It’s rare that we speak with a winery owner or manager and don’t hear about laws, licensing, regulations, and compliance—and all of the effort required to keep up with it all.
Here’s a pretty typical pattern: A winery decides it wants to grow, and hears about a great new trend. Maybe it’s building a new eCommerce website, or offering food in its tasting room to lengthen the experience, or using big data to revamp its wine club. These seem like reasonable-enough courses of action to take, and the precedent is there for doing so.
And then it happens…a legal entanglement that they did not expect.
We are by no means experts in the finer points of wine law. Nor are we a compliance service. But we work close enough with wineries on their logistics and shipping that we’ve heard about many of the regulations that are causing them pain in today’s regulatory environment.
And so, as you grow your sales channels, it would be good to keep these on your radar:
DTC Reporting and The California Consumer Privacy Act
The California Consumer Privacy Act (CCPA) is set to go into effect January 1, 2020; it requires businesses operating for profit or financial benefit in California to disclose the purposes behind collecting any consumer information. Consumers will also have the right to request that a business disclose the categories and specific pieces of personal information that it collects, its collection sources, and any information-sharing with third parties.
How does this affect wineries, particularly smaller wineries with a growing DTC channel? For one thing, many wineries track customer preferences and purchase history in order to recommend new products and generally do digital marketing. Wine clubs in particular have been able to attain a higher level of service by truly curating wines fit to consumers’ tastes. Smaller wineries gathering data on their eCommerce sites, or for their wine clubs, will need to find out how to comply with this new law. Indeed, some owners are already worried that the cost to comply with the CCPA’s data collection requirements (in terms of staff, lawyers, and technology consultants) could have a negative impact on business.
It is important to note that this law applies even if the company is not itself located within California, or if it conducts eCommerce outside of California but offers products to residents of California.
eCommerce and The Americans with Disabilities Act
The Americans with Disabilities Act (ADA) was passed in 1990 to prevent discrimination against those within a broad range of disabilities. Typically, this law has been applied to accomodations at brick-and-mortar locations, helping ensure those with handicaps could easily access the locations. However, in the past decade, several lawsuits (including a recent landmark case in New York) have started moving into the digital realm…including websites operated by wineries.
The sticking point comes with the phrase “public accommodation.” In the past, only wineries that served the public—with a tasting room, for example—seemed to be subject to the ADA because their physical facilities were open to the public. More recent cases have made the argument that stand-alone websites without any physical location can also be considered places of public accommodation, and thus subject to the ADA.
This means that wineries with websites, particularly eCommerce websites, may well need to comply with the ADA. This includes adhering to guidelines such as the Web Content Accessibility Guidelines (WCAG 2.0), which suggest steps like:
- Using alternative text for pictures, so that visually impaired visitors can decipher your site’s content with a web reader,
- Designing with high-contrast colors and large fonts,
- Making the site usable with a keyboard only, if necessary.
Fortunately, there are plugins available to help some websites’ content systems do this. It is also worth updating your policies page to make public the steps you are taking to be ADA compliant!
FDA/FSMA Regulations for Tasting Rooms and Shipping Facilities
It used to be that a wine tourist would hit the valley and visit half a dozen wineries or more, in quick succession. The aim of each winery, then, was to make a quick impression, sign someone up for a wine club, and keep the turnover going.
That model is being replaced with a new one, where visitors to the winery like to linger and make the visit into an experience. They visit fewer wineries per trip but want each visit to be special in some way. Many wineries are adding food pairings from professional chefs to do just that.
But having a full kitchen in a tasting room might mean opening up the winery to FDA inspections, and having to comply with The Food Safety Modernization Act (FSMA). This makes sense, if a winery is going to offer food; but many smaller wineries have gotten used to being exempt from FDA inspection (or at least being very low priority).
Even if your winery is not offering food in the tasting room, it will still need to be registered with the FDA. And what holds true for wineries also holds true for warehousing and logistics companies that help wineries sell wine DTC. Indeed, anyone involved in the storage, order processing, and shipping of wine needs to be so registered.
So, when shopping for a fulfillment partner, don’t just ask if they are an FDA facility. Anyone can make the claim that they are; the term “FDA facility” has no legal meaning. What you should ask is if they are an FDA registered facility, and if the answer is yes, ask to see their registration numbers.
A true FDA registered facility should also:
- Have the right environmental conditions and controls in place for your wine,
- Track shipping appropriately, including batch numbering,
- Be able to track and perform recalls, if needed, and
- Have the best quality controls available.
Packaging and Proposition 65 Warnings
We noted in an earlier blog post that there’s a trend toward new and exciting packaging, but that package redesign needs to be thought through carefully. California’s Proposition 65 is just one more thing that needs to be taken into consideration.
Officially titled “The Safe Drinking Water and Toxic Enforcement Act of 1986,” Proposition 65 (or just Prop 65) requires businesses to provide warnings to Californians about significant exposures to chemicals that cause cancer, birth defects, or other reproductive harm. This includes chemicals in the products that California residents purchase and/or consume.
This hits wineries selling wine DTC in two ways. First, all wines that could be consumed in the state of California need to bear this warning on the package or label:
WARNING: Drinking distilled spirits, beer, coolers, wine and other alcoholic beverages may increase cancer risk, and, during pregnancy, can cause birth defects. For more information go to www.P65Warnings.ca.gov/alcohol.
Second, some of the containers and bottles used by wineries might contain small amounts of Bisphenol A (BPA). BPA is sometimes used in cans and bottle cap liners. If you ship wine in cans or bottles with bottle caps (instead of corks), and these have BPA in them, the following warning must appear:
WARNING: This product can expose you to chemicals including Bisphenol A (BPA), which are known to the State of California to cause birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov For a list of products go to www.prop65bpa.org.
The warning statements have to be placed on the outside or inside the box where the consumer can easily see and read the statements before they consume the product.
The internet promised to make commerce that much easier—and for the most part, it has. But now the regulatory environment is catching up, and there are many laws that might apply to your products or your website, laws of which you might not be aware.
We’ve done our best to highlight some of them here. If you want to discuss further what kinds of compliance challenges to anticipate, especially when selling online or shipping DTC, we here at Copper Peak would love to talk to you. Just reach out using our contact form.