The Monthly Mash: June Part 1

ACSA Submits Comments to TTB on Label Modernization Rulemaking

This week ACSA submitted members’ comments on the TTB’s Proposed Rulemaking changes related to the modernization of labeling and advertising requirements for beverage alcohol. The document submitted represented the culmination of a more than six-month process to capture the voice of distillers throughout the U.S.

Over the course of those many months, we solicited feedback on the proposed rules, held a town hall, webinar and individual meetings where discussion was entertained, and continuously reached out to remind members and the guilds that their feedback was essential to this process. We also held a series of conference calls to engage members from all categories to examine and contribute to the TTB proposal. Ultimately, the ACSA Board of Directors both analyzed and signed-off on the ACSA response, which presents our industry’s diverse input as a single, unified voice.

Special thanks to Mark Shilling, Treaty Oak Distillery and Brewery (TX) and Nicole Austin, Cascade Hollow Distilling Co. (TN) who were the prime architects of the ACSA response, working with literally hundreds of distillers to solicit feedback, provide analysis, and assist in drafting the comments ultimately submitted to TTB. ACSA’s Board and Legislative Affairs committee also deserves our gratitude.

The complete text of the document submitted June 26 to TTB is available at the bottom of this newsletter.

Committee Passes One-Year Extension of Craft Beverage Modernization and Tax Reform Act

On June 20, the House Ways and Means Committee approved legislation extending the reduced Federal Excise Tax (FET) for craft distillers to December 21, 2020, giving spirits producers just under an additional year of tax relief. This Committee action is significant and marks a major victory for craft distillers. A number of other tax “extenders” were also included in the legislation, some dating to 2017 and 2018, so ACSA and our Board of Directors are pleased to be ahead of the curve with our expiration date set for the end of 2019.

Before the vote, our industry remained uncertain whether craft beverage tax relief would be included in any proposed legislation.

On behalf of our community of nearly 2,000 craft spirits producers, we are particularly grateful for Ways and Means Chair Richard Neal (D-MA), who moved this legislation forward, and to our two sponsors Ron Kind (D-WI) and Mike Kelly (R-PA) for advocating for FET relief in the bill.

Currently, there are 238 co-sponsors who support FET reform in the House of Representatives, but ACSA knows there is still more work to do, particularly as there were over 300 cosponsors in the last Congress. With Chairman Neal’s support, evident during his floor debate, when he championed the notion that the reduced FET has helped small businesses, ACSA and our industry partners in beer, wine and cider, will work diligently to continue to pursue reform.

The next critical step will be consideration for the full House of Representatives. ACSA will continue to work with the Congress and mobilize our grassroots on an FET relief extension, or even better, a permanent reduction.

To join us as we continue to rally support for this historical endeavor, please register and join us for our Public Policy Conference, co-hosted with the Distilled Spirits Council, on July 22-24, 2019, in Washington, D.C. (more info here). We look forward to your help as we seek more co-sponsors for the Craft Beverage Modernization and Tax Reform Act.

SCOTUS Strikes Down Tenn. Residency Requirement for Alcohol Retailers

The U.S. Supreme Court this week struck down a Tennessee law that imposed a two-year residency requirement on those seeking to operate retail liquor stores in the state. Since Granholm v. Heald (2005), no other matter before the Court garnered as much attention in the alcohol beverage community. In a 7-2 decision, the Court ruled in Tennessee Wine and Spirits Retailers Association v. Russell F. Thomas, Executive Director of the Tennessee Alcoholic Beverage Commission that the existing Tennessee legislation discriminated against non-residents and, therefore, violated the Constitution’s dormant commerce clause. Here is that opinion.

The Court, in essence, held that while the 21^st Amendment gives states broad latitude to regulate beverage alcohol, the interest of interstate commerce trumps the state’s interest in enacting laws that discriminate against out-of-state entities in favor of in-state ones.

Only Justices Neil Gorsuch and Clarence Thomas dissented, with Gorsuch drafting the dissenting opinion—asserting that Tennessee was within its rights to impose the residency requirement.

The residency was initially challenged by Utah couple Doug and Marie Ketchum, as well as retail chain Total Wine & More. The Ketchums had moved to Memphis, Tennessee, hoping the weather would be better for their disabled daughter. The Tennessee Wine & Spirits Retailers Association then threatened to sue the state’s Alcohol Beverage Commission if it granted Total Wine a license. A Federal Appeals Court last year struck down the two-year residency requirement.

ACSA Crafts a Movement

at Bar Convent Brooklyn

The second annual Bar Convent Brooklyn demonstrated that the U.S.-based edition of Europe’s largest bar industry trade show wasn’t going to be a one-hit wonder. Everything this year was bigger: the energy, the attendance and the ACSA Craft Spirits Pavilion—where nine member distilleries greeted bartenders, bar owners and managers, restaurants, food and beverage managers and distributors from all over the country and other parts of the world.

“This year to last year, turnout’s much better,” said Darren Case owner/distiller of Round Turn Distilling (Biddeford, Maine), who was part of last year’s ACSA Pavilion at BCB. Case showcased three versions of its Bimini brand: Bimini Gin, Bimini Overproof and Bimini Barrel Reserve No. 1.

“Our objective here is making contacts within the New York market,” Case noted. “It’s very difficult for a small brand to get access to buyers in New York and we know that they’re coming here over the course of two days. It’s really good to make those connections.”

It also helps a distillery test the waters in markets that are far from its base.

“We’re really trying to learn how to go forward,” offered Devon Roeshot, sales manager, distributed markets, for Wigle Whiskey/Pittsburgh Distilling Co. (Pittsburgh). “Are we going to be more about our local market or are we going to try to push toward distributing more to the outer markets—and how are we going to brand going forward?”

