The Latest on Retailer Direct-to-Consumer (DtC) Shipping

Lizzy Connolly
October 15, 2021

Retailer direct-to-consumer (DtC) shipping still has a way to go in terms of being as widely accepted as DtC wine shipping. However, there has been continued interest in making that a reality. 

Sovos ShipCompliant keeps a close watch on the latest updates in the beverage alcohol industry, and we’ve gathered a few of the top recent headlines related to DtC retailer shipping. 

Court case updates from NAWR

Tom Wark, executive director at the National Association of Wine Retailers (NAWR) provided a rundown of current federal court cases debating the effort to open more states for interstate wine retailer-to-consumer shipments

The Granholm v. Heald Supreme Court case made clear that a state’s alcohol laws may not pursue legitimate state interests through discrimination against out-of-state economic interests without demonstrating with concrete evidence that no alternative, non-discriminatory options exist. The Tennessee Wine v. Thomas decision confirmed that this principle applies to retailers in addition to producers. 

In nearly every instance when these lawsuits are filed in federal court, the state’s wholesalers petition the court to “intervene” in the case, making them defendants along with the state. This means those challenging the law find themselves up against the state and the state’s wholesalers. 

 

Wark noted that while it is not illegal in any state for consumers to purchase wine from an out-of-state retailer, it can be illegal for a buyer to have legally purchased wine shipped to them. There are currently eight states with lawsuits challenging the DtC retailer wine laws. 

Read Wark’s full breakdown here

The cost of shipping wine

Free shipping is no longer just a “nice to have” for consumers — it’s become an expectation. However, DtC wine shipping costs continue to creep upward. But why?

Larry Cormier, Sovos ShipCompliant vice president and general manager, spoke with Pix Wine about what alcohol producers and retailers are facing. It’s largely driven by the complicated compliance environment, pushing forward high out-of-pocket costs to pay for permits, licensing fees and paperwork.

Wine still accounts for about $500 million a year in revenue for FedEx and UPS, which means that those organizations are willing to continue managing the attendant paperwork, bureaucracy and regulation. 

Read the full Pix Wine article here

The ups and downs for retailers shipping DtC

Alex Koral, Regulatory General Counsel at Sovos ShipCompliant, provided further detail on recent changes for retailers shipping DtC in a contribution for Wine Industry Advisor. For starters, Idaho and Nevada altered previous stances on residents receiving wine shipments from out-of-state retailers. 

“These reversals in law come as retailers and advocates continue to fight in court, with limited success, to gain the right for DtC shipping in more states,” Koral wrote. “At the same time, retailers across the country have had to shut down shipping programs at the behest of carriers, who themselves face scrutiny for any and all improper shipments state regulators hear rumors of.”

Koral explains how the Supreme Court case Granholm v. Heald started to pave the way for DtC wine shipping, “as long as the wineries would agree to get licensed by the destination state and abide by a variety of regulatory requirements.” But does that apply to retailers? What can retailers do to also legally ship wine to consumers? 

While of course it would be a great boon to have the Supreme Court eviscerate discriminatory state laws regarding DtC shipping by retailers, it will not be sufficient in itself.

 

Check out the full Wine Industry Advisor article here

As always, stay tuned to Sovos ShipCompliant for the most up-to-date information on DtC alcohol shipping.

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Lizzy Connolly

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