Wine Technology Blog @ WineWeb.com

Kentucky open to direct shipments of wine?  Could it be that the state that enacted the first felony law on wine shipments be open?  It appears so, at least until January.  On Tuesday a District Court judge in Kentucky struck down the law prohibiting out-of-state wineries from shipping to Kentucky consumers.  Small wineries (under 50,000 gallons) can get a permit from the state and begin shipping directly to consumers. A new law scheduled to take effect in January requires all wineries (including in-state wineries) to sell through a distributor.  A victory?  Yes indeed, but maybe short-lived.

Good news - USA Today didn't fall for the hype and presented some more rational results from the survey. According to the survey of 1001 teens only 2% said they had purchased alcohol online. Only 10% said they had ever browsed a site that sold alcohol online, while 80% said they had browsed a site that had sexually explicit content. So if the WSWA spokesperson is "shocked" at the results, she should be shocked that 8 times as many teens think about sex versus booze. The Wine Institute statement contains a similar statement to my previous post that it's easier to get alcohol in person than online, and questions whether the publicity campaign is another misguided attempt by the WSWA. The WineWeb's press release will hit the wire services tomorrow.

The Wine and Spirits Wholesalers of America have paid for resesearch "confirming that millions of teenagers have ordered alcohol online, or have a friend who has ordered online."  A segment aired on NBC News last night (click the link to watch it). The headline screams "Epidemic!", but as usual it appears to be nothing more than a scare tactic to use on unknowlegable state legislators (as if the lobbyists' money is not enough). Although I haven't seen the research yet, the news clip stated that 1 in 10 had ordered alcohol online or knew of someone who had.  Obviously the second part of that statement is suspect:  did they see the other person's purchase?, did they talk to them directly? The real statistic to look at is the first piece (how many ordered online) and compare that to statistics on how many teenagers buy alcohol in person or through an adult.

Anyway, to conclude this entry on a positve note, here are some of the ways The WineWeb helps wineries who use our online order processing services to be compliant:

• The winery chooses the destinations where they are able to ship wine, and we will not accept an order from any other destination.
• We provide the winery  the capability to collect sales tax in the states where it is required.  We provide them with the current rate for each of these states.  Where the sales tax rate varies within a state, we can retrieve the rate based on the customer's zipcode.
• We do not allow orders from dry or non-shippable areas in Florida and Alaska.
• We collect additional information about an order, based on state compliance reporting requirements, such as ship-to birth date in Hawaii and Wisconsin, and ship-to retailer license number in Kansas.
• We check the order size against any state quantity limits and do not allow checkout to proceed until the order is within the limit.
• We retrieve the customer's individual or household order history for the compliance period and compare it to the quantity limit.
• For those states with an annual winery shipment limit, we ensure that the order does not cause the winery to exceed their limit.
• If the winery subscribes to our Enhanced Website Hosting service, we allow them to import customer order history from their tasting room, phone orders and wine club shipments to provide a consolidated customer history.
• If the winery uses our service to print carrier shipping labels, we include the adult signature option on all wine shipment packages.
• We provide an online compliance checking tool to allow the winery to inquire into the customer order history to verify compliance on a new phone or mail order.
• We monitor the regulatory changes and update the system as necessary, as a no-charge part of our service.

Arizona's governor signed a bill yesterday that allows some in-state and out-of-state wineries to sell direct to consumers and retailers in Arizona.  The law restricts this ability to only wineries producing under 20,000 gallons of wine per year.  Some industry observers are saying that the new law is discriminatory as it has the practical effect of including all Arizona wineries, but it excludes many out-of-state wineries.  Indications are that this may be the state where such volume caps are tested in the courts. 

You may think that I'm dwelling on Kansas shipping laws, as this is my third blog post on the subject, but hey, I was born there.  Good news -- the Kansas governor has signed the direct shipping bill.  It goes into effect July 1 and allows out-of-state wineries (under 100,000 gallons annually) to sell direct to Kansas consumers. I said "sell direct", not "ship direct", as any order must be delivered to a licensed liquor establishment, where the consumer must go and pay a small fee to retrieve it.  Strange you might say, but considering club cards and all the other hassles of my young adult days there, this is definitely progress.

Today marks the one year anniversary of the US Supreme Court's ruling on direct wine shipments to consumers.  Overall it appears that the wine industry and consumers have benefitted, as many more states are now open to direct shipments.  While there hasn't been a huge rush of consumers to online wine sales, it is growing steadily.  The Press Democrat has a good article on the state of direct wine shipments.

A bill is sitting on the Kansas governor's desk that would open up that state to direct shipments of wine.  The way I understand it, out-of-state wineries could sell to Kansas consumers, but the wine must be delivered to a licensed retailer, where the consumer would then retrieve it.  A bit of a twist, and a bit or work for us at The WineWeb to integrate that into our winery shopping cart system. 

The seminar I attended last week at Sonoma State, as well as some meetings with wineries, caused us to rethink how we handle the shipping parameters for WineWeb hosted winery websites.  While I believe that the existing system works well for a majority of wineries, think of the power if a winery could specify shipping costs and options using any combination of shipping destination, shipping carrier, shipping service level, bottle size, shipment package size, handling surcharge type, and shipping rate calculation.  Well, we did just that (would we tell you about it if we couldn't figure it out?). Look for it in the next version of our e-commerce service, due out in a few days.

Wine compliance is hard.  It would be hard even if many states weren't changing their laws.  I attended a seminar at Sonoma State U. last Friday, thinking it would be a good refresher, but I learned more than I want to admit.  The seminar was conducted by Steve Gross of the Wine Institute, who is one of, if not the expert in this area.

So if you as a winery want to step up to more compliant online orders, here are some items to review against your current shopping cart system. Does it restrict certain zipcodes in certain states that are dry or non-shippable?  Does it calculate the sales tax in the appropriate states?  Does it retrieve the sales tax rate by zipcode for the states that require this? Does it restrict a customer's order based on the bottle limits imposed by some states? If you answered "yes" to all the above, then you're well on your way to more compliant shipping.  If not, maybe it's time to switch e-commerce services.  The latest version of our order processing service handles all these items and is currently on our testing server.  Expect it in a few days.