Wigle presented a wide cross-section of products from its portfolio: Wigle Organic Pennsylvania Straight Rye Whiskey, Wigle Organic Pennsylvania Straight Bourbon, Wigle Organic Deep Cut Straight Rye Whiskey, Wigle Organic Single Barrel Straight Rye, Wigle Organic Dutch Style Gin and Wigle Organic Absent Minded Absinthe.

Gulch Distillers (Helena, Montana) had a similar objective at the show.

“This seems like the perfect event for a distillery of my size, where we’ve been sticking to our home state and looking to get out into the world, into the rest of the country,” said Steffen Rasile, co-founder of Gulch. “We have no distribution in New York now and to walk away with a deal in the works would be great.”

It certainly helps that Rasile was able to pour its Burrone Fernet, which won Best in Show at ACSA’s Craft Spirits Judging Awards Dinner in February.

Wiggly Bridge Distillery (York, Maine) has had a very limited presence in New York, but it was looking to expand that significantly. “[Our products] are currently in New York and D.C., but we never really focused on them,” said Wiggly Bridge founder/distiller Dave Woods. “We’re in a couple of places [in those markets] and that was fine for a couple of years because we didn’t have the juice. We’re coming on six years in the business and now we have the barrels, the volume to keep up and expand.”

Wiggly Bridge was pouring some of the contents of those barrels, particularly its Small Barrel Rum and Small Barrel Bourbon. The distillery also showcased its Vodka, Rum, Gin and Agave Blue Platinum.

Kayla Veatch, speakeasy manager for Golden Moon Distillery (Golden, Colorado) hoped her company’s pre-Prohibition-style products would appeal to crowds in the Big Apple market.

Gun Fighter 13, Golden Moon Gin, Gun Fighter American Bourbon, Ex Gratia, Gun Fighter American Rye, Golden Moon Créme de Violette, Golden Moon Amer Dit Picon, Golden Moon Dry Curaçao, Golden Moon Kümmel and Redux all evoke a wilder time in the nation’s history.

“We want more exposure here, especially since we’re all the way from Colorado,” Veatch said. “We want to stand out here in the New York market and people look for this kind of authenticity.”

Mad River Distillers (Warren, Vermont) brought seven products to the show—Mad River Bourbon Whiskey, Mad River Revolution Rye, Mad River Vanilla Rum, Mad River Maple Cask Rum, Mad River PX Rum, Mad River Mad Apple and First Run Rum—but president Mimi Buttenheim was giving special attention to PX Rum and Revolution Rye because of their appeal to the bartending community.

“This is a bartender-heavy event and we’re focusing on the products that bartenders really love,” Buttenheim said.

PX Rum, made from demerara sugar and aged in Pedro Ximenez sherry casks and Revolution, made from 100 percent rye with roasted grains and a chocolatey character, are just the sorts of flavor profiles bartenders like to play with.

“if you can home in on what your sort of ‘highlight reel’ is, then the quality of the interactions you’ll have here are really good,” Buttenheim pointed out. She added that she and her ACSA booth-mates have helped boost each other’s products. For instance, her rye paired really well with Gulch’s Burrone Fernet, so they were able to cross-promote.

Melissa Busto was new to Bar Convent Brooklyn, but the company she reps isn’t: Copper & Kings American Brandy Co. (Louisville, Kentucky), like Round Turn Distilling was a repeat participant on the ACSA Pavilion. Busto, the distillery’s regional sales manager for Manhattan and Upstate New York, marveled at the variety of contacts she was able to make while pouring samples of Copper & Kings American Brandy, Floodwall Apple Brandy, The Ninth: a Symphony in Orange, The History of Lovers, Destillare Intense Chocolat and Destillare Intense Cafe.

“A lot of the interactions have been with buyers and it’s been not so much New York,” Busto said. “We’ve met a guy from Philly, from D.C. and we’ve seen someone from Georgia too. So there’s been great turnout all around from different states.”

The face time with key decision-makers in the trade makes the brands more tangible for prospective buyers, notes Austin Furnas, sales rep for Cardinal Spirits (Bloomington, Indiana). “It’s a little bit easier when you can speak in more detail about the brand, directly to buyers and others in the industry,” said Furnas who was sampling Cardinal Straight Bourbon, Pride Vodka, Bramble Vodka, Terra Botanical Gin, Tiki Rum, Lake House Spiced Rum, Songbird Coffee Liquor, Nocino Liquor and Flora Liquor. The Cardinal table also showcased the company’s RTD mixed drinks: Maui Mule, Bramble Mule and Vodka Soda.

Pennsylvania Pure Distilleries (Glenshaw, Pennsylvania) already has some presence in most U.S. states as well as a few other countries, but brand ambassador Corinna Rozum was not content to stop there. “We’re distributed to 43 states and four different countries, and a lot of people who’ve approached us already are fans, but I’ve found that a lot of people still aren’t so familiar with us,” Rozum said. Best known for Boyd & Blair Potato Vodka, Pennsylvania Pure also showcased Boyd & Blair Professional Proof 151, BLY Rum Silver, BLY 105 Rum and BLY Ancho Chili Liqueur.

“We want to get to 50 [states],” Rozum noted. “Someone asked me about distribution in Hawaii today, so I guess that’s on my to-do list. Market research, right?”

Pictured above: Steve Johnson, ACSA PAC Chair; Carason Lehmann, ACSA Member Services and Social Media Coordinator; Mark Shilling, ACSA Legislative Affairs Committee Chair; Margie A.S. Lehrman, ACSA CEO