father of homebrewing, founder and innovator leaves lasting legacy after 40 years. Brewer’s Association

The History of Wine In 442 Podcasts | One of wine’s great treasures is available, free, with the touch of a smartphone or the click of a mouse. NY Times

Why More Wine Importers Are Adding Spirits Arms | Many are expanding the footprint of their portfolios to keep up with a changing industry. SevenFifty Daily

Can Amazon’s Alexa Hack It As A Wine Sommelier? We Put Her To The Test | A wine critic sums up his efforts to get drink recommendations from a digital “expert”. The Globe and Mail

Oldest Beer In Greece Dates To Bronze Age | A new study describes the discovery of two potential Bronze Age breweries. Live Science

 

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 | Further TTB guidance on the recent tax bill, a bevy of reports on 2017 sales and predictions for 2018, including the Sovos/Wines & Vines DtC report, and how well can Amazon’s Alexa recommend a bottle of wine? appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Guest Post: Taking Your New Federal Excise Tax Credits at Third-Party Providers

Wed, 01/31/2018 - 17:27

The following is a guest post written by Sara Schorske, founder of Compliance Service of America (CSA). Sara is one of the original compliance specialists in the alcoholic beverage industry. She has advised and assisted clients with compliance matters, trained many winery personnel and compliance professionals, and written numerousarticles on compliance for industry publications since she founded CSA in 1983. She is known in the industry for her clear, down-to-earth explanations of complex regulatory matters. CSA is a leading provider of regulatory consulting and licensing services for the alcoholic beverage industry, nationwide.

 

The new tax structure for alcoholic beverages enacted as part of the Tax Cuts and Jobs Act of 2017 is now in effect, and will continue for at least the next two years. The base excise tax rates on all classes of alcoholic beverages remain unchanged, but a series of tax credits related to taxable removals has been instituted.

The Small Producer Credit has been suspended till the end of 2019 and now ALL wineries, no matter how much they produce, are eligible for three levels of tax credits, based on gallonage removed from bond during the year. The new tax credits on all wines (except hard cider*) are as follows:

  • $1.00/gallon on the first 30,000 gallons removed
  • $0.90/gallon on the next 100,000 gallons removed (over 30,000 to 130,000 gallons)
  • $0.535/gallon on the next 620,000 gallons removed (over 130,000 to 750,000 gallons)

*Since the tax on cider is lower than on other wines, the allowable credits are also reduced.

A more detailed explanation of the tax rates and changes can be found here and here.

 

Here’s how the tax credits work:

When you file your excise tax return, you will calculate the tax due for the period at the full rate and then calculate the allowable tax credits in Schedule B, Adjustments Decreasing Amount Due. The total credits for the period are summed up and transferred to line 34, then deducted from the total tax due.

For wineries whose annual removals from all locations are under 30,000 gallons, keeping track of the allowable credit is easy. But for larger wineries it can be complicated, especially when wine is removed from bond at several locations. In addition to making taxable removals from their own facilities, many wineries use one or more third-party bonded wine cellars to ship their wholesale and direct-to-consumer orders. In addition, if your winery is part of a “controlled group” (group of wineries that share significant common ownership) or it has brands that are produced under contract and taxably removed by other wineries, removals from even more locations need to be combined.

For more information, contact your tax advisor or a compliance specialist.

Because the tax credit is calculated based on the first gallons removed, you must apply your credits to removals in chronological order, and monitor the cumulative volume removed at all locations so you can keep your third-party providers updated about which level of credit the winery is currently eligible to take. For this purpose, you do not need to distinguish between the various tax classes of wine removed (still wine, artificially carbonated wine, sparkling wine, cider, or wine over 16% ABV). The volume of all types of wine must be combined for purposes of tracking cumulative removals for the tax credits.

 

Here’s how to track removals:

You can use an Excel spreadsheet to track removals by date. This is especially important for a winery selling over 130,000 gallons a year, because you will end up paying tax at three or more different rates each year as removals accumulate and the allowable credit changes. Almost certainly, the transitions between tax rates will occur in the middle of tax periods, and the winery needs to know exactly when that occurs so you can alert your warehouses when to start calculating your taxes at the new rate.

It will be helpful for your spreadsheet to have a separate column for each removal location, a column for daily total gallons removed, and a column for year-to-date total gallons. Entries should be made as shipments are made, one row per day. Your source documents will be bills of lading or electronic records of shipments, received from each shipping point.

For a tax period in which your tax rate changes because you cross into the next level of taxable removals, you need to inform each warehouse how many gallons to pay at each rate. We suggest that you add a second row to your spreadsheet for each day on which cumulative gallons removed crosses the point where the tax credit changes. The first row for that day would show gallons removed at each location at the older (lower) tax rate. The second row for that day would show gallons removed from each location at the new (higher) tax rate. See the example below.

Thanks to the deferral period between the end of each tax period and the due date of the return, you will have at least a few days to collect your data and figure out if you need to advise your warehouses of a change in tax rate during the last tax period.

Staying aware of your tax rate as it changes will help both the winery and its shipment partners stay in compliance with correct excise tax payments, and avoid possibly having to amend returns and pay interest later.

 

NOTE: If you would like a copy of the Excel spreadsheet pictured above, email me at sara@csa-compliance.com and I’ll send you a copy.

 

Find out how ShipCompliant by Sovos can help your business stay on top new tax rules and rates by signing up for a free demo.

 

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Third-Party Provider Reports for Illinois Due

Fri, 01/26/2018 - 10:47

The Illinois Liquor Control Commission has issued details regarding a new report required to be filed by third-party providers facilitating direct to consumer (DtC) shipments into Illinois. Third-party providers are any parties, expect for common carriers, who have been authorized to ship wine on behalf of a licensed direct shipper winery.

Under a set of rules, which became effective January 1, 2017, when applying for a new or renewed direct shipper license, wineries must submit the name and address of all third-party providers they authorize to ship wine on their behalf to Illinois (state notice provided here). In addition, third-party providers are required to report the shipments they’ve made in the previous year.

 

The first report, for shipments made in calendar year 2017, is due on February 1, 2018. The report should be emailed to Joseph.Z.Jones@Illinois.gov.

 

Third-party provider reports must include the following data for each shipment:

  • Name, address, and IL Direct Shipper license number of the winery who promulgated the shipment;
  • Name and address of the IL recipient
  • Package tracking number from the common carrier
  • Ship date
  • Number of bottles in the shipment
  • Date of the shipment

In addition, all records and documents containing data related to these shipments should be kept on file for three years.

