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It's all very well making top-end spirits, but connecting to the customer is proving difficult.

It's a golden age for US spirits – if only distillers could get their product to the customer.

We're in the middle of a craft spirits boom, but some people are having trouble getting the spirits that are fueling it.

Distilleries are popping up all over the US offering unique gins and other spiritous elixirs. It's an exciting time to be a spirits drinker, and Millennials in particular have noticed, as spirits sales are rising while beer and wine sales are flat. There's a "however". Unlike wineries, which can use a tasting room to build a customer base from afar, the more than 1800 craft distilleries in the US simply cannot send their products directly to people who want to buy them.

It's not illegal to ship whiskey and other spirits in much of the United States. But it is difficult, because the nation's two largest carriers – FedEx and UPS – have stopped accepting spirits shipments, even where they're allowed.

A UPS spokesperson confirmed that refusing all spirits shipments is now UPS policy. FedEx would not respond to queries on the issue; retailers shared emails from FedEx that showed that FedEx will not accept spirits shipments.

Even in states like California and New York where spirits shipments are legal, according to beverage attorney John Hinman, UPS and FedEx still refuse to accept spirits. If you order a bottle of Bourbon online in California it might be delivered by a smaller delivery company like OnTrac or DHL. If you order locally, it might be delivered by a shop's own drivers. Both distillers and retailers have to work their way around the market hole caused by the absence of the nation's two largest common carriers. (Amazon, which is rapidly building its own delivery network, could own the nation's spirits shipping business if it chooses.)

The reason is not federal law, nor even state law. It's the ABSENCE of state laws specifically allowing common carriers to ship spirits. It seems to be a loophole that legislators forgot about in the wake of the 2005 US Supreme Court decision that ultimately opened most of the country to direct shipping from wineries.

Many states have laws now that specifically address shipping of wine. But whiskey and other spirits were mostly left out of the laws. And that ambiguity is holding back the industry.

I called the American Craft Spirits Association for an interview on this topic and they referred me to Dan Farber, president and founder of Osocalis, a California distiller that makes brandy from grapes Farber grows himself (which is very unusual, even in France). Farber is on the board of the ACSA. But he doesn't even try to have a tasting room or direct sales; all his brandies go through the three-tier system.

The interview is lightly edited for clarity. Think of it like chill filtering.



How important is direct shipping for distillers?

The spirits industry throughout the United States is pretty much based on the three-tier system. There's been a lot of consolidation on the distribution side. Small individual distilleries have an almost impossible challenge of reaching the consumers for their product. From an economic standpoint, it barely makes sense for a distributor of any size to handle a small distillery. Even if the numbers for a small business might be worthwhile, if the consumers are spread far and wide, no distributor can make the economic case that it makes sense for them to service that part of the market. For almost all craft spirits producers, somehow being able to directly reach consumers who are interested in what they do is critical. Direct wine shipping has sustained a lot of small wine producers, to where they're sustainable, but still not large enough to be interesting for distribution. Distribution is the most efficient way to get product to customers.

Distributors can take a large amount of product and move it closer to the customer base. It's always going to be more efficient to do it that way. Unfortunately for these small brands, that onramp is closed.



Can you use another delivery service, other than FedEx or UPS?

We don't. When there's ambiguity in the law, and when people feel unsure about how the law might be interpreted, they're really hesitant to put their neck out. We only work through wholesale. We don't have a tasting room or any of those ancillary things that many other distillers do have.

I do have a sense that if you don't know the legality of shipping in state or out of state, it's not worth the risk to your business to attempt that. I think that's what limits the fulfillment companies, UPS and FedEx, from participating. What would really help would be very clear guidelines as to the legality of intrastate shipping. Interstate shipping has to start from intrastate shipping. If you can't ship to a customer in-state, you can't ship out of state. The absence of a law precluding it may not be enough in today's environment to motivate UPS or FedEx to take that on. If there was a law that made it absolutely clear that a distiller in California could ship to a consumer in California, I would bet that UPS and FedEx would take on that business. They would want to see a law on the books stating in the affirmative that it may be legal. My sense is that they want to see clear guidelines. Does the recipient have to be present and sign? Does the recipient have to be over 21? We do ship wine, and one can imagine those same guidelines should apply to distilled spirits.

So you think state legislators should write a law specifically allowing spirits shipping?

We absolutely wish they would. We would like to work with state legislators around the country to clearly state the requirements of shipping spirits to consumers. It's our position that beer, wine and spirits should be treated equally. They're all alcoholic beverages and they can all be consumed responsibly. It certainly is the hope of our membership that in future years we can clarify this and make a path for small craft distillers to reach their fans across the United States. The growth in the craft spirits industry in the time I've been in it is phenomenal. That experience of visiting a distillery and seeing how these products are made, and then being able to show it to your friends back home, that's part of the magic of the experience. It's perplexing that we can't do it, and it really does seem like a holdover from an earlier time.

Distributors are the main obstacle in the legislature, though, right? Is it challenging for you to deal with them and also have to nudge legislation that would allow people to sell liquor without using distributors?

No businesses that are successful like to see any changes in the way they do business. They might say, you may think it's a benefit, but we're doing fine the way things are now. But some people are interested in products from small producers that don't make enough to make it economically viable for distributors. That wasn't the case 20 years ago when the spirits market was dominated by big brands. These small-volume distilleries are viable small businesses in places around the country where we haven't seen these kind of high-quality manufacturing jobs before. It's critical that we allow these distilleries to reach consumers who understand them. We do need more consumer awareness that we can't ship these products because we have these limitations. We need more grassroots support for how these small distilleries can get these guidelines. The wine world is an excellent model for how it would look if consumers could get access to the products they enjoy, and small businesses could access their consumers.