Category: Legal

Practical Tips

Cyndi

How to Maintain Beverage Inventory Levels in Uncertain Times

man with clipboard counting bottles of wine

By Nick Fryer, Vice President of Marketing, Sheer Logistics

Managing beverage inventory has never been simple, but in today’s environment it’s harder than ever. Geopolitical tensions, climate-related disruptions, shifting consumer demand, and rising logistics costs have all made supply chain management a high-stakes balancing act for wine, spirits, and beverage brands.

  Take the March 2025 tariff scare, for example. When the U.S. threatened new duties on European goods, hundreds of Chianti orders were suddenly grounded in Tuscany. For importers, it was a stark reminder that sales performance alone doesn’t determine success. If products aren’t where they need to be, when they need to be, revenue is lost. Similarly, when President Trump announced a 25% tariff on Canadian whiskey, some Canadian provinces ordered the removal of American-made spirits from retail shelves, causing a 66% drop in sales between March and the end of April.

  So how can beverage producers minimize delays, manage risk, and keep shelves stocked without overcommitting inventory? Below, we’ll break down the most effective tools and strategies to build resilience—from smarter freight partnerships to just-in-time inventory systems that actually work.

How to Forecast Seasonal Spikes and Holiday Demand

  Many reports have appeared in the last year bemoaning customers who are drinking and spending less. Even as some note declines in wine sales, there are still plenty of spikes that businesses can take advantage of.

  Food and beverage consumption has major seasonal variations. So much so that entire studies have been done to determine the environmental and psychological factors at play. Most craft beverage operations don’t need in-depth academic research on the issue, though. What they need is clear and accurate predictive analytics.

  The best way to forecast seasonal spikes is through forecasting platforms. Usually powered by AI and advanced algorithms, this technology uses internal, historical sales data as well as external market, season, and weather trends to determine when certain products will be in demand. The value of this is that it not only improves sales approaches but it helps craft beverage operations avoid supply chain disruptions.

  Businesses can plan what to have in stock, where, and then bolster shipping operations accordingly. Forecasting demand makes it much easier to ensure that inventory and logistics are ready for demand spikes like holiday demand rather than overwhelmed by it. There’s a competitive advantage in this as well.  Businesses that can get ahead of seasonal trends the most from them.

Tips on Selecting Reliable Freight Partners for Your Craft Beverage Shipments

   As e-commerce customers demand increasingly quick and easy deliveries, that pressure invariably trickles back to the businesses targeting those customers. For that reason and many others, having a reliable freight partner is an invaluable part of any beverage manufacturing or distribution operation. Here’s what to look for:

Craft Beverage Experience:  Most wines, if not sold in cans or boxes, are sold in fragile glass bottles that need to be handled with care at every step. That’s why a logistics partner with some experience in this industry is so important.

Proper Compliance and Permits:  Transporting spirits across national and state borders comes with legal requirements that can cause lengthy delays if not complied with. This again is an area where experience helps, as it ensures that logistics teams have better knowledge of permit systems and are up to date on regulations.

Cold Chain Capabilities: The right freight partner needs to have cold chain capabilities that match the needs of your products to ensure end-to-end quality control. In-transit conditions should protect the integrity of your product, not degrade it.

References:  Track-records speak volumes. Hearing from others who have worked with a logistics team is a great way to get a sense of their reliability. It’s also worth checking public records on insurance claims histories, etc., for potential red flags.

Technology and Tracking: Many wineries and beverage makers are shipping their products for delivery over long distances. Freight partners that offer up-to-date technology and tracking can make these journeys far less stressful.

  Tracking ensures transparency and makes it easier to keep customers accurately informed on delivery times. It’s also important that tools like routing technology are in use to keep transit as efficient as possible.

Flexibility:  How would the team respond to a last minute delivery request due to demand spikes? What plans do they have in place to deal with delays? These questions can expose the flexibility and resilience of a freight partner and how well they can pivot in tight situations.

The Trick for Maintaining Product Integrity in Transit: Packaging and Temp Control

  Wine and many other craft beverages are adversely affected by temperature variations. That said, even when temp control has been maintained, damaged packaging can give the impression of a damaged product. Maintaining quality in transit is all about addressing both areas.

  IoT (Internet of Things)devices that track environmental factors can help keep wine packaging and its contents in perfect condition. The devices will automatically flag if temperature or humidity levels go out of range so that logistics teams can quickly intervene. This then prevents condensation from forming that could damage packaging. It also stops chemical reactions from occurring, such as accelerated fermentation, which could degrade product quality or even lead to bursting cans. This is a common problem with wine spritzers transported without proper temperature control.

  Packaging itself also impacts temperature control. In this instance, however, it’s not about whether wine is stored in a bottle or a can but how it’s packed in transit. Insulated boxes, for example, ensure that even if there’s a delay on the road, wine is still kept at a steady temperature.

How to Cut Inventory without Sacrificing Stock Availability

  Shipping delays are often discussed in terms of what goes wrong in transit. It’s the reason why GPS tracking and data-driven routing are so important. However, many delays actually begin in the warehouse with inventory issues.

  Overstocking can crowd storage areas and slow fulfillment, while understocking has its own issues. The last thing any craft beverage operator wants is demand coming in that their inventory levels can’t match. Here’s how to balance both:

Predictive Analytics:  This technology empowers businesses with insights that allow them to cut the inventory that’s unlikely to sell and instead only stock what’s needed. This makes deliveries much easier to manage as stock is easier to find. It also prevents stockouts and the costly shipping delays that come with them.

Inventory Tracking:  Another way to reduce inventory without threatening availability is through better tracking. Here again, IoT sensors can be useful. RFID tags are another tracking option. Either way, these devices can automatically track inventory levels in real time and, when paired with an IMS, help automate restocking to keep up with predicted demand. This prevents businesses from holding onto too much stock while still ensuring that they have enough to meet customer demand.

FINAL POUR:

Key Takeaways for Reliable Shipping & Inventory

  The trick to addressing shortages and delays in craft beverage operations comes down to inventory and shipping management. Here’s a quick overview of how businesses can make these areas more reliable:

•    Track inventory and use predictive analytics to forecast demand and prevent warehouses from being overloaded with stock or scrambling due to shortages. Data takes the guesswork out and puts the balance back.

•    Invest in great packaging and temperature control in order to protect the quality of your products throughout the logistics network.

•    Pick freight partners carefully based on their experience, use of technology, and the kind of flexibility they can offer.

  Nailing the above can help businesses prevent and handle delays. Most importantly, it builds systems that can thrive no matter the season or the directions this industry takes.

Author Bio:

  Nick Fryer is the Vice President Of Marketing, Sheer Logistics with over a decade of experience in the logistics industry, spanning marketing, public relations, sales enablement, M&A and more at 3PLs and 4PLs including AFN Logistics, GlobalTranz, and Sheer Logistics.

From the Sublime to the Ordinary

Cyndi

Art in a bottle and insurance considerations

photo showing rows and rows of barrels on racks in a winery

By Brad Berkman & Louis J. Terminello of Greenspoon Marder LLP

The wine-making experience is often sublime, requiring the best attributes of the artist. Sometimes, however, it is essential to call on the practical among us. In this instance, at least, I am referring to the insurance broker along with the versed attorney who can assist in advising on insurance policies that manage and limit the winemakers (“Suppliers”) risk (it’s worth noting that these recommendations are applicable to all producers of beverage alcohol as well as distributors). Of course, this article is written by an alcohol beverage attorney, so its main objective is to make this publication’s readers aware of recommended areas of coverage for production and distribution relationships and agreements, as well as in the context of the contract packaging relationship.