A version of the report has been made available by Wine Institute, on their IL State Shipping Laws page, available here. Or third-party providers can create their own version, as long as it contains all of the required data.

 

For questions, please contact:

Zoel Jones

Illinois Liquor Control Commission

Enforcement Division

100 W Randolph St

Chicago, IL 60601

MC 7-801

(312)814-2604 (Office)

Joseph.Z.Jones@Illinois.gov

 

Licensed Direct Shipper wineries are reminded that as the license holder, they may be held responsible for the acts and breaches of responsibility of their authorized third-party providers.

 

Download the free 2018 Direct-to-Consumer Wine Shipping Report to learn more about the DtC wine shipping channel’s continued explosive growth.

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6 Trends to Watch in the Direct-to-Consumer Wine Shipping Channel

Thu, 01/25/2018 - 10:10

Since 2010, Sovos has collaborated annually with Wines & Vines to highlight the growth of the direct-to-consumer wine shipping channel. Our eighth annual Direct-to-Consumer Wine Shipping Report tracks sales by region, state, winery size, varietal, price point and more. The 2018 report revealed more and more consumers turning to this channel as states loosen their wine shipping laws, with accelerated growth expected for years to come.

 

Top 6 Trends in Direct-to-Consumer Wine Shipping

 

1. DtC shipping is on pace to top $3 billion in 2018: Despite the impact of the Wine Country fires in 2017, the value of wines shipped reached $2.69 billion, up 15.5% from 2016.  Winery direct shipments now represent a notable 10% of off-premise sales of domestic wines, according to Jon Moramarco, managing partner of BW 166 LLC and editor of Gomberg & Fredrikson Report – up from 8.6% just one year ago.

2. Sonoma County is on path to surpass Napa County as the largest source of wine shipments: Wine shipments from Sonoma County climbed 26% over last year. Though Napa still dominates, shipping a higher value of wine than all states outside of California combined, Sonoma ships a greater variety of wine. At its current rate rate, Sonoma is on track to overtake Napa County in the coming years.

3. Pinot Noir gains dominance: Pinot Noir overtook Red Blends as the second most common varietal shipped. Two of the most important wines to the DtC channel, Cabernet Sauvignon shipments increased 16% in volume and 18% in value, and Pinot Noir shipments increased 15% in volume and 16% in value. Together, these two wines accounted for over 45% of the value of all shipments from wineries to consumers.

4. Medium-sized wineries performed exceptionally well: These wineries producing 50,000 – 499,999 cases annually accounted for 37% of the total dollar growth of the DtC shipping channel. Small wineries still dominate DtC shipping, though, making up 43% of all shipments and 46% of all sales of DtC shipped wines in 2017.

5. In its first full year permitting DtC shipping, Pennsylvania cracked into the top 10 destinations by volume. With a 158% increase in shipments over 2016, Pennsylvania is poised to climb to the sixth or seventh most common state for winery-to-consumer shipments by 2019.

6. Rosé continues its heyday. Rosé shipments increased by 58% over 2016 without taking any decrease in average price-per-bottle shipped. Its share of volume in the DtC channel has increased by 200% since 2010, the largest increase in share of any wine tracked.

 

Download the free 2018 Direct-to-Consumer Wine Shipping Report to learn more about consumer taste preferences, plus volume and order values by state and winery size.

 

 

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2018 Direct-to-Consumer Wine Shipping Report Indicates DtC Sales on Track to Reach $3 Billion This Year

Mon, 01/22/2018 - 20:47

Direct shipping proves tremendous growth opportunity for wineries, who shipped nearly six million cases directly to consumers last year, according to the annual Direct-to-Consumer Wine Shipping Report from Sovos and Wines & Vines.

(Boston, MA) JANUARY 22, 2018

Wineries shipped $2.69 billion worth of wine directly to consumers in 2017, according to the 2018 Direct-to-Consumer (DtC) Wine Shipping Report from Sovos and Wines & Vines. Despite fires ravaging wine country during peak harvest season, wineries shipped 15.3% more wine to U.S. consumers at a 15.5% higher value than they did in 2016. Outpacing the six-year average growth rates for volume and value, the winery DtC shipping channel is on track to reach $3 billion in sales in 2018.

The 2018 Direct-to-Consumer Wine Shipping Report details several notable trends from 2017. To read more, head over to Sovos.com

The post 2018 Direct-to-Consumer Wine Shipping Report Indicates DtC Sales on Track to Reach $3 Billion This Year appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | DtC Shipment Value Rose 15.5% in 2017, Big Changes Coming to Oklahoma Beer Distribution in October

Mon, 01/22/2018 - 15:49

This week, the BevAlc Roundup tackles new revisions to Oklahoma beer distribution, the continued growth of the Direct-to-Consumer shipping channel, guidance from the TTB regarding the new tax overhaul, and why craft breweries are finding massive success despite the overall U.S. economic climate favoring huge corporations.

LegislativeUpdate

What the Ale – Big Changes Coming To Beer Distribution In October | Oklahoma distributors prepare for upcoming revisions to tiered system in current law.

Tax Cuts and Jobs Act of 2017 – Craft Beverage Modernization and Tax Reform | Guidance from the TTB on how beverage alcohol producers should respond to the recent tax reform act.

House Committee Gets Preview Of Big Changes Sought On Alcohol | The governor and some lawmakers want to rewrite many South Dakota laws on making, distributing and selling liquor, beer, wine and other alcohol and expand some too.

IndustryUp

DtC Shipment Value Rose 15.5% in 2017 | Pennsylvania bounds into top 10 states for shipments; DtC a boon for Northeast producers. The data in this article is data from the 2018 Direct to Consumer Wine Shipping Report, a joint ShipCompliant by Sovos and Wines & Vines production.

Analyst: 2018 Should Be A Good Year For Sonoma County Wineries, Grape Growers | The North Coast wine industry will enjoy another successful year, though storm clouds are on the horizon as growth slows and competition increases from imports and other domestic regions, an industry analyst predicted Thursday.

An Interruptionist Seeks To Change U.S. Wine Distribution | According to Bjoern Lanwer, owner of the Alabama-based BevDeals, his relatively new online platform promises every distributor discounting deal available for every restaurateur and retailer to see and to partake.

Craft Beer Is the Strangest, Happiest Economic Story in America | Corporate Goliaths are dominating the U.S. economy. Yet small breweries are thriving. Why?

JustFun

Making the Case For Shochu | The Japanese spirit is showing gains in the U.S. market – particularly as a base spirit for cocktails.

