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  • contract brewing requirements

    Does anyone know the requirements for contract brewing in New York State. Albany has not been very helpful. From what I've gathered it seems like I won't need any licensee from the state ABC as long as I don't want to wholesale myself. I envision it would work like this, I cut a check to my wholesaler who in turn pays the brewery for producing my brand. My relationship with the wholesaler is normal from that point on. I would own the rights to the brand while the wholesaler would have the distribution rights. Any thoughts?


    Thanks in advance.

  • #2
    ask the contract breweries!

    I don't quite know the answer to that question, but I'd bet the brewery or breweries that you're considering can tell you exactly how it works, legally.

    In addition to state laws, there are BATF regulations, particularly regarding label approval, that don't seem to be addressed by your description...

    Call your local contract brewer and ask!

    Cheers, Tim

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    • #3
      Contract Brewing

      I have never heard of the type of arrangement that you propose. In my experience with contract brewing, you would be the one who deals directly with the brewery. The brewery would produce your beer, and you would buy the beer from the brewery and sell it to the distributor. Distributors do not want to be bothered with any of the logistics of the production of your beer, they may not even want to deal with selling it. Unless there is some real incentive for the distributor to sell your specific product, it can very easily get lost in their other product lines. You would also be responsible for licensing the beer in New York (where each brand has to be registered) as well as all the label approvals, etc. for the TTB (formerly BATF).

      The good part of contract brewing is that you do not have the up front capital investment needed to build a brewery. The bad part is that as a brewer without a brewery, you also do lose one of the key selling points of a small craft brewed product. You also need to invest a much larger amount of money in marketing and sales.

      I don't mean to discourage you, but I would start talking to both retailers and distributors to determine how your product could can increase their profits (because that is the only way they will move your product). I would also talk to the breweries themselves. Any brewery that has experience producing contract beers will be able to point you in the right direction.
      David Schlosser
      Brewmaster / Founder
      Naked Dove Brewing Company
      Canandaigua, NY

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      • #4
        This senerio was proposed by a wholesaler. I have always assumed I would need a wholesale license myself. I've met with the wholesaler, brewer, and potential retailers and am finalizing company structure and financing now.

        Thanks everyone for the advice

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        • #5
          Contract Brewing

          I would be extremely hesitant leaving the production of your product to the distributor. You are the one making the investment in your brand. You are the one who suffers financially if the brand fails. What happens to the distributor if the product fails? The answer, absolutely nothing. They just pick up another brand to fill your shelf space in the retailer. If you own the brand, you should be responsible for the production. The only way that I would go down the route the distributor proposes would be if they had a stake in the brand. Unfortunately, this is not legal in New York. The three tier system prohibits such a possibility.

          Just because you don't own the brewery doesn't mean that you aren't responsible for the quality and production of your beers. No matter how good of a saleperson you are, and how good your marketing, if the beer isn't of high quality and consistent, your product will fail. All successful contract breweries have people that are responsible for the quality and production of the beer. If you are not qualified to do so, then you need to hire someone who is. If you don't, the success of your whole business is dependant upon the actions of other people. I wouldn't be willing to take that risk, are you?
          David Schlosser
          Brewmaster / Founder
          Naked Dove Brewing Company
          Canandaigua, NY

          Comment


          • #6
            I would actually control all production but for legal purposes would not directly pay for the production. All recipes, packaging and QC would be my responsiblity. Does that seem more resonable? The arrangement is more of a paper trail then the actual day to day business. My brewing experience is limited to 8 years homebrewing. I am working with an experienced brewer, independent of the brewery making the beer, for recipe formulation, and QC.
            Last edited by frigatebay; 10-31-2003, 12:07 PM.

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            • #7
              It sounds much better, but I don't know that its legal in New York. I do know that it's legal for a brewer can legally distribute their own product (as well as other products). But I'm not sure that a distributor could act the way you propose and you still own the brand. Sounds like its time for the lawyers to get involved. Even if its just on paper, I think the product will still have to go through you between the brewery and the distributor.
              David Schlosser
              Brewmaster / Founder
              Naked Dove Brewing Company
              Canandaigua, NY

              Comment


              • #8
                I sure hope it can work that way. At least thats what I've been told by several people including the wholesaler, and someone who didn't /won't give me their name in albany.

                thanks again

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                • #9
                  NY Contarcts

                  If you are a contract brewer you are usually suppose to pay state or state and federal taxes on your Federal ID Permit. The distributor picks up the product at the contract brewers warehouse and sends you the check for the product. You in turn pay the brewer (i.e vendor) for the product at the price you arranged. You pay for marketing, advertising, salesmen, packaging, POS etc. tough market for slim margins!


                  Good Luck!
                  Kai Adams
                  Sebago Brewing Company
                  www.sebagobrewing.com

                  Comment


                  • #10
                    Here in New York State most small contract brewers have had wholesale licensees. All of them have self distributed is some shape or form. Since I have no desire to self dist. I figure I don't need a wholesale license. Normally the wholesaler doesn't pay the taxes right? i get the whole part from the time my distributor picks up the beer but am stumped with the taxes part. no one has said anything about that to me until you did. I'm pretty sure the price I was quoted included the brewer paying the taxes. I'll have to look into that. Would that be the case if the contract brewery also held a brewer's license and brewed some of thier own beer? Is this how its worked for you in the past?

                    Thanks

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