Understanding the Legal Landscape of Alcohol Delivery
Jaci Flug, Drizly’s head of regulatory affairs discusses state and local laws, and compliance considerations
Consumers can get just about anything delivered to their door these days — restaurant meals, groceries, medications, toilet paper, and more. Since the Covid-19 pandemic, consumer demand for easy and convenient delivery has only intensified, leading to unprecedented opportunities for alcohol delivery providers.
For beverage alcohol retailers seeking a new way to reach customers and increase their revenue, on-demand alcohol delivery is a key growth strategy, and a channel that has seen a recent surge in legalization in states across the U.S.
BevAlc Insights reached out to Jaci Flug, Drizly’s vice president of regulatory affairs, to learn what retailers should be thinking about if they want to get into delivery.
BevAlc Insights: Why should a retailer consider alcohol delivery to grow their business?
Jaci Flug: Because we’re living in 2020 and people expect that anything can be delivered. We lived very busy lives even before Covid and it’s just a convenience that consumers are looking for. Once you talk post-Covid, we’re living in a world where people are trying not to go out and interact, so delivery is certainly in high demand.
How has Covid-19 impacted the alcohol delivery landscape?
It has certainly increased consumer knowledge and awareness of our platform and alcohol delivery, especially in the sense that when Covid started and the restaurants shut down, many states made allowances for restaurants. Those who legally couldn’t deliver could now deliver. So, we’re receiving a lot of attention and brand awareness that it is possible to order alcohol online.
From a legal perspective, what should retailers know if they’re considering getting into alcohol delivery?
They should know their state and municipality law. Depending on the state, alcohol delivery can be run by the county or the state and alcohol delivery is legal in 35 states right now, including Washington, D.C., because we had some recent changeovers. So, they need to know if it’s legal, they need to know if they need an additional license, or whether their delivery privilege is contained within their license, and they need to know if they can use an outside third-party delivery entity to make the delivery, or whether they are required to do the delivery themselves. If you are wanting to engage with a third-party company, you need to know if the third party is required to have a license or not in your state.
Do delivery laws sometimes differ between wine, beer, and spirits?
Yes, delivery laws, in terms of spirits versus beer and wine, depend on if you’re in a control state or not. In control states, the state actually sells spirits, and private retailers can sell wine and beer. Most of them allow for the delivery of beer and wine from private retailers, but not the delivery of spirits. So, in states like North Carolina, Ohio, Virginia, and Oregon, you can have beer and wine delivered, but you can’t have spirits delivered.
What should retailers know about their local customer base when launching alcohol delivery?
They should know where they’re located because when you launch delivery, especially on a platform like Drizly, you establish a service area, the area that you’re going to do delivery in. You don’t want to be delivering 10 miles away if that’s going to be too much time. You also want to know the products, the top sellers; those are the products you’re going to put online as options for customers to buy. A good knowledge base of what your customers are looking for is important, and price points as well.
What specific steps should retailers take before launching alcohol delivery?
Again, you should first make sure you are aware of your state rules and whether delivery is legal. You need to decide how you’re going to do the delivery: Yourself, or if you want to use a third-party vendor. Depending upon the state, if you’re doing the delivery yourself, you might be required to own the delivery vehicle. Every state has different rules, so you just really want to be knowledgeable about the delivery rules in your state.
And then, I certainly suggest getting in touch with a platform like Drizly, because in most states, alcohol retailers, liquor store owners are mom-and-pop businesses. Your typical mom-and-pop shop doesn’t have the capabilities to make a sophisticated platform for consumers to shop by with lots of product knowledge, lots of things that come up in SEO searches, so I think you really want to use an entity like Drizly, which specializes in this, to help get your product seen.
What should a retailer look for when choosing to work with a platform like Drizly?
Drizly isn’t the only platform around and I think retailers should look closely at the different options out there, and what their compliance reputations are. At the end of the day, it’s the retailers who are responsible for the sales. Drizly is an unlicensed entity. We don’t touch alcohol, we don’t touch money for alcohol, and we’re not responsible for these sales. Retailers are, no matter what platform they use. So I think they want to make sure they’re operating with a reputable platform.
What do you foresee for the future of alcohol delivery?
I see it growing, honestly, I just see it growing. E-commerce alcohol sales are growing each year–and have jumped fairly significantly during the last few months. So, the more awareness that is there, the more customers will keep turning to it.