What’s the difference and why does it matter?
Consumers may not care about the legal technicalities of how their favorite alcoholic beverages arrive at their front doors, but federal and state regulators absolutely do. Here’s a quick guide to what producers and retailers must know about direct-to-consumer (DtC) shipping versus local delivery of beverage alcohol.
• DtC shipping is when an alcohol seller receives an order from a consumer that is fulfilled through a shipment using a third-party common carrier, sent directly to the consumer.
• These shipments often cross state borders and must abide by the rules of the state where the consumer is located and will receive the shipment.
• There are regulatory restrictions on DtC shippers, from licensing and tax requirements to outright bans on who can ship.
• Not exactly. While 47 states and the District of Columbia allow residents to have wine shipped directly to them, just 11 states and D.C. allow the same for beer while seven states and D.C. allow liquor to be shipped directly to consumers. Only 14 states allow out-of-state retailers to ship DtC.
• Smaller producers who struggle in the three-tier system can readily establish a national presence, while meeting consumer expectations that everything is available online.
• The wine industry has been shipping for decades, and there is widespread interest in the beer and spirits markets to expand their access.
• What was once a novel market expansion has since proven win-win-win for producers in terms of business growth, states in terms of increased tax revenue, and consumers in terms of increased choice and convenience.
• Alcohol delivery is when a local retailer makes a sale, but the consumer has their purchase brought directly to them instead of taking possession at the storefront.
• Often, retailers must deliver alcohol in their own vehicles, using their own employees.
• Many third-party services have recently provided marketplace and delivery support.
• These deliveries do not cross state borders (in some cases, not even county borders), and except for the delivery, otherwise are three-tier sales.
• Just like with DtC shipping, the local delivery of alcohol is not available in every state.
• There is also a difference between where a retailer can deliver using their own employees and vehicles versus where they can rely on third-party services to handle the delivery.
• As the use of third-party services has expanded, many states have added new licensing requirements and other controls on them to ensure the safe handling of alcoholic products.
• Local alcohol delivery promises the advantages of the three-tier system, with a suite of available products, matched with the benefit of having those products brought directly to the consumer.
• This provides convenience for consumers who are busy or are otherwise unable to go to a retail store.
• Consumers are limited to products that have gone through the local three-tier system. Small production or highly allocated products that do not get widely distributed may still be unavailable to consumers.
Want to learn more about the DtC shipping process and why compliance is so key? Reach out to our team and see how Sovos ShipCompliant can help.