Free the Grapes! Direct Shipping Year in Review 2015

    December 29, 2015

January 4, 2016

Winery Licensees Now Have Option of Reaching 90% of US Population

Looking back at winery direct-to-consumer shipping in 2015, the most visible wins included opening Massachusetts in January 2015 based on the win in 2014, and passing legislation in South Dakota that goes into effect this month.

Forty-three legal states now give winery license holders the option of shipping; these states comprise 89.7% of the U.S. population, although they include some difficult-but-legal states like Arkansas, Arizona and New Jersey.

Streamlining burdensome regulations—perhaps less visible, but nevertheless extremely important—were additional wins for the industry, such as:

  • Indiana removed the “winery visit penalty,” requiring a consumer to first visit the winery before any wine can be direct shipped, removed the affidavit and bond requirements, and raised the annual capacity cap to 45,000 liters
  • Iowa changed the reporting requirement from monthly to twice per year
  • North Dakota changed the carrier penalties from criminal to civil which allowed FedEx to begin shipments, and
  • Oregon changed its reporting frequency from monthly to quarterly.

The wins in 2015 underscore the twin goals of the industry’s coordinated DTC campaign: to not just open new states but to streamline existing DTC regulations for the benefit of both wineries and wine lovers.

The groups most directly involved include the PR and consumer advocacy campaign by Free the Grapes!, and industry representation led by Wine Institute, Family Winemakers of California and WineAmerica. (The legal foundation, the Coalition for Free Trade, provide a crucial third leg of this strategy, and ‘retired’ in 2014 after achieving its goals.)

More specifically, the role of Free the Grapes! is to convert consumer frustration into constructive action. Free the Grapes! generates 100+ articles per year; engages consumers through social media (21,000+ Facebook fans) and wine tasting events (e.g., MA, AZ); and partners with, or creates, local consumer advocacy groups (e.g., AZ). The result is that wine consumers write editorials to local newspapers and use www.freethegrapes to write messages directed to their state representatives in support of favorable legislation. Simply put, Free the Grapes! is the conduit for consumers to express their support directly to elected officials, who listen to their constituents.

What’s Left to Do? Plenty!
Of the remaining states that continue archaic bans winery-to-consumer DTC shipments, Pennsylvania is by the largest, accounting for 4% of the U.S. population. There has been steady progress in that state, too. Wine Institute has worked closely with state legislators and the PLCB over the last several years toward a workable DTC solution. Meanwhile, Alabama, Kentucky, Oklahoma, Delaware, Utah and Mississippi make up the remaining non-legal states (a new bill is expected in DE).

Additional targets for improvement include states with statutes that stifle consumer choice, including capacity caps banning shipping by wineries producing more than an arbitrary case production “cap” (e.g. AZ, NJ, OH), and that require consumers to first visit wineries’ premises (e.g., AR, AZ, RI).

Finally, in many of these states – even those that allow limited DTC shipping and are looking to streamline regulations – local opposition often seeks to make these laws more restrictive and more complicated for wineries and consumers. In each case, the industry needs to defend against backtracking that hurts consumers and wineries.

A Growing Sales Channel Benefiting all Production Tiers
The 2016 ShipCompliant/Wines&Vines Direct Shipping report will be released at the DTC Wine Symposium 2016 next week, and it is likely to show the continued growth of this sales channel.

Back in January 2015, their comprehensive report on 2014 data showed that DTC shipments grew to 3.95 million 9-L cases (+13.6% vs. PY) with a value of $1.82 billion (+15.5% vs. PY). These are the largest increases since the report was first published. Average bottle price was $38.40 (1.6%). Oregon continued to show big increases (46%/53% volume and value gains), and nationally, Pinot Noir shipments rose 22%. Small wineries (5k-50k cases) accounted for 48% of the value of shipments. But shipments from large wineries (500k+ cases) grew 19.4% by volume and compose a small but growing share (5.5% of volume).

By origin, Napa County shipments totaled 32% of national DTC shipment volume and nearly 48% of shipping value. The sales channel for Napa wineries generated $883 million in sales on volume of 1.26 million cases, with an average bottle price of $58.13, and $88.45 for Cabernet Sauvignon. Source: http://www.shipcompliant.com/content-library/

Financials and the DTC Wine Symposium
Free the Grapes! is on solid financial footing. The successful DTC Wine Symposium, now in its ninth year, provides a productive national conference on DTC marketing and sales for the industry, and continues to be the primary funding source for Free the Grapes! The 2015 summit earned more than $100,000 while winery contributions comprise the balance of income, including donations from co-founders and board members, the Napa Valley Vintners and Wine Institute. These funds are important for ongoing activities and in-state campaigns necessary to support streamlining regulations. For example, an integrated campaign of PR and consumer events began in 2015 to rally local support to remove Arizona’s “winery visit penalty” and capacity cap, hopefully, in 2016.

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Media Inquiries: Jeremy Benson, executive director, Free the Grapes!, shackles@freethegrapes.org, 707.254.1107