What is DTC Shipping?

If you are a winery, this may seem like a basic question. Doesn’t everyone know that DTC shipments are made from a licensed business – such as a winery licensee or a retailer licensee – through a common carrier to an adult consumer? Well, no. Outside the wine industry, the definition gets cloudy, the implications a bit tricky. Legislators, journalists, state alcohol regulators and other groups have different definitions and operate within different contexts. For example, here are some common misinterpretations of DTC shipping:
  • Wines purchased from a wholesaler, delivered to the retailer, who in turn delivers it to the consumer using their own transportation or some third party. This is not DTC shipping since the wines were not sold directly to the consumer, but were sold through the traditional channel of winery-wholesaler-retailer-consumer.
  • Wines purchased by a consumer at a winery and carried home by the consumer, such as in the trunk of their car. This is a DTC “sale” but it’s not a shipment because it wasn’t handled by a common carrier.
  • A wine that is not listed by a retailer is requested by a consumer. The retailer seeks out the wine, purchases it from a wholesaler, and the consumer picks up the wine at the retailer’s premises. This isn’t DTC shipping; it’s a “pass through” sale.
Aren’t we splitting hairs? Not really—context matters in state legislatures and how issues are framed by the media. Earlier this month, representatives of the Free the Grapes! Board met with the Editorial Board at the Napa Register newspaper. It was a terrific meeting and helpful for us to put DTC shipping in the broader, national context of the issue. For example, in Napa Valley, and other winegrowing regions, “DTC Shipping” is often reported as contributing to strains on local infrastructure and county resources. But this is like looking through a straw; you can’t see the wider world. The fact is that in Napa Valley DTC Shipping has grown much faster than tourism. Between 2012 and 2016, DTC shipments from Napa wineries grew 47% by case volume, but the number of tourists visiting the region grew less, by 19%. Which means that DTC shipping is creating a disproportionately large amount of economic value for Napa County, as compared to tourism growth. Are the local impacts of tourism any less important? Of course not. But if the issue is not presented in full context, than reporting can lead to poor policy decisions. Another example. Especially outside California, state legislators often conflate “DTC shipping” with major order aggregator companies, the common carriers, or subscription wine clubs. That is, many legislators do not perceive DTC shipping as a channel that benefits the small, family-owned winery, but as a sales channel for the media company’s wine club, for example. What to do? For those of us at Free the Grapes! and the organizations behind it, we must continue to present DTC shipping in the broad, national context as a means of satisfying consumer demand in a complex marketplace while addressing regulatory concerns with a proven solution. If we don’t, we should start imagining the economic implications of a DTC shipping sales channel that looks more like 1997 than 2017. But that’s a topic for another post. Sources:
  • “Direct-to-Consumer Wine Shipping Report” by Sovos ShipCompliant and Wines & Vines, 2012-2017. These numbers account only for wines shipped directly from wineries to the end consumer.
  • Visit Napa Valley “Visitor Profile” by Destination Analysts, 2012, 2014, 2016.