2019 ShipCompliant End-Of-Year Webinar

Delaney McDonald
December 12, 2019

In our end-of-year webinar we covered the news and changes that encompassed the beverage alcohol industry in 2019. We discussed industry growth, the latest trends like hard seltzer and canned wine, and recent regulatory updates like the Tennessee Wine & Spirits v. Thomas decision. 

Industry growth through ShipCompliant data

2019 was a busy year for direct-to-consumer shipping. Our thousands of customers shipped almost 9 million packages and generated and filed 360,000 reports. We focused on protecting and helping grow the DtC channel. As 2020 nears, we are looking at opportunities to expand services for distributors and importers and keeping an eye on retail DtC and DtC shipping for cider, beer and spirits.

Regulatory Changes in 2019

There were a lot of regulatory updates in 2019 that could affect beverage alcohol producers and DtC shippers. Here are some highlights we covered: 

  • CA: CCPA, which will protect customer data is going into effect Jan. 1 2020
  • CT: Raised excise taxes
  • CT and FL: Now allow permit DtC shipping by retailers
  • LA: Expanded bottle size options for DtC shipping 
  • OR: Doubled the cost of various licenses, new AVA labeling rules for wines produced in the state
  • VA: Raise the price of DtC licenses
  • WA: dropped the threshold for B&O tax 

DtC Wine Shipping in National News

In the past year, the national news media paid close attention to changes in DtC Shipping—from a business, consumer and regulatory perspective. The Craft Beverage Modernization and Tax Reform Act (CBMTRA), which lowered the federal excise tax for wineries, breweries and spirits producers for a two year period, is set to expire December 31, 2019 unless Congress takes action. The US has also increased tariffs on certain foreign goods which could have effects on the wine industry and customer preferences.

In the Supreme Court case of Tennessee Wine & Spirits v. Thomas, the court decided Tennessee’s residency requirements strongly favored residents and noted that the non-discrimination and anit-protectionist principles upheld in the Granholm decision may focus on wine producers, also applies to beverage alcohol retailers. This decision could pave the way for laws in 20 states to be challenged in court.

Ongoing Industry Trends: Gen Z, Hard Seltzers, Premiumization and Marijuana 

As Generation Z (people born after 1997) age into the legal drinking age there is speculation on if they will be as alcohol-friendly as previous generations. With movements toward more health-conscious products and more readily available consumer information, there is skepticism  if Gen Z-ers will consume alcohol at the same rate as millennials or Gen X-ers. 

Some say 2019 was the year of the hard seltzer. With demand continuing—sales growing roughly 200 percent in the past year according to MarketInsider—and the brands and options still expanding, it seems hard seltzer is here to stay.

In the past decade we’ve seen the trend of ‘premiumization,” consumers purchasing higher priced items, valuing quality over price. But with the increased popularity of affordable boxed and canned wines it will be interesting to see if premiumization continues to stay as prevalent.

As more states consider or work towards legalizing recreational marijuana, some beverage alcohol producers grow concerned that this will become a competing product. Though, from the states where is already legal we haven’t seen a huge correlation.  

2020 Forecast: Industry Trends and Outlook

As 2020 nears, and we look back at this year’s data (our annual DtC Wine Shipping Report for 2019 will be released in January), we predict DtC shipping will continue to build a broader market. With the resolution of some ongoing litigation on retail DtC shipping, and potentially more states like Alabama or Delaware allowing DtC shipping the DtC market could expand.

With room for growth in the DtC shipping market, there is still some uncertainty ahead in the general beverage alcohol industry. There are concerns on where growth can come from, and how climate change will continue to impact growers. 

Best practices for end-of-year reporting

In the second half of the webinar we went over  end-of-year reporting best practices and things to keep in mind when filing with our platform. Being fully informed and prepared through trainings and webinars such as this one can help minimize time spent on reporting during the busy holiday season. Our support team is also available at 303-996-2356 or at shipcompliantsupport@sovos.com

 

Listen to the webinar for more in-depth information and to get detailed end-of-year reporting best practices here

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Delaney McDonald

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