How DTC Sales and Regulations Are Changing the BevAlc Landscape
There have been some notable shifts within beverage alcohol (BevAlc) categories, from the dip in consumption among Gen Z consumers to states updating their laws to sell beer and wine in supermarkets. Direct-to-consumer (DTC) selling is also impacting retail sales of adult beverages, as nearly all states now allow people to buy wine from producers around the country and some have approved the DTC shipping of spirits, ciders and beer.
More loosening of restrictions may be on the way, as state legislatures in different parts of the United States, including New York, have introduced or passed laws allowing DTC spirits shipping. Meanwhile, DTC purchases from breweries are allowed in 10 states.
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While interest in and availability of DTC shipments may be on the rise, beverage producers and retailers must stay compliant with regulations that address licenses, taxes and buyer age requirements. Progressive Grocer recently spoke with Kelly Martin, chief compliance officer at beverage technology company DRINKS, about alcohol payment compliance, in light of considerations such as age restrictions, biometric age verification and various delivery methods. DRINKS is an e-commerce platform for retailers, brands, marketplaces and alcohol producers.
“One of the things that a lot of states, such as California, are doing is requiring retailers to pay wholesalers by electronic funds transfer,” Martin reported.
This move and other requirements impact stakeholders across the chain. “If you are a third-party marketing a product or brand, it’s about the flow of funds – making sure it goes to a licensed entity. The licensed entity has to be in control,” Martin pointed out. “This is about the tiers within the industry.”
At the same time, advancing technologies are affecting the way that purveyors can sell alcohol in a direct way, such as the use of biometrics. “There are challenges, especially when you talk about smaller retailers, because it’s a big investment for them,” Martin said, adding that larger retail chains generally have legal counsel advising them on compliance in this arena.
In this climate, retailers face competition from DTC sellers and many are also ramping up their own shipping capabilities, working with platforms like DRINKS. “I do see that both sides can live together, though,” remarked Martin.
For instance, retailers authorized to sell adult beverages can carry certain products that are not available for DTC shipping and therefore differentiate their assortment.