Sovos ShipCompliant, in partnership with the American Craft Spirits Association, published their 2023 Direct to-Consumer (DTC) Spirits Shipping Report last month. Despite the report touting broad support for DTC spirits legislation, the data shows that this is, yet again, a misleading conclusion.
While SOVOS says that “87% of regular craft spirits drinkers say they want to be able to legally purchase craft spirits via DTC shipping,” they fail to point out that the findings only apply to a tiny subset of U.S. alcohol consumers – mainly craft spirits drinkers, fewer than 30% of respondents to their own survey. They also fail to note that of this narrow group, most were college educated men under the age of 34 with a household annual income above $100,000 – not the broad base of support the headline implies.
The report’s assertion that 81% of regular craft drinkers would be more likely to try new craft spirits brands if they were able to purchase them through DTC shipping is dubious at best. Consumers are much more likely to discover craft brands through retailers, on premise and off, when individual interaction and tastings can help people determine what product is right for their taste.
In truth, craft spirits are booming under the three-tier system. Craft producers have grown by 14% growth, with craft spirits sales showing an impressive 7% increase by volume and a 10% surge in retail value over the last five years.
SOVOS also disregards risks associated with multi-national producers dominating the online landscape if DTC shipping were to take over.
Rather than DTC legislation passing in states, as SOVOS claims is poised to happen if only craft spirits drinkers raised their voice, legislators have responded to the concerns consumers have that DTC shipping would increase underage alcohol access, undermine the integrity of the existing regulatory framework, and compromise local public health and safety.
Not only has no state passed DTC spirits legislation since Kentucky did so in 2020, the number of state legislatures even considering the issue has dwindled year after year. For example, while 15 states introduced DTC spirits legislation in 2022, only seven did so in 2023.
In fact, in Texas – a state identified by SOVOS as “giv[ing] hope for successful [DTC legislation] in the future” – industry associations from all three tiers have banded together to oppose DTC spirits shipping for future legislative sessions, including the Texas Distilled Spirits Association (TDSA). This compromise between the tiers was rooted in an understanding that public health and safety are paramount when considering alcohol legislation, and that DTC spirits shipping directly threatens these values.
We appreciate SOVOS’s contribution to the discussion, as it gives us the opportunity to share facts about what is happening in the real world.