T C U D O R G P N I C R U O S W
ine, beer, and distilled spirit sourcing has become a modern and convenient trend within the supplier industry. The costs and time associated with a startfrom-scratch approach could prove cost prohibitive for many startup brands. Aside from constructing a business plan and securing financing through private or third party means, the alcohol licensing requirements for a new product can also be time consuming and costly. Our alcohol regulatory system mandates a dual licensing process for suppliers including both federal and state license and permit requirements as well as post-licensing compliance factors. Generally, new brand development begins not just with production and definition of the product formula itself, but also with product identity including labeling and obtaining label and license approvals from first the U.S Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (“TTB”) and subsequently any state into which the product will be imported, distributed and sold. For a novice brand owner or producer, this process could be fairly lengthy and riddled with regulatory obstacles from first impression. After overcoming federal and state licensing hurdles, many start-up producers can also be stalled by the added complexities of our three-tier system requirements, which govern the distribution and sale of alcoholic beverages within the United States. Without going too far into this regulatory scheme of federal and state rules that aim to prohibit tier entanglement of interests, suffice it to say that distributor relationships and compliant marketing WWW.ARTISANSPIRITMAG.COM
S T I R I P S G N I T F N A R E CR D O M A IN D L R O W
plans are priority items for a successful brand launch. Accordingly, even after navigating the licensing and permitting processes, start-up brands can lose momentum in developing a strategy for getting their product to market without the need for added price markups that ultimately make a product an unattractive option for consumers. While there are a variety of exemptions that may streamline this process for certain qualified producers and brand owners, please note that such exemptions vary by state and may restrict production capacity. An appealing option for many start-up producers and brand owners is pairing with sourcing manufacturers or established importers that can navigate the pre-market processes and assist with a brand launch. Many of these service providers offer to assist with regulatory requirements, business consulting, and product launches that can ease a new industry member into the market and help educate owners and operators on the business of producing and selling alcoholic beverages. These types of service providers, while often criticized for devaluing the “craft” categories, allow new brand owners with less start-up capital to focus on making the product and developing brand identity rather than the intricate regulatory complexities that can seem daunting at first. However, while third-party service
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providers offer an immediate aid, new brand owners and producers should consider the benefits of independently running and developing their business, whether that is accomplished at the inception of business development or later once a product has already been initially established and is market-ready. For example, anyone entering the ever-evolving alcohol industry should study the licensing process and the rules and regulations that will ultimately govern their business. This includes state and federal review of the types of pre-requisite licenses needed along with the many rules and regulations that govern label design and ultimately the distribution and sale of alcohol products. Like many other regulated industries, the “ignorance is bliss” concept won’t shield industry members from administrative, civil and/or criminal liability in many cases. Even those licensees and permittees that choose to pair with a third-party sourcing provider will continue to bear the ultimate burden of complying with the laws that govern the sale of their product along with their financial risk.
The magazine for craft distillers and their fans.