Should USPS Be Able to Ship Alcohol?

In the last few years, interstate shipping has been one of the most hotly debated topics in the alcohol business. Retailers and suppliers are generally in favor of loosening shipping regulations, while distributors are against the idea. Both are lobbying their respective representatives to try to get what they want.

For example, Rep. Jackie Speier recently introduced the United States Postal Service Shipping Equity Act (HR4024) to allow the USPS to ship beverage alcohol on par with FedEx and UPS.

Yes, technically USPS would just be carrying out deliveries similar to how FedEx and UPS do, but FedEx and UPS are private companies that have several stipulations for shipping alcohol including: a mandatory wine shipping agreement, clear labeling and proper packaging, the buyer and person who signs for package must be over 21, and the state being shipped to must allow that kind of direct shipping.

[Sidebar: The 15 markets where consumers can buy wine from out-of-state retailers are: Alaska, California, Idaho, Louisiana, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oregon, Virginia, Washington, D.C., West Virginia and Wyoming, per the NY Times.]

You’ll recall, FedEx and UPS have also been cracking down on illegal alcohol shipments. Around this time last year FedEx began notifying wineries and retailers around the country that they have “agreed to comply fully with all federal, state and local laws, rules and regulations and orders applicable to each shipment of alcohol.” Meaning no more shipping to the 35 markets that don’t explicitly allow it.

The proposed USPS bill would place similar stipulations on the agency’s ability to ship alcohol, including that the alcohol being shipped may not be for resale or other commercial purposes. But it’s hard to predict how well a federal agency would regulate alcohol shipments, and presumably not as easy to apply pressure to if they’re not doing a good job.

Recall, the Wine and Spirits Wholesalers of America (WSWA) has come out against the legislation. WSWA chief Craig Wolf says the bill would “create a ‘black market’ channel for counterfeit and potentially adulterated alcohol to reach American consumers, including minors” [see WSD 10-24-2017].

However, Rep. Speier argues: “It makes no sense to impose these restrictions, particularly since private shippers, such as UPS and FedEx, are exempt from this out-of-date rule. Congress needs to lift this ban for the benefit of wine manufacturers, consumers and our struggling postal service.” The USPS has been struggling in recent years and adding the ability to sell alcohol could provide an additional $50 million in revenue annually, per FedSmith publication.

This isn’t the first time the congresswoman has attempted to push through a bill like this. She introduced a similar bill in 2015, but it didn’t make it very far. Though, the current bill has 23 cosponsors.

Legislation is not the only means for loosening shipping regulations. This bill is being introduced at a time when several states are in the midst of reevaluating retailer interstate shipping laws. Indiana-based Lebamoff Enterprises, the owner of the Cap n’ Cork chain stores, for instance, is a plaintiff in two separate but similar DTC shipping lawsuits – one in Illinois and one in Michigan. Moreover, Lebamoff’s attorney, Robert D. Epstein, is the one who argued Granholm v. Heald in 2005.

Meanwhile, New York retailer Empire Wine is still embroiled in its lawsuit against the New York State Liquor Authority, which arguably kickstarted the larger national conversation of the issue [see WSD 04-13-2017].

What do you think? Should USPS be allowed to ship alcohol. If it was, would it change much? Send your thoughts to emily@winespiritsdaily.com

CAN CRAFT SPIRITS GET AS BIG AS CRAFT BEER?

There is a lot of money riding on the question of whether craft spirits will follow a similar trajectory as craft beer. According to ACSA’s Craft Spirits Data Project, most wholesalers believe it will–which explains their increased interest in the category–but retailers are less sure.

53% of wholesalers believe craft spirits will perform in line with craft beer, and an even larger percentage (60%) believe it will become more relevant to the spirits category than craft beer is to the beer category.

Retailers still need some convincing. The majority of off-premise retailers are “not sure” if craft spirits will perform in line with craft beer over time, with equal amounts (26%-27%) that agree and disagree with the idea. Similarly, most on-premise retailers are “not sure” (48%), but just slightly more of them disagree with the claim (30%) than agree (22%) that craft spirits will perform in line with craft beer.

