eCommerce sales of alcohol skyrocketed in the last few years, thanks in part to the pandemic, and the market is expected to continue growing. This growth offers fantastic opportunities for companies in the beverage alcohol industry, so long as they can maintain compliance for direct-to-consumer (DTC) shipping.
Shipping DTC offers growth opportunities for wineries, breweries, cideries, and distilleries across the country. However, alcohol compliance laws are not only strict; they vary from state to state. Therefore, someone has to constantly be on top of changes to ensure that the day-to-day tasks in the warehouse and shipping center remain compliant.
One of the main challenges is the variation in state requirements. Even without considering federal and state regulations, business owners need to be on top of carrier requirements, record-keeping, and taxes. For a business to legally sell alcohol direct-to-consumer, you must meet the following criteria:
Of course, any federal or state regulations (such as the drinking age) must be adhered to in order to maintain compliance. This becomes more challenging as laws and regulations will inevitably continue to evolve.
Warehouse management software that not only optimizes order fulfillment but can also seamlessly maintain compliance is essential. Infoplus’s WMS keeps companies and 3PLs compliant with all federal and state laws while adhering to strict shipping requirements. The software is optimized for all types of alcohol with special labeling and packaging for beer, wine, and spirits.
Compliance is ensured with automated item rules, and cartonization logic as every package follows product protocols and shipping regulations. With end-to-end automated tracking, you will feel confident in your recall and audit capabilities. Infoplus’ WMS allows alcohol compliance to become automated.
Every state has its own alcohol compliance regulations. Businesses need to know the compliance laws of the state it is based in. But businesses that send alcohol directly to consumers also need to be aware of which states legally allow alcohol to be shipped DTC.
Furthermore, the law is different for each type of alcohol: wine, beer, spirits, and cider. Here is an overview of the state legality of shipping alcohol for each type of alcohol:
Wine. Wineries are legally able to ship DTC in 47 states and the District of Columbia. Utah and Mississippi prohibit DTC shipment of wine. Within the states of Delaware, Arkansas, and Rhode Island, alcohol can only be shipped to a residence if it was purchased on-site at the winery. The Wine Institute maintains an up-to-date map with specific state requirements.
Beer. Residents within 9 states and the District of Columbia are legally able to receive beer shipments. These states are Alaska, Kentucky, Nebraska, New Hampshire, North Dakota, Ohio, Oregon, Vermont, and Virginia.
Spirits. Seven states allow DTC shipping of spirits; they are Alaska, Arizona, Kentucky, Nebraska, New Hampshire, North Dakota, and the District of Columbia.
Cider. How cider is classified varies state-to-state. Check state-specific regulations on cider. In Oregon, for example, it is handled the same as wine.
It is also important to stay up-to-date on general state laws, as they are constantly changing. For example, Alabama began allowing DTC wine shipping in 2021, while Nevada stopped allowing breweries and distilleries to ship to consumers directly.
Infoplus’s ability to track and organize various metrics can make keeping track of all these regulations easier. Keeping track of customer data, for example, can flag orders should a customer move to a state with different compliance issues.
Custom fields on the Infoplus “Alcohol” tab include useful information like the type of alcohol, container size, vintage year, and country or region of origin. These can be configured in whatever way will keep sellers organized and compliant. Furthermore, all of this info is easily available should a business ever need to present it for proof of compliance.
There are three main aspects of ensuring a business maintains compliance when shipping alcohol directly to consumers.
As a business that sells alcohol, you are likely already aware of licensing requirements within your state and probably have the proper alcohol license for selling to customers at your location. However, states require an additional separate license for DTC shipping of alcohol. And DTC shipping businesses will need to acquire a license for each state they plan to ship to.
The consequences of failing to acquire and maintain a license include monetary penalties, license revocation, and potential action at the federal level. Alcoholic beverages are one of the most highly regulated products in the United States. As such, it is important to ensure your business is regularly checking state websites for updates to laws and regulations.
One way Infoplus makes this easier is through automation. For example, you can automatically add “Adult Signature Required” to any orders that are going out to states you know have this as a requirement for DTC alcohol sales.
While it is recommended you visit each state’s website directly, the National Conference State Legislatures has a directory of state licensing requirements. The website even provides a specific regulatory section where the latest version of the regulations can be found.
To be compliant at a state level, a business will need to register with:
While it is required for a business that sells alcohol to have a permit at the federal level from The Federal Alcohol and Tobacco Tax and Trade Bureau (TTB), a separate permit is not required for shipping directly to consumers within the country.
Shipping alcohol directly to a consumer within a state requires paying taxes on the sale as though it took place within the state. This means that DTC shippers are subject to various federal, state, and local tax laws that vary widely from state to state and county to county.
As the business grows to service many orders within multiple states, automating processes becomes vital for sustainable growth. Infoplus software already deals with multi-state sales tax issues based on a product’s destination. Integrating warehouse operations and shipping with the accounting department ensures that customers are charged correctly and that the appropriate state alcohol sales taxes are paid and reported.
States may enforce compliance through audits. To ensure you can show compliance if audited, it is necessary to maintain accurate records. It is also recommended to keep records on hand for at least five years unless otherwise dictated by state requirements. These records might include, but are not limited to:
Utilizing software like Infoplus’ WMS, with end-to-end automated tracking and complete audit trails, ensures your business is able to manage product traceability properly.
Only two carriers legally ship alcohol for DTC alcohol businesses: UPS and FedEx. Both carriers have specific requirements that must be met in order for a business to ship alcohol through them.
If shipping alcohol with UPS, you must become an approved shipper and enter into an agreement. There are also packaging requirements, including internal packaging and external labeling. You can find guides on shipping wine, beer, or spirits with UPS here.
FedEx requires shippers to sign an alcohol shipping agreement. It, too, has specific packaging and labeling requirements. Of course, both carriers require the shipper to be licensed and require that an adult signs for the alcohol upon delivery.
As a DTC shipper, working with carriers is essential for the business. With most products, finding the fastest and most cost-effective shipper is all that matters. For alcohol, there is the added issue of compliance. Luckily, once these processes are implemented, Infoplus’ WMS is able to automate carrier compliance.
As one of the most highly regulated products in the United States, those in the beverage alcohol industry are accustomed to acquiring licenses and following regulations.
The ability to directly ship to consumers offers brewers, wineries, cideries, and distilleries modern opportunities for growth, especially in the age of eCommerce.
Infoplus’ WMS provides compliance ease and process automation at every step of the process. Offering owners the ability to “set and forget” many of the head-ache-inducing aspects of the business.
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