Why Do So Few Breweries Ship Their Beer Directly to Customers?

Why Do So Few Breweries Ship Their Beer Directly to Customers?

Demand for direct-to-consumer beer sales is high, but regulations are causing a missed opportunity for the majority of U.S. brewers.

If Prohibition taught us anything, it’s that America’s beer laws have at times been—let’s just say—excessively restrictive. And yet, nearly 90 years after the 21st Amendment, many states still have laws that harken back to the 1930s. During the pandemic, as many people stayed at home and relied more on online shopping, one of these restrictions became especially clear: Getting beer shipped in the United States isn’t as easy as it could be.

Only 13 states allow for beer to be shipped directly to consumers from an out-of-state brewery (known as “DtC” sales), according to independent brewery trade group the Brewers Association (BA). “As of March 2021, the only states that provide clear, statutory authority for brewers to legally solicit and fulfill sales remotely and across state borders are Alaska, Kentucky, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oregon, Vermont, and Virginia, as well as the District of Columbia,” according to a report the BA published with Sovos ShipCompliant, which provides software to the alcoholic beverage industry.

Shipping beer direct to drinkers within a brewery’s own state is more widespread—and some areas have passed temporary rules to help struggling brewers during the pandemic—but even then, DtC rules are far from universal. As a result of this patchwork of laws, only 13 percent of craft brewers surveyed said they currently offer DtC shipping, with the vast majority of them saying most of those sales are in-state.

And yet, as the COVID-19 pandemic has significantly impacted the brewing industry due to the closures of bars and restaurants, what the BA and Sovos also uncovered in their report is that—more than ever—people want to have beer shipped straight to their door.

A poll conducted in the first few months of this year found that 84 percent of people who drink craft beer at least once per month wanted to be able to purchase beer directly from breweries and shipped to their home, with 73 percent of this group saying that their desire to make such purchases has increased during the pandemic.

Meanwhile, 70 percent of brewers said they’d consider DtC sales if they were legal. And they’d certainly have a chance to find a new audience: 80 percent of the drinkers polled said they’d be more likely to try new brands if they could have the beers shipped directly to them; and 78 percent said they’ve tried beers while traveling that they’d have shipped to them if they were allowed.

“It’s perhaps no surprise that craft beer drinkers’ interest in having their favorite beverages shipped to their doorsteps grew amid the COVID-19 pandemic,” Larry Cormier, vice president and general manager for Sovos ShipCompliant, said in announcing the report’s findings. “Consumers got a taste for DtC beer shipments, and these attitudes and interests are here to stay. Brewers and regulators alike have a great opportunity to learn from the success of the $3.7 billion DtC wine shipping channel that has grown—compliantly—over the past 15 years.”

That comparison to wine is an important benchmark because—oddly enough—the laws for beer and wine are strikingly different. DtC wine sales are currently allowed in 45 states and the District of Columbia, according to Sovos. And the difference isn’t an accident. “Given the geographic concentration of the wine industry in particular parts of the country, the wine industry has made direct-to-consumer shipping a priority for many years,” Bart Watson, the BA’s chief economist, told Food & Wine.

So how does the beer industry achieve a similar level of shipping freedom? Raising awareness of the issue, as the BA has done with this new report, is a major first step. The hope is that, from there, momentum will grow. “The Brewers Association believes there is real traction for direct-to-consumer beer, driven by consumer demand, producer need, and the logic of fairness compared to the wine industry, which has proved this model safe and effective,” Watson continued. “Multiple states are already pursuing new direct-to-consumer shipping laws, with introduced bills in Illinois, Hawaii, and Maine, and we believe more may be coming during this legislative session.”

Full Article by Mike Pomranz for Food & Wine