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How to purchase beer in bulk?


grehorst

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I am exploring the possibility of purchasing beer from a brewery (or possibly getting it free as it is waste) for the purpose of creating a Bierschnapps. I have called, left voicemail and emailed my TTB specialist several times over the course of two weeks and have gotten no response. Anyone know what I would have to do to transfer beer from a brewery to my distillery and keep the goverment happy?

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I am exploring the possibility of purchasing beer from a brewery (or possibly getting it free as it is waste) for the purpose of creating a Bierschnapps. I have called, left voicemail and emailed my TTB specialist several times over the course of two weeks and have gotten no response. Anyone know what I would have to do to transfer beer from a brewery to my distillery and keep the goverment happy?

Are you trying to contact your specialist in Cincinnati or your field inspector. You should ask your field inspector or contact the regional office. I would think that you could use the Transfer in bond form.

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Are you trying to contact your specialist in Cincinnati or your field inspector. You should ask your field inspector or contact the regional office. I would think that you could use the Transfer in bond form.

I've been trying to contact the specialist in Cincinnati since I'm also trying to find out the status of a bond revision from back in Sept. I got it back rejected in Nov, turned it same day and still haven't seen it (so much for increasing bond before the holidays!).

I'm under the impression the specialist in Cinci is suposed to be the point of contact for all these things- maybe I'll give our field agent a call. If you were refering to TTB 5100.16, this seems to only address the transfer of spirits.

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I've been trying to contact the specialist in Cincinnati since I'm also trying to find out the status of a bond revision from back in Sept. I got it back rejected in Nov, turned it same day and still haven't seen it (so much for increasing bond before the holidays!).

I'm under the impression the specialist in Cinci is suposed to be the point of contact for all these things- maybe I'll give our field agent a call. If you were refering to TTB 5100.16, this seems to only address the transfer of spirits.

The reason I suggested talking the the regional office, is b/c a copy of your transfer in bond goes to the regional office. So I assume they are the ones that are responsible for keeping track of transfers.

From what I can see, wine and distilled spirits "groups" have forms for transfering alcohol in bond. Beer doesn't. But 5100.16 just needs a "plant number". Even though breweries don't have DSP permits, They are under bond and have their own permit number. The form is only a paper trail for the TTB for tracking their revenue. The form allows them to do it.

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I had a similar question last year, when trying to figure out how to document transfering wine to a DSP (and spirits back). There are a couple places int he Regs that talk about certain ATF form numbers - and i called to ask about them. The specialist said those references were obsolete - they use commercial records now - so long as the commercial records contain all the info specified in the CFR. I looked at both the wine, and the spirits sections - and mostly the required info is the same.

Maybe the situation is the same for beer?

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I don't have a complete copy of 27 CFR 25 handy to do a complete search, but it's not nearly so clear for beer as it is for wine. BW to DSP transfers are clearly laid out in 27 cfr 19 and 24. Beer isn't. I found 27 cfr 25.186, which deals with transfers to another brewery, and a section for transferring unfit beer to a _fuel_ DSP (specifies part Y of 27 cfr 19). <shudder>. On the other hand, it looks like there's a fair amount of leeway in section 25 for research and testing, with the permission of the Bureau.

On the DSP side, I found 27 cfr 19.312, which deals with receipt of distilling stock from a bonded wine cellar or a _contiguous_ brewery. Well, that puts a damper on things. So if you were planning on doing things like this routinely, you might tape off a section of the floor and register it as a brewery. Then transfer BR to BR and then BR to DSP across the tape line. But doing it on the fly looks tougher than I might have hoped.

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I don't have a complete copy of 27 CFR 25 handy to do a complete search, but it's not nearly so clear for beer as it is for wine. BS to DSP transfers are clearly laid out in 27 cfr 19 and 24. Beer isn't. I found 27 cfr 25.186, which deals with transfers to another brewery, and a section for transferring unfit beer to a _fuel_ DSP (specifies part Y of 27 cfr 19). <shudder>. On the other hand, it looks like there's a fair amount of leeway in section 25 for research and testing, with the permission of the Bureau.