New Study Finds Incentives For Wine Producers To Vie For Competition Medals | French researchers matched wine contract dates, prices and quantities of influential Bordeaux-based brokers with the records of eleven important wine competitions.

Why Beer Professionals Are Becoming Cicerones | Beer experts discuss the certification process and their motivations for pursuing the title

 

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 Shipping: Get ready for the 2018 DtC Report, the DtC Wine Symposium, and Unified!

Thu, 01/11/2018 - 19:18

It’s an exciting time of year for ShipCompliant by Sovos, as we gear up to release our annual Direct-to-Consumer Wine Shipping Report with our partners Wines & Vines. We’re also looking forward to sponsoring and presenting at next week’s Direct to Consumer Wine Symposium, as well as exhibiting at the Unified Wine & Grape Symposium the following week.

 

What’s in the report?

The report draws on data from the Wines & Vines database of U.S. wineries, using an algorithm to extrapolate all DtC shipments from millions of transactions filtered through the ShipCompliant by Sovos platform in 2017.

The model tracks sales by winery region, annual production, destination of shipments, wine type and price points. This culminates in the most extensive and accurate estimate of the domestic direct-to-consumer shipping channel. Since ShipCompliant and Wines & Wines began producing the report in 2011, we’ve seen an explosion of growth in both the volume and value of shipments as the domestic wine retail market has taken off.

This year’s edition of the report will provide insights into the continued growth of the industry, elaborate on the predictions we made in 2017, and demonstrate how new markets like Pennsylvania are changing the game.

 

What’s the deal with the events?

The DtC Wine Symposium is being held at the Hilton Concord Hotel in Concord, California from Jan. 17-18. Larry Cormier, General Manager of ShipCompliant by Sovos, will give an exclusive sneak preview of some of the highlights from our forthcoming 2018 Direct-to-Consumer Report during his session “Sell Compliantly, Sell Successfully” at 2 p.m. on Wednesday. Make sure to check out Larry’s presentation for insights that won’t be available to the public until the report is released!

The Unified Wine & Grape Symposium will take place at the Sacramento Convention Center in Sacramento, California from January 23-25. ShipCompliant by Sovos will set up shop in booth 1605 on the first floor of Exhibit Halls A-E. Our team would love to chat with you about your compliance challenges, DtC shipping, or anything else, really. Make sure to stop by the booth!

 

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BevAlc Roundup | TTB reminder that 2017 excise taxes are due this week, new marketplace Casemates looks to take over from Amazon Wine, and understanding the provenance of whisky gives perspective on time itself.

Mon, 01/08/2018 - 16:47

The Roundup took a quick break over the holidays, but we’re back with a longer edition for the beginning of 2018! We’ve got top stories on the recent tax bill and its effects on beverage alcohol producers, gender equality in the wine industry, and a look at what will fill the place of Amazon Wine for the DtC market. All of us at ShipCompliant by Sovos hope you had a wonderful holiday season, and offer our best wishes for 2018!

LegislativeUpdate

TTB Newsletter | Top stories include a reminder that 2017 excise tax returns must be filed by January 12 and a request for comments on information collections by the TTB. TTB

GOP Tax Overhaul Includes Big Reductions For Alcohol Producers | Congress gifted major federal tax cuts for alcohol producers and importers by incorporating the Craft Beverage Modernization and Tax Reform Act into the Tax Reform and Jobs Act. ShipCompliant

TTB Updates To The Semi-Annual Regulatory Schedule | Alcohol and Tobacco Tax and Trade Bureau (TTB) announced updates to the Fall edition of the semi-annual Unified Agenda of Federal Regulatory and Deregulatory Actions (Regulatory Agenda). Alcohol Law Advisor

Republicans Say They’ve Slashed Taxes On Small Breweries. But Big Alcohol May Be The Biggest Winners. | Experts and industry advocates disagree on whether the tax cuts are set up as a boost to independent brewers that will provide economic stimulus, or whether it’s primarily a giveaway for the biggest alcohol firms that already have all the extra cash they need. Washington Post

Wineries Decry Rule-Making Slowdown | Those awaiting AVA approval hope new year will clear way for decisions. Wines & Vines

Mass. Alcohol Laws Need Massive Rewrite, Task Force Concludes | The price of beer, wine, and liquor in Massachusetts would increase, but unpopular restrictions on the sale of alcohol would go away, under a radical proposed overhaul of the state’s byzantine booze laws. Boston Globe

Two Sides In Beer Battle Renew Efforts To Settle How Nebraska’s Craft Brews Are Distributed | Last year, craft brewers and liquor distributors conducted a contentious tug of war, both in the Nebraska Legislature and within the State Liquor Control Commission, over how, exactly, brews produced by the state’s expanding breweries could be distributed. Omaha Herald

IndustryUp

The State Of Gender Bias On The Floor | A look at how female somms, wine directors, and restaurateurs are treated differently from their male counterparts–and how to change the paradigm. SevenFifty Daily

Whole Foods’ Wine Biz Replaced Amazon’s, Leading Dallas Founder Of Woot.com To Create Casemates | As 2017 ended, Amazon shut down Wine.Woot and its own wine marketplace in favor of Whole Foods’ expansive wine operation. As a result, Dallas entrepreneur Matt Rutledge sees an opening in the market. Dallas News

The Future Of Oregon Wine: It Ain’t Pinot | It’s time we make room for more grape variety, experts say. Portland Mercury

Building an Online Wine Marketplace | After integrating Vin65, Wine Direct now sets sights on online wine sales. Wines & Vines

The Bourbon Secondary Market Is Now Legal In Kentucky, Sort Of | On January 1, Kentucky’s new “Vintage Spirits Law” took effect, permitting licensed retailers to sell certain vintage spirits purchased from nonlicensed persons — but many details remain unsettled. Chuck Cowdry Blog

JustFun

Millennials consume almost half of all wine in the U.S. | Men are more likely to drink a full bottle by themselves than women, too. Daily Dot

A Glass Of Whisky Could Help You Get Your Head Around Deep Time | Appreciating the deep geological timescales that shape rock, water, and the taste of the whisky gave rise to stories about the past. The Conversation

Next Gen Shall Be Served | Gen Z’ers, Millennials Transform Merchant Realities & Practices. Beverage Media

Understanding Operations In One Liquor Control State | For people who don’t do business in a liquor control state, the rules can seem confounding — here, professionals in Vermont discuss how it works. SevenFifty Daily

 

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Direct-to-Consumer Shipping: How Does the Granholm Decision Impact Retail Shipping?