  In simple terms, business insurance is essential for managing risk and protecting a business against economic loss. Wine is obviously a consumable good, and risk exposure occurs from the production facility through the distribution chain and ultimately, to the consumers’ table. It is advisable that the producer ensure that it, and its partners down the distribution chain, have adequate insurance guarantees that are memorialized as obligations in the various agreements that the Supplier may enter.

General Contractual Provisions

  Insurance terms and their requirements can be confusing to those unfamiliar with them. As an exercise in clarification, below is a sample of insurance provisions that may appear in a Supplier/distributor agreement with terms that may be known to the reader, but little understood. First, read the following:

Supplier Insurance: Producer will maintain: (1) primary products liability coverage totaling at least $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate, on an occurrence and (2) commercial general liability insurance of not less than $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate. Producer will give Distributor at least 30 days’ advance written notice of cancellation, nonrenewal, or material change in the terms of the liability policy. All policies shall name Distributor as an additional insured party.

Distributor Insurance: Distributor shall maintain Commercial General Liability Insurance and Product Liability Insurance in such an amount as is commercially reasonable but not less than the coverage amounts stated in Paragraph above. Within ten days of the effective date of this Agreement, Distributor will provide to Brand Owner an original certificate of insurance evidencing such insurance and these terms and thereafter will provide Brand Owner with each certificate of renewal, within ten days of the effective date of renewal.

What Stands Out?  

  Obviously, the reader will notice that the insurance provisions are reciprocal and that both the Supplier and distributor have insurance obligations. Additionally, both parties are named as additionally insured on the other party’s insurance policy. The additionally insured party is not the policyholder but is added to the policy, and the policy’s protections are extended to the additionally insured, covering them for the risks of the policyholders’ activities. In our example, additional insurance provides the distributor with protection against a Supplier risk event, and the producer is protected against a risk event associated with the distributor. This begs the question, what are the party’s insurance policies covering in the above clauses?

For the Producer-Product Liability Coverage

  Wine producers and Suppliers should have product liability insurance coverage as identified in the contractual provision. This type of coverage covers consumers’ claims against the producer stemming from damage caused by the alcoholic beverage. Such damages may include those resulting from a manufacturing defect during the production process. Ideally, the product will always come off the bottling line fit for human consumption, but sometimes contaminants or other substances may be present and consumed by the end user, which causes injury. Product liability insurance will cover the economic consequences of such incidents. Those entities in the chain of distribution, such as wine distributors, should also consider obtaining product liability insurance to guard against economic loss resulting from the distribution of beverages that may be defective.

  Many insurance policies, including those covering consumables like wine and alcohol beverage, have policy payout limitations. Phrased another way, your insurance provider will only pay up to a maximum coverage amount per occurrence or in the aggregate. Per-occurrence limit is the amount the insurance company will pay for a single claim or incident. The aggregate is the total amount the insurer will pay for all claims covered by the policy for its term.

  It is wise for the Supplier and distributor to include these policy limitations in their agreement to ensure adequate coverage in the event of a claim. Further, it is important to consult with an insurance professional to be sure that the policy limitations provide adequate coverage and protection based on the policyholder’s economic exposure.

General Commercial Liability Insurance

  General commercial liability is also called for in the above reciprocal clauses. As an industry standard, General commercial liability insurance protects against economic loss from claims that the Supplier or distributor caused injury to another person or property. Common areas of coverage include bodily injury, medical expenses, or property damage caused by the wineries or distributors business operations. As an example, this type of coverage may cover damage caused by a distributor’s vehicle to a retailer’s property when delivering the Supplier’s product. As with product liability insurance, adequate amounts should be acquired per occurrence and in the aggregate based upon risk exposure. Again, speaking with an insurance professional is essential for determining sufficient coverage amounts based upon the economic risk exposure to the policyholder.

Additional Areas of Coverage for Consideration

  There are many types of risk coverage available to wineries and other alcohol beverage industry members. Other coverage areas to explore include:

•     Liquor liability insurance: Covers claims for incidents as a result of the consumption of alcohol and for actions brought by claimants under dram shop laws (dram shop laws concern a business’s liability for the service and over-consumption of alcohol by consumers on their premises). This is especially important for Suppliers that have tasting rooms on their premises.

•    Recall insurance: Covering economic loss for the recall of defective alcohol beverage products that made its way into the marketplace.

•    Crop Insurance (for wineries in particular): Protects against losses to the crops from damages due to weather and other factors.

•    Business interruption insurance: Covers losses resulting from an unplanned interruption or temporary stoppage in business due to unforeseen circumstances.

  Risk management and the policy types mentioned here, and the terms defined, are meant to introduce and bring clarity to an often thought of as mundane area of business operations. However, it is extremely important that stakeholders in the beverage alcohol industry, in whatever form they take, bring serious consideration to this matter. Inadequate insurance coverage amounts or the wrong policy coverage could lead to catastrophic consequences for those who labor so hard to create and distribute art in a bottle. The reader should take care to consult with well-versed insurance professionals and attorneys to ensure adequate risk management.

pretty very purple wine grapes

Sustainable and Organic Wines-Alternatives, Opportunities and Compliance

Cyndi

By: Louis J. Terminello and Brad Berkman, Greenspoon Marder LLP

It’s common knowledge that consumption of alcoholic beverages, in general, has been on the downslope. Wine sales in particular, as reported by SipSource, dropped by approximately 6% from 2023 to 2024. Gen Z is at the forefront of this trend and is choosing to consume alcoholic beverages that are perceived as being healthier alternatives to the usual fare. With that in mind, it might be useful to introduce a few wine-making certifications that are regarded as eco-conscious or “green” and carry the perception of being a healthier and sustainable alternative to traditional wine. In addition, this article will look at federal labeling requirements that must be considered when seeking TTB label approval for these wines, especially those carrying the reasonable consumer-alluring USDA Certified Organic seal.

Sustainable Practices

  Sustainable winemaking is arguably a broadly defined term that is applied to the winemaking process that minimizes or totally avoids the use of chemicals, especially pesticides. The practice of this sort of winemaking extends significantly beyond that limiting definition and can include other important impetuses such as environmental and social concerns.  Issues of responsible irrigation, water usage, energy consumption, and reducing the production of greenhouse gases can be included. For some certifications, safe and fair labor practices can fall within the rubric of sustainable practices and become an important part of the certification process.

  Communicating a winemaker’s efforts and commitment to sustainability is, at least on the wine label, conveyed by the affixing of the certifying organization’s seal, of which there are many.

  Regardless, the concept of sustainability and “green” practices go well beyond the mere affixing of a seal. The certifying organizations and those in the industry who follow their guidelines take the matter of sustainable practice very seriously. Moreover, a significant number of consumers consider sustainability when deciding on a wine purchase. The bottom line is sustainable practices, and their commensurately labeled wine may be good for the bottom line, as well as the environment.

  What follows are examples of a few sustainable certifying organizations, that, after meeting the organization’s requirements, are permitted to affix their seal to the label.

