WSWA’s recent study will harm the industry

[Erik Owens]

From the Irish Liquor Lawyer: https://irishliquorlawyer.com/liquor-industry-insights/wswas-recent-study-will-harm-the-industry/

WSWA put out another report that will no doubt be used as propaganda to stop and in some cases reverse direct-to-consumer (DTC) shipping for manufacturers and retailers.

WSWA conducted its own poll in partnership with Morning Consult, which shows that 25% of adults they surveyed, who purchased alcohol from an online vendor or manufacturer were not age verified.

WSWA goes onto make the claim that DTC shipping is supported by a 10% (based on their surveyed audience) radical fringe of society and with the dangerous 25% failure rate, people should be majorly concerned about the advance of DTC shipping on behalf of this radical fringe group.

The study goes onto spout stats such as 76% of American adults are concerned about the age verification process when purchasing product online. And that 60% of adults identified increased risked to underage access as a concern, and 85% agree that online vendors should be held to the same standard as a brick-and-mortar location.

Finally, the study spewed stats about consumer choice, which are meant to make DTC advocates a radical minority that represents a great outlier. The stats pertain to where people like to purchase alcohol. Under the study, 65% purchase from grocery stores, 64% from the liquor store, 47% from bars and restaurants and only 10% from online vendors and 9% from manufacturers.

Problem with the methodology

Unlike the VinoShipper study, which provides great detail to prove its conclusions, the WSWA detail provides us no background data.

To illustrate, in the oral argument in the 1^st Circuit’s Rhode Island wine retailer shipping case, Anvar v. Dwyer, the Rhode Island attorney stated that the plaintiff admitted in deposition that she was not asked by the common carrier driver for an ID. The state intended to drive the point home that DTC shipping is dangerous and people are not being verified and this could lead to minors getting their hands on alcohol.

Alex Tanford in rebuttal simply answered that she is 70 years old. It drives home the point, people that are senior citizens are generally not age verified and not age verifying a 70-year-old does not mean minors are more likely to get their hands on alcohol.

It is common sense that if someone looks like Uncle Jesse from the Dukes of Hazzard, they are probably not being age verified whether it is in a brick-and-mortar or by common carrier.

What WSWA does not do is provide details in its study on the age demographic of the 2,200 U.S. Adults it surveyed, and whether the 25% crowd were senior citizens or a demographic of 21–25-year-olds. Second, the data does nothing to demonstrate that the 25% failure rate of adults surveyed will lead to minors getting increased access to alcohol via DTC shipping.

The survey contacted 2,200 adults; an adult is someone over 18 in general terms. If the survey provided responses to how age compliance fared for the 18-20 crowd, and what the compliance rates were for age verification, we might be able to take this study seriously.

Unfortunately, WSWA like the Wizard of Oz, will not let us see behind the curtain, yes transparency matters!

The 10% radical fringe argument suffers from the same faults as the 25% age verification failure rate does. We don’t know the surveyed demographic. If those surveyed were at the higher age bracket that did not grow up with technology that would matter, however, this crucial piece of information is missing. So, the argument that the DTC market only is supported by 10% of society is not credible.

What is missing is concerning

If minors gaining access to alcohol is a major concern, then I believe WSWA misses the boat on some glaring but important issues. In the VinoShipper study, they utilize Substance Abuse and Mental Health Services (SAMHSA) data to track retail licensees that failed minor compliance stings. (Substance Abuse and Mental Health Services Administration (n.d.) Underage Drinking Prevention and
Enforcement 2021, SAMHSA, https://www.samhsa.gov/, accessed December 2022)

Unlike the WSWA study that surveyed adults, the SAMSHA stats look at selling directly to minors and whether retailers attempted to age verify them. According to the SAMSHA stats, Delaware and Pennsylvania retailers sold to minors without age verifying more than 25% of the time. I will allow the reader to judge whether these glaring failures of the system were left out by WSWA because the brick-and-mortar retailers purchase through the three-tier system.

VinoShipper v. WSWA study

The VinoShipper study came to a radically different conclusion than the WSWA study. VinoShipper’s study concluded that minors were not utilizing online purchasing to obtain alcohol. VinoShipper utilized independent data from IDology a 3^rd party age verification software provider to conclude that out of the 633,985 registered buyers only 943 purchases were attempted by minors. Attempted minor purchases represented .15% of all attempted purchases.

Unlike WSWA’s data, VinoShipper utilizes an independent third party and does not rely on in-house data. Further, it produces data from government agencies and maintains citations to independent sources.

WSWA’s data comes from an non-independent source and it provides no citations to independent third-parties.

If transparency and independence is crucial in a study’s credibility and reliability, then we must question WSWA’s results and conclusions.

Another interesting point to note, WSWA tried to diminish VinoShipper’s study being stating that “What Gray and Harrison fail to mention is that these 1.05 million shipments are a drop in the bucket (only 2%) of the total 41 million-plus DTC wine shipments nationwide, according to the Sovos 2023 Direct-to-Consumer Shipping Report.[1]”

If 2% is so small to make a study uncredible, then I think WSWA has just questioned the efficacy of its own study. WSWA claims it contacted 2,200 U.S. adults. According to the U.S. Census Bureau in 2020 there were 258.3 million adults in the U.S.[2] WSWA’s surveyed number represents .00085% of the population. Maybe WSWA should put an asterisk around its own study.

Why this study is so harmful

We can dismiss the methodology and the conclusion it raises; however, we should not dismiss the harm the study will cause. Many legislators do not know liquor issues well, they are inundated with numerous subject matters, and often times learn the issue from a well-paid lobbyist.

We should learn from Wisconsin that a DTC open state can become a DTC closed state through effective lobbying and the stroke of a pen.

This study will no doubt be used as propaganda and passed out to unknowing legislators as the gospel on the impact of DTC shipping.

Further, attacks on DTC access for producers could not come at a worse time. Alcohol manufacturers experienced their worst year since 1991.[3]

DTC access for manufacturers opens up sales and expands markets that  otherwise would not become available. Since Granholm the number of wineries in America has doubled and DTC shipping has led to growth. For the spirits industry the lack of DTC shipping options is hurting growth potential.

A niche distillery in Oregon may have a cult following across the country. Suppose this demand is for 10 cases in a state. The volume is not enough to make it profitable for the in-state wholesaler to take on this distillery. However, the distillery could expand its brand and sales and develop the market through DTC sales. Without DTC access the distillery is losing sales and potential growing market share.

Conclusion

Minor access to alcohol and DTC shipping are serious issues and should be addressed. Nobody wants to see minors getting access to alcohol, but providing suspect studies on DTC shipping and ignoring in this study, the failures of brick-and-mortar stores on selling to minors, is irresponsible and does not serve a greater purpose.

Further, trying to shut down DTC markets, which provide a market to grow for suppliers that a wholesaler will not take on, is harmful. Especially when our liquor industry is going through tough days, advocating to shut off markets through suspect studies will only harm an industry that is suffering a downturn.

[1] https://www.wswa.org/news/wswa-responds-recent-stories-efficacy-dtc-alcohol-shipping

[2] https://www.census.gov/library/stories/2021/08/united-states-adult-population-grew-faster-than-nations-total-population-from-2010-to-2020.html#:~:text=Population Under Age 18 Declined Last Decade&text=In 2020%2C the U.S. Census,from 234.6 million in 2010.

[3] https://www.wine-searcher.com/m/2024/01/us-alcohol-industrys-worst-year-since-1991