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S A L ES & M A R K ET I N G Direct-to-Consumer Reporting and You Weigh the costs and benefits of compliance software and service providers By David Sandri N o matter how a winery files them, direct-shipping reports have become a way of life for those who count on direct-to-consumer sales to aid the bottom line. Since the U.S. Supreme Court's Granholm vs. Heald decision in 2005, many states have opened to direct-to-consumer (DtC) shipping, and in turn they have required permits, reports and taxes (sometimes both excise and sales tax) due on a regular basis. More automation (in the form of software or a third-party service that can assist/do filings for wineries) saves time but comes with additional costs. Wineries can file everything themselves, but can they do it without tying up too much of their winery personnel's time? Ultimately, winery owners want to be able to serve their consumers in the best possible way while staying compliant within the guidelines of the various states' laws. First of all, you have to • irect-to-consumer shipping is a profitable sales D really look at how much of channel for wineries, but it comes with a complithe winery's business will ance burden. be (or already is) direct to consumer (as well as which • he article discusses how wineries can weigh the T states current customers costs and benefits of handling their own DtC comreside in and which states pliance vs. using outside services and/or software. the winery wants to target). Then, the winery should • very solution still requires wineries to record E look at costs. Do the costs of licensing, software, etc., timely and accurate information about their DtC make sense when looking shipments. at the business you would generate from being able to ship to any state? Keep in mind, it's not gross revenue, it is the Also, keep in mind that the winery net that should determine your business will have to file a state's sales tax reports decision. and fees as well as excise tax reports and fees. Many states require a winery to be licensed to ship to wholesalers before they will grant a DtC permit. Some states have production limits to qualify for a DtC permit. In addition, many states require you to file "zero" reports (in other words, if you do not have sales for that reporting period, the winery may still have to file a report, even with all zeros) and possibly register labels. If, after looking at all of this, it makes sense to go full steam ahead and apply for a DtC permit in a state, a good resource for contact information and forms is the Wine Institute website (wineinstitute.org; from the home page, click on the "state shipping laws" box on the left side of the page). So, now your winery is on the path to obtaining a DtC permit in the state(s) of your choosing. A winery can do the process on its own or use a winery compliance company. For some wineries, using a compliance services company is another tool in their arsenal of compliance solutions. "We chose to outsource our compliance reporting and Highlights L is a Ma ttso n/J ordan Vineya rd & Win ery 32 W in es & V i ne s J U LY 2 013