SIP Certified

  SIP Certified, based in Atascadero California, has been promoting sustainable winegrowing since 2008. SIP claims that the organization has certified 43,000 vineyard acres in California, Oregon, and Michigan, six wineries, and more than 63 million bottles of wine have been SIP Certified (as stated on their website). SIP is a membership organization whose members uphold values such as social responsibility, water management, safe pest management and energy efficiency among other values. According to the organization, it sets strict “non-negotiable requirements that measure environmental, social, and community impact of its members while assuring consumers that the product in their bottle was made with conscience and care.” There is a rigorous application and inspection process that if passed and adhered to, successful applicants may emblazon their products with the SIP seal.

For more informaion contact…

Whitney Brownie

Certification Coordinator

Email: whitney@vineyardteam.org

Phone: 805.466.2288

Beth Vukmanic

Executive Director

beth@sipcertified.org

Phone: 805.466.2288

Sustainability in Practice (SIP) Certified

5915 El Camino Real

Atascadero, CA 93422

The Demeter Association

  Demeter is another well-regarded sustainable practice association that focuses on certifying biodynamic wines. Sustainable and organic practices are part and parcel of biodynamics, but the concept of biodynamics goes beyond organic practices. Demeter and biodynamic producers take a “holistic approach to the wine-making process and treat the vineyard as a living organism.” Demeter adherents may incorporate such unique aspects as the lunar cycle in the growing and processing of grapes as well as certain soil preparations using unique ingredients not normally associated with traditional vineyard practices. Demeter is a worldwide organization and there are only a few wineries in the US that carry the seal.

For more information contact…

Demeter Association, Inc.

317 Church Street

Phoenixville, PA 19460

Phone: (541) 929-7148

Email: info@Demeter-USA.org

Certification Staff:

Evrett Lunquist – Director of Certification – Ext. 105 Office Hours 8-5 CST Mon-Friday

Sarah Rhynalds – Certification Manager – Ext. 209

FAQs: Wine Industry Intellectual Property Protection

Cyndi
ntellectual property word cloud on digital tablet with a cup of coffee

For wineries, managing intellectual property (IP) is crucial to maintaining brand identity and protecting creative investments. While general IP principles apply across many sectors, wineries face unique challenges and opportunities.

  We have spoken to several wine industry leaders and compiled their most frequently asked questions regarding IP protection. This article provides answers regarding core IP types and effective management strategies that wineries should adopt.

What is intellectual property and why is intellectual property protection important for the success of my wine industry business?

  Intellectual property refers to valuable non-tangible assets. Even though these assets are non-tangible, they can be protected. There are several types of intellectual property:

•    Trademarks identify source through the use of symbols, names, or designs and distinguish the company’s products from those of competitors. For wineries, trademarks may include the name of the vineyard, logo designs, and even unique label features or bottle shapes. Properly registering trademarks is critical to enforce exclusive rights and prevent misuse by others. A trademarked name or logo allows consumers to associate the product with a specific winery’s quality and reputation, building loyalty over time.  Trademark protection keeps others from using similar marks that would cause consumer confusion.

•    Copyrights cover creative works such as website content, photography, and advertising material. Any unique content produced for the winery—from label artwork to promotional videos—can be protected by copyright. This protection is automatic upon creation, but formal registration strengthens the winery’s legal standing, making it easier to defend against infringement. Copyright protects against creative expression being copied by others without permission.

•    Patents protect useful inventions and may apply to novel winemaking processes or technologies. Although less common in winemaking, patents could cover novel fermentation techniques or vineyard management technologies. Patents provide exclusivity, ensuring the winery can control the use of its innovative methods.

•    Trade Secrets include confidential information such as proprietary blends, aging processes, and customer data. For trade secrets to retain their protected status, wineries must take reasonable steps to keep this information confidential, such as using non-disclosure agreements (NDAs) and limiting access to sensitive information.

What are some steps I can take to protect my brand and trademarks?

  A winery’s brand is often its most valuable asset, making trademark management a priority. A lot of effort goes into making high-quality wines and curating tasting experiences that customers will remember. When a consumer is facing a wall of wine at the wine store or an extensive wine list at a restaurant, you want these consumers to remember your wine and not confuse you with a competitor that may be piggy-backing on the reputation you have taken the time, effort, and expense to build. Here are best practices for wineries to consider:

•    Choose Distinctive and Protectable Names: Wineries should select unique, memorable, and legally protectable names. Trademarks fall into categories ranging from “fanciful” (completely made-up words) to “generic.” The less the mark naturally conveys about the product, the more protectable it is. Names like “Yellowtail” for wine are highly protectable because they bear no direct relation to aspects or qualities of the product.

•    Consider Trade Dress: Trade dress is a form of trademark protection and covers the distinctive visual appearance of products or packaging, such as wine labels and bottle designs. To be protectable, the trade dress must be unique to the winery and have come to be recognized by consumers through regular use. Distinctive bottle shapes or label layouts can qualify for trade dress protection, provided they are original and have developed a reputation in the market.

•    Monitor and Enforce Rights: Trademark protection requires ongoing vigilance. Wineries should regularly check for unauthorized use of their trademarks or similar marks that could confuse consumers. Enforcing rights may involve issuing cease-and-desist letters or, in severe cases, taking legal action.

•    Geographical Indications (GI), including AVAs: American Viticultural Areas (AVAs) and other geographical indicators are specific to wine-producing regions. To label a wine as originating from a GI, the grapes must come from that area. Napa Valley, for example, is a protected AVA, and only wines produced within this region can use the name legally.  Wine companies must be careful to confirm they are using any geographical indications properly.

Do I need to register my trademarks?

No, but there are advantages. These include:

•    Constructive Nationwide Use: If a business does not register a trademark, then it can only enforce the trademark in the geographic areas in which it actively uses the trademark. Registering a trademark grants the owner nationwide rights regardless of whether it uses its trademark nationally, though actual enforcement must wait for use in the geographic area where the infringement is taking place.

•    Presumption of Validity of Rights: Because registering a trademark involves an application and vetting process, after a registration is granted, there is a presumption that the owner’s rights to the trademark is valid. Although this presumption can be rebutted in litigation, it makes things more difficult for the opposing party. It can also make cease and desist letters more persuasive because the trademark owner is able to provide concrete proof of its trademark. 

•    Use of the ® Symbol: Although a business can use the ™ symbol without registering its trademark, the use of the ® symbol is reserved for trademark owners who have registered their trademark. The use of this symbol indicates to potential infringers that you have a trademark registration and can be a potential deterrent.

Does my U.S. registration protect me throughout the world?

  No, trademarks must be registered in each country in which you want to protect the mark. But there are some shortcuts. As an example, one registration covers the whole European Union. In certain cases, it is also possible to use a registration in one country as the basis for protection in a different country. The rules are different depending on the circumstances and the country.

What are some steps I can take to protect copyrightable material?

  Marketing content for wineries often includes unique visual and written material that benefits from copyright protection. Having clarity about who owns the copyright to different materials and how other can use this material can have substantial benefits for wine industry businesses.  For example, it can be the difference between being able to use a label for decades and profit over the built goodwill associated with it or having to pay to have a different label designed for new products because the designer, not the company, owned the rights, and then having to start building goodwill almost from scratch. It can also help wineries capitalize on the social media content of consumers, which is often free and very persuasive to other consumers. Here are several ways to manage these assets effectively:

•    Get Copyright Assignments From Contractors: Many wineries hire freelancers to create content, including label designs and websites. Without a copyright assignment, freelancers retain ownership of the work they produce. To avoid complications, wineries should require a written assignment transferring copyright ownership to the winery.