On the DSP side, I found 27 cfr 19.312, which deals with receipt of distilling stock from a bonded wine cellar or a _contiguous_ brewery. Well, that puts a damper on things. So if you were planning on doing things like this routinely, you might tape off a section of the floor and register it as a brewery. Then transfer BR to BR and then BR to DSP across the tape line. But doing it on the fly looks tougher than I might have hoped.

Ugh.

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Guy,

This may or may not be helpful to you, but I had to determine this early on in our business planning. As you know, the stalled project I was working on was intending to source wine and or beer for distillation into our own products as well as we planned to undertake contract distillation from other's products as brand extensions. I asked the transfer question directly of an agent when I met with him in Arizona. I posted the exact sections that he said apply to this issue below. Luckily I had saved these in a document after he told me this. I kept taking exception to his directions noting that in some cases beer was excluded, but he said this was where the regs apply even though it is not explicitly mentioned. As you know, each little TTB fiefdom can interpret things in their own way so I offer this only as one account of the same sort of inquiry. Sorry about the smileys that appear in the sections I emboldened! For some reason this forum's controls are inserting these guys!

§ 19.313 Use of materials in production of spirits.

The proprietor may produce spirits from any suitable material in accordance with statements of production procedure in his notice of registration. The distillation of nonpotable chemical mixtures received pursuant to application as provided in §19.67 shall be deemed to be the original and continuous distillation of the spirits in such mixtures and to constitute the production of spirits. Materials from which alcohol will not be produced may be used in production only if the use of the materials is described in approved statements of production procedure.

(Sec. 201, Pub. L. 85–859, 72 Stat. 1349, as amended, 1353, as amended (26 U.S.C. 5172, 5178))

§ 19.312 Receipt of materials.

The quantities of fermenting and distilling materials (including nonpotable chemical mixtures containing spirits produced in accordance with §19.67), and of spirits, denatured spirits, articles, and spirits residues, for redistillation, received on bonded premises shall be determined by the proprietor, and reported as provided in subpart W of this part. Fermented material (except apple cider exempt from tax under 26 U.S.C. 5042(a)(1)) to be used in the production of spirits shall be produced on the bonded premises where used or must be received on the premises from (a) a bonded wine cellar, in the case of wine, or (B) a contiguous brewery where produced, in the case of beer.

(Sec. 201, Pub. L. 85–859, 72 Stat. 1356, as amended, 1365, as amended (26 U.S.C. 5201, 5222, 5223))

Given the "contiguous" denotation above, I asked him what if I have beer shipped in from another brewery? His reply was that was acceptable since we are allowed to receive NGS as part of the process and should be reported by the originating manufacturer in a similar fashion. And then he cited this section which does not use the work "beer" but he said applied:

Receipt and Use of Spirits, Wines and Alcoholic Flavoring Materials

Sec. 19.372 Receipt of spirits, wines, and alcoholic flavoring

materials for processing.

(a) Proprietors may receive into the processing account--

(1) Bulk spirits (i) from the production or storage account at the same plant, (ii) by transfer in bond from another distilled spirits plant, or (iii) on withdrawal from customs custody under 26 U.S.C. 5232;

(2) Wines (i) from the storage account at the same plant, or (ii) by transfer in bond from a bonded wine cellar or another distilled spirits plant;

(3) Spirits returned to bond under the provisions of 26 U.S.C. 5215;or

(4) Alcoholic flavoring materials.

(B)Spirits and wines received in bulk containers or conveyances shall be recorded as dumped on receipt, but may be retained in the containers or conveyances in which received until used. Spirits and wines received by pipeline shall be deposited in tanks, gauged by the proprietor, and recorded as dumped. Alcoholic flavoring materials may be retained in the containers in which received or may be transferred to another container if the proprietor marks or otherwise indicates thereon, the full identification of the original container, the date of receipt, and the quantity deposited. Alcoholic flavoring materials and nonalcoholic ingredients shall be considered dumped when mixed with spirits or wines. The proof gallon content of spirits, wines, and alcoholic flavoring materials shall be determined at the time of dumping.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1356, as amended (26 U.S.C. 5201))

Sec. 19.373 Use of spirits, wines and alcoholic flavoring materials.