When asked if craft spirits will be more relevant to larger category than craft beer, off-premise retailers skewed pretty strongly toward the disagree viewpoint (opposite of wholesalers), but on-premise retailers were a bit more positive in this assertion, but again, most of them were unsure.

HOW TARGET IS ADAPTING TO THE CURRENT RETAIL ENVIRONMENT

You may recall, Minneapolis-based Target Corp. has revealed some new initiatives to seduce more customers into coming through the doors. The most recent announcement from the company is that it will be speeding up its plans to remodel stores. Company executives said it is planning a facelift to more than 1,000 stores by the end of 2020, as well as opening new small-format and more traditional stores, and adding grocery delivery, per Chain Store Age.

For beverage alcohol specifically, Target has increased its private label wine offerings, and its new stores have a second entrance that goes directly to its “Wine & Beer Shop.”

Earlier this year, Target said it would revamp 600 stores by 2019, but apparently the redesign is clicking with consumers. Target has seen a 2%-4% sales lift at each of the 110 locations it revamped this year, per The Street.

As for the new small-format stores, Target is opening nearly a dozen of them this week in major metropolitan areas like New York City, Chicago, Los Angeles, and Philadelphia, bringing “its small-format store portfolio to 55,” per CSA. The retailer reportedly wants to boost this number to 130 by the end of 2019, according to The Street.

Additionally, Target announced plans to roll out its next-day delivery service, dubbed Target Restock, nationwide next year (it is currently available in 11 cities). The program, as of now, includes “more than 15,000 items, such as household essentials, dry grocery items, school supplies and baby food,” per CSA.

In an effort to optimize its supply chain, Target is reducing its inventory, improving its accuracy, and investing in staff training for better customer service.

“As we open more small-format stores in new neighborhoods across the country, we’ll be even closer to our guests, and our reimagined stores will provide elevated inspiration and ease, along with serving as hyperlocal distribution centers to fulfill digital orders faster,” said Target CEO Brian Cornell.

WSD BRIEFS:

STE. MICHELLE REVENUES SLIGHTLY DOWN IN Q3 ended September 30, per parent company Altria’s earnings call this morning. Net revenues were down 0.5% for the quarter and volumes were “essentially unchanged.” In the nine months through September, net revenues were down 5.4% and shipment volume was down 8.1% to about 5.7 million cases. The company attributes the decline to increased competitive activity, continued trade inventory reductions and slower premium wine category growth, per a release.

MOET HENNESSY RELEASES MASTER BLENDER’S SELECTION NO. 2. Hennessy Master Blender’s Selection No.2 is the second in a limited series reflecting former Master Blender Yann Fillioux’s tastes and knowledge. It is a blend of eaux-de-vie that are at least 10 years old, aged for 18 months in young coarse-grained French oak barrels before additional aging in old barrels and bottled at 86 proof. It will be available exclusively in the US at select retailers for approximately $92 a 750 ml.

WILLIAM GRANT & SONS’ HUDSON WHISKEY INTRODUCES PRIVATE BARREL PROGRAM. Hudson Whiskey, produced by Tuthilltown Spirits, just completed its first private barrel program to celebrate William Grant & Sons’ acquisition of the brand, per a release. Select bars, restaurants and retailers nationwide chose from 40 casks of Hudson Four Grain Bourbon and 20 casks of Hudson Single Malt to exclusively offer at their respective locations.

STILLHOUSE SPIRITS CO. LAUNCHES SPICED CHERRY WHISKEY. Spiced Cherry Whiskey is a limited release for the holiday season. It is made by infusing Stillhouse Original whiskey with a blend of holiday spices including black cherry and vanilla and bottled at 69 proof. Spiced Cherry is available now at a retail price of $29 a 750 ml.

SEE YOUR NAME IN FLASHING LIGHTS. We are accepting a limited number of sponsorship opportunities for our 2017 Wine & Spirits Daily Summit at The Breakers hotel in Palm Beach, FL in January. Register here, or for more info on sponsorship opportunities, please email rena@winespiritsdaily.com

Until tomorrow,
Your Editors

Emily Pennington – emily@winespiritsdaily.com
Sarah Barrett – sarah@winespiritsdaily.com

“And my problem was that I always tried to go in everyone’s way but my own.” — Ralph Ellison

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