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America’s Fastest Growing Alcoholic Beverage? Cider!

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Blog 24

That’s right, as an alcoholic beverage, cider is growing faster than any other category of alcoholic beverages.  From 2012 to 2013 growth increased by 46%!  We know our office is having more and more inquiries about cider from a licensing and compliance point of view.  Most of the inquiries have been about whether or not the production of cider requires a license from TTB, whether or not FDA actually controls the regulation of cider, and what is necessary when labeling a cider.  Fact is, there is a lot of confusion.

Just recently National Public Radio did a piece on cider called: Party Like it’s 1799: Traditional Cider Makes a Comeback. You can read the story and listen to the audio here.  I can tell you that it makes you want to go out and buy some cider!  The piece focuses on an interview with the Shelton family, owners of Albemarle Cider Works. If you are in Virginia, or the District of Columbia, you are in luck and can try one of their many varieties.  If not, take a look around your own area and you are likely to find a cider quick enough.  As mentioned, this category is growing rapidly, so you won’t have too much difficulty checking it out.

So, why is there any confusion about putting this product into the market?  TTB explains that the FDA “has primary jurisdiction over the labeling of a fermented cider that contains less than 7 percent alcohol by volume.” However, TTB has jurisdiction over some labeling requirements, most importantly the Government Warning Statement for any alcohol beverage over 0.5 percent alcohol by volume. So even if you fall under the 7% alcohol by volume measurement, you may very well still need to meet the labeling standards for the Government Warning Statement.

When it comes to the question of whether or not the producer needs a license from TTB, the rules are a bit trickier.  TTB’s official guidance states that you must register as a bonded winery, pay tax and follow all rules of a winery operation, including labeling requirements of a winery unless the cider you produce is “the non-effervescent product of the normal alcoholic fermentation of apple juice only, which is sold or offered for sale as cider and not as wine or as a substitute for wine.”

Federal Regulations actually define the term “tax exempt cider,” which effectively means a producer does not need a license from TTB to produce said product. The regulations are clearly the basis of TTB’s guidance from above as they define the term “tax exempt cider” to mean “cider when produced solely from the noneffervescent fermentation of apple juice without the use of any preservative method or material, and when produced at a place other than a bonded wine premises and sold or offered for sale as cider, and not as wine or as a substitute for wine.” If this is the case, then the production of cider is not subject to the tax on wine, or to the provisions of this portion of the regulations.  The guidance here about bonded winery premises seems somewhat obvious, however it seems to create a different standard for bonded wineries that produce a cider meeting the method of production, versus others who might make cider in the same manner.  Clearly, the use of any preservative material seems to trigger the requirement for a producers permit and the taxation and reporting requirements of a bonded winery.

As can be seen from the above, the determination about whether or not the product is tax exempt will have to be based on the production method of the cider.  Once this analysis is complete, all producers should check with their State Alcohol Beverage Control to determine its treatment of cider.  It is entirely possible that the State could regulate production even if the federal government does not.  Furthermore, the required license and taxation methods vary from State to State with some licensing cider as a malt beverage and others as a wine.

If you are thinking about producing a cider and either have or don’t have a producers license, or simply don’t know if you need one from the federal or state government, feel free to contact our office for additional guidance.

We're Here to Help

Dear friends in the alcoholic beverage industry,

As we as an industry, nation and planet collectively try to navigate this unprecedented period the coronavirus has brought us, We’d like you to know that we at Craft Beverage Consultants (the other CBC!) are here to answer any question you may have (or not know you have) about not just surviving this time but positioning yourself to thrive as soon as social distancing measures allow your business to function at full capacity again.

If you schedule a free 60-minute phone or video conferencing consultation with me or any of my 11 highly specialized colleagues, we’ll help you figure out any of your immediate and/or longterm business needs, or “everything but the staffing,” as we like to say. We’re not high-pressure sales kind of people, especially these days, so you don’t have to worry about fending off annoying pitches. Make an appointment on our website or Facebook page, or just call us the old-fashioned way at 314-768-0220.

Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production, and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality, and even values-based executive coaching. 

For example, we can coach you through this season when chain accounts have canceled their spring, in some cases, fall resets and distributors have drastically cut orders. Our director of business strategy and compliance can save you money – now – on excise taxes, caution you to avoid naming your beers in ways that risk alienating your buyers (Wuhan Wheat? Coronavirus Cream Ale? Groan. No.), and secure TTB approval for the tastefully named beers you do make. Our creative director and web team can get your e-commerce site up and running and launch a social media campaign that keeps you top of mind for current and future customers. Our director of storytelling can put you in front of the press so you can tell your story to your community. 

Once you’re ready, we can look forward together. Now is the time to talk about post-virus. We all suspect the legal landscape to look different. But how? And how do you prepare yourself in a way that positions you to charge out of the gate ready to maximize the potential and profit of whatever the “new normal” turns out to be? Please get in touch so we can talk about it. 

CBC’s roster includes local and regional clients like Epic Brewing, Logboat Brewing, Piney River Brewing, SudWerk Brewing, Waves Cider and Common Cider Company, just to name a few.  The agency was founded in 2004 by Jacob and Beth Halls, formerly known as Convergence Consulting; Rick Laxague, joined as a partner in charge of sales, marketing and distribution consulting in 2019. 

Rick hase close to 20 years of experience, a bulk of which was with Crescent Crown Distributing in Arizona. His last role there was Area Sales Manager for the dedicated craft beer division, coaching and leading a sales team to be nationally recognized. In early 2014 Rick helped take a regional brewery national as their Director of National Accounts and increase that segment of their business from 30,000 cases to almost 300,000 cases in two years, an increase that equates to $4.8 million in IRI dollar sales. 

Co-founder Jacob Halls brings 17 years of experience in regulatory compliance, business strategy, marketing and craft brand management to the company. In his former position as craft brand manager for the N.H. Scheppers Distributing Company in Columbia, Missouri, Jacob helped lead his team to winning the 2016 Distributor of the Year award from New Belgium and to a nomination for the Brewers Association’s Distributor of the Year award. Jacob is also the founder and director of the South East Craft Beer Fest and several other industry specific charitable event marketing festivities. Beth Halls is Director of Business Operations and Coordinator of Charity Operations for the festivals and events run by CBC, such as the South East Craft Beer Fest, MO Bacon & Bourbon, and many more. 

Again, please reach out to us for anything.  CBC can be reached at (314) 768-0220 or at craftbeverageconsultants.com.

We look forward to meeting/talking soon.

Sincerely,

Rick Laxague, Jacob Halls, and Beth Halls