Thu, 01/04/2018 - 16:59

As the Internet increasingly becomes the default source for retail sales of goods, a question that keeps emerging: What about alcohol? Indeed, the direct-to-consumer (DtC) market for wineries selling their products has exploded over the last ten years to become valued at $2 billion annually. But this success has created another issue: What about retailers?

In August, Missouri repealed rules that previously permitted limited direct to consumer (DtC) sales of wine by licensed retailers. This rule change highlighted the complexities surrounding retailer DtC sales. This is the third installation of a three-part blog series to remove some of the confusion these complexities can cause. Today’s entry will examine the political and legal background of retailer DtC.

 

Why Doesn’t Granholm Apply?

Perhaps the first thing you might will discover when learning about the DtC beverage alcohol market is the 2005 Supreme Court case Granholm v. Heald. In this case, the Supreme Court ruled that a state’s ability to govern its internal beverage alcohol market, as mandated by the 21st Amendment, can be limited by the Interstate Commerce Clause, which restrict states from restricting or otherwise discriminating against commerce coming from other states. Practically, this meant if a state permitted suppliers licensed in that state to make DtC sales, that state could not also prohibit licensed suppliers in other states from also making DtC sales to their residents — there would need to be national parity among all suppliers and their ability to sell DtC.

Naturally, you might be thinking, “shouldn’t this also apply to retailers? If a state allows in-state retailers to sell and deliver directly to local consumers, under Granholm, how can the state prohibit out-of-state retailers from also making those type of sales?”

The unsatisfying – at least to some – answer is: Despite Granholm’s impact, the ruling was fairly limited in its scope. By restricting out-of-state producers from being able to sell on equal terms with in-state producers, Michigan and New York improperly discriminated against goods coming from out of state.

The Commerce Clause of the U.S. Constitution, as interpreted by the Supreme Court, prohibited states from preventing out-of-state goods from entering their local markets. For producers, the DtC market presented a possible workaround from the three-tier system – especially critical for smaller-scale producers. If a state were to provide in-state producers that workaround, but not out-of-state producers, that was unfair discrimination against the ability of out-of-state goods to enter that state’s market.

In every subsequent ruling, when trying to apply Granholm to retailer sales, courts have highlighted the differences between a producer having its goods enter a different state’s market, as opposed to a retailer, who is inherently selling goods produced by someone else. In the three-tier system, which Granholm explicitly “does not call into question,” retailers are not the supplier of goods, they are the end seller. They, then, do not have an interest in having their goods enter a different state’s market.

It is also commonly cited that alcohol control boards have greater interest in regulating their local markets, and in particular retailers as they make final sales to consumers. This is opposed to producers, who are typically (or at least, historically — the rise of the craft market has changed things a bit) located out of state, and operate on a national level. As noted in Granholm, for many of the regulatory concerns that states had regarding DtC sales — primarily payment of taxes and not selling to underage people — these producers had a long history of complying with, or could easily begin complying.

This isn’t to say that retailers are unable to comply with these rules (particularly with checking IDs, they have a great amount of experience), it’s more that, unlike producers, they are unused to complying on a national scale in multiple jurisdictions. This, matched with the traditional interest state regulators have in controlling local retail operations, has so far distinguished retailers from producers enough to mean that Granholm has never been successfully applied to retailers. (Check out this very thorough review of whether Granholm would apply to retailers, posted on this blog in 2007.)

 

Couldn’t A Case Be Made That Granholm Should Apply?

There have been several lawsuits over the years, where retailers argued that Granholm rules should apply to them as well as suppliers — that states shouldn’t be able to discriminate against out-of-state retailers when it comes to making DtC sales. However, none of them have been successful. The case that made it to the highest court, Siesta Market v. Steed, argued before the 5th Circuit Court of Appeals in 2010, came down decisively against the retailer’s position. The court asserted that the different standards for regulating retailers and suppliers sufficiently distinguished this case from Granholm, permitting the court to rule against the retailers.

In 2017, there have been three prominent cases attempting to extend Granholm to retailers. A case from Illinois came down against an Indiana retailer, with the court noting that by selling from Indiana, the retailer was attempting to avoid Illinois’s higher taxes, which would harm Illinois retailers. A case from Missouri was dismissed after the state changed its retailer DtC rules. And a case from Michigan is still ongoing.

Until retailers can demonstrate that they can compliantly operate under the same conditions and rules that wineries have for years, it is unlikely that any such case will succeed. Indeed, a key factor in the Granholm ruling was the fact that, at that time, wineries were compliantly making DtC sales in 26 states, which lessened Michigan and New York’s argument that by opening up the DtC market, the Supreme Court would usher in a wave of illegal sales. If retailers can demonstrate that they can sell compliantly in the 13 states where they are permitted to, that would greatly enhance their arguments before the courts.

Ultimately, the future of retailer DtC will be entangled in politics. Even after Granholm universalized DtC sales for wineries, it took years of effort to convince states to open up their rulebooks to actually permit those sales. And even then, there is near-constant work to refine and amend those rules. For retailer DtC to succeed requires first political action by retailers and customers alike to convince their local legislatures of this market’s potential value, followed by compliance with the rules and regulations that are developed — the same model that has allowed winery DtC to bloom.

 

Want to know everything about DtC shipping? Download our 2017 Direct-to-Consumer Wine Shipping Report, and be on the lookout for the 2018 version of the report, set to be released at the DtC Wine Symposium later this month.

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GOP Tax Overhaul Includes Big Reductions for Alcohol Producers

Wed, 12/20/2017 - 17:49

Congress voted on a near party line split this week to pass the Tax Cuts and Job Act (“Tax Bill”), a piece of legislation that could have major effects on the U.S. economy, including, notably, major effects for the beverage alcohol industry.

That is because the Tax Bill includes major provisions that were part of the Craft Beverage Modernization and Tax Reform Act (“CBMTRA”). This act, originally introduced in 2015, provided for drastic reductions in federal excise taxes for all alcohol products produced in or imported into the U.S. Despite broad, bipartisan support, the CBMTRA was unable to get through Congress. Until, at least, it was included in a Republican lead effort to overhaul the Internal Revenue Code.

The beverage alcohol provisions of the Tax Bill are slated to come into effect very soon, and be in effect to products taken out of bond after January 1, 2018. There are a number of sweeping changes, which we will attempt to outline here.

 

What Are The Changes?

The biggest effect that the Tax Bill will have for the beverage alcohol industry are reduced federal excise taxes for beer and spirit products, and expanded tax credits for wine products. Producers of all sizes will be able to receive most of the benefits from the rate and credit adjustments, as will both foreign and domestic products.

