How to Get Started in Direct-to-Consumer (DtC) Beer Shipping
Direct-to-consumer (DtC) beer shipping is continuing to rise in popularity, partially fueled by the COVID-19 pandemic and consumers seeking alternative ways to access their favorite beverages. But DtC beer shipping requires adherence to numerous rules and regulations that can vary from one state to the next. When shippers understand the basics and know how to stay compliant, DtC beer shipping can be a fantastic avenue for their business.
Why consider DtC beer shipping?
Being able to ship beer directly to consumers is a great way to connect with those customers. It can create a more personal connection, which beer lovers want. The COVID-19 pandemic did not introduce the idea of DtC alcohol shipping, but it did help increase the expectation of internet sales. Nearly half of regular craft beer drinkers (48%) said they purchased craft beer directly from a brewery and had it shipped directly to their home via a third-party carrier prior to the pandemic, with 51% saying they did so since the pandemic’s onset. Additionally, 73% of regular craft beer drinkers said the pandemic increased their interest in purchasing craft beer via DtC shipping—that’s nearly three in four!
Breweries can also develop a greater national presence, as DtC sales and three-tier distribution go hand-in-hand, one often helping to further fuel the growth of the other. For example, a brewery may not be ready for a distributor partner, but building a fan base now through DtC shipping can strengthen any eventual entry into the three-tier distribution channel.
DtC beer shipping may not be as widespread as the DtC wine market, there is lots of room for beer to grow. The wine shipping channel brings in $3.7 billion annually in sales, proving that consumers are willing and able to search across state lines for the beverages they enjoy.
The DtC beer shipping basics
Since non-compliance can result in fines or other penalties — even loss of licensure — there are several key things to remember about DtC beer shipping. First, shippers must abide by the rules of the destination state. Identify the states that you want to ship to and ensure that they in fact allow DtC beer shipping.
Currently, 11 states and the District of Columbia do so:
- District of Columbia
- New Hampshire
- North Dakota
- Rhode Island
(An updated list of states can always be found here.)
States generally follow a DtC beer shipping framework, enabling out-of-state parties to make DtC alcohol shipments. Typically, these rules require shippers to:
- Be licensed by the destination state
- Use approved carriers who will check IDs and collect signatures
- Verify age of purchaser and recipient
- Label boxes with notice of alcohol contents and adult signature requirement
- Abide by per person volume limits
- Agree to remit all applicable sales and excise taxes to the destination state
- File regular reports detailing all their shipments
- Only ship brand/labels that are produced or owned by the shipper
Now, let’s review some logistical details that all DtC beer shippers must know to remain compliant.
A tasting flight of DtC beer shipping details
As we mentioned, getting licensed is the first step in entering a new state. Almost every state requires a special shipping license. Shippers must identify the correct license for each new state (e.g., being licensed in Kentucky does not mean you can ship into New Hampshire). Also ensure that the license you are applying for is for beer, and not for wine or spirits.
The licensing application process is less onerous than a production license, but it can still be time consuming. The costs can also vary between states. Licenses range from $25 annually to several hundred dollars.
Each shipper must also use their own license. The “selling” party needs to own the product and the “shipping” party must own the license.
Apart from licensing, there can be any number of complications from one state to the next to watch out for. Let’s look at Alaska, which allows DtC beer shipping but currently has 78 dry cities and counties where the sale of alcohol is prohibited. Producers can ship beer into Alaska, but they cannot ship to customers who live in a dry community. However, not every state has dry areas, meaning the entire state could be open for DtC beer sales.
Remember that there are plenty more details to attend to when starting — or expanding — your DtC beer shipping journey. This is just a small sample of what shippers must pay attention to.
Don’t go it alone
One final area that could be overlooked is asking for help. Along with having the right tools in place, such as a POS system and automated tax compliance and reporting software, working with the right experts is essential for successful DtC beer shipping. Connect with your legal counsel or consultants, as they will be able to help you avoid missteps. Bad advice can happen – if something seems too good to be true, ask more questions and double check your compliance requirements.
DtC beer shipping can be an amazing step for your business, but doing the necessary research and taking the time to maintain compliance will ensure that it’s a positive — and profitable — endeavor.