Last year, Constellation Brands issued a voluntary product recall for a small batch of their popular Corona Extra lager due to the potential of small glass particles in some bottles. Unfortunately, it seems to be a process the company is all too familiar with. For a massive company like Constellation Brands, a small-scale product recall is hardly damaging. But what if your brewery or distillery finds itself in a similar situation?
While you can initiate a product recall of your own accord, it usually starts when the TTB has reason to believe that an alcohol beverage is, or may be, adulterated. Before taking any recall action, the TTB first consults with the FDA. If the FDA identifies an urgent health hazard, or the TTB decides there are significant mislabeling issues, the TTB will contact the responsible party and recommend a product recall. As part of this process, you will need to create a strategy for removing affected products from the market, present this strategy to the TTB, and inform the TTB of the final results of the recall effort.
Technically, the TTB does not have statutory authority to require you to recall products, but they are far from powerless. They can notify trade associations and the public by any means they see fit, detain product shipments, and suspend or revoke permits and licenses. They can also examine financial records and other documentation relating to the manufacture, removal, or sale of the product in question. So, if they request that you conduct a product recall, it’s in your best interest to comply and act quickly.
After your recall strategy has been implemented, the TTB will follow-up by requesting a Recall Status Report to determine whether your recall efforts were effective. Generally, this report should include:
• Dates customers were notified
• Number of customers notified
• Number of customers responding
• Quantity of product returned and when this occurred
• Additional details and benchmarks attesting to the effectiveness of the recall
Once the TTB double-checks with the FDA and is satisfied with the results, they will advise you to stop your recall efforts. Unfortunately, a successful recall doesn’t guarantee that you’re in the clear – the TTB can still take administrative action against responsible parties after the recall is complete. If that occurs, you should contact a lawyer with experience in alcohol beverage law (if you didn’t already at the start of the recall process) to clarify your rights, liabilities, and which courses of action are best for your unique situation.
Similar to our local regulations regarding the production of Tennessee whiskey, Scotland has legal requirements regarding the production methodology and labeling requirements for the country’s world famous style of the spirit. The Scotch Whisky Regulations of 2009 (an update to the Scotch Whisky Act of 1988) outline everything a distiller needs to know if they’re producing Scotch whisky. Like Tennessee’s House Bill 1084, Scotland’s production guidelines grant enough leeway for distillers to create Scotch whiskies with a wide variety of flavor profiles – several of which have intense smoky/umami/medicinal-tasting characteristics. While that type of bouquet is certainly a signature of the Scotch style, the unique method by which the flavor is achieved it is not actually required by the Scotch Whisky Regulations.
Large parts of Scottish land are covered in peat bogs. Peat forms when plant matter starts to decay, then stops due to specific environmental conditions. For centuries, the Scots have cut slices of peat out of the bogs, dried them, and used them as an energy source – like coal briquettes but faster-burning. Peat is also what gives certain Scotch whiskies (especially those from the Islay region) the unique flavor profile mentioned above. Once the grains are malted, they are dried over the smoke of a peat fire for about 30 hours.
Since bogs only accumulate peat at a rate of about 1 millimeter per year, it’s a semi-non-renewable resource. I’m not familiar with the laws protecting the peatlands, but I do know that many Scottish distilleries use methods to reduce their peat consumption. For example, instead of using whole briquettes, the Bowmore distillery grinds their peat into powder that is gradually added to a fire to produce just the right amount of peat smoke. Several of the more modern and industrialized distilleries use closed systems that pass the same smoke over the malted grains multiple times to ensure none of it is wasted.
So even though it’s not a legal requirement, many distilleries make their Scotch whisky by literally incorporating the country’s land into the process. Perhaps Tennessee’s distilleries could take inspiration from Scotland and incorporate wood from the tulip-poplar tree to put a little more “Tennessee” in Tennessee whiskey.
Whisky masters and enthusiasts are forever questing for tweaks to traditional distilling and aging methods to create unique flavors of the spirit. They’ll go to the ends of the earth in pursuit of whisky’s secrets – and when they run out of earth, they’re not afraid to head into space.
In 2011, the famous Ardbeg distillery in Scotland partnered with aerospace research company NanoRacks to test the effects of gravity (or lack thereof) on the whisky aging process by sending whisky to the International Space Station and aging it there for two and a half years. Since the available room on any space vessel is extremely limited, a traditional barrel was out of the question. Instead, newly distilled whisky and charred oak wood shavings were placed in a specially designed vial that kept the whisky and wood separated until they reached orbit and the seal between them was broken. A control sample was left back on Earth for comparison.
