With alcohol ecommerce booming, now is the time to incorporate real-time compliance into your online workflows
Direct-to-consumer (DTC) shipments and alcohol ecommerce sales hit an inflection point in 2020. With bars, restaurants, tasting rooms, and on-premises establishments severely limited, large numbers of consumers discovered the convenience of online ordering. Breweries and distilleries jumped into DTC for the first time, and alcohol marketplace sales soared.
In 2021, investors are looking to capitalize on these trends. For example, Uber announced plans to acquire Drizly for $1.1 billion and Vivino raised $155 million to accelerate their DTC mission. In March, Southern Glazer’s Wine & Spirits announced it was making an equity investment in ReserveBar, an ecommerce platform for premium and luxury spirits in the U.S. It will be interesting to see what the rest of the year brings.
The last year was busy in terms of legislation, regulation, and enforcement. Kentucky allowed DTC shipping by wineries, breweries, and distilleries for the first time. To ease the pain licensees experienced from the loss of business, many states introduced temporary measures to allow the sale and delivery of “cocktails to go” as well as other allowances for delivery of alcohol from licensed establishments. At the same time, states like Texas, Tennessee, Virginia, Michigan, and California stepped up their auditing and enforcement of DTC shipments and local delivery of alcohol. We expect these enforcement trends to continue as ecommerce and DTC are subject to more scrutiny.
Over the coming years, we expect more and more states in the U.S. to modify their laws and regulations to allow and regulate the online sale of alcohol by suppliers, retailers, marketplaces, and delivery apps. On the international front, countries are increasingly adopting policies to collect tax revenues faster, with more transparency and less fraud via e-invoicing and live reporting requirements. It’s likely only a matter of time before these trends start to emerge in the U.S. Fortunately, alcohol sellers could be better positioned for these potential changes than other industries because of their existing need to monitor real-time compliance prior to fulfillment.
For example, in Texas, each consumer can receive no more than 9 gallons of beverage alcohol in a given month, but only 36 gallons in any 12-month period; wineries can ship a maximum of 35,000 gallons into Texas on an annual basis. In Kentucky, where counties can be wet, dry, or “moist” (and some dry counties containing wet or moist precincts), alcohol cannot be shipped into dry areas.
There’s a lot to keep track of, and failure to comply with regulations can have dire consequences, like license revocation. Avalara Shipping Verification for Beverage Alcohol can help businesses successfully navigate the many pitfalls of alcohol tax compliance. It provides a simple yet scalable API, allowing alcohol sellers to determine whether transactions will be compliant prior to fulfillment.
Avalara Shipping Verification integrates seamlessly with any type of order management system, including ecommerce, wine club, subscription, point-of-sale, and reservation management systems. To see it in action today, check out the full-featured integrations with partners like Commerce7 and Bloom. Avalara Shipping Verification is also an easy add-on to existing AvaTax for Beverage Alcohol integrations with partners such as VineSpring, 360Winery, OrderPort, Spirits360, and Boxcheck. We also look forward to future integrations with committed partners like WineDirect, Vonnda, and CellarPass.
If you’d like to learn more about Avalara Shipping Verification or AvaTax for Beverage Alcohol, please contact us for a live demo, come to Avalara CRUSH Virtual to see it in action, or reach out to your account manager if you’re an existing Avalara customer.
Stay up to date
Sign up for our free newsletter and stay up to date with the latest tax news.