How to Start an Alcohol Beverage Brand Without a Distillery, Winery or Brewery
Have you ever wanted to start your own alcohol beverage brand? It seems that nearly every celebrity now has an alcohol brand, so why not you? Getting a brand to market doesn’t have to be scary. As principal attorney for a law firm specializing in the alcohol beverage and cannabis industries, I’d like to share how it can be done without a distillery, brewery or winery of your own.
The biggest decision may very well be deciding what you want in the bottle. If it’s tequila, bourbon or vodka, it’s likely to be less research and development and more choosing your specific profile. If you want a complicated ready-to-drink cocktail, you may need to engage a formulation expert or work with a producer that can help you formulate your dream. Not to worry, producers generally work with you and allow you to choose from a few samples.
When researching a distillery, winery or brewery, you should discuss minimum orders, lead time, payment terms (including reduced federal excise taxes based on your small production) and whether they can source any materials for you. For instance, many are finding a shortage of cans given the high demand for RTDs. Maybe the producer can source your cans and you may also enjoy the benefits of the producer’s bulk pricing.
Before you get too far down the road, I recommend setting up your new company to shield you from personal liability. You will also want to apply for a trademark for your brand. Processing times for trademarks can be lengthy, even up to nine months, so getting a move on your trademark sooner than later is always helpful.
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Once you have a company formed, a trademark, a product in a bottle or can and a brand story, now you just have to sell, sell, sell. Many startup brands utilize a third-party compliance company, such as American Spirits Exchange, MHW or Park Street, to get product into the hands of bars, restaurants and liquor stores. Some brands choose to obtain permits on their own, which is certainly doable as well. This just means you will have to obtain your own state and federal permits and manage the applicable paperwork to have an alcohol beverage license.
Because alcohol is so highly regulated (name another product referenced in the U.S. Constitution), you will likely need an alcohol beverage permit or a TTB federal basic wholesale permit. This allows you to profit from the sale of alcohol at the wholesale level. As a brand, your profit will generally be how much you sell the product to distributors for minus what you paid the producer for that product and all other costs related to getting the product produced (e.g., bottles, labels, cases, corks, etc.). You should also consider costs related to marketing and public relations agencies and other third-party payments.
Either way, products will come from the producer and then go to a distributor. Like everything, there are exceptions. For instance, domestic wineries can ship to most states, directly to consumers. Some brand owners might work with a compliance company to act as a distributor in some states because it can be difficult to get a more traditional distributor to carry an unproven startup in this highly competitive industry.
You are likely your best salesperson, so now it’s on to the fun part and what you were picturing when pondering the glamorous world of owning an alcohol beverage brand. That’s getting drinks for friends, chatting with new customers and sharing your new brand with the world.
The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.