Direct Shipping: Still a Long Way to Go

image by Kyle May

Recent court decisions (the Court of Appeals for the First Circuit in the Family Winemakers case, and the Supreme Court in the Granholm case) represent major victories for wineries looking to use additional distribution methods and for consumers. The path for direct shipping, however, is still very cluttered in most states. The problem is that, while court cases may open the door for more direct shipping, additional changes to the laws are needed for consumers to actually benefit from the courts’ decisions.

Many states, even while allowing direct shipping to consumers, also limit wineries with:

- Winery capacity caps;

- Consumer aggregate volume limits;

- Special permit requirements for each delivery truck carrying alcoholic beverages; and

- Other limitations (such as a consumer’s physical presence requirement at each year (AZ)).

These requirements are just as onerous and problematic for wineries and for wine consumers as are the discriminatory legislation at issue in the court cases.

Take the consumer volume limits as an example. Often, a winery in violation of the aggregate limits risks fines, the loss of its shipping privileges, and, even, the loss of its license. The problem is that wineries have no reliable way to know if the case of wine it is shipping to a consumer will put that consumer over his or her volume limit. In a state like New York, where the volume limit is 36 cases per year, the risk may be less. But, in other states, such as New Mexico, with a 2 case limit, the risk is far greater. Wineries are, essentially, burdened with tracking how much wine each consumer has purchased not only from their winery, but from all wineries.

There are few carriers that will even deal with the business of delivering wine, FedEx and UPS being the two major carriers for interstate delivery. They have both avoided interstate wine shipments to states that require special permitting for each delivery vehicle, or have other onerous delivery requirements (such as Massachusetts).

Until these types of laws are also changed, the court cases based on discriminatory legislation will not be enough to really allow wineries to ship directly to their consumers.

*** A good resource for the state requirements on direct shipping is the Wine Institute