Delivery vs. Direct Shipping

How is alcohol delivery different from direct-to-consumer shipping, aka DTC?

The Adult Beverage Alliance is focused on advancing the policy interests of alcohol delivery. To do so, it’s important to clarify not only what alcohol delivery is (see What is Alcohol Delivery?), but what it isn’t. In particular, it’s helpful to differentiate alcohol delivery from direct-to-consumer shipping, aka DTC. Alcohol delivery refers to local delivery of alcohol from licensed alcohol retailers (e.g., grocery stores or restaurants) to consumers.

Alcohol delivery does not include DTC shipping, which typically applies to sales and shipments by alcohol producers (e.g., wineries, breweries, distilleries) to consumers, and most often refers to interstate shipments. Alcohol delivery and DTC are each highly-regulated, but they are distinct, and they warrant different considerations among lawmakers and regulators. This summary is intended to explain the key differences between alcohol delivery and alcohol DTC shipping.

Delivery Man Holding Paper Bag with Food

What is alcohol DTC?

Direct to Consumer Visualization US Map Wine Delivery California to New York
Alcohol DTC most commonly refers to alcohol sales made by producers directly to consumers, and it typically refers to interstate shipments via common carrier where the recipient is located in a different state than the seller of the alcohol. Outside of the basic fact that both DTC and alcohol delivery involve fulfillment of an alcohol order to a consumer’s home or business, the two concepts are distinct from a regulatory point of view.

The Adult Beverage Alliance is focused on innovation specific to the alcohol delivery arena, so it’s important to distinguish delivery from DTC. Below are some of the basic facts about DTC, along with further explanation on how DTC and delivery differ.

Who sells alcohol for DTC?

Alcohol DTC typically refers to shipments made by a winery, brewery, or distillery directly to a consumer. Since each state’s three-tier system dictates that sales to consumers generally must be made by licensed retailers in the states, the ability of producers to sell and ship alcohol DTC is an exception the normal three-tier system, particularly when the producer is located outside of the state.

Where can alcohol be shipped?

DTC often refers to interstate shipments of alcohol, where the selling producer is located in a different state than the recipient. The laws of the recipient’s state dictate whether DTC is allowed, and if so, by which types of producers. Wineries have the most expansive interstate DTC privileges, while breweries and distilleries can each ship to consumers in only a handful of states.

Who fulfills DTC shipments?

Common carriers. DTC shipments are typically fulfilled by common carriers, and alcohol DTC shipments are handled similarly to any package that is shipped interstate, although there are special age verification requirements for alcohol DTC fulfilment.

Are retailers ever involved in DTC?

Yes, sometimes retailers are involved in DTC. DTC shipping as it relates to retailers refers to interstate shipping by a retailer licensed in one state to a consumer located in another state. Retailer DTC is allowed for less than a third of the states for wine, and even fewer states for beer and distilled spirits.

How does DTC impact the three-tier system?

DTC laws operate as exceptions to normal three-tier distribution rules. While the contours of DTC vary by state and the type of alcohol involved, DTC sales always bypass the distribution and retail tiers in the state where the recipient is located, since DTC transactions are directly between producers and the consumer. In the limited case of retailer DTC, the end consumer receives the product from outside their state, so while the selling retailer has acquired the product via the three-tier system, the sale bypasses the three-tier system in the recipient’s state.

What are the key differences between alcohol delivery and alcohol DTC?

With both alcohol delivery and DTC, a consumer receives alcohol at their door. Apart from that similarity, alcohol delivery and DTC are very different, particularly when it comes to the laws surrounding them and the regulatory considerations that should be taken into account when considering innovation in these areas.

Let’s recap alcohol delivery and DTC, and how they’re different.

  • Alcohol delivery involves alcohol sold by the same merchants that already sell alcohol to residents of their communities. Delivery facilitates sales made by grocers, convenience stores, liquor stores, and restaurants, by adding a convenient option that today’s consumers want.
  • DTC primarily involves sales and shipments by alcohol producers like wineries, breweries, and distilleries, directly to consumers.
  • Alcohol delivery refers to local delivery of alcohol, usually with delivery occurring soon after an order is placed. Alcohol delivery is simply a convenient addition to ordering dinner or groceries for delivery.
  • DTC primarily involves interstate shipments of alcohol, where the seller is located in a different state than the recipient.
  • Alcohol deliveries are made by independent contractors of third-party delivery companies, including the Adult Beverage Alliance members.
  • DTC shipments are fulfilled by common carriers, such as those typically used to ship packages.
  • Alcohol delivery works within each state’s existing three-tier system, and simply offers merchants and consumers an additional fulfillment option from traditional in-store sales and pickup.
  • Alcohol DTC shipments are an exception to each state’s standard three-tier distribution system. DTC is meant to provide alcohol suppliers a means to sell their products directly to consumers, and thus DTC bypasses distributors and retailers in the recipient’s state.