Four Roses Barrel Dump

6 BIG Bourbon Law Changes (Possibly) Coming In 2019

 

A few weeks ago the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued a proposal to change the legal requirements for aging and labeling bourbon. This has the potential to be huge. Below are 6 of the proposed changes that would directly impact bourbon. With each change I’ve included a brief summary, an excerpt from the TTB document, some background, and my take.

 

1. All bourbon must be aged in a ~50 gallon oak barrel

Excerpt from the TTB-
“TTB proposes to define an oak barrel as a “cylindrical oak drum of approximately 50 gallons capacity used to age bulk spirits.” However, TTB seeks comment on whether smaller barrels or non-cylindrical shaped barrels should be acceptable for storing distilled spirits where the standard of identity requires storage in oak barrels.”

Background-
Existing regulation states that bourbon must be aged in a new charred oak container. It does not specify the type of oak, the shape of the container, or the size. Despite the lax wording just about every distiller uses a barrel to age their bourbon; this doesn’t sound like a radical proposal. But while every large bourbon distiller primarily uses 53 gallon barrels many craft producers start by using smaller, 15, 20, 30 gallon barrels. Smaller barrels age bourbon faster due to surface area the liquid is exposed to inside the barrel and they cost less to manufacture. Craft distillers often sell younger bourbon aged in small barrels for their first few years while they wait for 53 gallon barrels to properly age.

My Take-
It’s generally accepted that 53 gallon barrels produce a better bourbon over time than smaller barrel. The catch here is the phrase “over time”. Many craft distillers want to get a product to market quickly to recoup some of the cost of opening their distillery. If they are set on releasing a bourbon, their options are the use smaller barrels or source aged whiskey from someone else. One year old bourbon aged in a 53 gallon barrel is not likely to be a hot seller. Prohibiting craft distillers from using smaller barrel sizes would be a very big deal to getting their distilleries off the ground.

 

2. Bourbon “finished” in a secondary barrel type (ie. wine) is no longer bourbon, it is a ‘specialty spirit’

Excerpt from the TTB-
“TTB has seen changes in the alcohol beverage industry and in various formulas and believes that treating intermediate products as natural flavoring materials does not provide adequate information to consumers, as required by the FAA Act. Accordingly, TTB proposes to clarify that blending components such as distilled spirits and wines together first in an “intermediate product” is the same as adding the ingredients separately for purposes of determining the standard of identity of the finished product. Additionally, TTB proposes to change its policy with regard to statements of composition for specialties to require the disclosure of elements of the intermediate product (including spirits, wines, flavoring materials, or other components) as part of the statement of composition.”

Background-
Taking aged bourbon from its original barrel and placing it in a “finishing” barrel has become all the rage. Generally fortified wine casks are chosen as the secondary maturation vessel. Port, Sherry, Madeira etc. Angel’s Envy is the most well known brand practicing this method. By taking 4 to 6 year old bourbon and placing it in used port wine casks, for up to 6 months, they achieve a unique and well received product. They are not the only brand engaging in this “finishing” process. WhistlePig won Best Whiskey at the 2017  San Francisco World Spirits Competition with their Boss Hog: The Black Prince rye whiskey finished in Armagnac casks. Heaven Hill’s 2018 Parker’s Heritage Collection release is finished in orange curaçao barrels. Essentially what the new regulation states is that putting bourbon through a finishing process is the same as blending a barrel of bourbon with a vat of wine. The spirit can no longer be considered bourbon and is instead a “Specialty Spirit”.

My Take-
It’s about time. I have nothing against the practice of finishing liquids in used barrels. I love the brands I mentioned above. Some great tasting products, including whiskey, can come from a finishing process. Barrel aged beers are some of my favorite beers. But how can the rules state that no “coloring, flavoring, or blending materials” may be added to bourbon yet allow finished bourbon to be labeled as bourbon? By finishing a bourbon in a used wine barrel the blender is very clearly adding coloring and flavoring. If those things were not added then what would be the point of the finishing process? An Angle’s Envy tour guide once told me that they “re-charge” their port barrels after a handful of finishing cycles by adding port wine to the cask and sloshing it around so they can continue to use it to finish more bourbon. It’s hard to argue that process is not adding coloring, flavoring, and blending materials to the bourbon. Not to mention the port casks are 60 gallons 🙂

 

3. The State of original distillation must appear on the label

Excerpt from the TTB-
“The State of distillation, which is the State in which original distillation takes place, must appear on the label of any type of whisky defined in § 5.143(c)(2) through (7), which is distilled in the United States.”

Background-
This one is pretty self explanatory though not a practice that is always followed. Independent bottlers, or Non-distiller producers (NDP), will often omit the original source of their bourbon. But probably a lesser known practice is taking a whiskey distilled by someone else, running it through your own still, and claiming it was distilled by you. Why would someone do this? When the whiskey has already been distilled once it can run through the still a second time like water through a fire hose. The practice saves a lot of time, money, and effort.

My Take-
This one isn’t that much of a game changer. It’s taking transparency in labeling a bit further and providing more information to the consumer while helping to close potential loopholes. Given that the original distiller sourced the grain, chose the mashbill and yeast, and contributed the distillation skill it seems fair to make it clear to the consumer who and where the distillation took place. The concept of terroir is well established in wine making and, thanks to craft whiskey distillers, it’s becoming more prominent in bourbon production as well.

