DISTILLERY
CLUB CONSIDERATIONS L
iving in Northern California, it’s hard to throw a cork without hitting a winery, and most if not all of them have a member’s-only club offering perks like regular discounts on wine shipments. Recently, I’ve noticed that club model gaining traction in the spirits industry. This is likely due to distillery clubs being a great way to increase brand engagement, improve sales forecasting, and incentivize repeat visits. But as with most things in the distilling industry, great ideas have legal issues to consider before implementing. Boil it down and a distillery club is an agreement: The distillery provides goods or services to members, who in turn pay for them. Because the distillery club is a contract, the details matter. The club’s terms should be in writing and clearly outline everyone’s responsibilities. Whether you have a distillery club — or are thinking of starting one — here are things you should consider:
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GENERAL CONSIDERATIONS FOR YOUR DISTILLERY CLUB REVIEW YOUR STATE’S LAWS. States have authority to regulate alcohol manufacture and sale. It is certainly within a state’s power to bar discounts, or to prevent the creation of a distillery club altogether. MAKE SOME DECISIONS ABOUT THE PARAMETERS OF YOUR CLUB. Assuming no restrictions, consider the following: Are you going to have different levels of membership? When is payment due? How many bottles of spirits does the member receive and how often? Are the spirits selected by the distillery or the member? If the distillery, can the member make exchanges? Are you going to cap membership? What is the minimum term length? How often does the contract renew? How does the member cancel? How much notice must they give before canceling? If the member cancels early, are they obligated to pay back any savings? All these terms should be spelled out and signed by the member. OUTLINE MEMBERSHIP BENEFITS. This could include free or discounted tastings, bringing guests to free or discounted tastings (how many friends?), member-only events (how often and when?), and merchandise, additional bottles, tours or private event discounts. Remember, this is a contract. Just as the member is required to keep up their end of the bargain, so is the distillery.
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SHIPPING CONSIDERATIONS Unlike wineries, most states don’t allow Direct-to-Consumer (DtC) shipping for distilleries. At last count, there were seven states plus the District of Columbia that allow DtC shipping of spirits. Some states regulate brandy and other grape derived spirits differently than spirits generally, so there may be DtC options for those products. If you’re lucky enough to be in a state that permits DtC shipping and you intend to offer DtC, there are additional considerations. First, for out-of-state members, ensure both your state and the customer’s mailing address state allows distillery DtC shipping. Second, spell out what happens if the member moves to a state that does not allow DtC shipping. Finally, you will need to confirm that you have a delivery service that will carry alcohol for you and have the member pay the shipping insurance (or specify that it’s included in the membership).
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