Legislation to be Introduced in Delaware Proposing Removal of Wine Shipment Restriction
Nearly 98% of Americans can do something Delawareans can’t—that is the direct shipment of wine to consumers. So, if you live in the First State, you won’t be finding Wine of the Month Club memberships stuffed in your stocking next week. That could change, however. Republican State Representatives Jeff Spiegelman of the Townsend, Clayton, Smyrna areas and Mike Smith of Pike Creek Valley will be introducing legislation in the 153rd General Assembly to give Delawareans the option of ordering wine and having it delivered to their homes by UPS, FedEx, or some other carrier. Representative Spiegelman said the bill would allow consumers to get the products they want adding that they are demanding this service. The legislation is intended to fill a niche in product availability and consumer choice.
Additional Information from Legislative Hall:
Wine Business Monthly reports that the United States is home to more than 11,600 wineries. According to the Wines Vines Analytics Winery Database, in 2022, 49% of all U.S. wineries produced fewer than 1,000 cases annually, while an additional 33% were producing fewer than 5,000 cases. By contrast, the largest American producer, E & J Gallo Winery, sells 100 million cases annually.
“More than 80% of wineries are small-scale producers, too small for broad distribution,” said Rep. Smith. “Our proposal would allow these craft wineries to ship directly to consumers. It’s not uncommon for people to discover a unique wine while on vacation or visiting friends, but if they want to purchase a bottle for themselves, it’s nearly impossible if it comes from a small producer.”
All beer, wine, and liquor sales in Delaware are handled through a three-tier system of distributors, wholesalers, and retailers established following the repeal of Prohibition over 90 years ago.
Traditional retailers have no economic incentive to engage in the fringe business of stocking obscure wines or ordering such labels one or two bottles at a time—if they are even available through a distributor. The profit margins do not justify the more significant investment of resources compared to marketing the top sellers for which there is an established clientele and demand. According to the Wine Institute, the nation’s top 50 largest wineries produce more than 90% of the wine sold.
There have been numerous attempts over the last 15 years in Delaware to allow limited direct home shipment of wine. All these efforts have failed after lobbying by a coalition of alcoholic beverage retailers, distributors, and unionized distribution workers who benefit from the current restrictive status quo.
Opponents have argued that direct-to-consumer (DTC) wine sales would undermine retail sales. However, no credible evidence has supported this assertion, even as the number of states allowing DTC wine shipments has steadily increased since 2005 from 26 to 47. In fact, U.S. retail wine sales have improved yearly over that period, rising from $38.5 billion in 2005 to $106.3 billion in 2023.
Ironically, while Delaware’s four small-scale wineries can ship their products to consumers in other states, our state’s archaic law bars them from sending their products to Delawareans. “Yeah, that’s true,” Rep. Spiegelman said. “For example, Harvest Ridge, in my district, is in Kent County on the border between Maryland and Delaware. They can ship to homes in Maryland but cannot send their wine to someone living in Wilmington, Newark, or Middletown.”
Past versions of the bill have received bipartisan support, and Reps. Smith and Spiegelman believe the latest incarnation of this measure will also attract support from both sides of the aisle.
The bill would only cover limited sales from wineries directly to consumers. Online retail sales would continue to be prohibited. Wineries and carriers (FedEx, UPS, etc.) would need to obtain a state license. Delivery drivers would be required to receive training on making wine deliveries responsibly. They would also be mandated to deliver only to adults over 21 who identified themselves and signed for the package. State alcohol taxes would be levied on all shipments, holding them to the same standard as retail sales. There would be an annual limit on DTC wine sales to any one household.
“We’re not reinventing the wheel here,” Rep. Smith said. “Our bill mirrors the laws already operating in dozens of other states.”
The case for the bill should be stronger than ever, thanks to a state law enacted in late September. Passed by the General Assembly with only five dissenting votes, Senate Bill 166 allows for home delivery of alcoholic beverages through third-party services. Adults 21 and older can now get wine, beer, and mixed cocktails from restaurants, brewpubs, taverns, and taprooms delivered through their preferred food service apps.
