DTC Licenses vs. Vinoshipper: What's Best for Your Small Winery?

Direct-to-consumer sales can transform small wineries by bypassing middlemen and selling straight to customers. This business model increases profit margins in most cases, but navigating compliance regulations and operational demands may feel overwhelming at times. Having worked with countless wineries, I've seen how the choice between securing your own DTC licenses for wineries and using a platform like Vinoshipper can shape your business' growth. 

Having Balanced Business Group on your side helps you immensely when you want to break down these options to see which works best for your winery. As a seasoned expert in alcoholic beverage compliance with over a decade of experience in the industry, I can help you navigate the complex regulatory landscapes you face when determining small winery DTC sales options for your CPG brand.

In this article, we break down these options by examining the costs, compliance implications, and operational impacts of Vinoshipper vs. DTC licenses. 

Understanding DTC Licenses for Wineries

Selling wine directly to consumers has significant benefits, but you must adhere to state-specific compliance regulations. Obtaining DTC licenses lets your winery legally sell across state lines, giving you control over your operations and pricing while cutting out middlemen like wholesalers. However, I've found the process can prove time-intensive and complex, involving applications, renewals, and ongoing reporting requirements. Here's what you need to know before offering sales directly to the public.

DTC Licenses and Their Importance

DTC licenses let wineries bypass traditional distribution channels and sell directly to consumers. Each state has unique licensing requirements, and securing these licenses involves paying fees and submitting applications. Also, your company must follow direct-to-consumer wine shipping compliance regulations to the letter, including tax remittance and shipping restrictions.

Obtaining and Maintaining DTC Licenses

Applying for DTC licenses demands significant time and resources, but for many small wineries, it's worth it. First, I recommend researching state-specific requirements and preparing detailed paperwork. After obtaining your DTC license, you need to renew it periodically and complete ongoing compliance paperwork, including reporting sales, remitting state sales taxes, and ensuring adherence to various state laws.

Benefits of Owning DTC Licenses

For wineries planning significant DTC sales, the level of autonomy offered by owning your own DTC licenses provides substantial long-term benefits. For example, owning a DTC license gives you complete control over pricing, branding, and customer relationships. It also eliminates third-party fees, which often boosts your profit margins. 

What Is Vinoshipper?

When you're looking for ways of simplifying wine DTC licensing, Vinoshipper may be the compliance solution you need. This third-party platform simplifies DTC sales and shipping by handling licensing, tax remittance, and reporting on behalf of your small winery. Because Vinoshipper handles the heavy lifting in terms of compliance, you have more time to focus on growing your business — all without dealing with the complexities of state-by-state licensing.

How Vinoshipper Works

Vinoshipper acts as a licensed intermediary, allowing your winery to sell DTC without needing individual state licenses. The company manages tax remittance, compliance reporting, and shipping logistics. Because it handles things founders may not even consider, I've found this platform often makes it easier for smaller wineries to enter the DTC market without hefty upfront costs.

Services Vinoshipper Provides

In addition to licensing and compliance, Vinoshipper offers wineries tools for managing online sales, tracking shipments, and reporting taxes. The user-friendly platform soothes many operational headaches, freeing up your time for improved customer engagement and production.

Reasons to Use Vinoshipper

For small wineries with limited resources or founders uncertain about DTC market potential, Vinoshipper offers a cost-effective way to test the waters. It eliminates significant upfront licensing costs and simplifies operations, making it ideal for small-scale or newly launched wineries.

Costs of DTC Licenses vs. Vinoshipper

Understanding the financial implications of securing DTC licenses for wineries vs. using Vinoshipper helps you align your decision with your winery's budget and goals. Both options involve trade-offs in terms of costs, fees, and potential profits. Let's break down the costs so you can determine which option might work best for your winery.

Upfront and Ongoing DTC Licensing Costs

Securing DTC licenses involves application fees that can range from several hundred or several thousand dollars per state. Renewals and compliance reporting also add to the ongoing expenses for holding DTC licenses. These costs can add up quickly, especially if your winery plans on expanding across states. If you plan on going this route, I suggest getting familiar with state-by-state requirements.

