A common question in the industry is whether a hard seltzer brand owner must obtain an Alcohol and Tobacco Tax and Trade Bureau (“TTB”) permit. The answer depends on how your business operates and your level of involvement in production, sales, and distribution.
Some brand owners collaborate with licensed beverage producers or contract manufacturers to develop and package their products. In most cases, the manufacturer is responsible for production, following the ingredients and specifications provided by the brand owner. While the manufacturing company handles production, the brand owner typically retains ownership of the intellectual property, including the brand name, logo, packaging, and marketing strategy.
This kind of business structure is typically known as:
- Contract production
- Contract bottling
- Co-packing
In either of the above relationships, the brand owner will outsource the production to a third-party manufacturer that will generally control the production, processing, and bottling of the wine. Will the hard seltzer brand owner require a TTB federal basic permit based on this model? It depends.
Does a Hard Seltzer Brand Owner Need a TTB Permit?
If your company is a hard seltzer brand owner and sources finished, bottled hard seltzers from a contract distiller, co-packer, or bottling facility, your company may be required to obtain a TTB federal basic permit. If your company is purchasing the finished product from the contract distiller or contract bottler and reselling the product to wholesalers or (where legally allowed) to retailers, then a TTB federal basic wholesaler permit is generally required.
But what about if your company is not purchasing the finished product and/or taking possession of the finished product? While it is a common misconception that if a brand owner does not physically handle or take ownership of the finished hard seltzer product, the company is exempt from obtaining a TTB federal permit, that’s not necessarily always the case.
Even if the company does not take physical possession of the spirits, its business activities may require a TTB Wholesaler’s Basic Permit if they align with wholesale operations, such as the following:
- Selecting the distributors or retailers who will carry the hard seltzer;
- Managing and finance branding, marketing, or promotional strategies for the hard seltzer brand;
- Setting the pricing and market positioning of the product.
The specific requirements will depend on how your brand operates within the three-tier system. If you are unsure whether your business requires a TTB permit, consulting an alcohol beverage attorney is recommended to ensure full compliance with federal regulations. Our firm routinely assists alcohol beverage brand owners and can happily guide your company in the process of applying for a TTB federal basic permit or determining if such may be required based on your business model.
How Can Lindsey Zahn P.C. Assist Your Hard Seltzer Brand?
At Lindsey Zahn P.C., we assist hard seltzer brand owners in successfully navigating the permit application process, with extensive experience in handling federal alcohol beverage permits and a deep understanding of TTB regulations or application requirements.
If your company is seeking assistance with a TTB permit application or has regulatory concerns, contact Lindsey Zahn P.C. today for a consultation to discuss how we can support your business: info@zahnlawpc.com or (929) ZAHNLAW (929-924-6529).