How to Manage Alcohol Market Innovation and Avoid Sales to Minors

Alex Koral | February 23, 2023

If you ask a beverage alcohol regulator what their biggest concern is, nine times out of ten, you’ll hear about efforts to prevent sales to minors. The health risks associated with alcohol, particularly for developing brains, validate those concerns, but there is something of a reflexive response around underage consumption—a response grounded more in fear than in the facts—that affects how regulators react to changes in the beverage alcohol industry.

New ways to sell alcohol are automatically suspect and seen as potential gateways to rampant drinking by teens and tweens, despite evidence of market innovations that have not increased underage access and contrary to the fact that underage drinking has decreased dramatically since the 1990s. These responses have been especially visible with the rise of direct-to-consumer (DtC) shipping options for alcohol sellers.

To be 100% clear, no one is advocating selling or making alcohol available to people under the age of 21. But the kneejerk reaction that innovation will necessarily erode protection for minors is almost always overblown, as we’ll see below, and leads to diminished options for those who can legally purchase alcohol.

Two recent stories in the news highlight the prevailing perceptions regarding online sales of alcohol and access by minors. By moving past the headlines and digging into what the stories are reporting, we can lessen confusion and gain a more nuanced understanding of how we can both enjoy innovation in the alcohol industry and protect minors.

First the ‘bad’ news

In October 2022, the Oregon Liquor and Cannabis Commission (OLCC) released a report, “Eyes on Oregon,” which detailed systemic failures within third-party delivery services handling alcohol orders. According to the headlines, the report found that over a third of deliveries of alcohol made in Oregon committed compliance failures, putting the state at serious risk of a wave of underage drinking and overconsumption.

Stories like this put fear into the hearts of anyone advocating for expanding online sales options, as they seem to imply that any such enterprise is doomed to failure. However, when you look more closely at the report, it becomes clear that nothing in it points to any actual illegal sales or any systemic problems within the online alcohol market.

As the report says, the results were based on 106 online orders fulfilled by different third-party delivery services in the state from May to September 2022. Notably, all the volunteers who made the purchases were between 21 and 26 years old, and all able to avail themselves of the Oregon alcohol market. So, when the headlines state that the report demonstrates rampant illegality in the delivery of alcohol, that is dead wrong—none of these orders appear to have been illegal in and of themselves.

Instead, where the report indicates “compliance failures,” it actually means that the third-party delivery service did not check (or more so, did not “appear” to properly check) IDs. Certainly, this is problematic—checking IDs and getting the signature of someone of age at the time of delivery is not only best practice, it is almost always required by law. But it hardly means that there is any entrenched flaw in the delivery of alcohol.

Indeed, per the report’s own data, fully two-thirds of the orders were perfectly compliant. And in the one-third of deliveries that were “non-compliant,” the failure was most often (29 times out of 39) that the recipient’s ID was “insufficiently checked,” not that the delivery person didn’t check the ID but that, per the volunteer purchaser, the check “did not appear to be carefully” done or only involved the use of an ID scanner (the problem there presumably being that the recipient is using someone else’s ID). Still not the best but also not anything like irreparable failure.

That leaves 10 orders out of 106 that could be characterized as problematic, with either no attempt to check the recipient’s age or only a very superficial one. Notably, the alcohol package was left with no contact with the recipient on only two occasions. While even one such delivery is troubling, it is hard to see this as a scourge of society.

Really, this report needs to be seen in the broader context of how much the alcohol market has changed in the last few years. These kinds of online sales involving the use of third-party delivery services are still very new, and as with any new system, there will be kinks that need to be worked out. A few compliance failures are not cause to throw the whole process of innovation out the window. Instead, they should be seen as teachable moments, showing where improvement is needed while allowing for refinement and change.

There’s also good news

In comparison to the OLCC’s report, the online wine marketplace Vinoshipper recently released an internal study of DtC orders through its system that found 100% effectiveness at stopping sales of alcohol to minors. The study, examining two years of sales, comprising over 1 million shipments to more than 600,000 buyers, concluded that they had no sales to minors. They describe having managed this through a process of validating consumer information through an online database (IDology) and conducting follow-up reviews wherever there appeared to be a problem. The study asserts that 75.3% of consumers passed on the first review, with 24.6% able to confirm their age on the second review; just 0.15% of the orders had to be canceled because the consumer’s age could not be verified.

There are some notable differences between the Vinoshipper and OLCC reports, most critically in that they address slightly different types of delivery methods, one using common carriers like UPS and FedEx, and the other using local third-party services like DoorDash or Uber Eats. The markets are also different, the one being licensed DtC wine shippers (an established market), the other delivery from local retailers (a developing one).

Indeed, that the DtC wine shipping market can be so effective should be a sign of hope for local delivery services. By educating that segment of the industry to follow best practices—namely, that signatures must be collected at the time of delivery and that IDs must be looked at carefully—the OLCC could help strengthen their alcohol market for the retailers and consumers it seeks to serve.

Rather than handwringing about how any failures supposedly signal inherent problems in the market, we can recognize that compliance systems, like all systems, need time to develop. However, unlike a fine wine that may need years to mature, the growing third-party services can benefit from the experience of DtC alcohol shippers and apply those lessons today to ensure a safer and healthier alcohol market.

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