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Archive for the ‘alcohol beverages generally’ Category

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 .

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More ARTAL

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.

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Perspective from a Pernod Lawyer

There is lots of focus on what the craft people are up to, and certainly there is much movement in that regard. But here we turn back to the big companies, and how they see things. Artisan Spirit magazine recently published my email interview with Tom Lalla. Tom was the head lawyer at Pernod for many years. An excerpt is below, and you can find the full article at the link.

Who were the legendary beverage lawyers before you, and what made them so?

The outstanding, legendary beverage lawyer of the past few generations was Abe Buchman. I worked with Abe and his firm for 10 years and then continued to work with him when I joined Pernod Ricard. Abe was a mentor and a role model for tireless devotion to the industry. Abe taught me the necessity of finding practical solutions for our clients’ issues.  Sometimes, as lawyers, we lose sight of being practical. We get hung up in the legal niceties of an issue. What Abe stressed was that we find a solution that was practical for the client and accomplished the client’s goals without running afoul of the legal requirements. Another legend was Bill Schreiber.  I had the pleasure of working with both Bill and Abe when the Buchman and Schreiber firms merged in 1986. Having both Abe and Bill together in the same office was a beverage alcohol lawyer’s dream come true. With so much shared knowledge about the law, the industry, and its players and so many exciting projects being worked on by them, it was a unique moment in my career.

Very few other people have a vantage point as good as Tom’s, after many decades building Pernod, and working at a top law firm specializing in alcohol beverage matters.

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Crafty, In a Good Way

I heard about this on the radio this morning, on the way in. Apparently it’s illegal to allow farms, or picking fruit for free, on New York City lands — so these guys put it on a barge. It struck me as pretty crafty. That is, crafty in a good way.

The rules say:

Public foraging and policy
According to the New York City Parks Department

No person shall deface, write upon, injure, sever, mutilate, kill or remove from the ground any trees under the jurisdiction of the Department without permission of the Commissioner.

No person shall deface, write upon, sever, mutilate, kill or remove from the ground any plants, flowers, shrubs or other vegetation under the jurisdiction of the Department without permission of the Commissioner.

Swale says:

Because of the common laws of New York City’s waterways, Swale is able to act as a test case as an edible public food forest. Swale is built atop a barge that was once used for hauling sand to construction sites before it was re-purposed for growing food.

We are always on the lookout for what is crafty, in a good way. A CBS story on this is here . I wonder how well an alcohol beverage operation would fare with a similar sleight of hand.

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Flavor Ingredient Data Sheets

A recent issue of the TTB Newsletter had some good information about Flavor Ingredient Data Sheets — often referred to as FIDSs. FIDSs can be very important, and so it is good to have this information readily available.

The FAQ explains that a FIDS is typically needed when “you’re using a compounded flavor that was purchased from a flavor manufacturer. … For this purpose, a compounded flavor includes any flavor, cloudifier, or blender that consists of multiple ingredients that are combined to produce a particular taste characteristic.” The same FAQ provides a blank, fillable FIDS form.

The FAQ emphasizes that you should get the FIDS from your flavor supplier; it is not a document that can or should normally be prepared by the producer of the end beverage. The FIDS form first burst onto the scene 20 or more years ago, and has not changed very much in the intervening years. It covers the basics like, is the flavor approved, safe, natural, and does it contain any colors or other ingredients with labeling or safety implications. In an attempt to go a bit beyond where TTB’s document already goes, here are a few common examples of where a FIDS is and is not indicated.

  • Cherry Liqueur (made with Natural Cherry Flavor)
    • Get a FIDS for the cherry flavor
  • Cherry Liqueur (made with cherries)
    • Don’t bother with the FIDS because, as above, the FIDS is intended to be used with compounded flavors
  • Cherry Liqueur (made with artificial flavor)
    • Trick question because liqueurs must contain at least one natural flavor and can’t contain any artificial flavors, so the FIDS is not going to help here
  • Straight Bourbon Whiskey
    • If you have a FIDS you are probably going in the wrong direction because this category should not have anything added
  • Malt Beverage with Natural Cherry Flavor
    • Needs a FIDS
  • Malt Beverage Brewed with Cherry Juice
    • Does not need a FIDS or a formula approval. Does not need a formula approval due to the tremendously important liberalizations at TTB Ruling 2015-1 and the accompanying list of exempt ingredients and processes. Does not need a FIDS because the juice is not compounded.
  • Grape Wine with Natural Cherry Flavor and a Cloudifier
    • You need a FIDS for the cherry flavor, and for the cloud. Even though the cloud is not really a flavor and probably does not need to be mentioned on the label, it does need a FIDS because it’s probably compounded (of various ingredients) like a flavor.

As soon as you start talking to your flavor company, it’s worth asking which flavors do and don’t already have a FIDS. That’s because if you need one, but the flavor company does not have one yet, it could take them quite a few weeks to get the TTB flavor approval needed as a foundation for the FIDS. You should not assume all flavors have a FIDS because not all flavors are made in the US, or intended for use in alcohol beverages, where the above rules most directly apply. As yet one more example, if you are making pickle-flavored potato chips in Parguay, you probably don’t need a FIDS or a TTB formula approval.

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