Wine Law By the Case: The Year in Review

2014 is quickly winding down.  A look back on the year in alcohol beverage practice most notably reflects issues raised by changing methods of doing business, including the avenues used to make sales to consumers and to deliver products to them.

E commerce and direct shipment continue to generate questions without clear answers.  New businesses operating outside of the traditional brick and mortar establishment model are testing the application of older laws.

With direct shipment, the many laws among the states allowing it make simple answers difficult. States are addressing the issue, and going forward, the industry can expect to also see efforts at improving existing shipping laws, including simplification of reporting requirements, streamlining permitting procedures, and removing capacity caps and burdensome paperwork requirements.

In March 2014, the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued a ruling regarding wine growlers, which has been a recent topic of interest. In ruling number 2014-03, TTB took the position that the filling of growlers with taxpaid wine for the purpose of consumption off the premises is an activity that may be conducted lawfully only by a qualified taxpaid wine bottling house.

However, TTB later suspended the ruling based on concerns raised by industry representatives.  Concerns were raised that the ruling would unduly burden the businesses who sell wine growlers in states where such sales are permitted under state and local law. TTB recognized that its existing regulations were intended to cover traditional taxpaid wine bottling activities, rather than the filling of wine growlers. As such, TTB determined that it would be appropriate to engage in rulemaking on the issue so that it can modernize its regulations to specifically address the filling of growlers with taxpaid wine, and it suspended its ruling in the interim.

2014 also saw the resolution of a number of the franchise law cases that had been initiated in Missouri state and federal courts. Unfortunately for those hoping for a clear directive on the laws, much of the litigation was resolved by settlement short of a court determination on the merits. Requests for review of distribution agreements by both suppliers and wholesalers with an eye toward whether a franchise relationship is being established and the extent of any protections are common and likely to continue as this area of the law remains uncertain.

In terms of market trends, craft breweries and beer, as well as craft or specialty spirits, have continued to grow and gain popularity this year, which raises questions about the potential impact on the wine industry and its market share.  This topic will be interesting to follow in the upcoming year.

Innovative means of reaching and influencing consumers, particularly with advancing technology, can be seen all over.  A quick internet search for web sources or a search for apps, such as wine apps, on a smart phone, demonstrates this trend.  For example, there are wine apps that allow consumers to obtain information on certain wines, including price and ratings, while others allow consumers to share their opinions on wine and to connect with other wine drinkers.  Still other apps assist consumers with finding their flavor preferences or the perfect pairing for a particular meal.  Wineries will want to keep these sources in mind and continue to pursue original and interesting ways to entice customers, as consumers increasingly turn to these means of obtaining information.

As we roll into 2015, we expect changing technology will play a big part in the issues raised, whether it is in the context of alcohol beverage advertising, sales or shipping. We are frequently surprised about the challenging and unique issues that come through our door, and we look forward to meeting them in the New Year.

Jamie J. Cox, is an associate with the law firm Brydon, Swearengen & England P.C. in Jefferson City, Missouri. Jamie practices primarily administrative law and represents professionals before the Administrative Hearing Commission, as well as a number of Missouri licensing boards.  During November 2014, Jamie began her term as vice-chair of  the Missouri Bar’s Administrative Law Committee