•    Register Copyrighted Works: While copyright protection is automatic, formal registration of key assets like photos, website content, and promotional videos provides a clear legal advantage in case of infringement. Registration enables wineries to seek statutory damages and attorney fees if they need to enforce their rights.

•    Get Authorization for Use of User-Generated Content: Many wineries encourage social media sharing by customers. However, they should ensure they have permission to use these posts in marketing campaigns by including terms of use that give the winery a license to repurpose customer photos or comments.

What are some steps I can take to protect my trade secrets?

  Trade secrets cover any confidential business information that gives a winery a competitive edge. This can include market research, proprietary viticultural and vinification research and practices, profit and loss information, and customers lists, in addition to many other things. To safeguard these valuable assets, wineries should:

•   Implement NDAs and Confidentiality Agreements:  Employees, contractors, and business partners who access sensitive information should sign confidentiality agreements. These legal tools restrict information sharing and set expectations about handling proprietary knowledge, from recipes to customer lists.

•   Limit Access to Sensitive Information: Only essential personnel should access trade secrets. Implementing access controls, such as password-protected systems or secure filing cabinets, can help maintain confidentiality.

•   Educate Staff on Trade Secret Policies: Employees must understand the importance of confidentiality and the specific measures implemented to protect trade secrets. This can be accomplished through regular training sessions that reinforce these practices.

  The wine industry often revolves around physical assets: acres of vineyards, tons of grapes, wine processing space, cases of wine, storage space. But the intellectual property that informs the physical products and often increase their quality and profit margins is also incredibly valuable.  Investing and protecting these intellectual property assets is crucial to long-term success in today’s wine industry.

About the Authors

  Nate A. Garhart is special counsel and MaryJo Lopez-Oneal is an associate in Farella Braun + Martel’s San Francisco office.

Why U.S. Wine Labels Leave Consumers in the Dark

Cyndi
three black wine bottles with blank lables

By Greg Martellotto

As an Italian Wine Ambassador and a winemaker, I’ve had the privilege of immersing myself in the world of wine from both sides of the glass. While the complexities of terroir and the delicate art of winemaking have captivated me for years, a growing concern has emerged: the glaring lack of transparency in the U.S. wine industry. It’s a subject that not only perplexes but frustrates me as both a producer and consumer of wine.

While Americans have become increasingly conscious of the ingredients in their food and beverages, wine—a product enjoyed by millions across the country—remains shrouded in mystery. Unlike most other consumables, wine in the United States escapes the rigorous scrutiny of nutrition and ingredient labeling. This lack of transparency is not only puzzling but also problematic in an age where consumers demand to know what they’re putting into their bodies. With every other product, from packaged snacks to soft drinks, offering detailed breakdowns of ingredients and nutrition facts, the wine industry stands out as a notable exception. It’s time we ask: why is wine treated differently?

The Opaque Reality of U.S. Wine Labels

To truly understand the issue, we need to consider the labeling regulations—or lack thereof—that govern wine in the United States. Current U.S. regulations primarily focus on alcohol content, producer information, and origin, leaving out crucial details such as ingredients, additives, and nutritional information. This is in stark contrast to the global trend toward transparency, particularly in Europe, where wine labels often provide comprehensive nutritional and ingredient information.

The European Union, for example, has recently moved toward implementing mandatory ingredient and calorie labeling for wine. Consumers in the EU can expect to see labels indicating the use of preservatives, stabilizers, added sugars, and other additives. This trend is not just limited to wine but applies across the food and beverage sector, reflecting a broader consumer demand for transparency and informed choice.

In the U.S., however, wine labeling remains woefully outdated. Consumers are often unaware of the dozens of additives that could be present in their wine—ranging from sulfur dioxide, which is used as a preservative, to Mega Purple, a concentrated grape juice used to enhance color and sweetness. These additives are legal and commonly used in winemaking, yet most consumers have no idea they exist, let alone how they might affect their health.

Hidden Ingredients in Plain Sight

Wine is a natural product at its core: grapes are harvested, crushed, fermented, and aged to create the drink we love. But winemaking, especially at the industrial scale, can involve a variety of processes and additives that are far removed from the idyllic image of grapes ripening under the sun. Additives such as fining agents, preservatives, flavor enhancers, and colorants can all be used to achieve a desired taste, texture, or appearance. In some cases, additional sugar is added to adjust the sweetness of a wine, while acids might be used to alter its pH level.

One of the most glaring omissions on U.S. wine labels is the amount of sugar in the wine. While consumers are increasingly aware of sugar content in other beverages, many wines, including those marketed as “dry,” can contain significant amounts of residual and added sugars. These sugars can contribute to the flavor profile, but for consumers trying to watch their sugar intake, this lack of information can be problematic. When consumers think they are choosing a dry wine with little to no sugar, they may be unwittingly consuming sugar that has been added to balance flavors or boost sweetness.

This issue of hidden sugars is compounded by the lack of clarity about other additives. Many consumers would likely be surprised to learn that certain mass-produced wines contain additives like artificial coloring agents, flavor enhancers, and clarifying agents like egg whites or gelatin. Some of these additives can trigger allergies or intolerances, yet without ingredient labeling, consumers are left in the dark.

I had sent Napa Cabernet for independent testing, marketed as “dry,” contained 10g/L residual sugar–information the winery deemed proprietary. This raises transparency concerns, especially with “American wine” requiring just 75% U.S. grapes and Napa Cabernet needing only 75% Cabernet Sauvignon. Grocery stores and large producers exploit these loose regulations, leaving consumers in the dark about the contents of their bottles.

The Case for Transparency

Why does this lack of transparency persist in the U.S. wine industry? The answer is multi-faceted, involving a combination of industry resistance, historical precedent, and regulatory inertia. The wine industry has long argued that listing ingredients on labels would complicate the winemaking process and confuse consumers. There is also a concern that ingredient labeling could expose the use of additives, which might deter consumers who prefer a more natural product. However, these arguments overlook a growing trend: consumers want transparency and are capable of understanding it.

The U.S. Food and Drug Administration (FDA) requires nutritional labeling for almost all packaged food and drink products, yet wine remains under the jurisdiction of the Alcohol and Tobacco Tax and Trade Bureau (TTB), which has less stringent requirements. This bifurcation in regulatory oversight is a key reason why wine labeling standards have lagged behind other industries. While the TTB enforces rules related to alcohol content and certain health warnings, it does not mandate the same level of ingredient disclosure required for non-alcoholic beverages.

The European Union’s recent push for ingredient and calorie labeling offers a compelling case study. There, winemakers are embracing the move toward transparency, recognizing that it can build trust with consumers. Far from confusing the marketplace, these new labels are empowering consumers to make informed decisions based on their dietary needs and preferences. For producers who prioritize quality and sustainability, these labels offer an opportunity to differentiate their products in a crowded market.

Consumers are increasingly drawn to wines that are organic, biodynamic, or made with minimal intervention, and transparent labeling can help highlight these qualities.

The Benefits of Transparency

As a winemaker, I understand the importance of building trust with my customers. For me, transparency is not just a regulatory obligation; it’s a philosophy. When I craft my wines, I strive to use the highest quality grapes and minimal intervention. I believe consumers deserve to know exactly what goes into their bottle. This is why I’ve always been open about my practices, even without a legal requirement to do so.

