1. March 2010 ShipCompliant, Inc Where are we now? The Direct Shipping Saga Continues… NABCA Legal Symposium Arlington, VA March 10, 2010 Jason Eckenroth Founder & CEO

2. March 2010 ShipCompliant, Inc Goal Perspective of Wineries and Retailers  Growth of direct shipping since Granholm  Size of the direct shipping market  Ongoing challenges for direct shippers, consumers and regulators

3. March 2010 ShipCompliant, Inc About ShipCompliant Technology company that automates alcohol compliance Initial focus in wine direct shipping, now also wholesale compliance for wine & spirits suppliers  1,700 wine brands in 27 states utilize ShipCompliant  Completed 10 millionth compliance check in November Industry partnerships Power Wine Institute’s direct shipping rules portal Affinity programs with WineAmerica, Oregon Wine & Grape Growers, Washington Wine Institute FedEx and UPS

4. March 2010 ShipCompliant, Inc Producer Direct 2004 - 2010 2004200520062007200820092010 Reciprocal Limited Other 83% of US population

5. March 2010 ShipCompliant, Inc Retailer Direct 2004 - 2010 2004200520062007200820092010 Limited 9% of US population

6. March 2010 ShipCompliant, Inc Retailer/Importer vs. Winery GranholmGranholm

7. March 2010 ShipCompliant, Inc Challenge for Non-Producers Retailers losing ground Options for retailers, importers and virtual wineries  Legislative change  Build network to utilize existing 3tier distribution (wine.com)  Utilize a modified 3-tier network Challenge: Like most distribution options not explicitly governed by legislation, this is currently a fluid situation and open to interpretation

8. March 2010 ShipCompliant, Inc Challenge – Domestic Producers

9. March 2010 ShipCompliant, Inc Challenge – Domestic Producers > 700 state reports per supplier per year

10. March 2010 ShipCompliant, Inc Benefit of Technology Technology has enabled direct shippers to scale

11. March 2010 ShipCompliant, Inc Direct Shippers 6,223 Wineries

12. March 2010 ShipCompliant, Inc 6,223 Wineries, Who is Shipping?

13. March 2010 ShipCompliant, Inc % of State Wineries Participating in Consumer Direct

14. March 2010 ShipCompliant, Inc Main Obstacles to Licensing

15. March 2010 ShipCompliant, Inc NY has 8x more consumption Wineries Direct Shipping to These States NY has 8x more consumption

16. March 2010 ShipCompliant, Inc Licensing vs. Consumption Relative Ranking 22% of direct shippers licensed in North Dakota, 3rd worst market

17. March 2010 ShipCompliant, Inc Supply Chain Changed Past 40 Years 500 Wineries 5,000Wholesalers 6,000 Wineries 820 Wholesalers 19702006

18. March 2010 ShipCompliant, Inc Marketing Options Industry is creating new marketing options to meet consumer demand Examples:  Producer Direct Marketplace  Modified 3-tier Direct Shipping

19. March 2010 ShipCompliant, Inc State Regulatory Challenges Enforce statutes Generate much needed revenue Eliminate ambiguity eFiling

20. March 2010 ShipCompliant, Inc Summary of Challenges Retailers  Few legal options Producers  Cost and complexity impede direct channel  Lack of consolidated marketing State Agencies  Paperwork burden, tiny checks  Eliminate ambiguity

21. March 2010 ShipCompliant, Inc Shipcompliantblog.com

22. March 2010 ShipCompliant, Inc jason@shipcompliant.com 1 888 449 5285