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TRENTON (April 7, 2021) – The passage of bills A 1943 and S 2683, which would allow American wineries that produce more than 106,000 cases of wine a year to ship directly to New Jersey consumers, would be a victory for consumers, retailers and the state’s government, according to a new report.

Key findings of the Direct-to-Consumer (DTC) study on wine transfers:

  • In the short term, New Jersey would receive between $3 million and $4.4 million per year in tax revenue, and in the longer term, up to $6 million per year.

The state will collect new taxes for licensing and registration of wine labels, as well as sales and use tax withholding from wine producers. (Note: Since the current restrictive law was enacted in 2012, New Jersey has lost nearly $30 million in potential wine tax revenue. The law also resulted in a loss of nearly $30 million in potential wine tax and royalty revenue).

  • New Jersey consumers benefit from a wider choice and price range.

Under current New Jersey law, consumers may not receive DTC shipments from wineries that produce more than 90 percent domestic wine, including quality wineries that offer a wide range of prices and small wineries owned by large producers. No liquor store in NJ can handle all the wines available on the market. While the average wine store stocks 2,000 wines, wine producers have applied for 120,000 federal label approvals by 2020. In addition, the average cost per bottle of wine shipped through DTC in NJ in 2020 was $45.51, while the national average price for wine shipped directly was $36.83 per bottle last year. With better delivery to the vineyard, NJ consumers have access to better priced wines.

  • Local liquor stores will not be affected.

Only 30% of NJ liquor store sales come from selling wine, 80% of which are wines priced under $15 a bottle or sold in cans, cases, etc. Therefore, most liquor stores will generally not be affected by the increase in wine shipments. This result is consistent with research conducted in Maryland and the rate of retail growth in other states, which shows that the expansion of DTC wine offerings does not harm local businesses.  Moreover, a robust online marketplace that does not exclude large wineries benefits both wineries and local retailers by increasing consumer familiarity with the online channels heavily used by New Jersey wineries and retailers.

The study was conducted this year by veteran researchers Danny Brager and Dale Stratton for California-based Naked Wines. The report is available here: https://freethegrapes.org/press/.

General Information

A 2012 New Jersey law arbitrarily prohibits U.S. wineries that produce more than 250,000 gallons per year (about 106,000 cases – a medium-sized winery) and small wineries owned by those wineries from shipping to the homes and offices of New Jersey residents via common carriers like FedEx and UPS. Wine producers who produce less than this amount may ship their products directly to New Jersey consumers.

This capacity limit applies to both domestic and foreign wine producers. It denies New Jersey residents direct access to more than 90% of the wine produced in the United States. Of the 46 states and the District of Columbia that allow wine producers to deliver directly to consumers, only Ohio and New Jersey limit the size of wine producers who may deliver.  Massachusetts and Arizona lifted capacity caps a few years ago. (NOTE: the report states that 45 states allow DTC because it was written before Kentucky became the 46th state).

New Jersey ranks sixth among the states for total wine consumption, but only 21st.

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