When the whisky returned to Earth in 2014, a battery of tests confirmed that the microgravity environment made a definitive difference. The ratio of wood extractive compounds found in the space-aged whisky was notably lower than the control sample, creating a dramatically different flavor profile. According to the results of the “organoleptic assessment” (aka, taste-test) released by Ardbeg, the space sample could summarily be described as more peaty and pungent. Whether that’s desirable or not is subjective – either way, it confirms the potential for space-aging to create an untold number of new and unique flavors for whisky.
Seemingly inspired by Ardbeg, the Suntory distillery in Tokyo sent samples of its whiskies to the International Space Station last August. Their experiment is broken up into two groups – one to be aged for a year, and the other to be aged for two or more years. The first group is scheduled to return to Earth sometime next month, but the results may not be publicized until sometime later.
Currently, outer space is identified by international law as one of the four global commons – meaning it is outside the territory and jurisdiction of nation states (the other global commons are the high seas, atmosphere, and Antarctica). So, if space-aged whisky catches on, it makes me wonder what the TTB’s regulatory response would be, if any…
For many years, the legal definition of “Tennessee whiskey” was bland and straightforward. At the federal level, the North American Free Trade Agreement (NAFTA) requires that Tennessee whiskey be “a straight Bourbon Whiskey authorized to be produced only in the State of Tennessee.” However, we can be very particular about our whiskey. With that in mind, governor Bill Haslam signed House Bill 1084 back in 2013. This state-level law outlines specific quality and production standards that a distiller must follow if they want to call their product Tennessee whiskey. One of these production requirements is that the whiskey must be “filtered through maple charcoal prior to aging” – a process more popularly known as the Lincoln County Process.
If a distiller is calling their product Tennessee whiskey, but is found to not be meeting the manufacturing requirements for the spirit, they can have their license revoked or suspended for at least a year. Naturally, every distiller wants to follow these requirements to the letter – which would explain why I get so many questions about the specifics of the Lincoln County Process. “What ratio of charcoal-to-whiskey do I need for my stills?” “How long am I required to filter the whiskey for?” “Does the wood for the charcoal have to be grown in Tennessee?”
The truth is, House Bill 1084 deliberately omits these details to give distilleries flexibility. Imparting a specific flavor profile to any whiskey is an extremely delicate process. Changing the amount of charcoal or filtering time will change the flavor of the final product – so a lack of specific guidelines for the Lincoln County Process gives distilleries the flexibility they need to make their own styles of Tennessee whiskey.
Many distilleries have unique or proprietary takes on the Lincoln County Process. Jack Daniel’s first runs their charcoal through a grinder to get consistent bean-size pellets. The pellets are packed into vats 10 feet deep and the whiskey gets filtered by trickling through. The George Dickel distillery is similar, except they chill the whiskey first and allow it to fill a 13-foot vat instead of just trickling through.
Benjamin Prichard’s Tennessee Whiskey foregoes the Lincoln County Process entirely. They can still call their product “Tennessee whiskey” because they meet the exemption requirements outlined in Section 1(c) of the legislation. Ironically, this also makes them the only distillery in Lincoln County that doesn’t use the process!
As long as your Lincoln County Process involves some form of filtering through maple charcoal prior to aging – and you meet the other requirements from the law – your product can legally be called Tennessee whiskey in the eyes of the state. If you’re worried your filtration process could be interpreted another way, or you have other concerns regarding regulatory compliance, contact me and I’ll be happy to advise.
Most whiskey distillers have a love/hate relationship with time. On one hand, time can mature whiskey into an exceptional spirit. On the other hand, it takes so much time – 12 to 24 years in many cases. New barrels (which are a legal requirement for most whiskey in the U.S.) are quite expensive and take up storage space, so a distiller has to eat those costs and wait years to see a return on investment. Faced with those obstacles, it’s no wonder more distilleries are developing ways to accelerate the whiskey aging process.
As whiskey ages, it develops subtly complex flavors by absorbing compounds from the wood of the barrel in which it’s contained. Instead of waiting for this to naturally happen over several years, speed-aged whiskey uses a variety of techniques and technology to move flavors from wood to whiskey in less time. Among the simplest of these techniques is to use smaller barrels, which increases the surface area of the wood that is exposed to the whiskey. Tuthilltown Spirits in upstate New York takes this a step further by pumping low-frequency sound waves throughout their aging storehouse. Allegedly, the sound waves “agitate” the spirit, helping their award-winning Hudson Baby Bourbon reach sufficient maturation in only four months.
