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How Distilleries and Spirits Brand Owners Can Take Advantage of the New Tax Laws

In late 2017, Congress passed the Craft Beverage Modernization and Tax Reform Act (CBMTRA) as part of the Tax Cuts and Jobs Act of 2017 . The CBMTRA cut the Federal Excise Tax (FET) on distilled spirits from $13.50 a proof gallon to $2.70 a proof gallon for the first 100,000 proof gallons (approximately 52,631 9-liter cases of 80 proof spirits) removed from bond for consumption or sale in 2018 or 2019.

The rules for distilleries to qualify for the reduced FET are fairly straightforward. To take advantage of the reduced FET on their first 100,000 proof gallons removed from bond in 2018 and 2019, a distillery must distill or process those spirits. TTB’s definition of “process” is somewhat broad, but includes mixing, rectifying, and bottling. Therefore, a distillery who purchases whiskey or vodka in bulk, and bottles it at their facility, should be eligible to pay the lower FET rate, provided they have not removed more than 100,000 proof gallons in the current calendar year, and the current calendar year is either 2018 or 2019.

Read the rest of this article here .


I always sort of knew my wife would end up in Time Magazine, with Donald Trump and a bottle of whiskey. The Time article about Margie Lehrman, ACSA, whiskey — and even George Washington — is here .

The key part says:

What is bad news for consumers is worse news for distillers in the U.S. says Margie Lehrman, executive director of the American Craft Spirits Association — especially small and medium-sized businesses. “The EU is a very important market for craft producers who have really boomed in recent years, creating 20,000 new jobs,” she says. “The President should consider the impact not only on the companies but also on the communities that they’re working in. These distilleries have often brought life and even tourism to run-down parts of towns, that previously people just didn’t go to.”

Lehrman also questions the sincerity of Trump’s “America First” rhetoric. “It’s a shame whiskey has been caught up in this because if you go back to the roots of our country, with George Washington having a distillery at Mount Vernon, it’s really American heritage that’s being attacked here,” she says. “We urge the E.U. and the U.S. to work together to fix this and a stance that is mutually beneficial.”


I was fully prepared to do a whole bunch of client work on this quiet day after Easter, but then Jaycee showed me a new Industry Circular. It is 2018-2 , entitled Expansion of Allowable Changes to Approved Alcohol Beverage Labels . It adds some interesting new allowances, beyond the many set out here and here and here , etc. At first, the Circular looked pretty text-y and so it was hard to gauge the significance. To make it more visual, I prepared the above. It is easier to comprehend if you click on it , to expand it into its full glory (with all due apologies to Four Roses for monkeying with their back label). TTB seems to be on a roll, to expand the allowable revisions. It is quite a departure from the agency of a decade or two ago, not especially enamored of such changes. I wonder to what extent these allowable revisions are having a marked impact on the number of labels submitted.

To understand the image, the green lines show allowable revisions , and the red lines show revisions that would not be allowable without a new COLA . The lines go in order and roughly correspond to the order in the Circular:

    1. I made the label a bit bigger to accommodate the new text, and this line is just showing it’s ok to change the shape and size of an approved label, based on an earlier announcement ( item 3, here ).
    2. It’s ok to add, delete or swap among the TTB-approved instructional statements. This one is on the list so it’s ok.
    3. Similarly, it’s ok to add, delete or swap among the TTB-approved responsibility statements. This one is ok to add, on this back label, because it’s on the list.
    4. Once again, ok to add, delete or swap among the TTB-approved environmental statements.
    5. I have added a food pairing recommendation and it’s ok because it’s pretty in line with those allowed on the list.

  1. Even though this one is very similar to 1., it’s not ok because it’s not on the approved list.
  2. This one is quite similar to 2., but not ok because it’s not on the list.
  3. Similar to 3., but not on the list so not ok.
  4. Similar to 4., not not ok because not on the list.
  5. This one is a bit trickier. This indicates a change from a glass bottle to a bag-in-box. The Circular says:  “TTB wishes to caution industry members about using this allowable revision when changing between different types of containers, for example, when changing from a keg label to a bottle label, or from a bottle label to a bag-in-a-box label.  Labels for different types of containers usually look very different and may contain label information specific to the container type (e.g., instructions for serving from a bag-in-a-box container) or different graphics. … These restrictions make it unlikely that you will be able to use a label approved for one type of container for a different type of container without submitting the new label to TTB for approval.” Here, the front v. back probably changed, and it’s arguable that the spigot side would be the brand label, so it’s not an especially good idea to assume ARTAL alone would save anyone.

If you have any great ideas for how to expand the list still further, let us know.

Apothic Brew – Wine + Coffee for Real?

I most definitely did not see this one coming. I can imagine a lot of oddball combinations, but I would not have expected anyone to combine red wine and coffee.

The news of this product just came in a few minutes ago via Wine & Spirits Daily . Though the combination does not sound like the best, to me, I wouldn’t mind trying it, especially since the graphic design is so nice. The wine aspects are very much downplayed, on the main display panel. The UPC-side label makes it clear that the product is RED WINE INFUSED WITH COLD BREW COFFEE. E. & J. Gallo’s approval for this wine is here .

Gallo’s press release says the product is rolling out April 1st, and it’s no joke; Apothic’s winemaker said:

Last year during the long hours of harvest, I joined the cold brew craze myself. … Quickly, I realized that many of the characteristics in cold brew coffee and red wine naturally complement each other. This led us to experiment with a few blends, eventually leading to the seamless creation of Apothic Brew, which brings together red fruit notes and subtle mocha essences of cold brew.

Trumpy Libations

This is not quite the Trump Vodka of yore, but it is quite Trumpy nonetheless. Don’t you think so?

The whiskey on the left is America First Whiskey , approved for a DSP in San Marcos, California. I believe I see some sharks and monster trucks to go along with the tanks, jets, and deltoids. I found a discussion about the goals for this label, and it appears that the designer nailed it:  “We want people who love Donald Trump and the idea of “Make America Great Again” to look at this logo and say ‘Hell yes! That’s the whiskey I want!'” They also considered throwing in some fanny packs, and a T-Rex — but perhaps that would go too far. The bottler proclaimed:  “We’re [making a whiskey for Americans]  interested in Freedom, beards, rifles, explosions, The US Constitution, military/veterans, and reflecting on how badass Donald Trump is.”

The wine, on the right, is branded as Make America Grape Again , American Red Wine. It is bottled by Azari Winery of Petaluma, California.

And then there is Covfefe, with no less than six related label approvals:

  1. Artisanal Covfefe Stout
  2. Imperialist Pig Covfefe Stout
  3. Covfefe Merlot
  4. Covfefe Red
  5. Saugatuck Covfefe Ale
  6. ………………….and…………………………..the first one out of the gate is Surly Covfefe Beer (approved June 7, 2017, just a few days after the infamous tweet of May 31, 2017 )

In addition, there are no less than 38 trademark applications including the term COVFEFE.

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