California approves DTC spirit shipping bill
The US state of California has passed a bill to permanently allow distillers to ship their spirits directly to consumers.
The SB 620 bill was passed by the California Senate Committee on 11 January and will now head to the state’s Committee on Appropriations. Wineries in the state have been allowed to ship their products directly to consumers for more than 30 years.
In March 2020, the California Department of Alcoholic Beverage Control (ABC) allowed distillers to temporarily ship directly to consumers due to the impact of the Covid-19 pandemic. The measure was set to expire on 1 January 2022.
However, the direct-to-consumer (DTC) emergency relief measure was extended for distillers at the end of 2021 to 31 March this year.
The Distilled Spirits Council of the US (Discus) and the California Artisanal Distillers Guild (CADG) testified before the committee.
“Direct-to-consumer spirits shipping helped save many California businesses and jobs during the pandemic,” said Chris Swonger, president and CEO of Discus. “Stripping distillers of a responsible and critical revenue stream, and consumers of increased convenience, simply doesn’t make sense in the modern marketplace.
“We are committed to working with senator [Ben] Allen and members of the committee in their efforts to find common ground between interested parties. 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.”
Alex Villicana, owner of Re:Find Distillery and Villicana Winery, and member of the CADG, said wine and spirits were being treated “unequally”.
He said: “Being able to ship one of my products but not the other makes no sense. 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.”
The CADG, Discus, the American Craft Spirits Association (ACSA) and the American Distilling Institute (ADI) sent a joint letter to the state’s governor Gavin Newsom last month urging the approval of the bill.
In the letter, the groups cited a survey by IWSR Drinks Market Analysis in March 2021, which found that more than three quarters of Californians said they should be able to order spirits directly from distillers and that distilleries should have the same DTC benefits as wine producers.
Margie Lehrman, CEO of the ACSA, also noted that distillers have shown that spirits “can be shipped safely, with traceable transactions”.
The bill has faced opposition from the Wine & Spirits Wholesalers of California (WSWC), which claims that the move threatens up to 10,000 union employees within the wholesale tier, and the jobs of workers at more then 38,000 retail stores, restaurants and bars.
Furthermore, the WSWC believes that the state’s current system of age verification is not replicated in the DTC marketplace and could lead to underage access of alcohol. The organisation set up a microsite to highlight the ‘dangers’ of DTC spirits shipping.
Jeff Carroll, general manager for beverage alcohol at tax software firm Avalara, noted that the committee highlighted several concerns, including the extent to which large companies would have a DTC advantage and impact California retailers.
He said: “Wholesalers appeared ready to concede DTC shipping for ‘true craft distilleries’. And there was general agreement that more works needs to be done on this bill before it progresses further. We’ll see if the two sides can find room for compromise, especially around the proposal to create a ‘capacity cap’ to exclude larger distilleries.”