Vinoshipper's Fee Structure

Rather than charging per license, Vinoshipper charges transaction-based fees — often 5-10% of sales plus credit card processing costs. While this model eliminates upfront licensing expenses, these fees may negatively affect profit margins as sales volume increases.

Impact on Sales Volume and Profit Margins

Wineries with high DTC sales volumes may find Vinoshipper's ongoing fees less attractive than one-time licensing costs. Conversely, smaller wineries or those testing out the DTC market often find Vinoshipper's fee structure more manageable and predictable than paying for licenses and compliance costs in every state they do DTC business.

Operational Considerations

The operational demands of managing Vinoshipper vs. DTC licenses play an essential role in determining the best fit for your winery. Consider the time, resources, and scalability of each option, and use my guidance below to make informed decisions that empower your winery's growth.

Operational Demands of In-House DTC Licenses

Owning DTC licenses requires significant investments and substantial efforts in terms of compliance. You must track state regulations, submit regular reports, and remit taxes owed in each state where you have a license. For small wineries with limited staff, these investments and efforts can strain resources and take focus away from production and sales.

Simplifying Wine DTC Licensing With Vinoshipper

Vinoshipper automates tax reporting, compliance filings, and shipping solutions, making it a hands-off solution for busy wineries. The platform ensures compliance with state laws where you sell your bottles, giving you peace of mind and more time to focus on growing your business.

Scaling With Flexible Small Winery DTC Sales Options

As your winery grows, owning your own licenses provides greater scalability and control. However, for smaller wineries or those expanding cautiously, Vinoshipper's streamlined approach lets you dip your toe into new markets without overcommitting valuable resources.

When Does It Make Sense to Switch?

Deciding when to transition from Vinoshipper to owning your own DTC licenses depends on your winery's growth trajectory and long-term goals. Consider these factors when you're determining what's best for your CPG brand and creating an annual accounting and finance checklist.

Signs Your Winery Has Outgrown Vinoshipper

If transaction fees start cutting into your profits or your DTC sales volume increases dramatically, owning your own licenses may be more cost-effective than using Vinoshipper. I've also found when you're expanding into multiple states or targeting new markets, it may signal a need for greater internal control and ownership of your licenses.

Preparing to Transition to DTC Licenses

Start the process by evaluating your current DTC sales and future goals. Research state licensing requirements, build a compliance plan, and ensure you have the resources to handle reporting and tax remittance. Partnering with the experts at BBG can make the process smoother and improve your bottom line by ensuring you have experienced pros like me on your side who understand the regulatory and business aspects of the wine industry.

Long-Term Benefits of Owning DTC Licenses

Owning your own DTC licenses provides autonomy to your winery, helping you increase your profit margins. It also lets you scale your operations without third-party constraints. For wineries with established DTC sales, this investment pays off in revenue growth and better control over your business.

Making the Right Choice for Your Winery

The decision between securing DTC licenses for wineries and using Vinoshipper hinges on your brand's goals, resources, and growth plans. Both options have their merits, and understanding their trade-offs helps you make the most strategic choice.

My previous roles as an alcohol beverage paralegal at Dickenson Peatman & Fogarty and a compliance specialist at Rodney Strong Vineyards give me a unique insight into the winery sector. At BBG, I use this deep expertise in licensing, reporting, and compliance issues to help clients grow at their own pace and achieve long-term success.

BBG specializes in guiding wineries like yours through DTC compliance and operational decisions. Whether you're exploring Vinoshipper or securing your own DTC licenses, BBG can help. Contact us today to discover how we can help you grow your winery from a small CPG business to a highly recognized brand by using DTC sales.

Author: Nicole Elizabeth 

Nicole Elizabeth is a seasoned expert in Alcoholic Beverage Compliance with over a decade of experience in the wine industry. As the Compliance Team Lead at BBG, she advises wineries on navigating complex regulatory landscapes. Nicole’s previous roles as an Alcohol Beverage Paralegal at Dickenson Peatman & Fogarty and Compliance Specialist at Rodney Strong Vineyards have given her deep expertise in licensing, reporting, and compliance issues. With a background in Wine Studies and Marketing from Sonoma State University, Nicole brings a comprehensive understanding of both the regulatory and business aspects of the wine industry.