Wine enthusiasts in Florida received cheers-worthy news in June when state regulators ruled out-of-state retailers can now ship wine to Sunshine State residents. The decision does not affect beer or spirits.

The Florida Department of Alcoholic Beverages and Tobacco decision removed one of the numerous restrictions facing online sales of beer, wine and spirits in the United States. But shipping alcoholic beverages over state lines—or sometimes even within a state’s border—is tricky. A morass of state and local laws makes it difficult for retailers, breweries, distilleries and wineries to sell directly to consumers on the web. Despite that complexity, ecommerce alcohol sales have risen roughly three times that of store-based sales, encouraging the launch of a number of direct-to-consumer (DTC) merchants.

Online alcohol sales are expected to reach $983.4 million in 2019, which would be a 9.3% increase from 2018, according to a September 2019 report from research firm IBISWorld Inc. That contrasts with an anticipated 2.3% growth rate in stores. Those projections are in line with broader trends. The five-year compound annual growth rate for online alcohol sales is 11.6%, while in-store purchases over the same period are expected to grow by 2.7%.

While online alcohol sales are rising, there’s still plenty of room for growth; it accounts for just 1.6% of the more than $60 billion market, IBISWorld reports. In part, that reflects the challenges that online retailers, as well as wineries, breweries and distilleries, have faced.

“Regulations have posed a key hurdle for the industry,” says Darshan Kalyani, a senior industry analyst at IBISWorld.

But as those regulations have started to recede in states such as Florida, startups have entered the space. Those merchants are finding themselves competing with established online retailers, such as Wine.com, Total Wine and NakedWine. Other competitors include app-based delivery services such as Instacart, Drizly and Thirstie, which facilitate online ordering from local retailers.

 

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