DtC Shipping for Beer & Spirits: How to Develop and Grow a New Market

Delaney McDonald
August 26, 2020

Direct-to-consumer (DtC) is a phrase that can encompass many things: tasting room sales, retailers sales, sampling and festival sales. But, DtC shipping is the shipping of alcohol directly to the purchaser through delivery by a third-party carrier (e.g., UPS or FedEx). In DtC shipping the customer gets the product indirectly, but the sale is made directly with the producer.

There are a handful of reasons that breweries and distilleries might consider getting into the DtC shipping space:

  • To connect directly with consumers. Consumers prefer a personal connection and are increasingly relying on internet sales.
  • To develop a national presence. Through DtC shipping, you can enter a new state without going through the three-tier process. It can also help build your brand so you can expand your three-tier profile in the future.
  • To access a valuable new market. Wine shipping is a $3+ billion annual market. With a growing consumer base and online shopping becoming the preferred purchasing method for consumers, there is a lot of opportunity for beer and spirits to grow in the ecommerce and DtC shipping space.

DtC alcohol shipping map

 

*As of August 2020

How DtC shipping is currently done

After the Supreme Court case Granholm v. Heald in 2005, discriminatory treatment of out-of-state producers in DtC shipping was prohibited. This led to a “compromise” situation where states can allow DtC shipping of wine with license and tax payments required. Currently, 46 states allow DtC wine shipping.

Why not beer and spirits?

When it comes to beer and spirits shipping DtC, there are product-type concerns—some consider spirits as “dangerous” and when it comes to beer, the majority of the market is large corporations who wouldn’t benefit as much from DtC shipping. And, compared to the wine industry there has been significantly less engagement in lobbying efforts.

And cider?

Cider products are sometimes grouped into beer or wine regulations, but can vary depending on the ABV or fermented material—creating differences in taxation requirements. DtC shipping for cider is currently a grey area since no state’s DtC laws mention cider explicitly. So for a cider to be shipped DtC, it must be categorized as a “wine” and shipped under compliance with wine shipping laws. 

Shipping DtC compliantly—the basics

  • Licensing: Getting licensed is the first step to entering a new state. Almost every state requires a special shipping license, but the license names can vary. If you’re filing manually, prepare for a time-consuming and sometimes costly application process depending on the state.
  • Products: Product lists need to be accurate and compliant before shipping anything. Product and label registrations are required for DtC shipments—this means submitting Certificate of Label Approvals (COLAs) for any products you wish to ship DtC. Also be aware of state-specific product restrictions.
  • Customers: It’s crucial to have safeguards in place to ensure you don’t sell to anyone underage; also note that some states require POS age verifications. There are customer aggregate volume limits and total volume shipped limits that can vary by state as well.
  • Shipping: Ensure your packages and processes are in order, this includes compliant shipping labels and proper use of common carrier delivery services.
    Taxes: States require DtC shippers to pay sales and excise taxes, but the rates can vary. Make sure you’re paying on time and using the proper rates and forms to do so.
  • Reports: All DtC shippers need to report their sales to the states, this requires detailed information on each shipment made. Failure to report on-time and accurately can lead to the loss of your license.

How to expand the beer and spirits DtC map

The DtC wine shipping market has grown because wineries and consumers were very active in advocating for it. In order to expand beer and spirits DtC shipping, the laws need to be changed and this can take significant time. Industry groups like state guilds and national organizations can help create collective action and build lobbying platforms. Involving consumers can also help speed up the process—explain the limits of DtC shipping to any consumers who ask about it and share what they can do to help. 

Learn how ShipCompliant can help with your DtC shipping compliance.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Delaney McDonald

Share This Post
Share on facebook
Share on twitter
Share on linkedin
Share on email

North America ShipCompliant
June 18, 2021
How to Streamline Your Wine Shipping With UPS and FedEx

Wineries that use FedEx or UPS to print shipping labels for beverage alcohol packages can integrate with ShipCompliant to streamline the fulfillment process. This means: No more typing addresses to print labels One click can pull all shipment information from ShipCompliant into FedEx or UPS –  your labels are ready to print Tracking numbers sync […]

EMEA Tax Compliance VAT & Fiscal Reporting
June 17, 2021
Poland VAT Reporting: Draft Amendments to JPK_V7M/V7K Published

In Poland, the Ministry of Finance proposed several changes to the country’s mandatory JPK_V7M/V7K reports. These will take effect on 1 July 2021. The amendments offer administrative relief to taxpayers in some areas but create potential new hurdles elsewhere. Poland JPK_V7M and V7K Reports The JPK_V7M/V7K reports – Poland’s attempt to merge the summary reporting […]

North America ShipCompliant
June 17, 2021
Can Retailers Do Direct-to-Consumer (DtC) Wine Shipping?

The demand among retailers and consumers for interstate direct-to-consumer (DtC) wine shipping is growing, further bolstered in the wake of the COVID-19 pandemic. Retailer DtC shipping is allowed in just 15 states and the District of Columbia, but retailers still saw significant increases in online orders and DtC shipping in the past year. But what […]

EMEA VAT & Fiscal Reporting
June 16, 2021
VAT Trends: A Shift Toward Destination Taxability for Certain Cross-Border Transactions

As detailed within our annual report VAT Trends: Toward Continuous Transaction Controls, there’s an increasing shift toward destination taxability which applies to certain cross-border trades. In the old world of paper-based trade and commerce, the enforcement of tax borders, between or within countries, was mostly a matter of physical customs controls. To ease trade and […]

EMEA Latin America Mexico VAT & Fiscal Reporting
June 15, 2021
Understanding Mexico’s Carta Porte Supplement

On 1 May 2021, the Mexican tax administration (SAT) released one of the most important updates to the electronic invoicing system of the country since 2017. The update was about the new Bill of Lading Supplement (locally known as Suplemento de Carta Porte) that should be added as an annex to the electronic invoice (CFDI) […]