Rhetoric is heating up about direct sales in the wine and spirits industry. As with many other industries, technology and the Internet are bringing inevitable changes that create friction for the establishment, in this case the Three Tier System that includes wholesalers and retailers, who also stand to benefit from the expansion of the market. Like we saw in the music and publishing industries, consumers, equipped with their smartphones, have more buying power and selection than ever.
While those on various sides of the debate attack each other’s credibility and motivations, the data shows us that direct sales using an e-commerce platform, such as Vinoshipper, among others, are safe, reliable, and good for consumer, producers, and states for tax collection. Direct sales grew by almost 14 percent in the U.S. last year, setting a record at $4.2 billion in 2021.
While alcoholic beverages require stricter regulations than other consumer products, technology enhances our ability to enforce age-verification measures.
As mentioned in previous articles, there are four main areas regulators are focused on, including Age-verification, Licensing and Tax Compliance, and Auditability. Think of the four areas as ALTA.
Currently legal in 47 states, more jurisdictions are adopting policies to allow the direct shipping of wine, with many considering expansion to include beer and spirits. In growing numbers, regulators and lawmakers are well versed on the issues and understand the value e-commerce brings, including better compliance, tax revenue, reporting, and accountability.
“We encourage the states to examine the effects of their regulations on small producers and their ability to compete, including their access to distribution,” says a February 2022 report from the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) and the Food and Drug Administration (FDA).
In California, Senators Dodd, McGuire, and Allen have authored bills progressive for the state’s wine industry, particularly those wineries impacted by the pandemic and wildfires.
American consumers are well-accustomed to easy transactions through the convenience of technology. They expect more from their institutions and have less tolerance for rhetoric and politics from prohibition-era institutions who are fighting inevitable change.