DtC, Cannabis & More: 2023 Wine Summit Takeaways

A wide variety of speakers and presentations addressed some of the major issues affecting the wine industry at the 2023 Sovos ShipCompliant Wine Summit, which took place in Napa on April 19-20. Some of the highlights from the 18th annual event are presented below.

Sovos ShipCompliant updates

Larry Cormier, vice president and general manager, Sovos ShipCompliant and Lexie O’Neill, director of product management, Sovos ShipCompliant, provided a look at developments in ShipCompliant over the last year, including a refreshed user experience and improvements to the software’s reliability and scalability. The audience was particularly appreciative to hear more about the addition of Ohio to the rank of states using the Product Registration Online service in 2022.

Keynote: cannabis and wine

Arun Kurichety, COO and General Counsel for Petalfast, presented on the cannabis industry as compared to wine, including the complex regulatory schemas under which they operate and their respective roles as social lubricants. Arun made sure not to shy away from the areas where there is potential conflict between the growing cannabis industry and wine, such as competition for consumers and fears of agricultural contamination. But the overall message was that both industries can stand to learn from each other, cannabis on how to manage their compliance needs and expand legal sales opportunities, and wine on how to attract a younger audience and adapt to changing consumer desires.

State of the wine industry

Steve Gross, VP of State Relations for Wine Institute, provided his much-anticipated presentation on the state of the direct-to-consumer (DtC) wine shipping industry and updates on recent regulatory changes. Steve recognized the work of Wine Institute and Free the Grapes! over the last year, including minimizing the impact from regulatory burdens placed on fulfillment houses and carriers involved in DtC shipping, and efforts to improve the licensing process in Alabama. Looking forward in 2023, Steve was bullish on a push to remove New Jersey’s production cap on who can ship wine DtC, the last such cap active in the country. He also reminded the audience of Alaska’s recent DtC law changes, which will add licensing and tax requirements effective January 1, 2024, and a plan to establish similar requirements in Minnesota.

Updates from regulators

Mari Kirrane, Wine Trade & Technical Advisor for the Tax & Trade Bureau (TTB), provided an update from the TTB for the wine industry, noting the expansion to the TTB’s Cincinnati office as a center for permitting and taxation processing and the implementation of new rules and online tools for importers to take advantage of the tax relief found in the Craft Beverage Modernization Act (more information on this and other TTB guidance can be found in their library of past industry presentations).

Matt Botting and Ryan Mercurio, General Counsel for the California ABC and Commission Counsel for the Tennessee ABC, respectively, joined us to discuss new and ongoing compliance issues in their states. Of key concern for these states has been managing the rise of new sales and delivery options, such as cocktails-to-go, which present novel regulatory scenarios for enforcement agents. Their overall message to wineries was to take the time to properly understand how a prospective sales model would work and whether it is allowed under the permissions granted by the state under the license(s) owned by the winery.

Legal professionals’ take on wine regulation

Suhani Kamdar, Senior Associate with Rogers Joshep O’Donnell, and Susan Johnson, Partner at Stoel Rives LLP, spoke on developments in wine marketing and distribution and how wineries can better understand what is and is not allowed under state and federal law. Central to their discussion was the message that almost all aspects of the wine industry are subject to regulation and that just because there is a “new” way of doing something doesn’t mean that there is free rein. As wineries engage more and more with social media and working with influencers, they need to recognize that the “old” laws still apply, and that what has traditionally applied in print or other media also applies online. Ultimately, if a winery is concerned, there is never any harm with consulting with a legal expert first.

Subscription models versus traditional wine clubs

Susan DeMatei, President of WineGlass Marketing, shared insights on subscription models and how they represent a sea change from traditional wine clubs. While wine clubs worked well for the Baby Boomer generation, which appreciated the sense of exclusivity and belonging that came from being part of a club, that model may not work as well for young generations, which have bought into the subscription model for items from makeup to household goods to pet supplies. By offering a more bespoke approach that allows regular customers to opt in or out, or adjust an order to suit their tastes, wineries can make themselves more attractive to new consumers.

How your budgeting process supports your sales goals

Maria Pearman, Advisory Principal at GHJ, presented key budget management tools and techniques that wineries can implement to better track their operations and planning. Central to any effective budgeting approach is a unified plan that recognizes the individual talents and expertise of the winery’s team. Maria demonstrated several different budgeting methods that a winery could adopt, but ultimately the one that will work the best is the one that has the buy-in from team members and that enables that team to succeed.

Using data to better understand your customers

MJ Dale, Founder and CEO of Customer Vineyard, discussed the importance of thorough data analysis in developing a winery’s sales strategies. By recognizing key insights from sales data—such as where most consumers live or which group of consumers buy the most wine (as opposed to the most expensive wines)—a winery can more effectively and efficiently set out a course of action that is suited to their sales goals.

As Larry Cormier noted in his opening remarks, we at Sovos ShipCompliant hold a privileged position as a hub for much of the domestic wine market. In supporting the distribution and DtC shipping compliance needs for our users, we gap the arcana of regulatory interpretation with the everyday realities of moving wine around the country. The annual Wine Summit, then, is our opportunity to bring these worlds together in one room and help bring greater understanding to the industry. For helping us do that, we once again thank all of our fantastic speakers and our attendees who honored us with their presence. We hope everyone will join us again next year!