Recently Wisconsin passed legislation signed into law that represents the greatest attack on the American wine industry in recent times and will cause great harm to American Wines.

The American wine industry is dominated by great wine states such as California, Washington, and Oregon. However, every other state has their niche wine countries and states such as Ohio, Virginia, and Michigan rank in the top ten of wine producing states.[1] There are 752 million gallons of wine produced in the United States[2] and over 11,600 American wineries. 82% of these wineries are considered very small to limited production wineries[3]

An American winery has three routes to market, through the three-tier system, through self-distribution (direct to retail) or through direct-to-consumer (DTC) shipping.

Wisconsin does not allow in-state or out-of-state wineries to self-distribute wine to retailers.[4]

So, the only way for American wineries to sell to consumers in Wisconsin is through the three-tier system or through DTC shipping.

The three-tier system fails American wineries as its predominant supply is from foreign countries. From 2000 to 2022 there was a 220% increase in imported wines. And during this time wine consumption increased 62%, but domestic wine production remained relatively constant.[5] The numbers don’t lie, the foreign wineries have captured the American market

On, the largest online wine retailer in America, 70% of the wines are from outside the U.S., On Proof, Southern Glazer’s online management program, 60% of their online SKUs are foreign, and Total Wine & More, 56.5% of their SKUs are foreign.[6]

It is clear from the facts that the three-tier system is servicing the foreign wineries over the American wineries. When you think about it many foreign wines have bigger budgets and are more likely to sponsor major sporting events. Also, the wines from France, Italy, and Spain have more of a history than wines from smaller U.S. wine producing states.

Think about the last time you were in the liquor store and saw the French and Italian section and somehow missed the Iowa or Missouri section. The fact is foreign wines predominant. Why, I don’t have the answer, this could be from wholesaler business decision on what will sell or retail demand or customers not knowing or being exposed to American brands. Either way the facts are the facts and foreign wines hold a predominant place at retail.

This leaves us with one final and the most effective method for American wineries to get their product to market and that is by DTC shipping.

I wrote previously on how Fred Biletnikoff has a great wine and sells it for a great purpose, but even with this there is not enough demand for a wholesaler to pick up his brand in say Alabama. Now Fred is famous, imagine if you are a small Illinois or Iowa winery, good luck getting distribution in California. However, if someone from California visited your Illinois winery, they could order your product via DTC shipping. Enough of these orders could help the limited production Illinois winery survive and get off the ground and build. It was the gift the U.S. Supreme Court gave the small wineries in Granholm and since then the number of wineries has doubled.

With distribution in other states not plausible and with foreign wines dominating retail shelf space, the DTC system is the life blood for the majority of American wineries to survive.

And then comes along Wisconsin to stick a knife into a majority of American wineries. Under SB 268, which was signed into law by the Governor, if a common carrier ships into the state on behalf of an unlicensed winery in more than one month, their permit shall be revoked. Since the main common carriers UPS and FedEx ship hundreds of thousands of packages each year into Wisconsin, shipping twice for a winery that has an expired permit is not unforeseeable and it is a pretty exacting standard.

UPS and FedEx have already indicated they will exit Wisconsin for wine shipping purposes, if the law’s provision, which goes into effect in January 2025 is not changed[7].

Without the presence of the major common carriers DTC winery shipping is dead and with it the hopes of many American wineries to do business in Wisconsin.

I hope they see fit in Wisconsin to reverse their attacks on the American wine industry. The direct to retailer channel is cut off from small wineries and there are only two alternatives left.

Obviously, the wholesale tier wants to shut off the DTC channel and force everyone into the three-tier system. The same three-tier system that favors the foreign wineries over the American wineries. Sadly, the legislature and the governor followed suit.

If the Wisconsin status quo remains, what we can never underestimate is the ability of a bad idea or policy spreading to other states.

I hope for change in Wisconsin and that it takes a Pro-American stance for the good of the majority of the wineries in the United States.





[3] Sovos Ship Compliant 2024 Direct to Consumer Shipping Report considers very small wineries producing between 5,000 to 1,000 cases, limited production wineries produced below a 1,000 cases on a yearly basis



[6] Id.