Notably, all of the beverage alcohol provisions of the Tax Bill are slated to sunset as of January 1, 2020, and so producers and importers will have only a couple years to enjoy the benefits — unless Congress acts before then to extend the effective period.

The specific provisions are:

 

Beer

  • Reduce standard tax rate from $18 per barrel to $16 per barrel on the first 6 million barrels brewed or imported into the U.S.
  • For domestic producers brewing less than 2 million barrels per year only, reduce the current discounted rate to $3.50 per barrel on the first 60,000 barrels, down from $7 per barrel.

 

Wine

  • Expand existing credits for foreign and domestic producers to:
    • $1 per wine gallon for the first 30,000 gallons produced;
    • $0.90 per wine gallon on the next 100,000 gallons produced; and
    • $0.535 per wine gallon on the next 620,000 gallons produced.
    • The current $1.07 per wine gallon rate is still otherwise in effect.
      • Effectively, a winery producing up to 30,000 gallons annually would only pay 7-cents per gallon in net taxes; and
      • A winery claiming credits on the full 750,000 gallons allowable would receive a total reduction of $451,700 in annual excise taxes
  • Adjust the allowable abv of wine that receives the $1.07 rate from 14% to 16%
    • Wine with an abv from 16-21% would still be taxed at the $1.57 per gallon rate
  • Extend the lower $1.07 to low alcohol content wines (less than 8.5% abv) with a carbonation of no more than 0.64 grams of carbon dioxide per hundred milliliters of wine

 

Hard Cider

  • Expand existing credits to foreign and domestic producers to:
    • $0.062 per wine gallon for the first 30,000 gallons produced;
    • $0.056 per wine gallon on the next 100,000 gallons produced; and
    • $0.033 per wine gallon on the next 620,000 gallons produced.
    • The current $0.226 per wine gallon rate for hard cider is still otherwise in effect
  • These credits only apply to “Hard Cider”, defined as products made from apple or pear juice or concentrate, with an abv of no more than 8.5% and a carbonation of 0.64 grams of carbon dioxide per hundred milliliters

 

Mead

  • Establish a definition of mead in the tax code as a product derived solely from honey and water, with no other fruit product or flavoring, with an abv of less than 8.5% and a carbonation of no more than 0.64 grams of carbon dioxide per hundred milliliters
  • Extend the $1.07 per wine gallon rate to mead products

 

Spirits

  • Establish tiered tax rates for distilled spirits of:
    • For the first 100,000 proof gallons produced, $2.50 per proof gallon.
    • For production over 100,000 but less than 22,130,000 proof gallons, $13.34 per proof gallon.
    • For all production over 22,130,000 proof gallons, the standard rate of $13.50 per proof gallon.

 

Effect on Foreign Producers

The Tax Bill also extends rules relating to foreign producers assigning their reduced tax rates and expanded credits to their domestic importers. The aim to limit the ability of foreign producers to essentially game the new federal tax structure. It does this by preventing foreign from both assigning to any one importer more product than the foreign producer actually produces, or assigning tax-reduced products among several importers of an amount that would exceed the highest threshold amount for receiving a tax break. For example, a foreign winery cannot inflate its production numbers to receive extra tax credits; and a foreign brewery that produces 8 million barrels per year it cannot assign 4 million to one importer, and the other 4 million to a different importer, and still receive tax relief on all 8 million barrels. However, there are some concerns about how effective the tracking will be, and how much enforcement there will be if a foreign producers does seek to game the system.

 

In-Bond Transfers

The bill also adjusts rules regarding in-bond transfers for beer and spirits, permitting more transfers before tax must be paid. These adjustments permit tax-free transfers for:

  • Beer may be transferred tax-free from one brewery to another if the transfer is between breweries:
    • That are owned by the same person (an existing provision);
    • Where one brewery owns a controlling interest in the other;
    • Where one person or persons owns a controlling interest in both breweries; or
    • Where the ownership of each brewery are completely independent of each other, but the transferring brewery completely divests itself of all interests in the beer and the recipient brewery accepts full responsibility for payment of the tax.
  • Spirits may be transferred tax-free if the transfer is made under bond between bonded premises and in containers that are at least one gallon.

It remains to be seen how these adjustments to in-bond transfers will affect the industry, though the impact could be quite remarkable. Certainly for beer, these provisions appear to permit much greater opportunity for collaboration between breweries, and especially when the breweries are operating under the same corporate structure.

 

Where Have We Come From, To Where Do We Go?

The CBMTRA has had an interesting history. It began as a much more limited bill, introduced in 2015 to provide limited tax relief to select small producers, but then ballooned into its current shape. Over the years, industry groups including Wine Institute and the Brewer’s Association lobbied hard for passage — and indeed by this summer, it reportedly had majority support in both houses of Congress. However, it appears in this political environment, all the air was taken up by more ambitious bills. Thankfully for the beverage alcohol industry, the Senate, instigated by Senator Rob Portman (R-OH), included the provisions of the CBMTRA in its version of the Tax Bill. It survived the reconciliation process with the House, and now, after party line votes in Congress, the bill moves to the President’s desk for an all-but certain signature.

Responses from industry members has been overwhelmingly positive, as it appears that everyone will benefit from the bill. While large producers — even $100 billion corporations — will also benefit, it is undoubted how positive the tax relief can be for small producers. How the industry at large will react, though — whether by reducing prices, raising employee wages, investing in future growth, or just paying a dividend to owners — remains to be seen.

There have also been complaints from some predictable sources, who argue that taxes on beverage alcohol should go up, not down. Many note health concerns, stating that higher taxes mean less drinking, and therefore fewer ill-effects caused by overconsumption of alcohol. Others simply note that federal excise taxes haven’t been adjusted since the late 80s, and have failed to keep up with inflation. They remark that, with the reduced rates and expanded credits available in this bill, beverage alcohol will be taxed federally at the lowest rates since the 1950s.

However, these arguments largely ignore the additional state excise taxes that apply to all alcohol products, and the ongoing efforts among the states to increase their tax rates. And, while any death or illness is tragic, they also overlook the fact that alcohol consumption has been on a steady decline for years, without overly burdening those who continue to enjoy it.

It also bears repeating that all of these these provisions have an expiration date of December 31, 2019. This means there might be only a small window for producers and importers to enjoy the tax benefits provided by the tax bill. Without future action by Congress, everything will revert back to their current rates and rules in 2020 — which seems to be a common theme of the Tax Bill. In some corners, it is a given that a future Congress will come back and make everything permanent — after all, no one wants to be seen as a tax hiker.

