- While wineries and craft beer makers are permitted to ship their products directly to consumers, cideries and distilleries face a more difficult path to the market.
- A new bill proposed in Albany would place New York state's farm beverages — wine, spirits, craft beer and cider — on equal footing.
- Proponents say the changes would open new market opportunities for small businesses, give producers hurt by the COVID-19 pandemic a boost and support New York's agriculture and tourism industries.
- Opponents say the proposal will put wine and spirits shops out of business and increase underage drinking.
If Cider Creek is receiving a call from out of town, chances are Melanie Collins knows how the conversation is going to go.
“Our customers will call quite a bit and say ‘Hey, I really want this product but I can’t drive the couple hours to come see you. Can you just mail it to me?’ The answer is always no,” said Collins. “They ask ‘Well, how can you ship to other states?’
“That’s a great question.”
Welcome to New York state’s confusing farm beverage laws, which govern how wine, spirits, craft beer and cider makers deliver their products to consumers.
Cider Creek can send the hard cider it makes in Canisteo to more than 30 states across the U.S., but not to customers the next town over in Hornell — or anywhere else in New York state, for that matter. The Steuben County cidery also can’t ship its own products without using a third-party seller, a middleman that drives up costs for consumers.
Kara Mackey can relate. Mackey is the COO and distiller at Barrelhouse 6 Distillery in Hammondsport, in the heart of wine country off Keuka Lake. The area generates significant tourist traffic for much of the year, attracting visitors from afar.
Those guests may develop a taste for Mackey’s gin, bourbon and whiskey during a summer visit, but they won’t be able to order a bottle for the holidays.
“We have people in the tasting room constantly asking if we can ship it,” said Mackey. “People go to our website and send inquiries. 'When can you ship us your product? Why can’t you ship us your product?'
“They’re kind of perplexed.”
New law aims to change state policy
A proposal in Albany aims to eliminate that confusion and put the state’s farm beverages on equal footing in the eyes of the law. Wineries successfully advocated for the right to ship products directly to consumers in 2005. Breweries, distilleries and cideries were briefly allowed to do the same during the COVID-19 pandemic, but the provision expired in 2021 and the status quo returned.
The New York State Brewers Association, however, dug into state law and found wording that permitted breweries with a retail license to continue sending products to customers' doorsteps. Cideries and distilleries, though, remain sidelined, a potential revenue stream left dry.
Assemblywoman Donna Lupardo (D-Endwell) is sponsoring a bill that would remedy the disparity and give cideries and distilleries the same access to the market. Standalone proposals for each industry have been floating around Albany for years. A cider bill even passed the Senate but faltered in the Assembly.
Lupardo, who chairs the Agriculture Committee, is seeking cosponsors for the new bill that accounts for both cideries and distilleries. Lupardo believes direct-to-consumer shipping would be “a lifeline” for an industry that has struggled with changing consumer habits. Foot traffic in tasting rooms hasn’t fully rebounded since COVID-19, which pushed more consumers toward online shopping.
Nine distilleries closed in 2022, according to the New York State Distillers Guild.
“It was a lifeline during COVID, and because of consumer interest it would be a lifeline now,” said Lupardo. “One of my primary motivations is to not see this industry collapse because of changing consumer preferences and the way they shop. I’m trying to save an industry we created and make sure our farmers and tourist professionals have a place in this conversation.”
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How new law would impact New York businesses, consumers
Under the current law, Cider Creek is forced to ship through a third-party distributor that takes a cut of each sale. That makes Cider Creek’s hard ciders more expensive for online customers, a price hike that could be alleviated if producers were allowed to ship straight to consumers.
Lupardo’s bill may also allow cideries and distilleries to generate steady revenue during the offseason, when fewer people are in their tasting rooms. Collins dreams of starting a cider club akin to wine clubs that receive automated shipments.
“Right now, the customer can’t really choose efficient shipping rates, either,” said Collins, Cider Creek’s President. “The shipping can become really expensive through this third-party site. It’s a detractor for customers.”
Other producers, like Barrelhouse 6, find the third-party system too cost-prohibitive and aren’t available online at all. Securing shelf space in stores can also be a challenge for young brands. Direct-to-consumer shipping could provide producers an avenue to grow their customer base.
“For someone as small as we are, a distributor is a difficult thing for us just from a margin standpoint,” said Cartlon Reeves, president and distiller at Krooked Tusker Distillery in Hammondsport. “I’m self-distributing, so for us to turn around and take in that third party, I’m not so sure you get a great return financially from the standpoint of profitability.”
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Farm Bureau supports push for direct-to-consumer shipping
Direct-to-consumer shipping for all farm beverages produced in the state is among the New York Farm Bureau's 2023 legislative priorities. The Farm Bureau cited new market opportunities, putting craft beverage makers on parity with the state’s wineries, and the benefits to New York’s agriculture producers.
Farm cideries must utilize New York-grown apples. According to the New York State Distillers Guild, the state’s 160 distilleries purchase 1.84 million bushels of grain in the state.
Mackey said 99% of her ingredients at Barrelhouse 6 are sourced within 90 minutes of the distillery. At Krooked Tusker, Reeves has utilized 100% New York grain the past several years.
“Part of the attraction of this business for me was the locality of it all,” said Reeves. “A rising tide lifts all ships.”
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Why is there opposition to direct-to-consumer shipping?
Retailers and distributors have lobbied against direct-to-consumer bills, claiming the changes would negatively impact their sales. Stefan Kalogridis, president of the New York State Liquor Store Association, said the proposal is “a dangerous idea that will hurt consumers, put wine and spirits shops out of business, and increase underage drinking.”
“Your local community wine and spirit shop is in many cases the last store remaining on Main Street,” said Kalogridis, who owns Colvin Wine Merchants in Albany. “After struggling to survive the pandemic this law would put us out of business once and for all while handing the industry over to Amazon and Walmart.”
Proponents, though, counter that direct-to-consumer shipping would mostly benefit small producers and have little impact on the industry’s major power players.
“We’re like .4% of the nationwide market. The people that are shopping in that niche space are not making those kind of choices between a national brand and a local distillery,” said Mackey, at Barrelhouse 6. “They’ve usually already become a consumer of that product.”
The concept already has test cases in the wine and craft beer industries. Retail sales have remained strong after direct shipping was permitted in each industry. Proponents also note that direct shipping has not led to spikes in underage drinking since wineries started the practice in 2005, nor during the COVID window when the entire industry enjoyed the same privilege.
Lupardo’s bill would require UPS and FedEx to obtain a signature from someone 21 or older before delivering spirits and cider, just as they do for wine and beer.
While not directly involved, the New York State Brewers Association “fully supports” the push to bring shipping parity to the state’s beverage industry, said Executive Director Paul Leone.
“It was a bloody fight for wineries, but one that showed the wine distributors didn’t go out of business,” said Leone. “They didn’t make less money. It really saved the wine industry in a lot of ways. We expect no different if it were to happen for the cideries and the distilleries.”
Reeves, at Krooked Tusker, believes the state’s cideries and distilleries have been shut out of a critical distribution channel as consumer preferences increasingly favor direct shipping.
“Everything seems to be moving that direction, like it or not,” said Reeves. “I have mixed emotions about it but it seems that’s the way the world is headed."