A proprietor shall prepare a dump/batch record according to Sec. 19.748 for spirits, wines, alcoholic flavoring materials, and nonalcoholic ingredients used in the manufacture of a distilled spirits product as follows:

(a) Dump record. When spirits, wines, or alcoholic flavoring materials are dumped for use in the manufacture of a distilled spirits product, and when spirits are dumped for redistillation in the processing account, the proprietor shall prepare a dump record.

(B) Batch record. The proprietor shall prepare a batch record to report:

(1) The dumping of spirits which are to be used immediately and in their entirety in preparing a batch of a product manufactured under an approved formula;

(2) The use of spirits or wines previously dumped, reported on dump records and retained in tanks or receptacles; and (3) Any combination of ingredients in paragraphs (B)(1) and (2) of this section used in preparing a batch of a product manufactured under an approved formula.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1356, as amended (26 U.S.C. 5201))

Well, for what it was worth, that was his take on the issue. Let me know if it works out any differently than that assessment!

Eric Watson

PS: Your distributor's truck wraps for your products rocks!

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Guy,

This may or may not be helpful to you, but I ....

(Stuff deleted for brevity)

§

Well, for what it was worth, that was his take on the issue. Let me know if it works out any differently than that assessment!

Eric Watson

PS: Your distributor's truck wraps for your products rocks!

Eric, thanks for the sections- now if I can ever get a call returned I at least have a starting point in the books! Thanks for the compliment on the trucks.

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  • 3 weeks later...
Anyone know what I would have to do to transfer beer from a brewery to my distillery and keep the goverment happy?

Guy,

We do this on a fairly regular basis. The brewery we work with mashes for us, and ferments our whiskey products. Our wheat mashes, which he also does, we ferment onsite.

On his reporting form he notes a transfer to a DSP - there is a line for this on the brewers report. On our TTB report, we note it as a "raw ingredient - other" coming in. We note volume by wine gallon, proof gallon and alcohol percentage.

This is how we were told to do this by our regional TTB person.

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Guy,

We do this on a fairly regular basis. The brewery we work with mashes for us, and ferments our whiskey products. Our wheat mashes, which he also does, we ferment onsite.

On his reporting form he notes a transfer to a DSP - there is a line for this on the brewers report. On our TTB report, we note it as a "raw ingredient - other" coming in. We note volume by wine gallon, proof gallon and alcohol percentage.

This is how we were told to do this by our regional TTB person.

Don, thanks for the info- wow, almost seems too easy! :rolleyes: I will check with our Specialist and see if he agree's we should do it that way. Really appreciate the info and I'll report back with more info soon as I have some.

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Don, thanks for the info- wow, almost seems too easy! I will check with our Specialist and see if he agree's we should do it that way. Really appreciate the info and I'll report back with more info soon as I have some.

Verified! We just confirmed with our TTB specialist that Don's method is the acceptable method of recording a transfer from a brewery to a DSP.

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  • 4 weeks later...
  • 4 years later...

Hey all,

I'd like to second this last question. We're working on an arrangement with a local brewery to do our mashing and fermenting for the first year or two to allow us to get started with a little less equipment & production time. I haven't the faintest idea on where to start when talking with them about pricing.

Thanks,

Joel

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  • 2 years later...

Guy,

We do this on a fairly regular basis. The brewery we work with mashes for us, and ferments our whiskey products. Our wheat mashes, which he also does, we ferment onsite.

On his reporting form he notes a transfer to a DSP - there is a line for this on the brewers report. On our TTB report, we note it as a "raw ingredient - other" coming in. We note volume by wine gallon, proof gallon and alcohol percentage.

This is how we were told to do this by our regional TTB person.