But the future is definitely cloudy, and it is unclear where political trends will lead us. That could mean that, someday in the not-too-distant future, beverage alcohol producers and importers might wake up to an effective tax hike. Barring this uncertainty, it seems that producers and importers should take advantage of what they’re getting now, and not look a Congressional gift horse in the mouth.

 

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Happy Holidays From the ShipCompliant by Sovos Team!

Tue, 12/19/2017 - 16:19

As we’re right in the thick of Holiday Season, we at ShipCompliant by Sovos wanted to send our warmest greetings to everyone who has made our community so special this past year!

We hope this past year has been a great one for your business, and we wish you all the best in 2018. As always, ShipCompliant by Sovos will be there to navigate you through the challenges of beverage alcohol compliance in the new year.

With potential new developments emerging all across the United States on the horizon, it’s an exciting time to be in our line of work. While new regulations and rates can seem daunting at times, we are committed to providing the most comprehensive and scalable solutions to enable your business to thrive.

If you have any questions about how ShipCompliant by Sovos will handle new regulations, do not hesitate to reach out to your account manager. In the meantime, we hope you enjoy the rest of the holiday season and we want to thank you for being a part of our extended community.

Best wishes for an outstanding 2018!


-The Sovos Family

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BevAlc Roundup | TTB to delay labeling requirements for Hard Cider tax products, A-B can sell in China and so can you, and when possums drink, they go for the good stuff.

Mon, 12/18/2017 - 17:09

As we move towards the holidays, we’ve got a busy roundup for you to enjoy with some egg nog or spiced wine; top stories include a new round of law suits looking to open up direct shipping for retails, Walgreens stores are now serving as hold locations for direct orders, and distinctions between wine drinking and beer drinking countries are falling apart.

LegislativeUpdate

TTB Newsletter | Top stories include announced delays to the Hard Cider Tax Class labeling statement requirement and two new AVAs; in other news, the new Permit Online system has a delayed release date. TTB

What You Need To Know About Shipping Alcohol | A drinks laywer demystifies the recent buzz around legal changes affecting alcohol shipping in the U.S. SevenFifty Daily

The FDA and The Wine and Spirits Industry – Surprise Inspections Anyone? | Barbara Snider, senior counsel to Hinman & Carmichael, explores the laws behind FDA’s role in regulating alcoholic beverage producers, and lays out best practices for compliance. Hinman & Carmichael

Lawsuits Take Aim At Interstate Shipping | A concerted effort is underway to get retailer shipping laws before the Supreme Court. Wine-Searcher.com

Canada’s Wine Shipping Laws Go To Court | Dairy, egg and poultry producers worry about impact of interprovincial trade. Wines & Vines

IndustryUp

How to Get Ready for End-of-Year Reporting | We hosted a webinar last month detailing updates to legislation, potential changes on the horizon, and best practices for filing. ShipCompliant by Sovos

Walgreens Is Now A National Drop-Off Location For Wine | Both Wine.com and FedEx are using the drugstore’s branches for wine delivery. Wine Business

This Is How The World’s ‘King of Beer’ Says You Can Still Conquer The Chinese Market | Innovation and differentiation are key to a company’s success in China–along with making operations more efficient and tapping the right talent and strategies to win. Fortune

Michigan Wine Lovers Have No Access To 89% of Wines | New economic developments have increased the demand for interstate shipment of wine, but also throw in to sharp relief the deficiencies of the now archaic wine distribution systems and laws still in effect in many states. NAWR

Will California North Coast Fine Wine Pass A “Tipping Point” In 2018? | Two key matters on the horizon for the fine-wine business in the North Coast in 2018 are whether fine-wine sales will continue the strong, steady climb and the possibility of another large direct-to-consumer market opening nationwide. North Bay Journal

Fire Damage Becoming Clear | Two months after fires ravaged Napa, Sonoma, and Mendacino counties, a look at their impact. SVB on Wine

JustFun

Direct-to-Consumer Smartphone Apps Increases Sales and Consumer Loyalty | There is now a company dedicated to creating and maintaining DTC apps specifically for wineries. Wine Business

Craft Beer Is Dead — Your Favorite Delicious Style Killed It | In the past two weeks, two well-respected national beer writers have penned articles foretelling the demise of craft brewing, bemoaning the surging popularity of two different styles. Westword

Buyer Beware | There is, on the internet, a very active secondary market in rare bourbons and other alcoholic beverages. Unfortunately, in the United State the secondary market in alcoholic beverages is illegal. Chuck Cowdry Blog

We Can No Longer Divide The World Between Beer And Wine Drinkers, Economists Say | What is the fate of the mythic beer-drinking nation in a globally integrated economy? Quartz

Florida Opossum Threw Back Some Cognac After Breaking Into Liquor Store | Just because you eat trash all week doesn’t mean you shouldn’t drink like a king once in a while. USA Today

The post BevAlc Roundup | TTB to delay labeling requirements for Hard Cider tax products, A-B can sell in China and so can you, and when possums drink, they go for the good stuff. appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Retail DtC rules examined, how the alcohol industry can deal with sexual harassment, and beer does make you feel differently than wine.

Mon, 12/04/2017 - 16:16

In today’s roundup, we continue our examination of retailer Direct-to-Consumer rules, how wholesalers impact laws regarding how beverage alcohol gets distributed, whether wine labels should include ingredient lists, and how different beverage alcohol products affect your emotions in different ways.

LegislativeUpdate

TTB Newsletter | Top stories include six new approved grape varieties for American wines and a new tool for determining beer formula requirements; in other news, Permits Online will be unavailable from December 14-18 as the TTB works to launch the new and improved Permits Online. TTB

Where Is Retailer DtC Still Permitted? | Part 2 in our series of posts on retailers selling direct to consumer investigates the current regulatory environment in which retailers must operate. ShipCompliant

Laying Down the Distribution Law | Beverage attorney John Hinman explains why the wholesaler is always right, and how American liquor delivery laws can change. Wine-Searcher.com

Illinois’ Interstate Alcohol Regulations Hurt Small Businesses, Consumers | Legislation signed into law in 2016 could put a damper on Chicago’s retail wine market. Illinois Policy 

Comptroller Franchot Seeks To Lift Cap On Craft Beer Production, Sales | Maryland Comptroller Peter Franchot unveiled a legislative package Monday that would make sweeping changes to the state’s regulation of craft breweries. Baltimore Sun

