Limited to On-site Sales, Arkansas Passes Bill to Allow Direct Shipping
June 7th, 2013
On March 21, 2013, House Bill 1749 became Act 483, signifying its passage into law. Once enacted mid-August, the state of Arkansas will be added to the list of states that allow wineries to ship wine directly to consumers — but with many limitations.
Aside from the low cost of the license, the requirements under this new shipping law limit the abilities of licensed out-of-state wineries, arguably more than any other state that currently allows direct-to-consumer wine shipping. These limitations include requiring all shipments to be purchased in person at the winery, and affixing a special, ABC-provided, shipping label to each shipment.
For those wineries interested in navigating these one-of-a-kind requirements, Arkansas consumers will no doubt enjoy the ability to ship home a case of wine after visiting their favorite wineries. No license applications or information are available as of yet. Below is a breakdown of the licensing process, as well as the requirements and restrictions to operate, as stated in the new law:
Restrictions/Requirements (not limited to the following):
- Consumers must be physically present at the winery when purchasing the wine to be shipped to Arkansas consumers (onsite orders only)
- Every shipment must be affixed with a shipping label provided by the ABC, costing up to an additional $10 per label
- Collect and remit sales and excise tax, “as if the sale took place on the premises of a Arkansas Small Farm Winery”
- Ship only to a private residence – added difficulty, as shipments require an adult signature
- Customer volume limit of one case per customer, per quarter
Licensing Process
- Registration with the Arkansas Department of Finance and Administration Alcoholic Beverage Control Division (ABC), including a $25 annual fee.
- Provide the ABC with a copy of the winery’s home-state license as well as the winery’s TTB Federal Basic Permit
The Pac Northwest is Heating Up! Learn How to Harness the Growth
June 6th, 2013
Next week, our team will be in Napa to celebrate our 8th annual DIRECT Conference. If you’ll be in the area on June 13th, we’d love for you to attend!
But did you know that we’ll also be holding events in Oregon and Washington this month?
It’s easy to see why hundreds of brands in the Pac Northwest have begun to use ShipCompliant in the past few years; the region is now a formidable force in direct-to-consumer sales. When we compiled our 2013 Direct Shipping Report, we saw growth across the entire market, but Oregon and Washington stood out as outperformers. Though their direct wine sales are about one fifth of Napa’s, the upward trend is hard to ignore.
Let’s take a closer look at Washington.
According to our 2013 Direct Shipping Report, the Evergreen State has seen monumental growth in its wine industry, with year over year volume growth of more than 18% in 2012.Not only that, but the average price of a bottle from Washington has risen 19%. This has pushed the market past the $50 million mark for the first time last year, and is showing no signs of slowing down.
It also seems that the best food pairing for a glass of Washington Cabernet Sauvignon, is, in fact, another glass of Washington Cabernet Sauvignon. Sales of the varietal have shot up over 69% in the past year. Cabernets, Syrahs, and blends now represent 70% of the state’s market for wine by volume.
Heading south a bit, our friends in Oregon have also enjoyed huge success in recent years. The state boasted a 10% gain in direct shipping sales last year, and its average price per bottle has risen to over $37, slightly above that of both Washington and Sonoma.
The 2004 Paul Giamatti film “Sideways” was set in Santa Barbara, where the actor’s character was obsessed with Pinot Noir. Based on our data, the film could have easily been set in Oregon, where the varietal represents 60% of total shipping volume, as well as the highest average bottle price at $47. No other region is more dominated by a single type of wine than the Beaver State.
The source of Oregon’s rise in direct shipping, however, is not forged by Pinot alone. Now that Oregon has established itself as a haven for aspiring grapes, more varietals have stepped up to the plate, as Pinot Noir’s annual volume remains flat. Syrah/Shiraz, Sauvignon Blanc, and Cabernet Franc have all exploded in 2012 with growth of over 100% each. Meanwhile, Cabernet Sauvignon’s average price per bottle has risen 30%, to $35. Though these varietals have a long way to go to catch up to Pinot Noir, it’s this diversity that is truly fueling the state’s rapid ascent.
We welcome this growth, and we love to see it. In fact, we’re hosting two events in the Pacific Northwest this month, along with our sponsors, Moss Adams LLP. We call it “Step-by-Step,” and we’ve designed these seminars to help wineries finance, account for, and act compliantly through the rapid positive changes happening in their businesses.
To sign up for our June 18th seminar in Oregon, click here!
To sign up foro ur June 20th seminar in Washington, click here!
Your DIRECT source of Wine Shipping Information
June 4th, 2013
The ShipCompliant Blog brings you a steady flow of legislative updates, regulatory changes and other important news impacting wine shippers. If you find this information valuable, you won’t want to miss DIRECT 2013, ShipCompliant’s 8th annual Direct Sales and Shipping Seminar taking place June 13, 2013, in Napa, California.
This full-day seminar will feature multiple breakout sessions to discuss, in detail, some of the most important issues to wine direct shippers today, including:
- Regulatory Roulette: A Discussion of Key Regulatory Issues Impacting Your Business
- Integrating a Mobile Marketing Strategy into Your Sales Efforts
- Third-Party Marketing: The Regulatory Landscape You Need to Know
- Best Practices for Managing your Fulfillment Efforts in the Age of Amazon
- Shipping Analytics: How Do You Measure Up?
