Happy Birthday Granholm

May 16th is the 20th  anniversary of Granholm, twenty years later I look at how Granholm has impacted the marketplace.

Granholm’s legacy

The Supreme Court victory in Granholm was one of the greatest things to happen to the wine industry. The growth in wineries has been massive and the consumer has benefited from greater choice.

Previous to Granholm, there were 27 states that permitted winery DTC shipping and today there are 46 states where DTC shipping is permitted. [1] The amount of states opening their markets to out-of-state winery shipping increased by 70%.

In 2005 Pre-Granholm there were an estimated 4,700 wineries[2] in America, in 2024 there were an estimated 11,500 wineries[3] in America. The vast majority of wineries in America today are considered very small or limited production wineries. 50% are considered limited production wineries making under a 1,000 cases, and 32% are very small wineries making 1,000-4,999 cases.[4]

Since Sovos Ship Compliant began tracking DTC shipments in 2010, the market has grown from a little over $1 billion in DTC shipping sales to nearly $4 billion in DTC shipping sales.

Opening up and creating a freer market is Granholm’s greatest legacy.

 

The story the numbers tell

Without a victory in Granholm greater consumer choice and the expansion in the wine industry would never have happened. Pre-Granholm states did not open up their marketplaces and let other state wines in. It is hard for people to look back 20 years ago and believe that your home state would not let you get wine shipped to you from your favorite Napa winery.

With the state wholesaler tier fighting against free markets, the consumer suffered.

In Pre-Granholm days, the consumer was left out in the cold with no recourse. Granholm changed that! With the wholesaler backed state political interest forced to open markets, the consumer had access to a greater selection of wines. If you lived in a state with not a great abundance of wineries, previous to Granholm your consumer choice was limited to whatever home state wineries were located in your state or whatever the in-state wholesale network decided to provide.

Consumers finally had a greater freedom of choice!

With this great choice, consumers were expanding where they purchased wine from and this led to an explosion in the number of wineries in America. What occurred is the smallest wineries that never could obtain access to markets previously, were granted to access to markets across the country thanks to Granholm.

If you are Bear Creek Winery in Alaska or Mountain Chocolate Wine from Tennessee, a wholesaler in California or New York is not going to pick you up. It does not make business sense for the wholesaler to do so as it is a losing proposition. Bear Creek is not going to maintain massive sales in New York or California, and it would take attention away from more profitable brands that would sell quickly.

With no wholesaler betting on these wines, they are essentially shut out of the biggest markets in the country.

Along comes Granholm and it changes the paradigm. Since Granholm, limited production wineries have grown the fastest. Instead of being shut out of a state, now Bear Creek and Mountain Chocolate have access to the largest wine markets, which were before nothing more than a fantasy to them. Additionally, they also gained access to the other 44 winery shipping markets that were previous unavailable to them.

More free markets broke down barriers to entry and have resulted in more wineries. There was nearly a 145% increase in the number of American wineries since Granholm. When you look at the Sovos Ship Compliant reports, the greatest growth in the number of wineries comes from the limited production wineries.

Similar to the already existing wineries, DTC shipping provides a great benefit to new entrants. It instantly provides them nationwide access to a network that the wholesale system would not provide them.

Also, with the increase in wineries comes economic benefits that expand to but not limited to the agriculture and hospitality industry.

The People that made it work

Victory in Granholm did not come easy. When attorneys Alex Tanford and Bob Epstein took up this fight, they faced massive resistance from the politically powerful wholesale tier and nervousness from the winery industry establishment (some feared that if they were successful that states would shut down intrastate shipping).

What began as a court battle in 1999 in Indiana, became a roller coaster of twist and turns with loses and victories alternating back and forth.

Alex and Bob stuck in the fight, which was done on a 1983 basis, win and they get paid, lose and they are out of luck. At great risk to themselves they persevered and won by one vote at the Supreme Court. History sometimes hangs on the narrowest of margins.

If it wasn’t for Alex and Bob, wine shipping markets and consumer choice would still be in the dark ages. And the wholesaler tier would have even a greater choice over what is available to the consumer. Thanks to Alex and Bob the consumer and not the wholesaler can exercise the choice over what domestic wines it can purchase and consume.

But there were not just legal battles fought in this area, there were also legislative battles fought to expand winery direct shipping. And we need to give credit to some organizations that got legislation passed to expand DTC shipping. Remember, states could shut down the shipping market completely and comply with Granholm. For years large markets like Pennsylvania chose to completely shut off wine shipping even for their own wineries as a way to keep out-of-state wineries from the market.

Groups such as The Wine Institute and Family Winemakers of California deserve great credit for expanding DTC shipping.

Further, groups such as the Craft Wine Associations deserve credit for preserving winery shipping rights.

The Future of Granholm

The genie is out of the bottle and DTC will only expand and become bigger is the conventional wisdom. But this victory lap is short sighted. Although the wholesale tier could not stop the DTC shipping train from leaving the station, they are doing everything to slow down its momentum.

Through fulfillment house laws and limiting the definition of important concepts, the wholesaler is not stopping the train but containing it.

Any efforts to expand DTC rights are fought tooth and nail and DTC shipping is being attacked on a regular basis.

In a state like Virginia where the CEO of the Alcohol Beverage Control took over the position after serving as the President of Virginia Wine Wholesalers Association, you can see where the attacks are coming from in the DTC shipping markets.

The legislative branches and sometimes the regulatory branches are controlled and run by the wholesaler interest, which means continued attacks on the DTC shipping markets will not stop.

Conclusion Granholm at 20

At 20 years we can look back at Granholm and see its resounding success in the marketplace. Twenty years later we see the benefits of what the free market has brought. Free markets have decimated barriers to entry and we see expansive growth for the small wine industry, free markets have allowed wineries to take control of its market without relying on a party that might or can’t serve their economic interest, free markets have expanded DTC shipping growth by a factor of four, and free markets have offered the consumer greater consumer choice.

Granholm at 20 also demonstrates that DTC shipping is a safe and effective way to sell and deliver product. Twenty years of evidence shows that minor access to alcohol has not increased nor have social harms because of winery DTC shipping.

In concluding, Granholm is the most important event in the alcohol industry this century and it is not even close.

Happy birthday Granholm and thank you for all you have done!

 

 

[1] https://www.winespectator.com/articles/us-wine-shipping-laws-state-by-state-50258#:~:text=But%20then%20the%20Supreme%20Court,and%20Washington%2C%20D.C.%2C%20today

[2] , https://www.winebusiness.com/wbm/article/36590

[3] https://go.sovos.com/rs/334-HVN-249/images/2025-DtC-Wine-Shipping-Report.pdf?version=0&mkt_tok=MzM0LUhWTi0yNDkAAAGZsKBQVmTWFLSMJwGnwXNO2dhE0ps0GixMbj7SgOao_XunPGjzYFlDeTHMhmpbdyBH4QzTqivnalGq2FxXD1zk2hIgngwo-CmemxJ-IecVEbZT_A

[4] Id.