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Upswing in Alcohol Deliveries Brings Increase in Violations 

by Andrew Adams
June 26, 2020

Looser regulations on home delivery of alcohol have helped to keep consumers buying wine and other alcoholic beverages during the pandemic, but it appears several of those consumers who received deliveries were underage. 

The California Department of Alcoholic Beverage Control (ABC) frequently conducts “minor decoy” stings in which people younger than 20 purchase alcoholic beverages. Licensees who sell to these minors face stiff penalties. The decoy program has a “failure,” or infraction, rate of about 12% to 13% said the agency’s general counsel Matthew Botting. 

During the first few months of the pandemic, and acting off of complaints, Botting said the department set up a decoy program focused on delivery services. “What we’ve seen with delivery services is an excess of 50% failure rate,” he said. “That is just off the charts unreasonable.” 

Botting’s remarks came during a virtual summit on compliance issues in the direct-to-consumer segment of the wine industry hosted by SOVOS ShipCompliant. 

“We do not regulate the delivery companies,” Botting added, “we regulate the licensees. They are responsible and that is where our regulatory ax will fall.” 

Like many other states, California has loosened regulations on alcohol sales, and this has meant more retailers and restaurants are making deliveries through third-party providers. Botting referred to “cocktails” in his remarks and when asked for more specifics on the infractions and if any wineries had been cited after the summit, he forwarded those questions to a department public information officer who has yet to reply. 

According to information on the ABC’s website, in 2018 and 2019 the department visited 6,250 licensed premises through its minor decoy program and those visits resulted in an infraction rate of 12% leading to 768 arrests. A first-time violation can result in a fine or license suspension, a second-time violation within three years is an “automatic” license suspension and a third violation within three years may result in a license revocation. 

Botting said many of the violations during delivery occurred when the person making the delivery didn’t ask for an ID or just left the alcohol products on a doorstep. He said when the ABC first started getting complaints it reached out to the major service providers and he said all had policies in place to ensure age verification.  

But some had not done an ideal job of communicating their policies to their drivers and in some cases those drivers didn’t even know they were delivering alcohol. “The key to this, from our perspective, is the licensee is responsible.” 

Joining Botting in the session was Dexter Jones who is the chief of audits and investigations for the Texas Alcoholic Beverage Commission. 

Jones said the Texas agency experienced similar issues with deliveries but added there many ways options to use new technology to confirm a customer’s age while also ensuring proper social distancing. 

He said his agency has also had to deal with food trucks that would park and take advantage of liberalized regulations on to-go, alcohol sales with food orders to essentially operate as mobile, walk up bars. He said some delivery trucks were cruising through neighborhoods selling alcohol like an ice cream truck. “Once we tracked these folks down we actually got a lot of that stuff curtailed here in the state of Texas.” 

A more recent issue has been on-premise licensees trying to “push the envelope” on capacity limitations, which range from 25% to 75%, to gain a competitive edge. He said 17 locations in the state have had their licenses suspended for 30 days for violations on capacity limits.  

Jones also mentioned Texas’ new policy of conducting audits on out-of-state direct shippers, which includes wineries, to ensure that all wine shipped to consumers is produced and bottled on the premise of the licensed shipper. He said there have been some issues with shippers that acquired the inventories of other wineries and sought to ship those goods under their license but that is prohibited. “Be aware of what products you’re selling to Texas and where they are being produced,” he said. 

Some California wineries have also sought to dismiss the audits because of the state’s new law prohibiting the release of consumer data, but Jones said that law only applies to California and does not pertain to business done with Texans. 

Botting said California’s ABC has issued 16 notices of regulatory relief to help wineries deal with the pandemic-related limitations on business and also compiled a 56-point FAQ to help licensees understand the new normal. All of these materials are available through the department’s website. “We’ve tried to be as reasonable and as flexible as possible.” 

When the shelter-in-place orders began to take effect in California, Botting said there appeared to be some confusion between what the state was mandating and information coming out of local government. That resulted in the ABC receiving 190 complaints about licensees not complying with state directives, but Botting said the “vast majority” quickly complied and only a few are now being investigated by the state. It was unclear if any of these businesses are wineries. 

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