with Sonoma up a stunning 30% and Oregon in the mid-20s, Cormier told us. “We think that trend will continue,” he said, adding that Napa continues to have the lion’s share of shipments, but the growth is outside Napa.
In terms of varietals, cabernet sauvignon leads the way, with volume up 43% and value up 50%. What’s next? “We’re seeing Rose growing,” Cormier said. “Up 39% in terms of value, 47% in terms of shipments.”
The biggest growth, he added, is in the $100 to $150 bottle of wine. We wondered what that was. “Demographics explains the $100 bottles of wine,” he said. “Most DTC business is going into fairly large population markets with lots of high include individuals, mostly baby boomers. ”
Also: Most DTC volume comes from small to medium size wineries. Their wines are almost by definition higher.
Cormier told us he expects to see more growth in direct shipments are wineries and others get more sophisticated about e-commerce. “We’re seeing an evolution to digital marketing. We’re also seeing them move into the three tier system, where we’re starting to see boutique distributors work with smaller wineries” whose volume isn’t enough to interest major distributors.
And that is leading Ship Compliant to introduce MarketReady, which is an automated approach to compliance. It will be officially unveiled at ShipCompliant’s annual users conference May 31. It’s specifically about helping wineries, breweries and distilleries automate the process of getting their products into three-tier distribution faster by automating the label and brand registration in the states.
That can be incredibly important, because if a label or product isn’t registered in a state, it can’t be legally sold in a state. So delays in registration can have a direct impact on the bottom line.
ShipCompliant has a team of about 50 accountants and lawyers who are in constant touch with state regulators to make sure the needs of both suppliers and regulators are met. Also, ShipCompliant “stays close to industry associations who all have lobbying efforts going on to support the industry.”
Cormier told us that he believes about 400 of ShipCompliant’s existing DTC consumers want to get into three-tier distribution. But the opportunity goes beyond existing customers: Regional craft breweries are getting serious about distributing in multiple states, he said. “When you get into five or more states, that’s when you need this product,” he added.
Compliance challenges are only going to get more complicated, he added. The beverage industry is having to “walk the line between being like Amazon and rules about such things as free inducements. What do you do about free shipping? Also, age verification is being looked at a lot.”
There’s a whole regulatory push to make sure those in the market do it properly, and those who aren’t leave the market. Who might not be doing it properly? One example: A New Jersey retailer who thinks he can ship to consumers in New York.