by: Matt McGinnis
If there is ever a time to acknowledge silver linings, this is it. The COVID-19 pandemic has hit our local distilled spirits industry hard, creating an enormity of economic and market access restrictions. However, state leadership and the Virginia Alcoholic Beverage Control Authority (ABC) have risen to the occasion by enacting in-state direct to consumer (DTC) shipping privileges to help alleviate turmoil for Virginia’s distilleries whose tasting rooms were closed by mandate March – June and are now operating at only a limited capacity. Virginia joins a small number of states which allow DTC shipping of distilled spirits via common carriers such as UPS and FedEx. As it stands the DTC shipping privilege is temporary, but industry leaders are working diligently to make the privilege permanent.
The DTC shipping privilege is a “win-win-win” says Gareth H. Moore, CEO of Virginia Distillery Company in Lovingston, Virginia and President of the Virginia Distillers Association. “It is a win for Virginians because this new form of market access makes it easier for consumers to purchase all forms of Virginia Spirits products. Unbeknownst to most, Virginia Spirits are small-batch, artisan scale production, and as a result these products are often only available for sale at distillery tasting rooms or regionally at ABC stores. Now, Virginians can have access to these unique local spirits and support community businesses from the comfort of their homes. It is also a win for Virginia distilleries, as the shipping privilege provides financial support by allowing us to sell products via e-commerce during the public safety crisis. It is also a win for Virginia ABC, as it allows the Authority to continue to meet revenue expectations set by the Virginia General Assembly, which helps to pay for education, public access projects, healthcare and more.”
The million-dollar question is, will the state support DTC shipping permanency for Virginia distilleries? As Virginia ABC embarks upon their own historical Direct to Consumer pilot shipping program for all spirits in partnership with UPS (broader anticipated rollout 2020 / 2021), the concept seems hopeful.
A Win for Virginians
For the first time in the Commonwealth’s history, people can order their favorite locally made spirits online and have them shipped directly to their home. Virginians can purchase up to six bottles of liquor and two cases of low-alcohol-beverage products (a.k.a. ready to drink canned cocktails) per month from the comfort of their homes.
DTC shipping unlocks the ability for Virginians to explore small batch spirits that are hard to find since over 80% of Virginia Spirits are only sold at the distillery, or often only have a limited regional footprint in ABC stores.
“We’re noticing a trend with consumers where there’s an emphasis on purchasing special release products, the ones they used to have to stand in line for – or participate in the ABC lottery to obtain in addition to our flagship spirits,” says Becky Harris, chief distiller for Catoctin Creek Distillery and President for the American Craft Spirits Association. “This was evident with the recent release of our #InThisTogether Infinity Barrel benefit project. We sold out at 800 bottles as soon as the product was posted on our e-commerce store, with over half of those products being shipped directly to Virginia residents, the other half were available for curbside pickup.”
The stay at home orders that closed the distillery tasting rooms have led to the rise in virtual events. These online events erase distance and allow consumers to engage with Virginia distillers and product ambassadors far more easily (via Zoom, Facebook, Instagram Live, etc.). “We’ve combined our e-commerce market access with invitations to virtual tastings, “says Gareth Moore. “When consumers purchase our products online, they receive an invite to participate in one of many live “virtual” tastings where we discuss technical tasting notes for enjoying our spirits neat, suggested cocktail recipes and we answer a broad range of consumer questions. It’s helping to build a sense of community and social interaction around our brands despite in-person face to face contact.”
A Win for Distilleries
The DTC shipping privilege has been a financial saving grace for Virginia distilleries during these uncertain economic times. At the start of the COVID crisis, many Virginia distilleries had to evaluate how they were going to continue employing their staff and pay bills, despite revenue streams being severely constricted.
“When ABC enacted the DTC shipping privilege, it was a lifeline,” says Becky Harris. “We sent out a message to our consumer base that we can now ship, and we had an overwhelming response. We immediately put together an online store, which rendered several months’ worth of sales in just the first couple of days. Over the past few weeks, we’ve done more business online than we did during the same period last year when we were open to visitors at our tasting room.”
“We’re so grateful the DTC shipping was enacted by Virginia ABC,” says Moore. “Enacting the DTC shipping privilege was a noble show of support from the state and acknowledged the mounting challenges faced by our industry. Time will tell how consumers spending habits shift as a result of the pandemic. If consumers continue to feel a sense of trepidation with patronizing businesses which require a degree of face to face contact, such as distillery tasting rooms, then revenue will be negatively impacted. However, assuming the DTC shipping privilege becomes permanent along with e-commerce sales, then we will be able to rise to the challenge and adapt our business models for long-term success.”
Moore continues, “The online volumes we’re seeing are substantially higher than what we see in our tasting room. Being located in rural community is great when you want to escape the city life, and enjoy an adventure in the foothills of Virginia’s Blue Ridge, but isn’t always convenient for people to get to. Shipping product to the entire state expands our market reach, and gets our whiskey to far more consumers than we would have been able to previously by relying on our Lovingston-based tasting room or ABC retail stores which currently carry our products.”
A Win for the ABC / the Business of DTC Shipping
DTC shipping allows Virginia ABC to fulfill its mission to promote public safety through the responsible sale and regulation of alcoholic beverages even during a pandemic while continuing to meet budgetary measures set by the General Assembly.
Additionally, access to shelf space at ABC retail stores is increasingly limited/problamatic due to competition from multi-national suppliers. Virginia distilleries operate at “craft volumes,” often making it a challenge for ABC to fully embrace placement of most Virginia Spirits in their entire fleet of 380+ retail stores. The DTC shipping privilege allows Virginia distilleries to circumvent this logistics challenge, and shows that the Virginia ABC wants to support reasonable market access for both in-state distilleries and consumers.
The DTC shipping privilege has directly led to Virginia distilleries’ ability to maintain support over 1,500 Virginia jobs; creating more than $160M in economic impact to the Commonwealth. The path ahead will define whether or not the state supports this vital privilege permanently for in-state distilleries, helping to keep Virginians employed during the pandemic and well-beyond. Stay tuned to VirginiaSpirits.org for updates on this topic and more.
For a full list of Virginia distilleries who are currently offering their products via DTC shipping:
A. Smith Bowman Distillery, Fredericksburg,
Belle Isle Moonshine, Richmond
Blue Sky Distillery, Smithfield
Caiseal Beer & Spirits Co., Hampton
Catoctin Creek, Purcellville
Copper Fox Distillery, Sperryville and Williamsburg
Dida’s Distillery, Huntly
Eight Shires Coloniale Distillery, Williamsburg
Filibuster Distillery, Maurertown
George Washington’s Mount Vernon Distillery, Mount Vernon
James River Distillery, James River Distillery
Ironclad Distillery Co., Newport News
Lost Whiskey, Fairfax
KO Distilling, Manassas
MurLarkey Distilled Spirits, Bristow
Tarnished Truth Distilling Company, Virginia Beach
Reservoir Distillery, Richmond
River Hill Distillery, Luray
Tarnished Truth, Virginia Beach
Virago Spirits, Richmond
Virginia Distillery Company, Lovingston
Vitae Spirits Distillery, Charlottesville
Waterbird Spirits, Charlottesville