June 18, 2024

    Value of Winery Inventory Visibility Highlighted by California’s CRV Law Changes

    This year, California began including wine containers in the state’s redemption-based recycling program. In the long run, this figures to be a good thing – not just for the environment, but for wineries themselves, who stand to benefit from the increased manufacturing of high-quality, cost-effective containers made from recycled materials, especially glass.  

    But the change also comes with its share of headaches. Not only will wineries that sell in California be required to alter their labels by July 1 of 2025, but they have additional reporting obligations, adding to an already significant list of payments and regulations that every winery contends with.  

    So, what does it all mean for your winery?  

    Bottle Bill Obligations for Wineries 

     As a manufacturer, you’re responsible for paying a processing fee based on all sales in California. These fees help pay for the actual recycling process, and the amount depends on the container type. At the moment, that’s about half a cent per bottle for glass bottles and seven-tenths of a cent per container for bag-in-box.  

    If you conduct direct sales in the state, you’ll also need to pay redemption fees, minus 1.5% to help cover administrative costs. For glass and aluminum, redemption rates are 5 cents per container under 24 ounces and 10 cents for larger containers. Other types, like bag-in-box, have a redemption value of 25 cents each.  

    To add to the processing headaches, wineries can choose whether to pass this fee on to consumers or wholesale customers, which adds a level of complexity to order processing.  

    The good news for small and mid-sized wineries is that if you pay less than $15,000 per year in processing fees (which comes out to roughly 300,000 cases sold) or $75,000 in redemption fees, you can opt to report and pay annually. Larger wineries will have to do so on a more frequent basis.  

    Bottles used in tasting rooms are exempt from the program. 

    Why Inventory Management is Key 

    If your winery is still doing inventory manually, or even if you’re using basic ERP software, these new obligations promise to be a thorn in your side. You’ll need to keep track of state-specific sales by container type, and then determine what you need to pay based on the processing and redemption fees for each container sold. A spreadsheet on a server in a closet in your back office will be prone to human error and falling out of date quickly, while an out-of-the-box accounting program won’t be equipped to handle the particulars of the wine industry.  

    And getting it right is important, because if you underreport – or get frustrated and decide to blow it off altogether – you could be subject to a $10,000 fine, plus interest.  

    That’s why it’s a good idea to implement a Cloud-based, wine-specific inventory management solution that can help you keep track of all those intersecting valuables as accurately as possible. Assuming you go with annual CRV reporting, you’ll want your records to be clean, thorough, and easily traceable — after all, CRV probably won’t be top-of-mind most of the year. When your reporting deadline gets close enough, though, you’ll be tracking down spreadsheets and trying to fill in discrepancies, all while wishing you’d upgraded your inventory management process a long time ago. 

    Navigate CRV with Wine-Specific ERP 

    A wine-specific ERP like VinPoint, built in Microsoft Dynamics 365 Business Central, can help you stay on point when it comes to new laws and regulations like CRV. VinPoint automatically converts and tracks inventory in base UOM, bottles, and cases, making it easier to calculate your CRV payment. With Enavate’s CRV solution in conjunction wtih VinPoint, accruing these fees is seamless as well as passing the fee through to client segments as desired.  

    If you’re interested in reducing your compliance-related headaches, reach out to our expert team today to learn more. 

    Diane Fox

    Diane Fox is the Beverage Industry Program Leader within the Product Pod at Enavate. Her focus is to bring industry experience and technical leadership to our beverage offerings. Diane has actively worked in the Dynamics NAV/BC channel for more than 20 years and in the wine industry for 14 years. Outside of work, you’ll find her and her husband traveling in their fifth wheel and enjoying all of the amazing and varied regions the U.S. has to offer.

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