You noted that you report as "raw ingredient - other" on your ttb report. Is that your production report? Trying to figure this out for wines brought into the dsp. Thanks

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Yea - the bonding thing gets involved. The tax attaches to spirits at the time they are created, which is why you have an operating bond as A dsp, but it does not attach to beer until it is removed for consumption or sale, which is why brewers do not have an operating bond. Logic then dictates that since the beer removed from the brewery is not in bond, the liability does not transfer to your DSP operating bond. The term "consumption or sale" is defined in the beer regulations - Sec. 25.11, "Removed for consumption or sale. Except when used with respect to beer removed without payment of tax as authorized by law, (a) the sale and transfer of possession of beer for consumption at the brewery, or (B) any removal of beer from the brewery" The law allows a brewer to remove beer without payment of tax to a distillery for use as distilling material. Prior to about 1997 (don't quote me on the year, but I'm close), the law only allowed removal from a brewery to a contiguous DSP. A taxpayer relief act then changed it to allow removals from any brewery. 26 USC 5053(f) now reads, "Subject to such regulations as the Secretary may prescribe, beer may be removed from a brewery without payment of tax to any distilled spirits plant for use as distilling material." I added the emphasis. Beer may be removed to any DSP, not just to a contiguous plant and when it is, it is a removal without payment of tax, not a transfer in bond.

Some confusion can arise because the beer regulations have not been amended to reflect that change. They still state, at Sec. 25.201, that you may remove beer to a contiguous distilled spirits plant by pipeline without payment of tax. But as we have seen, it is no longer that restrictive. The spirits regulations were amended in 2011 and reflect the 1997 changes to the law. That is why Sec. 19.296 includes among fermenting materials, "beer received from a brewery without payment of tax." Wine is transferred in bond, beer is removed without payment of tax. And that is where the "round-about way the CFR handles this reflects the difference in bonding status of wine and beer." Given the provisions of law, yes, bluestar, it makes perfect sense.

The lesson is that It is dangerous to attempt to jump between commodities. You will often end up with an erroneous conclusion.

Finally, I have not read all of this thread, so someone else may have already noted that MadMacaw's citations posted in 2007 are all out of whack, notwithstanding the fact that he got them straight from a TTB agent. For example, if you bring wine onto a DSP premises for use as distilling material, you receive it in the production account. You do not enter it into the processing account. If you receive it for use as a flavoring, then you create the dump and batch record and conduct the operations in the processing account. . But you would not create a dump and batch record for wine received as distilling material - you either make neutral spirits or brandy, and all of that goes into production records and into the report of production operations. I didn't even read all of the citations in MadMacaw's post. I have no doubt that he reported accurately what the TTB agent said, but having been a regulatory for many years, I can vouch for the fact that not all their advice is good, even when I was the one giving it. I always told persons not to take my word, but to put their questions in writing and submit them for a written answer from someone who is authorized to state TTB's position. That is still good practice, if TTB can find the time to respond, given the way its budget has been bled in the name of deficit reduction.

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So it your understanding that the TTB wants to see wine reported into the production account, entered under part 4, materials used. As grape? or should I be writing wine? Or does it not really matter?

Thanks for your insight, dhdunbar

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You would write in under the category fruit and fruit products as grape wine (or pinot noir, etc), pear wine, apple wine, etc. If you are making brandy, be careful that the type of wine is appropriate for the type of brandy. That matters, in the same way that you can't make whiskey from molasses or rum from wheat.

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  • 1 year later...

Hello dhdunbar, In reading this old thread, for beer received from a brewery, I assume that I would record the receipt of beer in the Production Report, Part VI, Other Materials and add in a line for Beer and just record the gallons received.  From the Brewery I would have a receipt for the beer paid for (zero $ in this case).  While still in the totes received, waiting for distillation, I would label as beer with wine gallons and proof gallons.  Once distilled I would report it in the appropriate category on the Production Report, Part I.  Does that all sound correct?

BTW, your responses on the Forum are truly appreciated.

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You are correct.  Be sure that the brewery invoices and/or other shipping documents substantiate that the grain bill used meets the standard of identity for the product.  Because it is a brewery, we know it will be grain, but what grains matter when it comes to whether you can designate it as bourbon, etc.

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