Transparency in labeling could offer a range of benefits, both for consumers and the industry at large. For consumers, it would allow for informed decision-making. People with dietary restrictions, allergies, or simply a desire to consume fewer additives could choose wines that align with their preferences.

Nutritional information, particularly calorie counts and sugar content, would also help consumers make more informed choices about their alcohol consumption. In an age where consumers can instantly access information about virtually anything via their smartphones, the lack of detailed labeling on wine bottles feels increasingly out of step with the times. For the wine industry, transparency could foster innovation and differentiation. Winemakers who prioritize quality, sustainability, and minimal intervention would have the opportunity to showcase their products to a discerning consumer base. As consumers become more aware of the contents of their wine, they will naturally gravitate towards brands that align with their values. This could encourage more producers to adopt sustainable practices and reduce the use of unnecessary additives.

Moreover, transparency could help dispel some of the misconceptions about wine. For years, the wine industry has been hampered by conflicting studies about the health impacts of wine consumption. By providing clear, consistent information about what is in the bottle, the industry could contribute to a more nuanced understanding of wine’s role in a healthy diet. Consumers who are concerned about sugar, additives, or alcohol content would have the information they need to make choices that align with their health goals.

The Road Ahead

Implementing mandatory nutrition and ingredient labeling for wine in the U.S. will undoubtedly require adjustments from the industry. Producers will need to invest in new labeling systems and, in some cases, reformulate their wines to reduce the use of additives. However, the potential benefits far outweigh the challenges. By embracing transparency, the wine industry can build trust with consumers, foster innovation, and elevate the entire sector.

The time has come for the U.S. to catch up with the rest of the world. Mandatory nutrition and ingredient labeling for wine is not just a matter of consumer rights; it’s also an opportunity to elevate the industry. Let’s uncork transparency and usher in a new era of consumer trust in the U.S. wine industry.

Greg Martellotto is a winemaker, Italian Wine Ambassador, and the founder of Big Hammer Wines.

bottles of wine in a bar counter

Timely Reporting Changes to Operations is Essential

Cyndi
a line of different bottles of wine behind a counter

By: Brad Berkman and Louis Terminello, Greenspoon Marder

As likely every reader of this article knows, some type of federal and state permit(s) is required to engage in any aspect of the alcohol beverage industry. Suppliers of beverage alcohol, also known by the term of art, Industry Members, are required to hold either production permits and/or importer/wholesaler permits. For the purpose of this article and this publication, wineries, brand owners and distributors should be considered Industry Members, however, the discussion which follows is certainly applicable to virtually all licensees and/or permittees.

  The Alcohol Tax and Trade Bureau or TTB, part of the US Treasury Department is tasked with the administration and issuance of federal production permits (wineries, distilleries, breweries and importers), including wholesaler permits, while state alcohol regulatory agencies are tasked with the issuance of the state(s) level license equivalents, among other types of licensees (including vendors).

  Initial licensure can be a time-consuming process. Regulatory agencies, among other things, will look at certain operational aspects of the soon-to-be licensee/permittee as well as the qualifications and issues of impairment for the individual applicant. Many of the readers are likely familiar with the processes and procedures for initial licensure. What many Industry Members are unaware of, however, are the changes after initial licensure qualification that should or must be reported to the regulatory agencies. This article will focus on some of the important reporting requirements that affect licensure after initial qualification and related concerns.

Issues of Timing:  As a quick note, those changes which require reporting should be done so in a timely manner. Failure to report, whether at the state or federal level will be highly problematic.

As a general rule, at the Federal level, changes to the legally licensed entity must be reported within thirty (30) days from the date of change. All federally licensed Industry Members should take note of that thirty (30) day rule. If changes are not reported within that timeframe, federal licensure becomes null and void by operation of law. Continued operation in this instance is problematic and exposes the once licensed entity to administrative action and financial penalty if unlicensed operations continue.

Perhaps the most important area that required reporting, whether it be at the federal or state(s) level, is any change of ownership issues. Changes usually take two forms which are generally referred to as a change in control or change in proprietorship.

Change in Control:  As TTB defines this “a change in actual or legal control occurs when there are changes in stock ownership, LLC membership, or possibly major changes in the corporate officers or directors of a corporation.  Here, the legal entity which operated the business in the past continues to operate the business.  In other words, the same legal entity remains in existence and continues to operate the business in question. Only the shareholders or percentage of ownership amongst shareholders shifts amongst the existing shareholders. All changes of control must be reported to TTB.

  For wineries, TTB and Federal regulations require an amended application to Establish and Operate Winery be submitted within 30 days of the change of control, as mentioned above.

  As for Basic Permits, these are not transferable by reason of a change in control of the company. The Basic Permit will automatically terminate unless, within 30 days of the change, an application for a new Basic Permit is filed with TTB.  If an application is filed within the required 30-day period, the outstanding Basic Permit will remain in effect until TTB takes final action on the new application.

Change in Proprietorship:  A change in proprietorship occurs when there is a change in the entity that owns and operates the business.  It is synonymous with a change in ownership, or it may be due to a change of entity type. The entity which owned the business no longer operates or owns the operations at the designated location.

   In the change of proprietorship scenario, the new owner may continue to operate, if, within 30 days of the change, an application is filed for a new Basic Permit.  The outstanding Basic Permit will remain in effect until such time as TTB takes action and issues a new permit.

  If a change in proprietorship occurs prior to the filing and approval of the new winery registration or if the Basic Permit application is not filed within the required 30-day period, all regulated operations must stop until approval is granted by TTB.

  Clearly, from an operational perspective and at the federal level, untimely reporting will have a deleterious effect on operations. Advanced planning is essential.

State Licensing:  As with federal licensure, changes in control and/or changes in proprietorship must be reported to state regulatory authorities as well. Using the State of Florida as an example, where this writer resides, as a general rule, a change of proprietorship requires a new application process with original qualifications being made by the disclosed parties. The state will issue a new license to the new operator under this scenario.

  Changes in control, even of a de minimis nature must be reported on a proscribed form within a proscribed timeframe with each new directly interested party qualifying. Once again, using Florida as an example for illustration purposes, reports in a change of control must be submitted within 10 days from the date of change. The original underlying license remains in effect with the interested parties disclosed on the existing license.

  It is very important to note that state(s) reporting requirements vary significantly by state. Some states require reporting prior to the occurrence of any change, while others may do so after the change in control or proprietorship. A careful plan must be developed in advance of any change (for example new investors coming on board or in particular in the merger or acquisition setting). This general caveat applies to Industry Members and Vendors (retailers) alike. Further, some states reporting requirements after initial qualification are quite detailed (some might say, onerous). As a rule of thumb, plan, plan, plan in advance.

Other Considerations:  Although change in control and change of proprietorships are the two most common scenarios that require timely reporting, there are other areas for Industry Members, and in particular wineries, that must be reported. Though not wholly exhaustive, below is a list of operational changes, taken from TTB, that require reporting. The licensee should make specific inquiries with each state(s) regulatory agency for their reporting requirements.

