DtC Compliance: Tips from the Pros
On Wednesday, WineAmerica hosted a well-attended Zoom listening session on compliance in the all-important area of direct-to-consumer (DtC) wine shipping, a hard-fought privilege for the wine industry.
I opened with a brief history of how the wine industry successfully fought for this privilege, followed by Executive Vice President and Director of Government Affairs Michael Kaiser describing his role as a Board member of the consumer-focused Free the Grapes organization and as an advocate for the USPS Shipping Equity Act to let the postal service join FedEx and UPS in delivering wine to consumers in states where it is allowed (47, plus DC).
But the most vital part of the session was detailed compliance information from Alex Koral, a Senior Regulatory Counsel of Sovos ShipCompliant, a WineAmerica supplier member.
As always, the session was for WineAmerica members only, and was recorded, so those who couldn’t attend can contact Tara Good to access it (tgood@nullwineamerica.org).
A Tale of Twos
I described the Granholm v. Heald Supreme Court decision which led to today’s DtC environment as a “tale of twos” and a tipping point in a very long struggle.
– Two states, Michigan and New York, which allowed in-state wineries to ship directly to in-state consumers, but not wineries from other states
– Two women, Eleanor Heald, a Michigan wine collector who also wanted to receive out-of-state wines directly; and Juanita Swedenburg, owner of Swedenburg Estate Vineyards, a small Virginia winery which wanted to ship to eager New York consumers and sued New York due to its prohibition against that.
– Two laws, the “Dormant Commerce Clause” of Article I of the US Constitution, which basically allows states to regulate commerce within their borders but with an assumption of fairness to other states, versus the XXI Amendment to the Constitution which repealed Prohibition but let all 50 states regulate alcohol however they wanted, and also granted a de facto monopoly to wholesalers
– Two concepts, consumer choice versus monopoly control
– Two events, the December 7, 2004 oral arguments (which I attended), and the May 16, 2005 announcement of the 5-4 decision in favor of opening DtC (which I call Wine Emancipation Day). Of the 9 justices who voted that day, only one still remains on the court: Clarence Thomas, who voted against us.
– Two eras, before and after Covid, when DtC had been growing strongly for many years but boomed due to Covid restrictions against personal contact, and has grown to be 12% of total wine sold in the US.
Wine’s economic impact on the US economy grew by 25% from 2017 ($220 billion) to 2022 ($276 billion), reflecting increases in wineries, employees, wages and other variables. DtC was a significant part of that growth, particularly during the pandemic and especially for the smallest wineries.
WineAmerica Advocacy, Wine Institute Legacy
Executive Vice President and Director of Government Affairs Michael Kaiser then described how he has been active in the DtC arena, serving for many years on the Board of the consumer-focused “Free the Grapes” organization, and spearheading WineAmerica’s advocacy for the USPS Shipping Equity Act to allow the postal service to ship wine like FedEx and UPS.
We also applauded our colleagues at Wine Institute for their decades of work on opening states to reasonable DtC regulations, to the point where there are now 47 states and the District of Columbia which allow it in some form. (Delaware, Mississippi, and Utah are the missing links.)
Privilege Brings Responsibility
Alex Koral of Sovos ShipCompliant shared a comprehensive powerpoint presentation on the vital importance of compliance and many requirements wineries must follow in order to maintain the privilege of DtC. Among the most vital is that any winery wanting to ship into any state must have its own license in that state in order to be legal.
The wineries which Zoomed in yesterday have already received the recording of the session, and other WineAmerica members may do so by contacting Vice President of Development Tara Good.
Sovos ShipCompliant also offers many free resources on its website, and has partnered with Wines Vines Analytics to track the growth in DtC shipment over the years.
We thank Alex and his colleagues for their support of WineAmerica and their service to the industry.
St. Julian Wines Shine
One of WineAmerica’s oldest members, St. Julian Winery in Michigan, has also routinely been one of that state’s best, and proved that again recently at the annual Governor’s Cup competition, conducted by WineAmerica supplier member Beverage Testing Institute based in Chicago.
The late David Braginini was one of WineAmerica’s most loyal Board members and served as Treasurer for many years. His family continues to run the operation in Paw Paw, and Vice President of Winemaking Nancie Oxley has maintained the tradition of excellence, and was also Michigan’s first female winemaker.
The Michigan Wine Collaborative, a WineAmerica SRAAC member, recently announced that the top Governor’s Cup wine was the St. Julian Winery 2020 Braganini Reserve Cabernet Franc. Not only that, but the winery also won Best of Show in several other categories: Hybrid Red (2020 Petite Pearl), Rose (Dry Rose), Fortified (Solera Cream Sherry), and Specialty (Sweet Nancie Sparkling Peach). What a great showing.
Thanks and congratulations to the Braganini family and all their colleagues.
