Wineries Ship Direct So Why Can't Craft Breweries?

Beer cans in production — Beer cans photo Sovos ShipCompliant

In most of the nation, you can’t order an out-of-state craft beer shipped to your home unless a local retailer carries it, while ordering wine directly from a small out-of-state winery is almost ubiquitous. In 39 states it is currently illegal for outside breweries to ship you that sought-after “whale” of a beer, that brewery Beer Club subscription or that hyperlocal brand you loved on your last vacation. This means that small breweries without wholesale distribution arrangements outside their local market – and that’s most small breweries – may be off limits for you unless you travel to them.

Unsurprisingly, recent polling revealed that 86% of craft beer drinkers believe that current Direct to Consumer (DtC) shipping laws in the U.S. should be updated. Travel has a lot to do with it. An eye-opening 79% of craft beer drinkers have tried a beer while traveling, but discovered they can’t get it again because it’s not available near their home.

These and additional results from the annual Sovos ShipCompliant/Harris Poll consumer survey make it clear that consumers overwhelmingly support expanding direct access to beer as well as wine.

Breweries and their customers shake their heads in disbelief at the status of wineries, permitted to get licensed to ship their products to fill orders in 47 states to beer’s meager 12. The disparity simply makes no sense to craft beer drinkers.

Who gets distant beers on their doorstep?

Who Can Ship What Where? Courtesy of Sovos ShipCompliant

Currently, the only consumers with the right to order beers shipped across state borders are adults in Alaska, Kentucky, Nebraska, New Hampshire, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont and Virginia, as well as the District of Columbia. The shipments are made by carriers such as UPS who are responsible for checking IDs and collecting delivery signatures. Additional registration requirements and state tax compliance regulations are the responsibility of breweries making direct sales into these states.

The rest of the states have outlawed these direct purchases for beer, despite the interest their own adult residents express. In some jurisdictions, even selling and shipping directly to a consumer within the same state is forbidden. Furthermore, the US Postal Service is blocked from shipping any alcohol - even wine - anywhere in the nation, although there have been repeated efforts to convince congress that removing that restriction would help both consumers and the post office itself. See where UPS can and cannot ship beer.

Craft brewery beer clubs, inspired in part by the success of consumer-pleasing wine clubs, either select who can be members with an eye to the list above, work with third party services to coordinate with out-of-state distributors, or potentially risk penalties by working with services that skirt these laws. This chaotic state of affairs is particularly strange within a well-regulated shipping industry that safely and legally delivers other sensitive products to the doorstep, such as prescription drugs, weapons and wines.

Why wine and not beer or spirits?

America’s long complicated relationship with alcohol included a patchwork of local prohibition regulations expanding during the 19th century, before that movement became a national initiative. Consumers in areas where dry laws were passed sometimes arranged purchases from out-of-state vendors and hired a wagon to transport the goods to their doorstep. In 1933, at the repeal of the failed national prohibition experiment, some states dug up those earlier concerns and put similar but now illogical delivery restrictions into their new regulations.

After the Judgement of Paris in 1976, when American wines first began to be recognized as serious contenders on the international stage, U.S. wine drinkers from outside of California began to clamor for the right to have Napa Valley wines delivered to their homes.

The Wine Institute took up the challenge, encouraging customers to demand access from their state legislatures via a group called Free the Grapes, getting wineries on the same page about asserting their rights, hiring lobbyists, and bringing on attorneys to work on laws in all 50 states over the years. In 2002 they secured a US Supreme Court victory that determined that states that permit in-state DtC wine shipping may not block out-of-state wineries from shipping there as well. States have the right to control how alcoholic beverages are sold, but they cannot give in-state producers preference over other American producers.

Next, the wine industry stepped in to help shape new state laws complying with the court’s doctrine. Today, DtC wine sales amount to nearly $4 billion in the 47 states open for DtC shipping by wineries.

The struggle continues

According to Steve Gross, VP of state relations at the Wine Institute, the battle for DtC access is never finished. The wine industry has spent millions of dollars and thousands of hours on this ongoing effort. Opposition pops up from various places, from anti-alcohol groups, sometimes from wholesalers, and even from the Teamsters Union during attempts to reform the regulations in Texas.

It’s hard to imagine DtC doing significant damage to standard distribution and wholesale businesses. Shipping liquid to the doorstep is much more expensive, although it’s clear that special beers for special occasions, brewery club subscriptions, and niche brands with special personal meanings are sometimes worth the extra cost to consumers. Shipping DtC into another state can even serve as a first step to getting a distribution contract there, as it proves demand to the wholesalers.

Alex Koral, Regulatory General Counsel at Sovos ShipCompliant photo credit Sovos ShipCompliant

“The DtC wine shipping market is where it is because it undertook these efforts and worked hard, year after year, to campaign in state legislatures for its interests and the interests of its consumers,” agrees DtC expert Alex Koral, Regulatory General Counsel at Sovos ShipCompliant.

Summarizing the recent consumer survey that the Harris Poll undertook in partnership with his company, which provides solutions for complying with DtC regulations and taxes state by state, Koral said, “People recognize that we can't build a 21st century market on 20th century laws designed to solve 19th century problems.”

He’s eager for brewers to change things.

What are craft brewers doing about it?

Craft Brewers Conference & BrewExpo America in Las Vegas

Sam DeWitt joined Gross and Koral at a session tackling DtC restrictions at the 2024 Craft Brewers Conference in Las Vegas. The panel looked closely at what the wine industry has accomplished and how that work can benefit brewers’ efforts.

In his work on state government affairs for the Brewers Association (BA), DeWitt grapples with state laws all the time. He affirmed that reform will best be taken on with on a state-by-state battle, spearheaded by state Brewers Guilds and local consumer lobbying efforts.

DeWitt told the story of when NBC’s Today Show did a segment in Albuquerque, New Mexico, including a visit to Bow and Arrow Brewing, a Native American women-owned brewery that uses local ingredients. When the segment aired, the small brewery was inundated with excited calls from potential out-of-state customers who had to be told “no.” DeWitt saw this as a once-in-a-lifetime opportunity lost.

Peppered throughout the presentation were warnings to brewers to carefully scrutinize specialty shipping services promising to come to their rescue. DeWitt commented that “enforcement actions are getting more and more prevalent.”

He called for brewers to get involved in the initiatives to update state laws one by one, something that should move much faster for brewers than it did for the wine industry. The BA also urges consumers and supporters to take action by supporting grassroots efforts such as the petition from Craft Beer. Thanks to American wineries, the road has already been paved for challenging illogical restrictions on getting the craft beer of your choice delivered to your doorstep. Hopefully, changes will come sooner versus later.

To keep up with current state-by-state legislation regarding beer, visit the Brewers Association state and legal resources.