The Copper Fox Distillery in Virginia takes a different approach to increasing the surface area exposed to the whiskey. To create Wasmund’s Single Malt Whiskey, they load the distillate into normal-sized barrels. Then they add a mesh sack filled with toasted oak and apple chips, which works like a teabag to impart flavor. After about 12 months, they remove the mesh bag and put the whiskey in another barrel, which is heated and rolled several times over 2 months. Despite being aged for only 14 months, this whiskey was once “Best in Class” at the American Distilling Institute.
Right in our backyard, the O.Z. Tyler Distillery in Kentucky is planning to utilize a proprietary process called “TerrePURE.” According to the patent for the process, it basically uses ultrasonic energy and oxygen and temperature manipulation to create a better tasting whiskey in a shorter amount of time. Could accelerated aging catch on among Tennessee’s distillers?
In what’s referred to as “contract distilling,” a person hires an existing distillery to make products for them. The person might provide a recipe, container specifications, and the TTB-approved label while the distillery does all the rest for a fee. For alcoholic beverage producers who want to make new products, but don’t have the permits or the capacity, outsourcing to another facility can be the perfect solution. Contract distilling can also be great way for novices to ease into the distilling business, since the zoning, equipment, and manufacturing procedures are all taken care of by the contractor.
However, contract distilling does have its downsides. The profit margins are smaller, and unlike operating your own distillery, you don’t have any control of the contractor’s operations or production schedule. To get the most out of contract distilling, it’s important to do your due diligence. Before selecting a partner, consider the following:
Licensing – This isn’t usually an issue with established distilleries expanding their capacity, but your company may need to obtain a license with your state liquor agency (even though the contracted distillery is the one manufacturing spirits). If your company will be handling the distribution, you may also need a federal wholesaler permit from the TTB and additional licenses from the state. Whether you’re an investor with a great idea for whiskey or an established distillery that wants to dabble in a new type of spirit, you should speak with a lawyer before speaking with distilleries to contract with. That brings us to our next item…
The Contract – When you partner with another distillery to create your products, you should evaluate the contract to make sure all of your bases are covered, and negotiate where necessary. Some things to account for include intellectual property, record keeping and reporting, TTB application handling, and tax responsibilities.
Evaluation – When vetting potential distilleries, some questions to keep in mind include:
• How flexible are their production scaling capabilities?
• Do they have distribution partnerships you can leverage?
• Are they fully licensed with the TTB, FDA, and state/local authorities?
In the end, try to learn as much as you can about the potential distillery, ensure both parties have their paperwork in order, and protect your interests via contract. That way, you’ll be in the best position to enjoy the benefits of contract distilling.
I have procrastinated too long on this, and to all reading this and all those impacted by the fires in East Tennessee last month, I apologize. This was a terrible tragedy, especially with the loss of at least twelve lives. The alcohol industry members were also impacted. Some of them suffered at least some damage and we have heard that numerous employees have lost their homes in the fire. More on this later. I am saddened to hear that homes were lost this close to the Christmas season. I have no doubt that many hidden Christmas presents were lost in the fires, as well as personal belongings, food, clothes, etc. Hearing about this loss caused me to donate money to several organizations to help relief efforts and I encourage everyone reading this to dig a little deeper into their pockets and donate at least something. It will take a while for the area to recover; however, the area has opened back up and is ready and anxious to return to its normal level of tourism. I encourage everyone to go visit the area as soon as possible and spend money in the various shops and stores. Take your kids to the aquarium in Gatlinburg and ride the Ferris Wheel in Pigeon Forge. This is one of the best and easiest ways to help the entire area recover since it is so reliant on tourism. Please do not cancel your plans to stay in the area. There is still plenty to do while visiting. I also encourage people to buy the really awesome “Smokies Strong” merchandise to further help relief efforts. http://govols.shgstores.com
Now, back to focusing on the alcohol industry. I know two industry members have set up relief funds for their employees. All amounts collected go to the employees of these companies.
Ole Smoky: Go Fund Me https://www.gofundme.com/displaced-families-of-ole-smoky
1) Monetary donations can be mailed to:
CNB, 2661 Parkway, Pigeon Forge, TN 37865
Sugarlands Employee Emergency Assistance Fund – Account Number 4036124
2) Gift card donations can be mailed to:
Sugarlands Employee Emergency Assistance, C/O Sugarlands Distilling Company,
P.O. Box 1517, Pigeon Forge, TN 37865
If any industry member has a fund to add to this list, please e-mail me at firstname.lastname@example.org
The impact of this tragic event will not be fully realized for some time. I can only imagine how much production has been slowed down by the fires. And since the local members are very dependent on foot traffic for sales, the slow return of tourists will only further negatively impact these businesses. I encourage everyone to go visit the area as soon as possible and support the local economy by spending money, especially that Christmas money you got from your grandmother or that bonus money you got from your employer. Spending it in the area on something you like will benefit both you and the residents of the area.
