As the beverage industry adapted to changes in consumer behavior brought on by Covid , retailers embraced new technology facilitating ecommerce options like curbside pickup and local delivery . Now the limits on once-temporary regulatory changes that allowed those new buying options are being tested around the country . Shipping beer , wine and spirits to a consumer ’ s doorstep is widespread in practice , regardless of whether it ’ s legal .

From licensed retailers sending product beyond allowed borders to unlicensed enterprises skirting the three-tier system altogether , illegal shipping is the most consequential issue currently facing the beverage alcohol industry .

If more isn ’ t done to rein in rogue operators who break the law in the name of consumer convenience , it will endanger the entire three-tier system . For those who disagree , just look at Uber and Airbnb .

Both tech firms began as “ disruptors ” taking on longestablished licensing systems in the taxi and hotel industries by positioning themselves as saviors for consumers . They justified breaking local laws by promising lower prices , greater convenience and no need for regulation or oversight .

A few years later , the negative aspects of their business model have become clear . Hundreds of women have sued Uber over assault and kidnapping allegations , with the company admitting to reports of thousands more . The increase in Airbnb locations in many areas has corresponded to rising neighborhood noise complaints and higher housing costs .

I ’ ve visited hundreds of licensed establishments in dozens of states . They ’ re not perfect – some have limited product selection , high prices or outdated buildings . But they ’ re members of their local communities and play an important role in keeping a potentially dangerous product out of the hands of minors and intoxicated persons .

What unintended consequences could accompany relaxed standards in the alcohol industry to accommodate disruptors breaking laws they portray as anti-consumer ? That ’ s one question we hope to answer through our reporting on the rise of illegal shipping . The Beverage Information Group ’ s editorial team , led by Beverage Dynamics editor Kyle Swartz , spent months researching a series of feature stories that begin here .

Both on-the-record and off-the-record conversations with retailers , wholesalers , suppliers , law enforcement officials and industry associations have informed our reporting .

Our first feature in this series covers enforcement actions against illegal activity currently underway in Michigan and Massachusetts , which may serve as precedents for states going forward . It also includes an interview with the WSWA about how the middle tier views shipping laws and law-breaking . In future installments , we ’ ll explore the impact on law-abiding retailers , distributors and suppliers , public health concerns and what the industry is doing ( or not doing ) to combat illegal shipping .

Jeremy Nedelka Beverage Group Vice President , jnedelka @ epgacceleration . com

PHOTO CREDIT : © THAWEERA - STOCK . ADOBE . COM

Illegal shipping is a growing problem for the industry BY KYLE SWARTZ

“ It ’ s a huge , huge problem ,” says Ted Mahoney , chief investigator of the Massachusetts Alcoholic Beverages Control Commission . He spoke during the panel “ Flippers & Shippers — Best Practices on Thwarting the Secondary Market ” at the 2022 NABCA Administrators Conference in Pittsburg this past October .

“ We have a generational perfect storm today ,” Mahoney continues . “ We have never-before-seen levels of ecommerce , fueled by a pandemic that nobody has ever seen before . I would love to toss this into the lap of the Feds , but that ’ s not going to

14 Beverage Wholesaler • Winter 2022