Those of you in the business world have heard of terms like B2B and B2C, meaning businesses that sell to other businesses B2B, and businesses that sell to consumers B2C. Well, in the wine world, many states distribute wine with the help of a wholesaler or distributor, involving a three-tiered distribution system. In this form of distribution, wine is sold from the wine producer to a third-party distributor, who then sells to the retailer and thus to the consumer. There has been a growing movement towards a more direct form of distribution called Direct-to-Consumer DTC. This allows producers to sell and ship wine directly to the consumer, rather than routing through a third party.

According to freethegrapes.org, as of three decades ago, there were only four states that permitted DTC. Now, in contrast, there are only six states that do not allow DTC, and four states that ship DTC with limitations. Initially, these restrictions on shipping were established in order to maintain monopolistic control within each state. However, there are now supporters at the state and federal level who are in support of consumers as well as wine businesses who would like to amend these laws. In addition, Free the Grapes, a non-profit organization made up of five major wine industry associations, was established to advocate for lifting of restrictions on states that still prohibit direct purchasing/shipping from the winery to consumer homes.

The Model Direct Shipping Bill was used in a U.S. Supreme Court ruling Granholm v. Heald and is now the standard used in most states where DTC is legal. Since the latest legalizations of DTC, with Pennsylvania being the 44th legalized state, direct winery shipments are now allowed in 94% of U.S. states. This has resulted in over $1 billion in wine shipped to consumers from Napa, California. In Massachusetts, the first year of legalized DTC wine shipping resulted in over $27 million in wine shipments.

While some may feel that the DTC benefit to consumers will put wholesale distributors at a disadvantage, the reality is that there is room for everyone! With the exponentially increasing numbers of wineries each year, there are now more wines than ever being produced and it is impossible to have them all represented by retailers and third party distributors. With the number of wholesale distributors decreasing due to consolidation, there will still be a demand for wholesale purchasing. However, consumers now have the freedom of choice to purchase direct from the producer should they want to. Personally, I know plenty of people who will still make the bulk of their wine purchases from their local retail wine shop or market, and the food and beverage venues will still be purchasing from the wholesalers. Direct-to-consumer shipping provides increased access and more options for consumers, and when it comes down to it, it’s the consumers who sustain the wine business, so we should take care of them and by “them” I also mean me!

Those of you in the business world have heard of terms like B2B and B2C, meaning businesses that sell to other businesses B2B, and businesses that sell to consumers B2C. Well, in the wine world, many states distribute wine with the help of a wholesaler or distributor, involving a three-tiered distribution system. In this form of distribution, wine is sold from the wine producer to a third-party distributor, who then sells to the retailer and thus to the consumer. There has been a growing movement towards a more direct form of distribution called Direct-to-Consumer DTC. This allows producers to sell and ship wine directly to the consumer, rather than routing through a third party.

According to freethegrapes.org, as of three decades ago, there were only four states that permitted DTC. Now, in contrast, there are only six states that do not allow DTC, and four states that ship DTC with limitations. Initially, these restrictions on shipping were established in order to maintain monopolistic control within each state. However, there are now supporters at the state and federal level who are in support of consumers as well as wine businesses who would like to amend these laws. In addition, Free the Grapes, a non-profit organization made up of five major wine industry associations, was established to advocate for lifting of restrictions on states that still prohibit direct purchasing/shipping from the winery to consumer homes.

The Model Direct Shipping Bill was used in a U.S. Supreme Court ruling Granholm v. Heald and is now the standard used in most states where DTC is legal. Since the latest legalizations of DTC, with Pennsylvania being the 44th legalized state, direct winery shipments are now allowed in 94% of U.S. states. This has resulted in over $1 billion in wine shipped to consumers from Napa, California. In Massachusetts, the first year of legalized DTC wine shipping resulted in over $27 million in wine shipments.

While some may feel that the DTC benefit to consumers will put wholesale distributors at a disadvantage, the reality is that there is room for everyone! With the exponentially increasing numbers of wineries each year, there are now more wines than ever being produced and it is impossible to have them all represented by retailers and third party distributors. With the number of wholesale distributors decreasing due to consolidation, there will still be a demand for wholesale purchasing. However, consumers now have the freedom of choice to purchase direct from the producer should they want to. Personally, I know plenty of people who will still make the bulk of their wine purchases from their local retail wine shop or market, and the food and beverage venues will still be purchasing from the wholesalers. Direct-to-consumer shipping provides increased access and more options for consumers, and when it comes down to it, it’s the consumers who sustain the wine business, so we should take care of them and by “them” I also mean me!

This Valentine’s day, don’t eliminate the possibility of ordering your favorite wine from your favorite winery, even if it’s not available in your local wine shop.

Until next month, Cheers and have a Happy Chinese New Year~!

Alice

This Valentine’s day, don’t eliminate the possibility of ordering your favorite wine from your favorite winery, even if it’s not available in your local wine shop.

Until next month, Cheers and have a Happy Chinese New Year~!

Alice