•             Change in Premise Location

•             Change in Mailing Address

•             Add / Remove Signing Authority

•             Add / Remove Power of Attorney

•             Change in Business Name

•             Add/ Remove Variance or Alternate Method

•             Add / Remove Change in Alternation of Wine Premises

•             Add/Remove Wine Alternation of Proprietor

•             Add/Remove Trade Name

•             Add/Remove Non-Contiguous Extension of Wine Premises

•             Bond- Superseding/Strengthening/Adding/Terminating

•             Change in Bonded Wine Premises

•             Change in Winery Premises Location

•             Termination of Business

  This article leans heavily into the requirements for Industry Members as defined, with an emphasis on wineries. The reader should bear in mind that regardless of the tier of the industry it is operating in, it is virtually a certainty that reporting changes after initial qualification will be required. Proper planning and the execution of these reporting requirements, particularly in the larger M&A setting, is essential.

individual signing contract

The Contract Packaging Agreement

Cyndi

By: Brad Berkman and Louis Terminello, Greenspoon Marder

A few times on these pages, we’ve written about contracts of various types to assist brand owners in proper planning for brand manufacture, introduction and distribution. In this article, we’ll take something of a deeper dive into production agreements in a contract package or custom crush arrangement.

  First, building a winery, and perhaps developing a vineyard, is an extraordinarily time-consuming and expensive process. Returns on investment may take many years to see back. In addition, winemaking (as well as brewing and distilling), is a manufacturing process that requires great deals of expertise, technological know-how and a deep appreciation for the art form. Taking a brand to market and getting placed on wine lists and by-the-glass programs require a very different set of skills. Enter: the brand owner and the contract package relationship.

  It’s worth noting that brand owner, though a common term in the industry, is also a term of art in the beverage law. Since the writers of this article are striking their keyboards in Florida, we’ll refer to Florida Beverage Law for quick analysis.

  561.42 FL. Stat. makes the first reference to “brand owner” in the Florida Beverage Law. The statute is Florida’s tied-house evil statute prohibiting direct and/or indirect interests between upper-tier industry members and retailers. Brand owners are lumped in and treated similarly to manufacturers, distributors, importers, primary American sources of supply, registrants, and/or any broker or sales agent or salesperson. By this definition, brand owners, absent the presence of a statutory exception, are treated as upper-tier industry members and subject to tied-house laws and restrictions. This is generally true in all states.

  Brand owners, when appropriately licensed, are permitted to enter into contract packaging agreements with manufacturers. Both are upper-tier industry members and certain tied-house restrictions are inapplicable. Prior to finalizing the production agreement, a federal wholesalers permit is required, as issued by the Alcohol Tax and Trade Bureau (TTB), and in many instances, state permits are required as well. The reader should keep in mind that an alternative licensing paradigm exists called an “Alternating Proprietorship” arrangement where the brand owner, via a different licensing scheme, acts as a tenant of the winery and produces its own product on the winery’s premises. This article will focus on the former arrangement.

  Negotiating and finalizing the terms of a production agreement can be a daunting task. The brand owner and manufacturer share a common goal, but agreeing on the terms which will lead to the goal of a final product could be challenging generally because of the bargaining positions and goals of the parties.

  What follows is a look at some of the essential terms of a contract package or custom crush agreement that both parties to the contract should consider carefully. By no means is this an exhaustive list, and competent alcohol beverage contract attorneys should be retained to assist.

•             Quantities and Pricing:  Total quantities produced under the agreement require careful consideration, and for the brand owner in particular. There must be a meeting of the minds on production levels prior to focusing on other areas. Brand owners should be careful not to enter into agreements where production quantities and commensurate pricing/costs are higher than anticipated sales over the same time period. Managing brand building resources against production costs is essential. Phrased another way, brand owners should carefully manage their production dollars to ensure the required monies are available for marketing and sales spends.

                  On the flip side, manufacturers must consider the volume expectations of the brand owner. They must consider whether they can meet the production requirements of the brand owner. In the alternative, they must carefully consider allocating valuable production time to brand owners whose volume requirements are too low, which ultimately cuts into revenue potential.

•             The Juice:  Manufacturing services need to be clearly stated. The parties need to determine whether the winery will actually be producing and supplying the wine to be used or if it will be outsourced from a different winery and bottled at the contract packer’s premises. Quality specifications need to be determined and assurances need to be made that the end product will comply with quality standards established by the parties. By extension, provisions should be included for how to deal with a finished product that does not comply with agreed upon quality standards.

•             Raw Goods and Production Material:  Any ingredient specifications, if required, should be determined, agreed to, and set forth in the agreement. As with the above, finished product assurances (as to quality) should be included, as well as methods for dealing with materials not in compliance with quality standards.

                  The same should be considered with production materials. Bottles, caps, labels, cases and other constituent parts must be considered. Central issues such as how these items will be procured, that is whether the winery will procure these items and build their costs into the finished product or whether the brand owner should source them out and supply these items as required. Quality assurances need to be addressed as well, and in particular, how to manage materials that do not comport with quality standards.

                  Another seemingly innocuous issue is storage fees associated with the storing of raw goods and production materials at the packager’s location. Associated costs for storage services should be memorialized in the agreement. Hidden or undetermined fees may add up quickly, causing revenue issues for the brand owner and could potentially lead to disputes among the contracting parties.

•             Exclusivity and Production and Supply Goals:

                  Serious consideration must be brought to the issue of exclusivity by both parties. Brand owners need to determine early on whether a potential contract packager has the ability to supply all the requirements of the brand owner. Conversely, the packager must also make honest inquiries as to its ability to produce and pack according to the brand owners’ requirements. Generally, the preferred approach is the middle ground.  That is to say, a reasonable production number based on the brand owners’ requirements and the contract packer’s ability to produce should be agreed upon and memorialized in the contract packaging agreement. Under this scenario, both parties have a reasonable expectation as to their respective performance requirements under the agreement and an understanding of the benefits incurred. The issue of exclusivity could become moot, if the production and supply numbers are agreeable to both parties.

•             Production Forecasting and Scheduling:  Another area for the parties to agree upon prior to execution of the agreement, is anticipating production needs over time to ensure that the packer can produce according to a set schedule and the brand owner can rely on goods being ready according to their sales and marketing needs. Anticipated variances and procedures for adjusting product forecasts and scheduling should be memorialized as well.

•             Recall:  A system and procedures for recall should be established and memorialized as well, with allocation of costs based upon the reasons for recall. Recalls may occur for myriads of reasons, and when addressing this issue parties to an agreement should devise a method for determining the cause that led to recall. It should be clear that determining cause guides the parties in allocating costs for the same.

  Contract packaging agreements can be complicated agreements to negotiate and draft, requiring many more provisions than those stated above. Ultimately, agreeing on terms that satisfy the operational requirements of both parties is ideally supported by the legal protections required by both parties. As a word of warning, take care in proceeding forward with these types of agreements. Having experienced legal counsel involved is the most prudent course of action.

A Short and Quick Guide to Wine Importation Regulatory Process

Cyndi
row of Spanish wine bottles

By: Brad Berkman and Louis Terminello

Importing wine into the United State may initially seem like a daunting task. Licensing requirements and related matters appear to be complex with requirements at both the federal and state levels. With proper planning and guidance, the insurmountable becomes a manageable process. This article will act as a short guide to the initial licensing and regulatory concerns encountered by new importers.

Licensure At the Federal Level

  Importation of wine into the stream of commerce of the United States is regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB). Prior to importation, the potential importer must qualify to hold a TTB Basic Permit as an Importer. TTB examines the qualifications of the owners and officers through a personal questionnaire process that is executed under the penalty of perjury to ensure that the individual applicant is not impaired from holding the permit. Qualifications of applicants can be found in the Code of Federal Regulations. Printed below are the code sections showing the requirement for licensure and the required qualifications for licensure.

