Strategies to Protect and Grow your DtC Wine Sales

March 15th, 2015Sam Straka – Product Strategist

ABOUT SHIPCOMPLIANT

• Founded in 2000

• Based in Boulder, CO

• Core values driven company

• Powered by Sovos Compliance

• Looking back, looking forward.

• What’s happening with DtC regulations?

• How do I stay on top of these changes?

Agenda

Texas loves wine• Cab consumption up 19% by volume• Red Blend and Pinot Noir up 13%

Number 2 Wine destination after CA• Almost $200 Million shipped DtC in 2015

Looking Back, Looking Forward

1) Strong dollar / low domestic production = Imports

2) Premiumization is changing the market

*This graph courtesy of Silicon Valley Bank State of the Industry report 2016.

Looking Back, Looking Forward

SEASONALITY SMOOTHING?

2014 2015

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

January February March April May June July August September October November December

BOOMERS BOOM

% of Total Volume % of Total Value

Millennial Gen X Boomer Silent

11.6%

7.4%

32.3%33.2%

48.0%

52.1%

8.1% 7.3%

BUT CHANGE IS IN THE AIR – 5 YR CHANGE IN VOLUME

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2010 2011 2012 2013 2014 2015

BoomerGen X SilentMillennial

60%

50%

40%

30%

20%

10%

Sales approaching $2B

Heightened Enforcement

What’s happening with DTC Regulations?

What’s happening with DTC regulations?

Michigan

Illinois

South Dakota

Massachusetts

Colorado

What’s happening with DTC regulations?

Michigan - MLCC increasing enforcement with stings

• “a label containing DTC license #;order #; name and address of theindividual placing the order and thename of the designated recipient (ifdifferent), must be placed on the toppanel of the shipping container”

• Age Verification, Date of Birth, Phone Number

• Label Registrations listed on the invoice

What’s happening with DTC regulations?

Illinois

• Some winery cases being dismissed

• Wine Institute sued DOR in July

• Awaiting clarifying rules from the DOR and action on the litigation

What’s happening with DTC regulations?

South Dakota

• New Law effective 1/1/16• $100 annual fee• 12 case limit / customer• Age Verification• Label Registration• Sales and Excise payable quarterly

What’s happening with DTC regulations?

Massachusetts

• Opened for Direct Shipping 1/1/15• $27.5 Million in DTC sales in 2015• That will double this year

• Excise Tax issues = Credits may be available

$10

$20

$30

$40

$50

$60

$70

$80

$90

2015 2016 2017

MASSACHUSETTS UPDATE

(Mill

ion

s)

Wow, that’s

close!

Prediction:

$30M

Actual:

$27.5M

What’s happening with DTC regulations?

Colorado

• New Tax requirements for larger shippers.

• Bottom line, sales tax is getting harder.

• ShipCompliant.com/blog

• Wine Institute / Wine America

• Beverage Alcohol Community - Google it!

• 2016 Direct Shippping Report - shipcompliant.com/dtcreport

• DIRECT 2016 – Register at shipcompliant.com/2016direct

How do I stay on top of these changes?