Wednesday, September 10, 2014

Alcoholic Beverage Industry Unites to Urge Full Funding of TTB

The alcoholic beverage industry in the United States is highly regulated. The national regulator is the Alcohol and Tobacco Tax and Trade Bureau, part of the Treasury Department, which is known by the acronym 'TTB.'

The alcohol part of TTB has several responsibilities. It collects the Federal Excise Tax (FET), issues licenses to distilled spirits producers, and ensures accurate labeling of alcoholic beverages through its Certificate of Label Approval (COLA) process. Due to industry growth, especially in the micro-distillery segment, TTB has fallen down on that third part of its mission. In this space we have focused on one particular problem area, Rule 5.36(d) enforcement, which concerns state of distillation disclosure.

Recognizing that TTB is broken, the major trade organizations representing all three tiers of the beer, wine, and spirits industry (producers, wholesalers, and retailers) have formed a coalition to urge Congress to pass the full $101 million requested by the administration to fund the TTB.

In a letter sent to appropriations committee chairmen in the House of Representatives and U.S. Senate, the coalition praised the successful working relationship between the beverage alcohol industry and its primary federal regulator.

In addition, the industry groups pointed out that TTB is the federal government’s third-biggest revenue generating agency behind the Internal Revenue Service, and Customs and Border Protection. It also noted that TTB officials review well over 100,000 labels and thousands of product formulas each year, as well as completing all license review and background checks.

"[TTB’s] ability to respond swiftly and properly to changes in the alcohol industry has a direct impact on jobs, consumer protection, the innovation of new products, and the collection of federal excise taxes,” the letter said. It noted that TTB’s workforce had been cut by more than 50 full-time staff members at a time when the number of companies and products in the sector has increased by more than 53 percent.

“We need a well-funded TTB to be able to process label requests quickly in order to get new products to market in this highly competitive global marketplace. We also need a well-funded TTB to prevent and guard against unscrupulous actors from entering our marketplace who otherwise could harm the public with dangerous products, which has occurred outside of the United States with counterfeit alcohol,” the letter stated.

Hal Rogers, who represents Kentucky's Fifth Congressional District, is Chairman of the House Appropriations Committee.

Organizations that signed the letter include: American Beverage Licensees, The Beer Institute, Brewers Association, Distilled Spirits Council of the United States, National Association of Beverage Importers, Inc., National Beer Wholesalers Association, The Presidents’ Forum of the Distilled Spirits Industry, Wine America, Wine Institute, and the Wine & Spirits Wholesalers of America.

The letter itself is here.


Sam Komlenic said...

Boy, this whole thing has taken on a life of its own in no time flat. Thanks for your efforts in this regard, Mr. Cowdery.

Anonymous said...

The alcoholic beverage industry had no problems gaming the "fallen" TTB prior to consumers getting massively pissed at labeling antics and getting reporters/law firms involved. Convenient PR move for the alcoholic beverage industry--passive-aggressively plea for the aid of a "fallen" TTB. Consumers have a wider gaze of this labeling cluster-F. The current consumer backlash (regarding labeling) is a direct result of BOTH the TTB and the alcoholic beverage industry. Consumers are witnessed first-hand that this same gallant alcoholic beverage industry was equally comfortable gaming the crippled system prior to "falling" under their consumer's critical gaze.

Anonymous said...

Actually, many in the US alcoholic beverage industry who were just trying to do what was required in an above board manner were being negatively impacted by the lack of staffing -- the time lag between submitting a beer label for review and receiving approval was often measured in months. It's not just about Rule 5.36(d).

Anonymous said...

So, when I submit my labels for whiskey, there is no where on the form that asks what state I distilled my whiskey in. How is the agent supposed to know?

It seems like an easy solution would be to just add a question to the form - at least on the online system - that says "What state was your whisky distilled in?" That way it can be enforced at the application. Instead, right now, the only real way to enforce is to check each plant that makes whiskey after the whiskey is labeled to ensure that it was actually distilled there. (Or maybe hire label agents with psychic abilities to know which whiskeys will go in bottles with which labels.)

Also - you said that 5.36(d) requires "Distilled in ____" but the TTB beverage alcohol manual says that "____ Straight Bourbon Whiskey" would meet the requirement (if true, of course.)

Chuck Cowdery said...

It certainly shouldn't matter how 'where distilled' is conveyed, as long as it is true and unambiguous. The problem is producers who deliberately try to make it misleading and ambiguous.

Chuck Cowdery said...

I would love to believe that the industry is rallying to our grassroots 5.36(d) movement, but that is not the case. There are many other, more serious problems with TTB but they all derive from the same source. The industry has changed dramatically and TTB hasn't been able to adapt, in part because it is underfunded.

Anonymous said...

Our distillery just met with TTB agents to review the last 3+ years worth of production paper work, and it was shocking to me how few answers they had about how to fill out their forms and reports.

People are being moved over from wine who have no experience with spirits (either the business of making them or the rules regulating them). They were very open about having a lot to learn, but it was very clear that the type of transparency of disclosures and enforcement of rules that I want as a drinker are not going to be coming from the TTB anytime soon.