Selling Full Barrels

[HedgeBird]

My understanding is that we are only allowed to bottle/sell in the following metric container sizes:

1.75 liters

1.00 liter

750 milliliters

500 milliliters (Authorized for bottling until June 30, 1989)

375 milliliters

200 milliliters

100 milliliters

50 milliliters

I just want to make sure that there are no exceptions, or methods I am missing that would allow me to fill, label, remove from bond and sell a larger container. For example, like sell it to this bar that is calling and wants to buy a 5 gallon barrel and seems to believe that other distilleries are doing this type of thing.

Thanks!

[Mash]

In the state of Virginia it is not allowed. Our law states that Liquor By the Drink can only be served from the original container. Barrel aged cocktails are not allowed. Nor can they fill their own barrel.

[Silk City Distillers]

I was under the impression that most "barrel programs" involved a delivery of bottled product, usually with a personalized label or sticker, and an empty barrel.

[OldSpye]

It's sometimes difficult to separate fact from urban legend when it comes to this topic. For example - I was down at Barton a couple months ago and one of the guys there told me that "A bunch of guys from Texas bought a barrel, just came and picked it up the other day... loaded it in the back of a pickup and drove off." He even mentioned the price they paid.

[HedgeBird]

In the state of Virginia it is not allowed. Our law states that Liquor By the Drink can only be served from the original container. Barrel aged cocktails are not allowed. Nor can they fill their own barrel.

So technically we have the same/similar law in PA. The drink must be served from the original container thus preventing me from selling the customer an empty barrel and a bunch of bottles. But that state has said if the original container is a 5 gallon barrel and the bar buys that, then the barrel is technically the original container and the bar can serve directly from said container.

So on the state side I know whats allowed but just want to get some more info/confirmation about the federal level options/rules.

[HedgeBird]

I was under the impression that most "barrel programs" involved a delivery of bottled product, usually with a personalized label or sticker, and an empty barrel.

This is also my understanding and impression, but just want to make sure I am not missing anything.

[nabtastic]

I am quite certain that the distillate has to be placed in a pre-approved container for retail - how else would you prove tax records?

Barrels can be bought in bulk by a DSP holder, but in no other circumstance. I'm pretty sure you can't even do "futures" of spirits without a DSP...though the customer could probably buy the cask itself to "hold" the barrel for them and pay for the bottles at time of purchase a discount or something..

[dhdunbar]

This is a federal issue. The issue of bulk sales - sales of spirits in containers of greater than one gallon - goes back to political battles waged in the early 1900's. Historically, whiskey had been sold in barrels, often unaged, with the barrel serving as only as a container, just as it did for all sorts of other products, to wholesalers who rectified the product, that is, added ingredients to give it a flavor profile. Some of the more unscrupulous wholesalers were less than diligent about what they flavored the whiskey with, and instances of blindness or death led to battles over whether anyone other than a distillery should be allowed to concoct products. Those who favored prohibiting bulk sales, carried the day. The federal laws and regulations written in the 1930's, after prohibition, adopted the same approach, and bulk sale were and still are prohibited.

You can find the regulations on bulk sales in 27 CFR Part 1, beginning at section 1.80, which provides, "It is unlawful for any person to sell, offer to sell, contract to sell, or otherwise dispose of distilled spirits in bulk, for nonindustrial use, except for export or to the classes of persons enumerated in §§1.82, 1.83, and 1.84." The persons enumerated in those sections are DSP's, customs bonded warehouses, wineries for use in wine product, and the United States, or of any State or political subdivision thereof. That is it. The rules make no other exceptions.

Similarly, section 1,90 provides, "By the terms of the Act (27 U.S.C. 206), all warehouse receipts for distilled spirits in bulk must require that the warehouseman shall package such distilled spirits, before delivery, in bottles labeled and marked in accordance with law, or deliver such distilled spirits in bulk only to persons to whom it is lawful to sell or otherwise dispose of distilled spirits in bulk."

What are bulk spirits? By definition, "In bulk " means "Distilled spirits in containers having a capacity in excess of one wine gallon."

So that is the definitive answer to the question. I keep preaching that it pays to consult the regulations and to have some sense of the history of how requirements have evolved. You can find a lot of the history of the FAA Act in an on-line document dealing with the legislative history of the act. It is deadly dull reading for those who are not possessed of an interest in such matters, but it gives a foundation on which arguments can stand. The need to search regulations for answers is obvious.

[HedgeBird]

Thank you for this detailed and informed response dhdunbar.