Free the Grapes!
WSWA Comments on Retailer DTC: A Little Fact Checking is in Order
January 25, 2018
Shanken News Daily published quotations from an interview with WSWA president and CEO, Craig Wolf, on December 15, 2017. His comments and positioning are important to know since the middle wholesale tier wields tremendous lobbying muscle in all 50 states.
Here, we pull a direct quotation from the article and then respond.
Wolf: “When retailers ship out-of-state, you can’t hold them accountable for paying taxes or checking for IDs.”
Free the Grapes Response:
• Of course wine retailers already collect and remit local taxes, such as sales taxes. When wineries are licensed to ship directly to consumers in states that require collection and payment of taxes they already do this. Given a legal opportunity to ship into more states, retailers would do so as well, as they are already doing in the few legal shipping states they can access.
• Common carriers have systems in place to require an adult signature at the point of delivery, and they already use these systems in the states that allow wineries to ship directly to consumers. If retailers are given the same legal privilege to ship, they can avail themselves of these same delivery safeguards. Additionally, many states now have age verification requirements at the point of purchase, which provide for a second safety check when coupled with the required adult signature at delivery.
Wolf: “Long distance shipping is out of step with the times.”
• Let us paraphrase the WSWA’s position here: “Wholesalers know what’s best for wine consumers, who should be happy with the variety of wines wholesalers choose to sell to local retailers. And since consumers are trending to on-demand purchase and delivery, out of state retailer shipments are unnecessary since all inventory is available locally.”
• It is not logistically possible-or perhaps even smart business-for local wholesalers or retailers to stock wines from the 10,000 wineries in the U.S. So while the advent of legal local delivery is a terrific, convenient choice for many wine lovers, other consumers prefer to make their own choices in wine rather than limiting their choices to what their local wholesalers and retailers stock.
Wolf: “The retailers engaging in interstate shipping therefore don’t bring additional value to the market.”
• The well-justified uproar from consumers in 2017 over restrictions on retailer DTC shipping is proof positive that many retailers add value in a variety of ways, such as selling imported wines, stocking wines not readily available in a wine lover’s local market, by their expertise in specific wine regions, and host of other reasons. The New York Times wrote about this topic here: “For consumers who live in states stocked with fine-wine retailers, like New York, the restrictions are an inconvenience. For consumers in states with few retail options, they are disastrous.”
Wolf: “In the wake of the Supreme Court’s Granholm decision, every winery in the country can ship wine without limits to 45 states.”
• 44 states, not 45, allow some form of winery-to-consumer shipping, but let’s not quibble.
• Wineries have quite strict limits around shipping. They vary by state, but here are some key provisions defined in the Model Direct Shipping bill language:
- Wineries must receive a state-issued license in order to ship directly to consumers
- Wineries must pay taxes (excise and or sales taxes)
- In many states wineries are required to use age verification at the point of purchase, in addition to requirements for an adult signature upon delivery in all of the legal shipping states
- The amount of wine shipped is limited
- Wineries consent to the jurisdiction of the state issuing the license so oversight is provided at both state and federal levels
• It is important to note, however, that some states allow DTC shipping, but only with onerous regulations. For example, a winery or wine company that in the aggregate produces more than 250,000 gallons (about 100,000 cases) is prohibited from shipping to consumers in New Jersey and Ohio. That means that even a micro winery producing 1,000 cases – but that is owned by a larger wine company – is banned. (Similar laws were replaced with more consumer friendly laws in Arizona and Massachusetts). In Indiana, a winery can either ship direct to consumer or through a wholesaler, but not both. If they choose the former, you won’t find their wines in any restaurants or retailer shops in the state.