Direct to Consumer (DTC) shipping will unlikely decline after the pandemic.
Much the opposite. Online shopping for groceries and beverage alcohol have become the norm, and there is overwhelming consumer demand for direct-to-consumer shipping of distilled spirits, similar to wine, according to a national survey released today by the Distilled Spirits Council of the U.S. (DISCUS).
The survey of more than 2,000 spirits consumers, conducted for DISCUS in March 2021 by IWSR Drinks Market Analysis, released this morning during a media briefing hosted by DISCUS.
According to the key findings presented by DISCUS Chief Economist David Ozgo:
- 80% of consumers surveyed believe distillers should be allowed to directly ship their products to legal-age consumers in any state.
- At least 76% of consumers would consider purchasing spirits online shipped directly from distillers to them from outside or within their state.
- 75% of consumers agree wine and spirits should be subject to the same laws pertaining to DTC across states.
- Close to one in two (45%) have purchased alcohol online direct from a brewery, winery or distillery.
- 38% of respondents report having purchased alcohol online from a producer that was shipped from outside of their state.
- The pandemic accelerated the ability and expectation to shop online. 73% of all households surveyed shopped online for groceries, and 47% report they are shopping online more frequently than in the past year.
- 62% of consumers have purchased beverage alcohol online (either through DTC or other e-commerce platforms) and consumers are equally likely to have purchased spirits (32%), wine (33%) or beer (31%).
“The goal of this survey was to get a better understanding of the buying behavior of spirits consumers and determine if current state laws restricting direct shipping of spirits are hampering distillers’ ability to meet the needs and expectations of their customers,” says Ozgo. “These findings underscore that there is a very high level of interest among spirits consumers in purchasing products directly from a distiller located within or outside of their state, and having it shipped to them.”
During the briefing, DISCUS Chief of Public Policy Christine LoCascio presented the current legislative landscape for spirits DTC shipping. He noted that 46 states plus D.C. allow direct shipments of wine, but only nine states plus D.C. permit DTC shipping of distilled spirits.
LoCascio added that, as a result of the pandemic, an additional seven states temporarily allowed distillers to ship to in-state consumers. The temporary measures in New York and Montana recently ended, and there are bills in some states — including California — to make the measure permanent.
“We fully support the three-tier system and view direct-to-consumer shipping as an enhancement to the evolving and modern marketplace,” says LoCascio. “Consumers agree that distillers should be able to ship their products directly to them in a safe and responsible way, just as wine has done for decades.”
Ryan Friesen, head distiller for Blinking Owl in Santa Ana, California, provided a craft distiller perspective on DTC.
“As I work to grow our small business, it has been a persistent question as to why distillers like me are denied the same rights and privileges that California winemakers have enjoyed for more than 30 years,” Friesen says. “There is no doubt the governor’s temporary approval of in-state direct shipping of spirits helped saved Blinking Owl Distillery during the pandemic, but we are left to wonder how to bridge the gap when this vital revenue stream, which is slated to be rolled back on January 1, 2022, goes away.”
Friesen, who also serves as the vice president of the California Artisanal Distillers Guild, added that he sees DTC as an on-ramp for small and growing brands to the traditional three-tier system and to finding a distributor.
“Allowing me to reach more consumers through direct shipping will help me build our brand and generate enough interest to ultimately grow our wholesale distribution,” Friesen says. “That’s the end goal.”
Partnership to Advance Spirits DTC
Three leading spirits organizations representing both small and large distillers — the Distilled Spirits Council of the United States, American Craft Spirits Association (ACSA) and American Distilling Institute (ADI) — are aligning to make passing spirits direct-to-consumer shipping laws a top legislative priority for their organizations.
“As nonprofit trade associations, ACSA and DISCUS share the goal of providing a voice for our members,” says Margie A.S. Lehrman, CEO of ACSA. “We seek to enhance and build member businesses by meeting customers’ desires for similar shopping experiences for beer, wine and spirits. These survey results clearly illustrate the importance of this effort, and the need to work collaboratively to help move legislation forward to create these very opportunities.”
“In states where craft distillers have been permitted to ship their spirits products direct-to-consumer, they report it has been a saving grace and a much-need source of revenue during the hardships of the pandemic,” says ADI President Erik Owens, pointing to an ADI survey from earlier in the year. “Let’s face it. The pandemic has completely changed the way consumers shop, and there is no going back. It’s time to do away with antiquated DTC shipping bans so distillers can meet consumer expectations and compete in the rapidly changing marketplace.”