§ 1.20 Importers.

  No person, except pursuant to a basic permit issued under the Act, shall:

(a) Engage in the business of importing into the United States distilled spirits, wine, or malt beverages; or

(b) While so engaged, sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly or through an affiliate, distilled spirits, wine, or malt beverages so imported.

§ 1.24 Qualifications of applicants.

  The application of any person shall be granted, and the permit issued by the appropriate TTB officer if the applicant proves to the satisfaction of the appropriate TTB officer that:

(a) Such person (or in case of a corporation, any of its officers, directors, or principal stockholders) has not, within 5 years prior to the date of application, been convicted of a felony under Federal or State law, and has not, within 3 years prior to date of application, been convicted of a misdemeanor under any Federal law relating to liquor, including the taxation thereof; and

(b) Such person, by reason of the person’s business experience, financial standing or trade connections, is likely to commence operations as a distiller, warehouseman and bottler, rectifier, wine producer, wine blender, importer, or wholesaler, as the case may be, within a reasonable period and to maintain such operations in conformity with Federal law; and

(c) The operations proposed to be conducted by such person are not in violation of the law of the State in which they are to be conducted.

  In conjunction with the personal questionnaire process, the applicant entity is disclosed including ownership structure. Among other things, certain signing authorization forms are prepared, and parties are assigned signing authority on TTB documents.

  In addition to the Importers Basic Permit, it is wise for the applicant to apply for a federal wholesaler’s permit. This permit will allow the licensee to ship alcoholic beverages in interstate commerce. The process for applying for this license is quite similar to the federal importers permit. For consistency purposes, below is a reprint of the code section establishing the requirement for this license.

§ 1.22 Wholesalers.

  No person, except pursuant to a basic permit issued under the Act, shall:

(a) Engage in the business of purchasing for resale at wholesale, distilled spirits, wine, or malt beverages; or,

(b) While so engaged, receive, sell, offer or deliver for sale, contract to sell, or ship in interstate or foreign commerce, directly or indirectly or through an affiliate, distilled spirits, wine, or malt beverages so purchased.

  Both federal permits, if the application process is managed properly and barring any unforeseen issues, should be issued within 45-60 days.

  It’s important to note that basic permits do not expire. They remain in effect until revoked, suspended, voluntarily surrendered or automatically terminated. Automatic termination can occur by operation of law when there is an unreported change in the licensed entity. In particular, change in ownership or stock transfers, among other things, must be reported to TTB on the appropriate forms within 30 days of the occurrence. If they are not reported, the basic permit will terminate by operation of law. It is essential that any contemplated change to the business be analyzed for its effect on the license and reported appropriately if required.

  As an additional note, the foreign winery/production facility must be registered with the FDA as a food facility. A registration number is assigned and must be available at the time of importation or the wine will not clear customs.

Product Approval

  Prior to importation, certain wines may be required to go through a formula approval process conducted by the TTB laboratory, though most do not. Generally, if there are added ingredients including flavorings, formula approval process is required. However, most wines produced and containing only grapes should not require formula approval. Other alcoholic beverages such as spirits and malt must be analyzed separately, as those products tend to have a more stringent formula approval process.

Certificates of Label Approval (COLA’s)

  All imported wine labels must be submitted to the TTB prior to importation and approved. Approval results in the issuance of a Certificate of Label Approval, more commonly called a COLA, which is required to be presented to US Customs at the port of entry, along with other documents.  TTB will examine the label to ensure that all mandatory labeling requirements are met. The wine label approval process can be complex, particularly for a first-time submitter. Certain pieces of information need to be affixed and positioned according to the regulations or the label will be rejected by TTB until brought into compliance. It would be beneficial, especially for the first-time submitter, to consult an expert when commencing the COLA process.

State Licensing

  As noted, TTB regulates the importation of beverage alcohol in foreign and interstate commerce. Prior to brand introduction in any state, it is incumbent on the importer to determine which state licenses are required prior to selling the wine within the borders of that state. As a general rule, some sort of non-resident permit is required, and often times brand registration as well. This is not a one-size-fits-all model, and these writers stress that each state’s requirements be examined carefully, and the appropriate licenses must be obtained.

Will Crop Insurance Cover Losses to My Vines?

Cyndi
man on cell phone inspecting grapes in vineyard

By: Trevor Troyer, 
Vice-President of Operations 
for Agricultural Risk Management

Does crop insurance cover losses to my vines? What can I do about vine loss or damage?  Half of my vineyard got burned due to wildfires.  I have major freeze damage on half my vineyard.  What can you do?  Crop insurance only covers losses to your grape crop not your vines.  Is there any vine coverage or assistance for that?

  Yes there is! I get a lot of questions on this so thought to address it in this article.

  Grapevine crop insurance coverage is available for the 2025 crop year. The sign-up deadline is November 1st in all states where it is available.

  The states where you can obtain this coverage are: California, Idaho, Michigan, New York, Ohio, Oregon, Pennsylvania, Texas and Washington.  It is not available in all counties though.  The counties that are listed in the actuarial documents are not the same as the Grape crop insurance program.  This  program is available for grafted grapevines only.

  What is covered with this insurance product?  The Causes of Loss that are listed in the Grapevine Crop Provisions are below:

11. Causes of Loss

(a) In accordance with the provisions of section 12 of the Basic Provisions, insurance is provided only against the following causes of loss that occur within the insurance period:

(1) Freeze;

(2) Hail;

(3) Flood;

(4) Fire, unless weeds and other forms of undergrowth have not been controlled or pruning debris has not been removed from the vineyard;

(5) Insects, diseases, and other pathogens if allowed in the Special Provisions; and

(6) Failure of the irrigation water supply if caused by an unavoidable, naturally occurring event that occurs during the insurance period.

(b) In addition to the causes of loss excluded in section 12 of the Basic Provisions, we will not insure against damage other than actual damage to the vine from an insurable cause specified in this section

  The vine needs to be completely destroyed, or is damaged to the extent that it will not recover in the 12-month insurance period from November 30th.

  Any damage other than damage to the grapevine from an insured cause is not covered.  For example, chemical drift, terrorism etc. are not covered.  Failure to follow good farming practices or the breakdown of irrigation equipment are also not covered.

  For the grapevines to be insurable they must be adapted to the area they are being grown in.  They must be being grown and sold for fruit, wine or juice for human consumption.  The vines must be grafted to be insurable as well.  The Crop Year begins December 1 and extends through to November 30 of the following year. You must have a minimum of 600 vines per acre to be insurable also.

  Vines are classified into 3 stages of growth for the policy.  Here are the exact definitions:

(a) Stage I, from when the vines are set out through 12 months after set out;

(b) Stage II, vines that are 13 through 48 months old after set out; and

(c) Stage III, vines that are more than 48 months old after set out.

  Values are determined by the Stage (age) of the vine and the county they are located in.  Obviously Stage III vines are worth more than Stage I vines.  These prices are set by the USDA Risk Management Agency.

