Coronavirus (COVID-19) and Changes in the Beverage Alcohol Industry

Alex Koral
March 26, 2020

It seems as if, in a few short weeks, the entire world has been turned upside down. In response to the coronavirus crisis, society has adopted emergency measures to stem the tide of the virus, with companies shifting to remote work or shuttering wholly, and people adjusting to social distancing or more extreme quarantine measures.

No sector of the economy has been unaffected by the crisis, though each faces unique challenges. For the beverage alcohol industry, the effects have ranged from the extreme to the manageable. 

Every tier in the beverage alcohol industry has faced an impact from the crisis. Retailers have to contend with social distancing measures that prevent consumers from gathering in restaurants and bars, or even from entering a package store. Distributors are dealing with the general strain on delivery services, which means responding to both increased demand for remote fulfillment and considering the greater danger for their employees who cannot simply bunker up at home. Suppliers have had to shut down tasting rooms, experiencing a reduction in those sales, though, where available, direct-to-consumer (DtC) shipping can abate that; however they face a strain ensuring their employees, who are increasingly dealing with shelter in place orders, can even show up for work.

Action in the States

Thankfully, regulators and lawmakers have been responding, and acting to relieve pressure on the industry where they can. Many states have adopted temporary rules that remove restrictions on licensees making deliveries. New York and Colorado, for example, are permitting certain licensees, such as restaurants and brew pubs, to make deliveries of alcoholic beverages in closed containers when accompanied by a sale of food. Curbside sales for package stores have become commonplace. This is a boon for the licensees, who normally see a lot of their revenue from sales of alcohol, and for consumers, who can continue to enjoy a modicum of normal life. 

DtC Wine in the Era of COVID-19

The direct-to-consumer wine shipping market is well placed to support consumers looking to enjoy their favorite wines. As long as delivery services continue to operate—and we all owe an extreme amount of gratitude to all carriers and delivery workers these days—this market will continue to service the wine-loving community.

Regulatory Relief

Another very welcome response has been the adoption of forbearance on tax filings. Most states have issued notices allowing for late filings and eliminating penalties and interest during this emergency period. While these policies affect a broad range of taxes, from personal income tax to sale taxes, many alcohol excise taxes have been affected as well. We at Sovos are tracking worldwide announcements, including those from alcohol regulatory agencies, and sharing them here

While it is beneficial for regulators to be forgiving right now and relieve pressure on businesses dealing with more immediate harms, it should be remembered that regulators themselves are under pressure to avoid personal contact and many agencies have temporarily shut down. That means that response times for things such as licensing, label registrations, and general inquiries, may be severely reduced. Industry members should keep this in mind, and grant regulators the same leeway and understanding that they hope to receive from regulators.

These are uncertain times, with news seeming to change within an hour. What was unthinkable a few weeks ago is now mundane. But with patience and understanding, we can all work together to get through this and return to normalcy. In the meantime, we remain committed to tracking and sharing updates on how the compliance, tax and regulatory environment is evolving in this difficult time.

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Author

Alex Koral

Alex Koral is Senior Regulatory Counsel for Sovos ShipCompliant in the company’s Boulder, Colorado office. He actively researches beverage alcohol regulations and market developments to inform development of Sovos’ ShipCompliant product and help educate the industry on compliance issues. Alex has been in the beverage alcohol arena since 2015, after receiving his J.D. from the University of Colorado Law School.
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