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.