It’s common for new or small-scale hard seltzer brands to partner with contract producers or co-packers to handle production, bottling, and labeling. This type of relationship can be ideal for companies looking to enter the alcohol beverage market without the high upfront costs of equipment, licensing, or facility ownership. But while contract production offers flexibility, it also brings important legal and regulatory considerations.
At Lindsey Zahn P.C., we routinely advise alcohol beverage clients on structuring compliant co-packing arrangements. Here are key questions every hard seltzer brand should ask before engaging a co-packer.
What Is a Contract Producer or Co-Packer?
A contract producer (also referred to as a co-packer or contract bottler) is a licensed facility that manufactures alcohol beverages on behalf of another company. The co-packer is typically responsible for:
- Producing and bottling the product on their licensed premises.
- Maintaining title to raw materials and finished products until after excise taxes are paid
- Submitting label and formula applications to the Alcohol and Tobacco Tax and Trade Bureau (“TTB”).
While your company may not own the facility or hold a federal producer permit, you still may have obligations under federal and state law.
Key Questions to Ask Before Entering a Co-Packing Relationship
1. Does your company need a license or permit?
Even if the producer is licensed, your company may still need a TTB Wholesaler’s Permit and state licenses, especially if your business is buying, selling, marketing, or distributing the product.
2. Who is responsible for TTB label and formula approvals?
Generally, the co-packer submits these under its own TTB permit. It’s important to ensure you understand who is responsible—and that you retain branding rights.
3. Do you have a contract that protects your brand and IP?
Your contract should clearly state ownership of your intellectual property, including brand name, trademarks, and artwork. It should also clarify responsibilities for recordkeeping, tax reporting, and compliance.
4. Is the co-packer FDA registered and properly licensed?
The production facility should be registered with the FDA and have any required state/local health permits.
5. Can the facility scale to meet your brand’s needs?
Make sure your co-packer can accommodate small test runs or large-scale production, depending on your growth trajectory.
6. Is your company name properly filed with the TTB for labeling?
If you want your company’s name listed on the product label (e.g., “Bottled by [Your Brand]”), the name must be on file with TTB as a trade name under the producer’s permit.
How Lindsey Zahn P.C. Can Help You
Lindsey Zahn P.C. assists alcohol beverage clients with all aspects of federal and state compliance, including:
- Reviewing and negotiating co-packing agreements.
- Advising on required permits and licenses.
- Drafting and filing TTB permit and state license applications.
- Reviewing proposed labels to determine compliance and provide insight on any missing mandatory information.
We take a proactive approach to compliance so your brand can grow with confidence.
Contact us at info@zahnlawpc.com to schedule a consultation and learn how we can support your hard seltzer venture from concept to shelf.