This presentation discusses breaking into the US liquor market. It provides historical context on drinking culture and prohibition in America. It then outlines the complex regulatory system for alcohol at both the federal and state levels. Finally, it offers guidance on product registration, labeling, distribution, marketing, and compliance with laws regarding sponsorships, social media, free goods, and events. The overall message is that thorough understanding of regulations is crucial for success in this market.
3. A. HOW THE US SHAPED UP INTO THE
COUNTRY WHERE 10 % OF AMERICAN
DRINKERS (24 M ADULTS OVER AGE 18)
CONSUME, ON AVERAGE, 74 ALCOHOLIC
DRINKS PER WEEK…!
6. THE US: A COUNTRY WHERE 10% OF DRINKERS
CONSUME 74 ALCOHOLIC DRINKS PER WEEK!!
Source:WashingtonPost,2014!
7. INHERITANCE OF A LONG DRINKING HISTORY!
1830: the average American over 15 year old drunk 88 bottles of whiskey every
year = 3 times as much as a 20th century person drinks!
8. !
“Many Americans began their day with
an "eye-opener" of brandy and bitters,
following it up with a healthy-sized
Rum Flip, a couple of Gin Slings at
lunch, a Sherry Cobbler in the
afternoon with extra rations of Mint
Julep or Hot Whiskey” !
!
Dave Wondrich!
THE GOLDEN YEARS OF PRE-PROHIBITION!
9. By 1899, there were 300 000 saloons in the US for 74.5 M inhabitants = 1 saloon
per 248 people.!
THE GOLDEN YEARS OF PRE-PROHIBITION!
10. 1851, June 2 - The first prohibition law is passed in Maine (Portland counts 10 000
people, 200 licensed liquor dealers and 400 unlicensed ones). !
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1855 - 13 states have enacted prohibition legislation.!
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1862 - Government starts charging retailers a 20$ license fee and manufacturers
0,20$ per gallon of distilled spirit and 1$ for every keg of beer to subsidize the war
expenses. Within a few years, 1/3 of the government budget would come from
taxing alcohol.!
TEMPERANCE MOVEMENTS!
1881 - Kansas is the first state to have prohibition in its state
constitution.!
!
1913 - 16th amendment ratified allowing the federal government
to impose income tax, not relying anymore on alcohol taxes. !
11. 1915 - Almost half of the states are dry!
!
1917 - The US Senate passes the Volstead Act on December 18th, one of the
significant steps to the passage of the 18th amendment.!
PRE-PROHIBITION!
1917 - The US enter WW1. Hysteria against
Germany. The War Time ban on selling grain to
breweries is passed. Disaster for the German
American brewers: 1000 down to 500.!
!
!
October 28, 1919 - The Volstead Act passes the US
Congress and establishes the enforcement of
prohibition.!
12. January 16, 1920 - The 18th amendment is ratified by 36 states and goes
into effect on the federal level, outlawing alcohol and “putting an end to
drunkenness, crime, mental illness and poverty”.!
“SECTION 1. After one year from the ratification of this article the
manufacture, sale, or transportation of intoxicating liquors within, the
importation thereof into, or the exportation thereof from the United States
and all territory subject to the jurisdiction thereof for beverage purposes is
hereby prohibited.”!
PRE-PROHIBITION!
The 5th largest industry in the county is now illegal.!
13. Distribution completely disrupted !!
!
Some 180,000 saloons closed their doors, as well as unexpectedly hotel bars, fancy
restaurants, nightclubs and cabarets followed by restaurants and hotels !
For every legitimate bar that closed during Prohibition, 6 speakeasies opened in its
place (NYC 32000 at least, 1 for 230 inhabitants)!
!
Mid 1920: the US are the biggest importer of cocktail shakers in the world!
!
Organized crime replaced legal methods of distribution!
THE DARK AGES OF PROHIBITION!
14. THE DARK AGES OF PROHIBITION!
New consumption habits:!
!
- new cookbooks, sauces without wine, non alcoholic highballs and mint juleps
in newspapers, use of the "chemical" red cocktail cherry as a non-alcoholic
version of the brandy-soaked cherries used previously…!