  You can choose coverage levels for your Grapevine insurance from CAT (Catastrophic) to 75%.  CAT insurance is 50% coverage but you only get 55% of that 50% value per vine. Coverage increments are 5%, so you have 50%, 55%, 60%, 65%, 70% and 75%.   There is a sort of a double deductible with Grapevine insurance.  You have a damage deductible and a value/price deductible.  For example, if you choose 75% coverage you would have a 25% damage deductible.  That means that the first 25% of damage is not payable.  So, if you had 30% of your vines killed because of a freeze you would have a payable claim of 5% (30% minus 25% deductible).  There is also a value deductible as well. Again, if you have 75% coverage you would have a grapevine value deductible of 25%. For example, if the grapevine is Stage III in California in Napa County it would be worth $39.  At the 75% coverage level the dollar amount for that vine would be $29.25.

  There is an optional endorsement that changes the damage deductible.  This endorsement does cost a little more but is worth it, in my opinion.  This is called the Occurrence Loss Option or OLO for short.  It changes the damage deductible to a 5% damage trigger.  If your loss is 5% or more of the total value of the vines in a unit you would have a payable loss.  Plus, you are paid on the full value percentage of the loss.  So, if you had a 30% loss, you would get paid on the full 30%.  This does not change the value percentage of the coverage level, if you choose 50% you get that amount.  You cannot exceed the total insured value, Liability, of the vines in any case. 

  Once you sign up and complete all the forms with your agent, they are then submitted to the underwriter.  The underwriter will open an inspection and an adjuster will come and take a look at your vineyard.  The adjuster will determine if the grapevines in your vineyard are insurable.  The vines could be uninsurable for any of the following reasons.  The vines are unsound, diseased or in someway unhealthy.  They could have been grafted within a 12-month period before the beginning of the insurance period. Or they could have been damaged prior to the beginning of the insurance period.  Once the adjuster has completed the inspection, it is sent to the underwriter and then on to the USDA Risk Management Agency for final approval. 

  If you have damage from an insured Cause of Loss, you should contact your agent to get a claim opened.  It is always best to get a claim opened up sooner rather than later.  48 – 72 hours after discovering damage is best.  I know that a lot of growers want to wait and see how much damage there is before they do anything.  It is always better to get a claim opened up rather than wait and see.  If there is not enough damage, then you just let the adjuster know.  After you open up a claim an adjuster should be out within 10 days to inspect the vineyard.  Do not remove any damaged vines until it has been inspected!   In my opinion this is a good program, and it will provide protection to vineyards.  It will help to mitigate losses from Freeze, Hail, Flood, Fire et

CBMA: A Short Guide to the Rules of the Road

Cyndi

By: Brad Berkman and Louis J. Terminello, Greenspoon Marder

As is said, the only thing certain is death and taxes. As it applies to beverage alcohol, the tax at issue addressed in this article is an excise tax which is based on volume and alcohol-proof gallons. There are two levels of excise taxes collected for alcoholic beverages: one at the state and the other at the federal level. As the reader likely knows, state excise tax, in most instances, is paid by the distributor. This article will examine federal alcohol beverage excise tax rates established by the U.S. Internal Revenue Code and the changes to these rates under the Craft Beverage Modernization Act (the “CBMA”).

  First, a little history, the CBMA was initially meant to be a temporary measure, however, Congress, in 2020 made the CBMA a permanent law and transferred the administration of the CBMA to the Alcohol Tax and Trade Bureau (TTB) on December 31, 2022. As virtually all industry members know, TTB is tasked with administering excise tax collections for domestic and foreign producers of alcoholic beverages, among many other things. In 2017, as part of the Tax Cuts and Jobs Act, the CBMA came into effect reducing excise taxes imposed on wine, beer, and spirits at certain volume levels, produced in the U.S. and those items produced abroad and imported into the U.S. 

  At the introduction of the CBMA, TTB was tasked with administering the domestic component of the CBMA, (that is for wine, beer and spirits produced in the U.S.), and U.S. Customs and Border Protection, (CBP), was responsible for the administration and collection of taxes for imported alcoholic beverages (as they had always done for imported alcohol). Excise tax for imports was due at the time of entry of the product into the U.S. stream of commerce, (once it cleared U.S. customs). This required thorough and accurate reporting by importers and/or their customs brokers at that time to CBP. Incorrect or incomplete reporting to CPB led to the loss of importer revenue for many wine industry members. CPB reporting requirements were, and arguably still are an arcane process.

  Under the CBMA, importers are still required to pay excise tax to CBP upon entry of the product but the administration of the CBMA for importers is now carried out by TTB. TTB has created a reasonably friendly system or portal where licensed importers can register and file their claims to receive the reduced tax benefit.

  The process requires that the foreign producer must first register with TTB, using the portal at myttb.com, and disclose certain basic information such as ownership information, email address and phone number and key contact information including key personnel. After registering, the foreign producer, through the online system, may then assign all or a portion of available CBMA credits to an appointed importer. It is worth noting here that foreign producers are allocated the same tax credit benefits as U.S. manufacturers of beverage alcohol.

  After supplying the importer information (using the importer TTB issued Basic Permit number), the foreign producer must identify the commodity (wine, beer and/or spirits), the tax rate or credit, the quantities of proof gallons or beer barrels and the tax quantities being assigned to the specific importer. Foreign producers can assign all of their credits to one importer or allocate in any way they choose to their various importers, should they have more than one.

  As a side note, it is strongly recommended that the allocation of tax credits is addressed in the negotiating process between the importer and foreign supplier and memorialized in any import agreement that may come into being between the parties. Obviously, this will help avoid future confusion and potential strains on the business relationship.

  Importers are also required to register on my.ttb.com on the importer interface and submit their refund claims electronically, which they may be eligible for as a result of the reduced rate. All that said, below is a quick and dirty reference guide for importers to refer to when navigating the CBMA process, which will assist both the foreign supplier and the importer.

For the Foreign Producer

•   Foreign producers must assign tax benefits to the US importer for importer to be eligible for the benefit.

•   Foreign producers may assign all or a limited tax benefit based on commodity type.

•   Foreign producers must first register with TTB using the link: ohttps://my.ttb.gov/.    

•   Producer will receive a foreign producer ID.

•   After the producer receives the ID, they will be able to assign the benefit to the importer on the on-line portal with TTB.

•   The foreign producer will need to provide TTB with the following information:

            o Calander year for which the benefit is being assigned.

            o The importer to whom it is being assigned using the importers TTB permit number.

            o Commodity type (wine, beer, spirits).

            o The reduced tax rate being assigned.

            o Total proof gallons that the benefit is being assigned to.

 The Importer

•   Importers pay full tax rate to Customs and Border Protection (CPB) at the time of importation.

•   To use the CBMA reduced rate, the importer must:

            o File a refund claim (online) with TTB at the close of each calendar quarter covering the entries made in that quarter.

•   At the time of entry (likely using your customs broker), importer must submit in their customs entry filings, the identity of the products that will be subject to the claim which includes:

            o Commodity type.

            o TTB Foreign Producer ID

            o The rate or credit assigned to the

             imported quantity.

            o The above information is submitted on CBP ACE system.

            **The authors advise trying to use a customs broker that is familiar with the above process.

            o Importer or its broker must file the TTB “Message Set” electronically in the ACE system.

•   Once again, the importer files its claim with TTB on a quarterly basis and once processed, TTB will pay the difference between the tax paid at entry and the credits assigned by the foreign producer.

  The CBMA offers an opportunity for importers to take advantage of reduced tax rates under the CBMA. Navigating the process is challenging and will greatly assist importers to understand the reporting processes up front so as not to leave valuable tax dollars on the table.