The California Senate Committee on Governmental Organization passed SB 620, which would permanently allow California distillers to ship their spirits products directly to consumers just as wineries have done for more than three decades in the state. The bill now heads to the California Committee on Appropriations.
Both the California Artisanal Distillers Guild (CADG) and the Distilled Spirits Council of the United States (DISCUS) testified before the committee.
“As both a winemaker and distiller, the unequal treatment of wine and spirits products is even more clear to me,” said Alex Villicana, owner of Re:Find Distillery and Villicana Winery, and member of CADG. “Being able to ship one of my products but not the other makes no sense. Wine DTC shipping allowed that sector to grow drastically. Jobs skyrocketed for vintners, wholesalers and retailers. We simply want the same ability to safely ship our great spirits products to consumers – growing our sector and our brand, all while reaching our customers where they are.”
Since 2005, the number of retail employees at liquor stores in California has increased more than 30%. Employment in the wine and spirits wholesaler segment has grown to around 87,000 today from 50,000 in 2001.
“Direct-to-consumer spirits shipping helped save many California businesses and jobs during the pandemic,” Chris Swonger, DISCUS president/CEO said. “Stripping distillers of a responsible and critical revenue stream, and consumers of increased convenience, simply doesn’t make sense in the modern marketplace. Wine has been shipped directly to consumers for more than three decades in the state, and it is well past time spirits DTC was made permanent as well.”
The CADG, DISCUS, the American Craft Spirits Association (ACSA) and the American Distilling Institute (ADI) sent a joint letter to Governor Gavin Newsom last month urging him to approve SB 620.
“With continued modernization of alcohol regulations, distilleries around the country have demonstrated that spirits can be shipped safely, with traceable transactions,” said Margie A.S. Lehrman, CEO of the ACSA. “Direct-to-consumer shipping is a critical step to grow these U.S. small business manufacturers. Plus, as these small businesses grow, states receive more tax dollars, and jobs are created throughout multiple sectors that touch our distilleries. Farmers, hospitality workers, label designers, and all other workers within a wide variety of occupations, those who toil day in and day out to support our grain to glass industry, benefit with job growth.”
Swonger noted that DISCUS retained IWSR to poll more than 2,000 American consumers about their interest in being able to have spirits products shipped to them like wine. This survey showed:
• Nationally, 73% of all households surveyed shopped online for groceries,
and 47% reported they are shopping online more frequently than in the
past year.
• Eighty percent of consumers surveyed nationwide believe distillers should be
allowed to directly ship their products to legal-age consumers in any state.
• At least 76% of Californians surveyed agreed they should be able to order
spirits directly from distillers and that distillers should have the same privileges as
wineries to ship direct.
Swonger called direct-to-consumere shipping “a complement to the three-tier system.” Spirits direct-to-consumer shipping or distillery to doorbell shipping serves as an on ramp for smaller producers to connect with established wholesalers, Swonger explained. With more than 2,300 craft distillers across the United States and more than 15,000 spirits products, wholesalers can’t possibly give due diligence to all of the brands that are available, especially those that are small or only of regional interest. Spirits DTC provides a way for smaller distilleries to develop and showcase a brand “following” that is critical for the producer to be able to make the economic case for broader distribution through wholesale partnerships.
Direct-to-consumer shipping can allow larger producers to provide their fans with products not geographically available to them, or items limited to distillery-only
bottlings or a unique subscription offering (similar to wine clubs).
As for worries that direct-to-consumer shipping will hurt local retailers, Swonger said California consumers will not order a product online that is available at their local retailer, due to the high costs of shipping and the extra time required for delivery.
“Californians deserve the right to buy directly from the beverage alcohol producer of their choice, be it beer, wine or spirits,” said Erik Owens, president of ADI. “Wine DTC shipping has been happening for more than 30 years in California with tremendous success, creating an increase in jobs and no negative impacts for distributors or retailers. There is no reason distillers should be prohibited from doing the same”