- ShipCompliant Support Lab: 1-on-1 Training
- ShipCompliant University (three tracks)
- Back to Basics: ShipCompliant 101
- Compliance Made Easy
- From Sale to Shipment
You’ll also get to hear from best-selling author and keynote speaker, Dr. Joseph Michelli, as he shares his share his extensive, in-depth research into key differentiators that define the success of companies like Starbucks, Zappos, and The Ritz-Carlton Hotel Company. And more importantly, how wineries can incorporate these strategies to create their own “creaveable” brands.
Wine Institute Director of State Relations, Steve Gross, will give a detailed state-by-state overview of recent and upcoming changes affecting wine direct shippers. Pat Kohler, Director of the Washington State Liquor Control Board, and Deputy Director Rick Garza will provide insight on recent changes in Washington state that have industry-wide impacts.
Seating is limited, so register today to confirm your seat at this eighth-annual exciting and informative conference.
Sonoma County Updates, and a Cordial Invitation
May 22nd, 2013
Today, we would like to remind you of two things: one is a law that will affect our friends in Sonoma County this year, and the other is a cordial invitation to an industry event in the area on May 30th!
Sonoma County has seen great growth over the past few years, especially in 2012. According to our latest direct shipping report, created in conjunction with Wines & Vines, we have seen sales through direct shipping out of the area rise over 10% in the past year alone. Several regional organizations have taken note of this growth, and helped pass legislation in August of 2010 to ensure that Sonoma-based wines are properly branded and marketed.
Sponsored by the Sonoma County Vintners and the Sonoma County Winegrape Commision, AB 1798 requires that any wine from an American Viticultural Area (AVA) located in Sonoma County must also include the words “Sonoma County” on its bottle labels. Though the legislation was passed three years ago, very little action has been required by vintners—until now. The state of California will begin enforcing this new requirement on January 1st, 2014. The possible punishment of neglecting this new rule is the revocation of one’s winery license.
This marks the fourth kind of law, called “conjunctive labeling,” enacted in the Golden State. Napa Valley, Lodi, and Paso Robles have had this type of requirement enacted in the past.
The rationale is twofold:
- According to the sponsor organizations’ market research, Sonoma County’s brand recognition is much greater than most of the individual AVA’s that make their home in Sonoma County
- A voluntary program to place “Sonoma County” on the region’s wine labels resulted in a 20% participation, and sponsors of the bill want to increase those numbers significantly.
There is a counter-argument to this new initiative, however. Wineries have been using more detailed AVA information to better market their region, such as “Russian River Valley” and “Dry Creek Valley.” Adding Sonoma County to the label is seen by some as diluting the brand. Regardless, the legislation has long since passed.
While this may have been on your radar when it was first enacted, we wanted to remind you that this would be a good time to make sure your upcoming COLA submissions to the TTB are properly ready to go.
More detail on label requirements can be found at :
http://www.sonomawine.com/about-sonoma-county/conjunctive-labeling
As for that invitation…ShipCompliant is pleased to participate in the eWinery Solutions “State of the Industry” seminar at Sonoma State University on May 30th. We’ll be digging deeper into our recent direct shipping data, and talk about ways to use this data to your advantage! Click here to sign up!
Is the Marketplace Fairness Act Fair for Wineries?
May 7th, 2013
In short, yes, for a couple of reasons:
1. Wineries already pay sales tax in most states
2. The vast majority of wineries will likely be exempt from the law
So what is it, exactly?
Senate Bill S. 743, more commonly known as the “Marketplace Fairness Act“, is a pretty simple bill that would give states the ability to require out of state businesses that have “remote sales” in excess of $1 million annually to remit sales taxes. Each state would be able to opt in to the Act, but only after they have simplified their tax structure, either by joining the Streamlined Sales and Use Tax Agreement or to follow the steps outlined in the bill to simplify their sales tax requirements.
Will it pass?
With broad bi-partisan support, S. 743 passed out of the Senate with a vote of 69 to 27. However, a tough battle is expected in the House, and therefore the Marketplace Fairness Act has a long way to go before it is enacted with a signature from President Obama. Amazon.com is supporting the bill (presumably because they would like to move forward with their plans to build warehouses in each state to support same-day shipping), while eBay is one of the main voices in opposition.
What will it mean for wineries?
A lot hinges on the definition of “remote sales”. Keep in mind the fact that state legislation to allow wine shipments typically includes a provision that also requires wineries to register for and pay sales tax. As it stands in the Senate version, and based on our interpretation of the current language, sales by wineries to states where they are already required to pay sales tax would not be counted when considering the $1 million threshold for remote sales.
Based on some quick analysis, there are a few hundred wineries in the US that ship more than $1 million worth of wine to consumers each year. BUT, if you include sales only to those states (Alaska, Colorado, D.C., Florida, Iowa, Kansas, Minnesota, Missouri, New Hampshire, Oregon, and Wyoming) that do not require wineries to pay sales tax, then we estimate that less than 25 wineries would exceed the $1 million cap. In other words, the vast majority of the 7,000+ wineries in the US would be exempt from this law.
Wineries are already accustomed to calculating, collecting, and remitting sales taxes in most states. So, for those wineries that would not be exempt from this law, it would probably not be that big of a deal to add a few more states (initially the states of Iowa, Kansas, Minnesota, and Wyoming) to the list of states to which they would be required to remit sales tax. They already have the technology and processes to do so.
The bill would take effect, at the earliest, on October 1st, 2013. Once effective, the 22 “Streamlined” sales tax states would begin requiring sales tax for remote sellers with over $1 million in sales. After that, each of the remaining 28 states would choose whether to opt in to the Act and start requiring sales tax from remote sellers.
