Many Oregon wineries are optimistic, but it's "business as usual" for now.
The Supreme Court has ruled that states cannot selectively ban direct-to-customer shipments of wine from out-of-state wineries.
Interpretations of the Ruling Abound
A lot has been said about the ruling, much of it depending on who you speak with and just how carefully research was done.
The ruling was immediately heralded by wine advocacy groups nationwide as a win for wine lovers everywhere. An AP article this morning read:
"Wine lovers may buy directly from out-of-state vineyards, the Supreme Court ruled Monday, striking down laws banning a practice that has flourished because of the Internet and growing popularity of winery tours.
"The 5-4 decision overturns laws in New York and Michigan, which supporters said were aimed at protecting local wineries and limiting underage drinkers from purchasing wine without showing proof of age. In all, 24 states have laws barring interstate shipments.
"The court said the state bans are discriminatory and anticompetitive."
The actual impact of the ruling could turn out a little less rosy, as it just says that if a state chooses to ban direct-to-customer shipments of wine, that ban cannot be limited to out-of-state wineries, but must also include shipments made by IN-state wineries as well.
While the ruling may enable states to now free up laws to permit shipments, just says that the ruling cannot be uneven: either states can choose to permit ALL shipments, or they can choose to BAN all shipments. For example, last year, New Jersey passed legislation banning ALL shipments to customers from wineries in any state, including New Jersey.
Reasons For Banning Direct-to-Customer Shipments
OregonWines.com did a little research of our own, and found two primary reasons why some think direct shipments should remain illegal:
1. Legislation aimed at limiting underage purchases of alcohol
In Michigan, legislators had recently created programs to curtail underage drinking and purchasing of alcohol. If 16-year-old Joe were to get ahold his father's credit card, order wine online, and pretend to be his father if the winery calls confirming he's over 21, there would be little way for the winery to know they were dealing with a minor. Many wineries do have effective ways to prevent this, ranging from calling an individual at their daytime place of employment, asking for references, even doing background checks in some case, but the majority of systems in effect rely on the person doing the ordering to be honest and truthful.
2. Distributors and lobbying groups
Many "felony" states along the eastern seaboard, where it is literally a felony to direct-ship wine to a customer, heavily regulate any such shipments, and require wineries to send the shipments to liquor stores, where an of-age adult must go in order to pick up the shipment. This adds many layers of bureaucracy and control to the sale of any type of alcohol, and increases taxes and costs to the winery (but fattens up the revenue for the distributors and lobby groups).
Reasons for Permitting Direct-to-Customer Wine Shipments
Smaller wineries (which constitute the majority of the 300+ Oregon wineries) have few ways to effectively market and sell their wines. In a wine-rich area such as Oregon, it can be challenging to establish a brand when so many other great wineries are competing for the same shelf space.
And so, online sales seem the logical alternative, as it is very cost effective, and opens up the doors to many new markets the winery could not hope to reach in traditional means.
Take, for example, the case of one OregonWines.com visitor who contacted us today. He lives in New Jersey, a state that bans direct shipments, but he wanted to know when he could start ordering wine through our shopping cart, at:
Another customer contacted us from Illinois, and had just learned he was already able to order Oregon wines. He looked up a few on our shopping cart, and contacted them to place an order. Again and again, we have seen this as an added benefit -- online ordering can make it possible for customers half a continent away to connect with a local winery and buy legally.
Thanks to the Internet, and of course the press about today's ruling, those many small wineries are now fully realizing the benefits of such a setup, which is why it is all the more important for them that legislation be passed to permit such shipments.
Oregon Winery Reactions
We spoke with several Oregon wineries and asked their opinions about the ruling. Many simply said, "sounds good, could be better, we'll wait and see". One of the better opinions was, "we're heartened by it, but for now, it's business as usual" -- meaning that they'd likely wait and see how many of the current felony states pass legislation to legalize direct shipments, or instead vote to ban all such orders for good.
Regardless of the Ruling, Raised Awareness
No matter how you look at the issue, the raised awareness to the issue can't be a bad thing. In the case of the one Illinois customer who contacted us, he wasn't aware that Illinois already permitted him to buy from Oregon, but because of all the press surrounding this issue, he had just learned it was legal. No doubt, many consumers in the 13 reciprocal states (California, Colorado, Hawaii, Idaho, Illinois, Iowa, Minnesota, Missouri, New Mexico, Oregon, Washington, West Virginia and Wisconsin) may not be aware they can legally log onto OregonWines.com, and order wines from our featured wineries. There may be some hoops a winery has to jump through (reporting sales to a state agency, etc.) but the overall result is, it's legal.
Other states require special (and many times costly) licensing in order for a winery to ship wine, not to mention require that in some cases, the winery must send it to a local distributor or liquor store in order for the customer to pick up the order, but still, if the winery recognizes a good potential market, licensing can make it possible.
So what does this mean for Oregon wineries? Thanks to the Internet, even the smallest wineries with limited marketing budgets will most likely be able to take orders online from customers nationwide, and explode their business through the new target markets.
That's where OregonWines.com comes in. This web site was developed for this very reason -- to help promote and assist in the sales of wines by smaller Oregon vintners. Our online ordering system makes it possible for customers to order wine direct from select Oregon wineries:
At present, you can only order from an Oregon winery if you live in a state a winery is license to ship to. As we learn more about the Supreme Court ruling, we will update the online store to reflect the new rulings, with us adding to the list of permitted states that you can order from.
What Lies Ahead For Permit and Felony States
Each of the states that currently ban direct-to-customer shipments can now actively work to pass legislation, one way or another. It will likely result in a fierce fight between distributors and lobbying groups, and wine industry members, over which way the various rulings fall. All odds being equal, it would seem logical that if a state wine association wants to permit shipments badly enough, they will likely win in open court. On the other hand, smaller industries that don't have the resources may have to wait a while, as distributors push their weight around the arena.
In any case, this ruling has given us all a lot to think about. We at OregonWines.com are optimistic, but like one of our member wineries said today, "it's business as usual". We'll still raise a glass of Pinot Noir tonight, in optimistic anticipation of what the next 18 to 24 months hold. This is only the beginning of what we feel will be a good year for all wineries.