Sovos ShipCompliant hosted the 15th annual Wine Summit a couple weeks ago, only this time it was a shortened “Piccolo” virtual version. This half-day event featured some of the most popular sessions and presentations originally scheduled for the cancelled live event back in May. The recorded version of the event is available to watch on-demand; in the meantime here are some of the highlights and quick facts from each presentation:
Welcome & Updates, with Larry Cormier, VP, GM Sovos ShipCompliant
Larry shared some perspective on Sovos ShipCompliant in the era of COVID-19 and beyond along with data on the direct-to-consumer (DtC) wine shipping market since the pandemic began earlier this year.
- From July 2019 to January 2020 the Sovos ShipCompliant product team delivered 65 releases and almost 500 product enhancements.
- ShipCompliant portal uptime was 99.99% and the API uptime was 98.98%.
- ShipCompliant processed over 190,000 brand registrations through Product Registration Online (PRO) and Market Ready.
- Over 61,000 reports were generated through AutoFile and manual filing.
- Since the pandemic, the value of DtC wine year-over-year (YOY) increased 10% and the volume YOY increased 15%.
- In April, the volume of wine shipped increased 45% and value increased 15%. In May the volume increased 44% and the value increased 22%.
- White Blends, Sauvignon Blanc and Pinot Grigio all increased 20% to 30% YOY in value. Rosé increased 26% in both volume and value and Cabernet Sauvignon increased by 3% YOY and remains the dominant varietal in the DtC channel.
Stay in the Know: Regulatory Panel, with Dexter Jones, Chief of Audit and Investigations, Texas Alcoholic Beverage Commission and Matthew Botting, General Counsel, California Alcoholic Beverage Control
Dexter Jones and Matthew Botting discussed several regulatory topics with Alex Koral, Senior Regulatory Counsel, Sovos ShipCompliant, including temporary legislation changes resulting from COVID-19, the Texas DtC shipper audits, barriers in the three-tier system, and compliance regulations around common carriers shipping alcohol.
- During the pandemic many states have loosened or temporarily changed legislation to allow to-go or curbside pick up of alcoholic beverages from bars and restaurants. This has caused some problems when it comes to verifying age and identification.
- California has put up FAQs on the ABC website to help clarify and guide California residents.
- Texas is also working to educate and clearly communicate what these relief regulations entail and how producers, bars, and restaurants can stay compliant.
- Texas’s audit of all DtC shipper license holders in the state are continuing apace. This is an ongoing practice, which all DtC shippers active in the state should be aware of and be prepared for. Chief Jones recommended that when a DtC wine shipper receives an audit notice, they respond quickly and maintain open and clear communication with their auditors to ensure a smooth process. The TABC auditors are available to answer any questions that come up, so do reach out regarding any confusion. One area that has been a particular focus for the audits is Texas’s rule prohibiting DtC shippers from shipping any wines they do not personally bottle or produce, which get extra complicated after any merger or acquisition. This can cause confusion as to which wines are produced or bottled by the actual DtC licensee holder (as opposed to their sister wineries). Nevertheless, the TABC audits will continue. For more information on how to prepare, check out this webinar.
- It is no secret that smaller producers have greater trouble than major producers with the regulatory and market barriers that come up when dealing in a state’s three-tier system. While they may seem overly complicated or inefficient, these barriers are often enough a necessary measure for public safety and ensuring alcohol isn’t getting in the hands of minors. As such, state regulators will continue to enforce the laws on their books and stand up for the measure of public health and safety they are designed for. However, small producers can continue to push for less restrictive laws by belonging to trade and advocacy associations, which have been instrumental in passing direct-to-consumer and other craft producer measures in recent years.
- Especially in light of expanded delivery options during the COVID crisis, there have been some concerns around whether the delivery systems are properly ensuring that minors are not receiving alcohol. While carriers do have policies in place regarding the shipment of alcohol, there is some concern regarding deliveries from restaurants and couriers who are new to carrying alcohol. Matt Botting noted an alarming amount of deliveries being made that violate California’s laws during recent state checks on deliveries of alcohol. Often the courier is new to alcohol so may not know all the proper procedures, or the restaurant does not inform the courier that the items include alcohol. In all, the best solution is increased education for all parties so they know what is required—and prohibited—of them and use available technology and services to help them.
State of the Industry, with Steve Gross, VP State Relations, Wine Institute
In his fifteenth annual Wine Summit address, Steve Gross shared that the Wine Institute continues its work on expanding shipping by opening new states and improving existing statutes, as well as protecting existing shipping privileges. As the pandemic worsened, they shifted to also prioritize allowing wineries to do production, DtC shipping and curbside pickup, allowing virtual tastings and dealing with common carrier COVID-19 protocols.
- Wine Institute has run bills in Alabama and Mississippi, which failed to move forward, and one in Delaware that is still pending. The Kentucky DtC shipping bill (HB 415) has passed, allowing wineries, breweries and distilleries to sell DtC starting July 14, 2020 (although the state is still finalizing the application process at the time of publication).
- Mississippi’s legislature has passed a likely unworkable “special order” bill (HB- 1088) and forwarded it to the Governor for signature. It would create a system for special ordering whereby a Mississippi resident, who would need to get pre-approval from the state, could request a sale from a winery for products not otherwise available to them. The winery would then need to fulfill the sale through a state package store. The package store would pay the state excise and sales taxes, fees, and any surcharges but can charge a “service fee” for receiving and handling the shipments. While this does resemble similar special order rules in Alabama, it remains to be seen how effective it will be.
- Utah similarly passed a bill (HB 157) allowing the Department of Alcoholic Beverage Control (DABC) to create a special order process, though Utah calls it a subscription program. Under this program, a consumer in Utah would apply to the DABC to join (something akin to getting a personal license). The consumer would select a Utah state package store to serve as their designated pick-up location. Any wine they purchase would have to be delivered by a participating winery to the DABC warehouse. Utah would then assess an additional 88% markup, plus any additional handling fees. The wine would then be sent to the designated location for pickup by the consumer.
Wine Institute COVID-19 information and resources
- State-by-state closures: a list of state-by-state closures and other restrictions on restaurants, retailers, bars and other wine sales outlets.
- Restaurant, bar & tasting room reopenings: New rules being implemented as states begin to reopen their restaurants, bars and tasting rooms. This list will be updated daily as new information becomes available.
- State-by-state guidance for ABC licensees: A list of guidance documents from the state ABC’s response to COVID-19.
For more thorough information and discussion, get access to the event’s recordings and slides on-demand here. And mark your calendar for the 2021 Sovos ShipCompliant Wine Summit, April 28-29 at the Napa Valley Marriott. We look forward to seeing you there!