A Larger Kentucky DtC Spirits Shipping Channel – And Beyond

Lizzy Connolly
March 27, 2023

This blog was last updated on December 5, 2024

After a few years of DtC spirits shipping in Kentucky, opening doors for wineries, breweries and distilleries to expand their product reach. The change was especially welcomed by the Kentucky Distillers’ Association (KDA), which helped craft and guide the landmark DtC bill in 2020 that established these permissions.

Founded in 1880, the KDA is the first and only non-profit trade association that promotes and protects the Bourbon legacy in Kentucky. The “promote” part centers around The Kentucky Bourbon Trail®, while the “protect” part encompasses the legislative side, as KDA Vice President of State Relations Adam Johnson described to Sovos ShipCompliant.

The Kentucky Bourbon Trail® is a “road-trip style experience for Bourbon lovers to go behind the scenes” at the state’s signature distilleries. On the legislative side, KDA advocates to expand options to help both Bourbon consumers and spirits producers.

“So much of what we have done has been driven by tourism,” Johnson said. “It comes down to making your guests happy.”

It started with distillery visitors wanting to enjoy a cocktail – but they couldn’t. Enter SB 11 in 2016, which raised the daily per-person free sample limit to 1.75 ounces and allowed distilleries to operate restaurants and serve cocktails, among other benefits. During the COVID-19 pandemic, “take-home cocktails” were a boon to restaurants, bars and others in the hospitality industry. With SB 67 in 2021, take-home beverages became a permanent option.

Another part of meeting consumer expectations was DtC shipping, which allows distilleries to responsibly and safely ship orders to consumers in Kentucky and reciprocal states. As well, it gives visitors the option to ship home bottles from the distillery they toured. That’s why a key effort for the KDA is to help other states craft and pass similar legislation.

“There’s more work to be done, to be sure we are expanding the options for states to ship to,” Johnson explained. “We want to make sure it’s done the right way: making sure the taxes are accounted for, not shipping to minors. Everyone is doing this to make sure it’s done the right way.”

Working toward the greater good for DtC spirits shipping in Kentucky

When it comes to Bourbon, it’s hard to think of a state with a richer history than Kentucky. And with the Kentucky Bourbon Trail® and Kentucky Bourbon Trail Craft Tour®, more people can learn about that history. In 2022, the two Kentucky Bourbon Trails surpassed 2.1 million visits combined, a new record according to Johnson. After launching a campaign to book tours in advance, the booking window is now 40 days out, he said, whereas it used to be seven days or fewer.

“Kentucky is a destination for Bourbon lovers,” Johnson said. “It’s a bucket-list item. We’re catering to the crowd and working to offer new experiences and things to do.”

However, there is still more work to be done. One key target for the KDA currently is to phase out the state’s barrel tax. As the only location globally to tax aging spirits, the law is turning away startup distilleries from Kentucky and forcing the business case for the Bluegrass State’s existing distilleries to age millions of barrels tax-free in neighboring states, Johnson explained.

“When you’re eager to get into Bourbon and spirits production, Kentucky is the major league. We offer the key resources and suppliers, from corn and barrels to nation-leading DtC, shipping and distribution systems and an incredible tourism stream. Phasing out the state’s punitive barrel tax only makes sense.”

Helping to expand Kentucky’s DtC spirits shipping is also on KDA’s agenda. At any given time, Johnson is sharing advice and takeaways with guild leaders in a half-dozen states nationwide seeking to responsibly expand their DtC alcohol shipping permissions.

“Part of my job is helping state guilds with what we went through on our own DtC bill; the compromises made and how it can be a model for other states to use,” Johnson said, adding that it’s important to ensure DtC shipping is done responsibly and legally.

“Every state we can help to further that effort is going to make the whole category stronger,” he explained. “That’s our goal: to help as many states as possible. And the consumer will only benefit.”

Kentucky Bourbon – and Bourbon as a whole – may be a massive industry. But it’s also a very small, familiar industry, according to Johnson. And that’s the secret to Kentucky’s success: everyone is helpful.

“Our membership strength is that our people help each other,” Johnson said. For example, when a consumer finishes a tour or visit at one distillery, they will be recommended another – competing – distillery to go to next.

“It goes back to the people really caring about the category. What’s good for the industry is good for the brand.”

Take Action

Want to learn more about the overall state of DtC spirits shipping? Download our inaugural Direct-to-Consumer (DtC) Spirits Shipping Report.

Sign up for Email Updates

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

Author

Lizzy Connolly

Share this post

alcohol deliveries
North America ShipCompliant
December 20, 2024
What if No One is Home to Sign for an Alcohol Delivery?

This blog was last updated on December 20, 2024 When no one is home to sign for an alcohol delivery, it becomes more than just a minor hiccup for direct-to-consumer (DtC) alcohol shippers. It’s a domino effect that transforms a perfectly curated product into a customer’s disappointment before it’s ever opened. This becomes an even […]

taxation of motor insurance policies france
North America VAT & Fiscal Reporting
December 18, 2024
Taxation of Motor Insurance Policies: France

This blog was last updated on December 18, 2024 France is one of the most challenging countries in Europe when it comes to the premium tax treatment of motor insurance policies. This is mainly due to the variety of taxes and charges that can apply and the differing treatment of different vehicle types. This blog […]

california bottle bill compliance
North America ShipCompliant
December 13, 2024
California Bottle Bill: Compliance Updates for Wine and Spirits

This blog was last updated on December 16, 2024 California’s bottle bill got a major upgrade earlier this year, and it’s changed the rules for wineries, distilleries and beverage distributors in a big way. For the first time, wine and spirits manufacturers will need to register with CalRecycle, report sales and pay California Redemption Value […]

unclaimed property compliance for wineries
North America ShipCompliant
December 12, 2024
Unclaimed Property Compliance: What Wineries and Wine Clubs Need to Know

This blog was last updated on December 12, 2024 Although hard to believe, unclaimed property obligations impact ALL industries, including wineries and other wine clubs. While most companies typically only associate unclaimed property with outstanding checks, including accounts payable and payroll, there are other exposures for wineries and wine clubs to consider. Understanding these risks […]

retail delivery fees for alcohol shipping
North America ShipCompliant
December 5, 2024
Navigating Retail Delivery Fees: A Guide for DtC Alcohol Sellers

This blog was last updated on December 5, 2024 Direct-to-consumer (DtC) alcohol shippers are no strangers to navigating a complex regulatory landscape. However, recently, a new challenge has emerged—the rise of retail delivery fees. From excise taxes to shipping restrictions, the industry has long dealt with a maze of state-specific rules that require careful attention […]