It’s been a hot July, meaning stores are stocked with all the citrusy-session beers and cucumber lagers that breweries put out to slake the summer sun. As this seasonal selection gets drunk down, behind the scenes those breweries are diligently producing the spiced and pumpkin-ed beers that so reflect the fall and holiday seasons. The same is true for wineries and distilleries, as they take stock out of bond to begin filling bottles that will grace the shelves months from now.
It’s an inherent condition of the beverage alcohol industry that manufacturing is always ahead of consumption — we’re always making now what we’ll be drinking down the line. So it’s natural for a manufacturer to be thinking of December’s flavors in July.
That also means that compliance and regulatory concerns for December’s products should also be top of mind in July. Getting your labels and other registrations in order now can save you a lot of turmoil later.
Getting Ahead of COLA Requirements
Your labels are all designed and your product is getting ready to package–what now? A good first step is to get your Certificate of Label Approvals (COLAs). Any product that is going to be sold from one state into another requires a label review by the Trade and Tax Bureau (TTB). This is how the TTB makes sure the labels have all required information (and none that is prohibited).
In years past, this may have been the biggest hold up in the go-to-market process. However, thanks to increased federal funds that the TTB has received in recent years, allowing the bureau to hire additional COLA analysts, the time for receiving approval is now down to less than a week for all product types.
However, if your application is returned for revisions, that can add more weeks to the process. If you’re registering a product that needs formula approval, that adds an extra step even before you get to label approvals.
If you’re just updating a product, however, say by changing the vintage year on a bottle of wine, or updating the holiday scene on a Christmas ale, you may be able to avoid going to the TTB entirely. Over the last couple of years, the TTB has greatly increased the number of allowable revisions that a supplier can make to their labels that do not require a new or revised COLA. Make sure to check the list of allowable revisions, and see if you can’t cut out a few weeks processing time.
Next Step: State Registrations
It’s necessary to ensure you’re legally permitted to sell your products in each state that you want to sell in. At a very basic level, this entails getting licensed as an out-of-state supplier. Most states do require suppliers to get a license in order to sell to local distributors. A more complex and time consuming process is to register your products with the each state’s alcohol board.
A few states don’t have any kind of registration or notice requirement for selling products. But these states are definitely a minority. Most states want some kind of notification that your products will soon be appearing in their restaurants, bars, and liquor stores. Depending on which states you sell in, the complexity and cost can vary widely.
There are states that make the process very easy. These states just want a notice that your products are coming. They’ll accept a COLA as proof of compliance with all local rules, offer online registrations and may even approve your registrations as soon as you submit them.
Then there are states that make the process, well, less easy. They have their own rules for what must appear on a label, and what cannot. They review each label thoroughly, possibly adding weeks to your go-to-market timeframe. They may charge a heavy fee for each label or brand you register. It’s important to know that these burdens are out there so you can plan accordingly and your products make it to market on time.
Remember Your Distributors
It’s not a regulatory burden (at least not typically one), but developing your distribution strategy is vital to actually getting your products into the marketplace. Talk to your distributors and make sure they’re prepared to take on your seasonal products. Check that they have the capacity to take on additional labels and brands, and are ready to market your products effectively.
Having a solid contract, which clearly indicates your distributors’ responsibilities and obligations, is a critical initial step when bringing products to market. Now that you’re going to have more brands and labels for distribution, check in again with your distributors and make sure they’re aware of what they need to do to make sure your products are properly sold and distributed.
If you foresee having complications with your distributors, then get prepared for a the possibility of a complicated and messy process. Most states have “franchise” rules, which can severely restrict your ability to re-negotiate with distributors and resolve problems you’re having. Although franchise rules are more prevalent for beer products, wine and spirit suppliers may also come up against them in several states.
This is one reason why having a solid initial contract is so important. Changing your distribution relationships is a tenuous process, which should only be done carefully with guidance from legal counsel and a great deal of patience.
It’s always a good idea to stay on top of regulatory requirements in the beverage alcohol industry. Whether that has to do with regulatory issues or day-to-day business concerns, it pays to think ahead. So while your customers’ glasses are filled with refreshing IPAs, Rosés, and mojitos, it’s also time to be thinking about those heartening drinks they’ll be enjoying this winter.