Brush up on your vocabulary around winery to consumer direct shipping
The subject of DTC wine shipping is a complex one, seemingly with its own language. Here is a quick rundown of some key words in this conversation; a refresher to help you keep on top of the discussion:
Shipping - this is when the product leaves the hand of the producer and goes directly to the consumer, most often crossing county or state lines. This is in contrast to…
Delivery - which is when the product is being sourced from a locally based vendor by a third party, and generally stays within county but certainly state lines.
Common Carrier - this is the service (such as FedEx or UPS) used in shipping. With delivery, a service like Instacart is in use.
Fulfillment House - provides winery direct-to-consumer shipping services to its clients, i.e. wineries. FHs do not buy or sell wine; they do not own the wine; they do not transact directly with consumers. FHs are logistics centers that act as agents for their winery clients. They store wine and pack wine boxes for pick-up and shipment by common carriers, as instructed by their winery clients. FHs are independent companies licensed in their state of operation. For more see our blog - https://freethegrapes.org/fulfillment-houses-why-theyre-important-to-winery-dtc-shipping/
Direct Shipper Permit - authorizes a winery to ship product directly to a consumer. These are issued by each state that allows for direct shipping. To be in legal compliance, a winery must hold a permit for each state they are shipping to. See Wine Institute's website for more guidance on permits and requirements: https://wineinstitute.org/our-work/compliance/dtc/
Extended Producer Responsibility - EPR is a policy approach where producers are held accountable for the environmental impact of their products, throughout their entire lifecycle. This includes end of life management. This can mean that producers are responsible for the collection, recycling, and final disposal of their products or packaging. Each state carries its own policy on this subject.
Reciprocity - a reciprocal arrangement in which one party enjoys the same privileges as another. As relates to DTC wine shipping, this means that “if a winery in your state can ship to a consumer in my state, only if a winery in my state can ship to a consumer in your state.” Prior to the passing of Granholm v Heald in 2005, the U.S. was a patchwork network of reciprocity in wine shipping.
On-site Purchase Requirement - only two states currently have this requirement in place; Rhode Island and Arkansas. This requires the consumer to be in person at the winery to complete the purchase transaction before the product can be shipped to them. This does not allow for online sales or wine club memberships, and thus frustrates DTC wine shipping.
Capacity Cap - only one state continues to have a capacity cap in place which limits direct shipping - New Jersey. Any wineries, or their parent companies, who produce 250,000+ gallons per vintage are not allowed to ship direct to consumers in New Jersey. This restricts consumer choice as many wineries fall within this capacity cap.
Three Tier System - this is the system which manages the movement and sale of alcohol from the producer through a wholesaler, to a retailer or restaurant, and finally to a consumer. DTC wine shipping complements this system by providing greater consumer choice and access to all of a wineries offerings, not all of which may be present within the three tier system.