IndustryUp

Confronting Sexual Harassment In The Drinks Industry | Managers take a stand against workplace harassment with staff training programs and zero-tolerance policies. SevenFifty Daily

Should Wine Labels List Ingredients? | Wine industry experts weigh in on whether wine labels should be more transparent, revealing when common additives are used. SevenFifty Daily

Hops Could Fall Out Of Favour In Craft Beer Industry As Brewers Look To Barley | Heavily-hopped beers may be on the way out as famers continue to raise the cost of their crops, according to Sharp’s beer sommelier Ed Hughes. Drinks Business

How The Vanilla Shortage Is Affecting Spirits Production | Surging vanilla prices are forcing spirits producers to get creative–or eat the costs. SevenFifty Daily

JustFun

How To Spot A Fake Whisky | The fight is on against counterfeiters of collectible spirits. Financial Times

How Our Emotions React Differently To Alcoholic Drinks | Wine relaxes you, vodka gives you energy and beer boosts your confidence. Daily Mail

Where Unsellable Wine Goes To Die And Become Fuel For Your Car’s Gas Tank | That unsold bottle of Merlot is probably winding up in your gas tank. Quartz Media

SodaStream’s New Concentrate Lets You Mix Your Own Champagne |
SodaStream has been inching its way into the adult beverage scene for a little while now and today the company announced that it’s launching its take on champagne (at least in Germany). Engadget

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Direct-to-Consumer Shipping: Where is Retailer DtC Still Permitted?

Tue, 11/28/2017 - 19:44

In August, Missouri repealed rules that previously permitted limited direct to consumer (DtC) sales of wine by licensed retailers. This rule change highlighted the complexities surrounding retailer DtC sales. This is the second installation of a three-part blog series to remove some of the confusion these complexities can cause. Today, we discuss where retailer DtC is still permitted, as well as the compliance requirements imposed on retailers making these sales.

 

Basic Retailer DtC Rules

As of this publication,13 states and the District of Columbia permit out-of-state retailers to sell directly to their residents, and fulfill those orders through a common carrier. Ten of these states require the retailer to receive a license, and comply with the rules of that license; the other three operate under a “reciprocal” process, described below. Except for selling to residents of these 13 states and D.C., it is illegal for a retailer to deliver beverage alcohol into any state in which it does not have a licensed retail operation.

 

Licensed Retailer DtC States

If they receive a license and comply with the rules under that license, out-of-state retailers may sell directly to customers in Alaska, Oregon, Nevada, Wyoming, Nebraska, North Dakota, Louisiana, West Virginia, Virginia, New Hampshire, and the District of Columbia. However, there are some quirks:

  • Neither Alaska nor D.C. have an actual DtC license, but standard DtC compliance rules – such as packaging rules and not selling to dry communities – apply.
  • In Nevada, retailers can receive a certificate of compliance if they send in an affidavit in lieu of a Federal Basic Permit, indicating that they are in good standing with their local alcohol board.

For these states, the licenses are generally the same as those required for manufacturers to ship DtC – though the price may vary, as is the case in Louisiana. The same restrictions imposed on suppliers will also apply to retailers. Without this license, retailers cannot legally sell to and make deliveries to residents of these states.

Nevada, Wyoming, Louisiana, Alaska, and West Virginia permit the sale of wine only. Nebraska, North Dakota, D.C., and New Hampshire permit the sale of all types of beverage alcohol. Virginia permits the sale of beer as well as wine, as does Oregon. However, Oregon only allows beer to come from states that also permit Oregon breweries to deliver to their residents. For more on DtC beer sales, head here.

Retailers must also follow specific tax rules. Each of these states, except for Alaska and D.C, require seller (i.e. the retailer) to collect and remit both excise taxes and state sales taxes. Neither Oregon nor New Hampshire have state sales taxes, but New Hampshire levies a special liquor tax that will apply. These states also require a regular report from the retailer detailing the DtC sales they have made – though in some states, this may be coupled with a tax return.

When the product is being delivered, it must be shipped in a properly labeled package indicating it contains alcohol and an adult’s signature is required for delivery to be made. Carriers experienced with the DtC market (primarily FedEx and UPS — USPS does not accept packages containing alcohol) are aware of these rules, and will collect signatures. These carriers will also ensure retailers have valid DtC licenses before agreeing to ship their packages.

There are also some individual state rules to note. Alaska, West Virginia, and New Hampshire have “dry” communities where it is illegal to sell alcohol in any manner, including by a DtC delivery. West Virginia and Virginia will require a DtC seller to indicate to the alcohol control boards which labels will be sold DtC. Virginia requires a retailer to post that they have permission from the manufacturer to resell their products through DtC, and also prohibits DtC sellers from using third-party marketing to advertise their DtC market.

These may seem like a long list of onerous rules that unfairly restrict retailers from participating in the DtC market. However, these are the same type of rules that wineries, the bulwark of the DtC market, have successfully complied with for years.

It may also seem unfair that the list of states that permit retailer DtC is so small. This, however, is a local political consideration. Each state is empowered to establish its own alcohol beverage rules, and many states have determined that it is not in their interests to permit out-of-state retailers to sell directly to their residents. Residents — and retailers — who oppose those restrictions can petition their state legislators to amend the rules.

Reciprocal Retailer DtC States

Beyond the ten “license” states and D.C., there are currently three states that operate under what is known as “reciprocity” rules. These states are California, New Mexico, and Idaho, and they all permit shipments of wine only. Missouri used to be a reciprocity state, but with the rule change, it now prohibits all deliveries made by retailers both in-state and out-of-state.

Reciprocity is essentially an “I’ll scratch your back if you scratch my back” methodology. More technically, these three reciprocity states say they will allow out-of-state retailers to sell directly to their residents only if those out-of-state retailers are in a state that allows out-of-state retailers to sell directly to their residents without any licensing, tax, or other regulatory burdens. Put more simply, the rules in state B must be as free and open for retailer DtC sales as the rules in state A for a retailer shipping from state B to sell to a resident of state A. They may also require a specific letter of agreement between the two states, indicating that there are no license or tax requirements.

In effect, this rule limits residents of California, New Mexico, and Idaho to only receive shipments from retailers from California, New Mexico, and Idaho. Retailers in California, New Mexico, and Idaho can then freely sell to residents of those states – or, if they get licensed, sell to residents of the other ten states, plus D.C.

Because a lack of regulatory burdens is the crux of these reciprocity rules, from a compliance standpoint it can much easier for a retailer in one of these states to sell to residents of the others. However, obviously, their customer base will be limited.

