W&V Directory & Buyer's Guide

2 0 1 9 2020 434 © 2020 Wines & Vines Directory BY USING THE WINES & VINES DIRECTORY/BUYER'S GUIDE, YOU AGREE TO NOT REPRODUCE, DUPLICATE, COPY, SELL OR RESELL FOR ANY PURPOSE. DIRECT SHIPPING REGULATIONS ANNUAL SHIPPING REORT Political and Regulatory Trends In June 2019, the U.S. Supreme Court issued a ruling in Tennessee Wine & Spirits Retailers Ass'n v. omas. is case focused on the validity of Tennessee's one-year residency requirement for applicants for package store licenses, which the Court found to be unconstitutional. However, this matters for the DtC wine shipping market, as the Court explicitly extended its doctrine from the 2005 Granholm v. Heald case – that states cannot discriminate against out-of-state interests in the beverage alcohol industry without clear public health and safety justifications – to the distributor and retailer tiers. Granholm, of course, marked the origins of the modern DtC wine shipping market, resulting in a flurry of debate as to whether omas will similarly herald a new world for retailers to engage in DtC shipping of alcohol. As of October 2019, this is all simply speculation, but the coming years will likely see much greater efforts to extend DtC shipping privileges to more businesses and products. Much of the other regulatory trends in 2019 were concerned with changes in most states' Sales and Use Tax rules, extending tax liability to more remote sellers, which DtC shipping wineries have also had to deal with (though to a lesser extent than other online markets). Commercial Trends e DtC wine market's yearly growth continued apace in 2019. While there were no new open markets for DtC shipping in 2019, mid-year reports showed that the market was growing at a robust 7% in terms of value of wine shipped, though this is relatively lower than previous years. Non-California wine regions have seen some of the greatest growth in the last few years, with Washington and Oregon increasing their share of the market. Notable from 2018, Sonoma surpassed Napa as the biggest source of DtC shipped wine, at least in terms of volume shipped. ere are only a few more states that continue to prohibit DtC shipping of wine, meaning that future growth will need to come organically, by building and strengthening a winery's connection with its consumers. But the online environment presents numerous channels for this to happen, especially as wineries invest in their websites and marketing platforms. Stable Growth Amid Regulatory Flux For more than a decade, Wines & Vines and ShipCompliant by Sovos have been collaborating to track the direct-to-consumer (DtC) wine shipping market, and over that time there has been tremendous change, building from a fledgling market to a $3 billion industry. ese data reflect a strong and still growing market, but 2019 did see several developments that may one day prove to be a turning point for DtC shipping of wine. While no new states were added to the DtC shipping map, there was increased focus on who is involved in the DtC shipping of wine. Retailer organizations have been making more concerted efforts to access the same privileges that wine producers have enjoyed for years. Currently, only about 15 states permit out-of-state retailers to ship wine DtC, while wine producers can access 45 states. Our tracking of the DtC wine shipping market shows it to be both dynamic and robust, with ample room for more sellers. Consumers are clearly showing that they desire greater access to more products, which they can get only through a DtC shipping model. With more market participants, there will be more attention paid to the DtC market by consumers, which can raise everyone's prospects. is also means 2020 is the right time to ensure your DtC market- place is ready for the future, both distinctive from other shops and enabled for compliance. DIRECT SHIPPING REGULATIONS ANNUAL SHIPPING REPORT

• Cover