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- Wine and port in classy speakeasies!
-Alcohol consumption divided by 3 (1/2 population stopped drinking…)!
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- Fear to be caught: getting a quick fix!
- Thirst for alcohol increased (… but other ½ population drunk more)!
15. THE DARK AGES OF PROHIBITION!
Consequences on the industry:!
!
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- Brewers ended up making soft drinks, cheese, and sold malt extracts!
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- Californian wine growing business increased from 9 to 375$ a ton of grapes!
!
- Craft fermentation and distillation disappeared:!
over 8,000 U.S. distilleries [cumulative] b/t 1890s-pre WWI, after WWII: only 8.!
507 distilleries, 1,217 breweries closed and 700 000 stills were ceased btw 1920 &
1926!
!
- Bootleg alcohol: whiskey, moonshine, !
yak yak bourbon, jackass brandy… !
Imported gin, whiskey, champagne!
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- Dramatic consequence on the gin industry!
in the US!
16. 1932 - On August 11th, Herbert Hoover gave an acceptance speech for the
Republican presidential nomination for president in which he discussed the ills of
prohibition and the need for its end.!
March 23, 1933 - Franklin D. Roosevelt signs the Cullen-Harrison Act which
legalizes the manufacture and sale of certain alcohols. !
Dec 5, 1933 - Prohibition is repealed by the 21st Amendment.!
1966 - There were no state laws banning alcohol anymore.!
THE DARK AGES OF PROHIBITION!
17. Trade trends !
!
- Collective, national lobotomy for the
US mixology!
- Brain drain into soda fountains!
- Craze for the Tiki drinks in the 1940’s!
- Premixes and powdered mixes!
- Slow incorporation of European
ingredients!
- Irish whiskey market killed in the US!
- Rum starts!
- Stimulated cocktail culture in nearby
countries!
POST-PROHIBITION!
18. Consumer behaviours!
!
- Women drinking into bars!
- Got Americans really, really into drinking
distilled liquors!
- Created the first wave of drinking-to-get-
drunk culture of imbibing!
- 1950’s: vodka becomes the spirit of choice!
- Sweeter, less complex preference in
cocktails (rise of bourbon)!
!
!
POST-PROHIBITION!
19. B. HOW THE US SHAPED INTO NOT ONE
COUNTRY, BUT 50 STATES!
34. 50 mL, 100 mL, 200 mL, 375 mL, 750 mL, 1 L, and 1.75 L!
(27 CFR 5.47)!
ACCEPTABLE SIZES FOR BOTTLES OF SPIRITS IN THE
US!
35. Current Information from
TTB:
Avg. Processing Time for
Distilled Spirit Applications:
33 days
Fed. Basic Permit
Formula Approval
Certificate of Label
Approval
State Registrations
REGISTRATION!
39. I. Who is your in-state distributor and do they operate in
your preferred other markets? !
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More Markets = More From The Distributor (Marketing Funds, Manpower, etc.)!
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II. Agreement(s) with Distributor(s): Watch for termination
penalties and franchise markets!
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III. Be sure you have the time/manpower to be in the
market. Remember, distributors are just “trucks”!
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WHAT IS THE FIRST STEP TO MOVE OUT OF STATE?!
41. 1. Sponsorships must be of a legitimate unlicensed third
party’s activities and NEVER a licensee but for very few
exceptions (e.g. MSG).!
!
2. Sponsorships must not be used as a pass-through to
conduct illegal activities (e.g. slotting fee).!
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3. You are paying for legitimate advertising, signage,
marketing benefits.!
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4. ALWAYS review state rules !
(e.g. In CA and TX, subject to various exceptions—e.g.
arenas— brands may not sponsor an event at a licensed
premises).!
SPONSORSHIP!
42. !
The issue: Is it a service, thing of value to a retailer?!
Any Exceptions? !
Can the brand pour samples/conduct a sampling in the state?!
!
CAN A BRAND AMBASSADOR DO A “BAR TAKEOVER”?!