 

4. Require that if a whiskey meets the standard for one type of whiskey it must be labeled as such

Excerpt from the TTB-
“TTB proposes to require that, where a whisky meets the standard for one of the types of whiskies, it must be designated with that type name, except that Tennessee Whisky may be labeled as Tennessee Whisky even if it meets the standards for one of the type designations. Currently, TTB allows the term “Tennessee Whisky” to appear on labels, even if the product meets a more specific standard of identity, such as for bourbon whisky.”

Background-
Currently a distiller can bottle a spirit that meets all the legal requirements for bourbon yet they can chose not to put the word “bourbon” on the label. Maybe they want to call it a whiskey or “Uncle Joe’s Moonshine Whiskey”. (No idea if that’s a real product). They have leeway in how they label their distilled spirit. Of course if it does not meet the requirements of bourbon they can’t call it a bourbon anyway.

My Take-
When I first started reading this proposed change my immediate reaction was “Oh no Jack Daniel’s is gonna be a bourbon now!”. Then I got to the second sentence in the guideline and chuckled. They wrote in a specific provision exempting good old JD from this new requirement. I guess I don’t have a preference on this one. On one hand, with most of these proposed changes the TTB is trying to make alcohol labeling easier to understand for the consumer. On the other hand, if I’m a distiller and I want to call my bourbon just plain “whiskey” shouldn’t I be able to? (Why any sane person would omit the word bourbon I have no idea.)

 

5. Defines rules for the use of “barrel proof,” cask strength,” “original proof,” “original barrel proof,” “original cask strength,” and “entry proof”

Excerpt from the TTB-
“Barrel Proof” and similar terms.
(a) The term “barrel proof” or “cask strength” may be used to refer to distilled spirits stored in wood barrels only when the bottling proof is not more than two degrees lower than the proof of the spirits when the spirits are dumped from the barrels.
(b) The term “original proof,” “original barrel proof,” “original cask strength,” or “entry proof” may be used only if the distilled spirits were stored in wooden barrels and the proof of the spirits entered into the barrel and the proof of the bottled spirits are the same.”

Background-
While lacking formal regulation, these terms have been fairly well established in the bourbon community for decades. Regulations prohibit distillers from publishing false information on a bottle’s label. Therefore it stands to reason that if a bottle states “barrel proof” or “cask strength” that it is in fact true. This is one of the reasons some bottles have a handwritten proof number on the label. Imagine having to print new labels every time you dump a barrel and the proof is a few points different from the last bottling run.

My Take-
These changes make sense to me. Again, they go a little further to ensure truth in labeling and transparency to the consumer. I don’t see this having an impact on most distillers as they are already following this guideline.

 

6. Requiring the terms “distilled by” and “bottled by” appear on a label instead of ambiguous terms such as “produced by”

Excerpt from the TTB-
“The current regulations in 27 CFR 27 CFR 5.36 allow for various statements as part of the name and address. The phrase “bottled by” is simple to understand—it may be used by the bottler of the spirits. Similarly, the phrase “distilled by” may be used only by the original distiller of the distilled spirits.Currently, section 5.36(a)(4) allows a variety of terms, as appropriate, to be used by a rectifier of distilled spirits, including “blended by,” “made by,” “prepared by,” “manufactured by,” or “produced by.” Because there is no longer a rectification tax on distilled spirits, and thus these terms have lost their significance under the IRC, some industry members and consumers are confused as to when the use of those terms is appropriate. TTB proposes to clarify in proposed § 5.66(b)(2) the meaning of those terms. For example, the term “produced by,” when applied to distilled spirits, does not refer to the original distillation of the spirits, but instead indicates a processing operation (formerly known as rectification) that involves a change in the class or type of the product through the addition of flavors or some other processing activity.”

Background-
This is an interesting change. Many bottles prominently display the name of the distiller, especially if the brand distilled their own juice. Resilient Bourbon is a brand committed to transparency in labeling and is sourcing bourbon from various distillers. The front label of their current release reads “Distilled in Tennessee & Bottled by BC Merchants in Pembroke, KY”. But not all brands voluntarily use these terms on the labels. This new rule squarely targets NDPs / independent bottlers; brands purchasing barrels from other distillers then aging/blending/bottling.

My Take-
This is another change I can get behind. Transparency is the name of the game. Phrases such as “produced by” and “made by” don’t have clear definitions. When a brand’s tagline is “Made by Ghosts” it’s pretty clear that’s an ambiguous term. And that’s likely why they are chosen for some labels. The terms “distilled by” and “bottled by” are pretty clear actions in the bourbon making process. An argument could be made that this stifles the branding and marketing creativity of bourbon brands. In this case I believe the clarity this change brings to consumers should be the deciding factor.

 

At this time, all of the proposed changes outlined above are just that, a proposal. The TTB is taking comments at the link below until March 26, 2019. There’s also an active discussion on the ADI forum linked here.

The complete proposal titled “Notice No. 176: Modernization of the Labeling and Advertising Regulations for Wine, Distilled Spirits, and Malt Beverages” can be found here: https://www.regulations.gov/document?D=TTB-2018-0007-0001

 

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