Want to know everything about DtC shipping? Download our 2017 Direct-to-Consumer Wine Shipping Report, and be on the lookout for the 2018 version of the report, set to be released early next year.

 

The post Direct-to-Consumer Shipping: Where is Retailer DtC Still Permitted? appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

BevAlc Roundup | Federal tax relief could be included in Senate’s overall tax reform plans, high hopes for the 2017 vintage, and we now know wine is older than we thought.

Mon, 11/20/2017 - 14:57

In today’s round up we go through a review of the rules for interstate wine shipping based on an interview with ShipCompliant’s own Alex Koral, examine an all-time low in global wine production, and look at the problems of categorizing whisky.

 

LegislativeUpdate

 

TTB Newsletter | Top stories include upcoming updates to permits online and FDA guidance for menu labeling requirements that will be required in May 2018. TTB

Cheers! Senators Propose Lowering Alcohol Tax | Senators propose amendment to their tax reform package to include long-discussed Craft Beverage Modernization and Tax Reform provisions. CNN

Arkansas: Federal Judge Denies Injunction Against Grocery Store Wine Expansion | A request for a preliminary injunction to block a state law permitting grocery stores to sell all types of wine, not just Arkansas and so-called small batch wines, was denied. Arkansas Matters

PA House Committee To Vote On Modernizing Liquor Licensing | The Pennsylvania House of Representatives’ Liquor Control Committee is set to vote on a measure to lift liquor licensing restrictions that have been in place since the repeal of Prohibition. Legal Intelligence

Commission Tentatively Endorses Plan To Legalize Sunday Retail Alcohol Sales In Indiana | Members of the Alcohol Code Revision Commission said overwhelming public support for Sunday sales prompted them to endorse a preliminary draft of a legislative proposal authorizing Hoosiers to purchase carryout alcohol on Sundays. NWI Times

 

IndustryUp

 

Sales Of U.S. Wines Up 4% In October | A rising tide lifts all boats, and despite the significant personal losses wineries and their workers faced due to wildfires in October, U.S. wine sales continued to lift the industry’s fortunes higher. Wines & Vines

Thirstie Launches The First Fully Integrated Ecommerce Solution For The Multi-Billion-Dollar US Alcohol Industry | The new ecommerce platform lets customers order alcohol and wine directly from the websites of global alcohol brands. Digital Commerce 360

Why Asian Whisky Has Seen Such Explosive Growth On The American Market | According to Nielsen Answers On Demand, Japanese whisky has grown more than 43% in volume and 21% in value for the 52 weeks ending Oct. 7. Forbes

Overall Beer Market To See Lower Volumes, But Craft Should Enjoy 5 to 6 Percent Growth, Report Says | Craft beer’s days of heady double-digit growth may be over, but it is expected to produce volume growth of 5 to 6 percent this year and outperform the broader category, according to a new report. CNBC

California 2017: Wildfires, High Quality And An End To Drought | The 2017 harvest across California is being hailed as excellent in a year that witnessed an end to a five-year drought as well as savage wildfires in the north of the state. The Drinks Business

 

JustFun

 

Protecting The Essence Of Scotch | Scotch distillers depend upon peat bogs but climate change could destroy them. Daily Beast

The Improbable New Wine Countries That Climate Change Is Creating | Though experts remain devided on which areas of the world will lose and which will win, they all agree that the world’s most famous wine regions are not going to remain the same. Quartzy

Earliest Evidence of Wine Found In Giant, 8,000-Year-Old Jars | The new research pushes chemical evidence of wine 600 to 1,000 years before the previous oldest estimates. Washington Post

Tapping Into The Beer Cocktail Trend | Why cocktails that spotlight the dynamic characteristics of craft beer are gaining traction. Seven-Fifty Daily

Genetically Modified Wine? Experts Find The Gene That Adds Flavour To Beer And Wine | Researchers in Belgium have discovered the gene in yeast responsible for giving beers and wine their sweet flavour. The Drinks Business

The post BevAlc Roundup | Federal tax relief could be included in Senate’s overall tax reform plans, high hopes for the 2017 vintage, and we now know wine is older than we thought. appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

Orchestrate 2017: #LevelUp and Learn from Industry Leaders

Tue, 11/14/2017 - 19:33

ShipCompliant is excited to sponsor Orchestrate 2017 at the North Warehouse in Portland, Oregon! If you’re planning to attend the conference this week, make sure to stop by our booth and say hi to our awesome team. And be sure to sign up for our own Alex Koral’s presentation, “Ease the Burdens of Invoicing and Reporting,” which will take place at 11:15 a.m. on Wednesday.

#LevelUp at Orchestrate 2017

Orchestrate is the largest annual event for all Orchestrated users to gather in one place to learn, collaborate, network and contribute to the future of business management software in the craft beverage manufacturing space. The theme for this year’s event is vintage gaming, exemplified by the #LevelUp hashtag.

Attendees will hear from an exciting mix of keynote speakers: Brad Windecker of Orchestra Software, Barb Sessler of Revolution Brewing Co., Zack Rice of Firestone Walker Brewing Co., Jeremy Danenhauer of Modern Times Beer, and Justin Smith of Grayton Beer Co.

Make sure to use the hashtags #Orchestrated2017 and #LevelUp to connect with fellow conference attendees and share pictures or insights.

Ease the Burden: Share your experiences and learn from your peers

Alex Koral will be hosting the “Ease the Burdens of Invoicing and Reporting” session on Wednesday morning at 11:15. The idea behind the panel is to foster a discussion on best practices for breweries when it comes to accounting solutions and practices.

Throughout the discussion, we’ll:

  • Analyze the various manners available to breweries for invoicing and reporting
  • Ensure accuracy in reconciliation and accuracy of invoices
  • Utilize technology to streamline your processes
  • Develop methods of preparation in case of an audit
  • Understand how technology solutions can assist with invoicing and reporting

We want to hear from breweries of all different backgrounds on how they manage their accounting needs, what works, what hasn’t worked, how their accounting practices have evolved, what they wish they knew more of when they started, what they wish they were doing better now, and more. The goal is a friendly discussion among a few brewery accountants or operators that informs our audience about the range of possible accounting solutions that are out there.

While this will be under the umbrella of O-Beer and ShipCompliant, we don’t want this to be an advertisement. Feel free to also talk about how you don’t use these services, or where you wish these services were better.

The post Orchestrate 2017: #LevelUp and Learn from Industry Leaders appeared first on ShipCompliant | The software leader of the beverage alcohol industry.

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