by KYLE SWARTZ
mong many trends in the alcohol industry supercharged by the Covid−19 pandemic was direct-to-consumer ( DTC ) shipping .
Sheltering in place during the health crisis , consumers learned at a rapid rate that they could order alcohol online and have it sent to their door . What was a growing DTC movement before 2020 burst into an enormous number of orders zinging across the country , arriving at home addresses .
This occurs both legally and illegally . In part 1 of our alcohol DTC series , we looked into the latter . Illegal shipping takes many forms : wineries mailing more than their legally allotted amount into states that limit these orders , retailers shipping rare whiskeys and even entire single barrels to wherever paying customers may live , overseas websites illegally importing bottles by switching labels in transit , and bad actors who operate shipping warehouses out of unmarked , unregulated locations .
Now , in part 2 , we explore alcohol shipped to consumers compliantly within the constraints of state and federal laws . These are the faces of the fast-expanding DTC industry , which shows no signs of slowing down as consumers today expect online shopping with convenient delivery .
MODERN TECH ENABLES DTC
Launched in 2013 , ReserveBar has grown into the primary ecommerce platform for premium spirits and buying products directly from brand websites . Currently , the platform displays around 150,000 SKUs .
“ We started around the same time as Drizly , but they ’ re more of an online liquor store , whereas we ’ re more about being the extension of what brands wanted ,” explains ResereveBar CEO Derek Correia . “ We are built to be the optimal brand environment , and to manage that last mile to consumers . Like any business , you need to be differentiable . You need to stand for something and to create specific value for consumers and businesses .”
Like other alcohol ecommerce services , ReserveBar does not have an alcohol license .
“ We ’ re a tech company that connects consumers with licensed retailers for compliant purchases ,” says Correia . “ We don ’ t ship or deliver . We ’ re a platform for consumers to be exposed to products , learn about them and buy them . Buyers are matched with retailers who have that product in stock .”
“ ReserveBar doesn ’ t ship anything ,” he adds . “ We don ’ t put bottles in boxes or ship anything . Brands pay us to have their products merchandised and to create content .”
What about concerns that the retailer who carries the purchased product might ship the alcohol illegally ? Perhaps across state lines ?
“ We have commercial agreements with 3,500 retailers which explicitly states that the retailer must operate reputably ,” Correia says . “ We only work with reputable retailers . They know all the licenses and laws in their area . They know if they can ship .”
“ We are not in the position of being — nor do we want to be — a regulator , or have the duty to enforce regulations ” he adds . “ There may be bad actors in our network . But we ’ re pro-enforcement . I ’ m talking to regulators all the time . We embrace and support the three-tier system . Retailers are operating on their licenses . Special licenses are required for retailers in some cases . It ’ s important that laws are maintained with maximum enforcement . If you ’ re a retailer , you must understand this .”
Elsewhere in the industry , Sovos ShipCompliant has emerged as the leader in automated alcohol beverage compliance tools for alcohol producers looking to sell and ship directly to consumers . The company launched in 2005 .
“ DTC in alcohol reflects broader market trends of the consumer increasingly expecting DTC options with whatever they buy ,” says Alex Koral , Sovos ShipCompliant Senior Regulatory Counsel . “ This was even more true during the pandemic . There ’ s been a tremendous surge in DTC wine . No surprise that this is also true in other alcohol product types .”
“ We provide end-to-end framework solutions that can track orders and rec- www . beveragewholesaler . com Spring 2024 • Bevearge Wholesaler 21