To members of the impacted community, please let us know how to help and we are here for you. Stay Smokies Strong and have a Merry Christmas!
Obtaining a COLA (Certificate of Label Approval) from the TTB can be a time-consuming process that’s difficult to sync with the rest of your operations. But here’s a little-known fact: if you are importing alcoholic beverages for use at a tradeshow, or to give out samples for soliciting orders, you may be eligible for a COLA waiver.
COLA waivers can be requested by submitting a formal letter to the TTB. The letter must guarantee that the products in question will meet these compliance requirements before reaching a U.S. port:
• The products will be imported by the holder of a Federal Importer’s Basic Permit (you also need to include the permit number)
• All applicable taxes and duties will be paid
• The imported products will have the following labels:
o Government Warning Statement (Code of Federal Regulations, Title 27, Subpart 16)
o Purpose label (e.g. “For Trade Show Purposes Only – Not for Sale”)
o A sulfites disclaimer for eligible wines (e.g. “CONTAINS SULFITES”)
The letter also has to provide information regarding the details of the products you need waivers for, including:
• The purpose for importing and for requesting a waiver (for tradeshows or other events, include dates and locations)
• The class, type, and quantity of each alcoholic beverage product
• The country of origin for each product
• The brand name of each product
The TTB accepts these waiver requests by both email and fax (202-453-2970). To make the process even faster and easier, I recommend using this official template provided by the TTB (this opens a MS Word file you can save and modify).
Even though the primary regulatory authority for the alcoholic beverages is the TTB, the FDA does have some power in the industry. Since many alcohol manufacturers aren’t sure when or where they may be subject to FDA regulations, I thought I’d shed some light on the agency.
Currently, the TTB and the FDA operate together under a non-binding Memorandum of Understanding, which basically outlines when, why, and how the TTB refers issues to the FDA. These issues are largely related to health and safety. For example, if you submit a formula to the TTB for a distilled spirit containing an unusual ingredient, the TTB will deny your application unless you can provide documentation certifying that the ingredient is Generally Regarded as Safe (GRAS) by the FDA for use in alcoholic beverages. You may recall the big industry upset circa 2010 when the FDA declared caffeine as an unsafe food additive for alcoholic beverages.
Beyond issuing certificates and declarations, there are circumstances where the FDA has more active authority. As part of the agency’s mission to promote food items that are properly labeled and safe for consumption, the FDA can take action in cases of adulterated or contaminated food products – including domestic and imported alcoholic beverages. Specifically, if alcoholic beverages have been reported as adulterated, the FDA has the power to seize those products, refuse their importation, and actively discourage their distribution through consumer markets. Generally, this happens when a manufacturer has been slow or ineffective at implementing a product recall.
In addition to formulation approvals, food safety compliance, and product recall procedures, alcohol manufacturers may also need to interact with the FDA on issues including:
• Registration of food facilities
• Labeling of wines and ciders containing less than 7% alcohol by volume
• Labeling of beers that do not contain barley or hops
• Facility inspections
If you have any questions about FDA jurisdiction in your business or other regulatory compliance issues, I’d be happy to help.
Like any manufacturing process, the production of alcoholic beverages creates byproducts. After mashing, grains are lautered to separate the wort from residual grain. While the wort continues on in the production of the spirit, the leftover spent grains have no further use. But rather than throw them away, brewers commonly sell or donate the spent grain to farmers who use it as fertilizer or livestock feed.
This environmentally-friendly exchange has been a popular practice for centuries, and continues today. However, I still get lots of questions from newer breweries about spent grains, compliance issues, and oversight from the TTB or FDA. This confusion likely stems from the upheaval that the entire alcohol beverage industry went through during late-2013 early-2014 when the FDA proposed some new rules in an update to the Food Safety Modernization Act (FSMA).
Essentially, the FDA proposed rules to better regulate the quality assurance of animal food by requiring “that certain facilities establish and implement hazard analysis and risk-based preventive controls for food for animals.” This would place an extremely expensive and cumbersome burden on breweries across the nation to bring their facilities, processes, and staff all up to code.
To make a long story short: all the trade associations and congress members backed by breweries, wineries, and distilleries spoke out against the proposal, the FDA back-pedaled and added an exemption to section 116 of the FSMA for alcohol-related facilities, and the producers and consumers of spent grains all lived happily ever after. Coincidentally, the latest iteration of the FSMA has compliance deadlines starting this month – but it’s nothing that the manufacturers of fine spirits need to worry about any more.
I’d toast to that.