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special bulk orders with special sizes/volume

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Hi, everyone. 

We're a small distillery in Brooklyn, NY... a customer (hotel) wants to buy a bulk order of our whiskey for special events and to gift to their VIP guests. The size they'd like is different from our normal sizes. Do I have to price post? Retail and Wholesale? 

Thank you!

Marie

 

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I sure wish someone had replied to query, Marie.  We're exploring a similar situation, selling an entire barrel of spirits to a consumer.  I'm going to post my own question, so maybe we'll both get answers.

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Some non-specific advice:

As a general rule whatever you sell is going to have to go through all the normal channels. If you can legally sell directly to the public or a bar then fine, but labeling rules will still apply. I don't know if in New York a distillery can sell directly to a hotel (I'm assuming the hotel bar in this case), I can't in Maine, but  having dealt with other states I would bet that price posting will be required. NY regulators should be able to answer that quickly.

 

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I missed this, but having just fought with permits on line for about two hours trying to get it to "take" input #$%@%, I'm taking a little time to wind down.  So

1. You cannot sell an entire barrel of spirits to a consumer unless you first bottle the contents of the barrel into bottles of a size allowed by federal regulation. 

2.  See 27 CFR 1.80 for the prohibition against selling beverage spirits in bulk (in containers in excess of one gallon).  This is written into law and no variance can be granted. 

3.  See 27 CFR  5.47a for bottle and can sizes authorized for use. 

4.  See 27 CFR 19.513, 5.46(d) and 13.21(a) for discussion of distinctive liquor bottles.The best description is found in Sec. 19.513, so go there first.  It's too late and the section is too long to quote it here.   

  

 

 

 

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We have sold two barrels to private business buyers.  The price we charged was/is inclusive of bottling the product for the buyer.  We agreed in advance on the size of bottles, etc. (one wants 750ML bottles for use at their bar, the other 375ML for client gifts) They are welcome to stop by the distillery and sample their product, and they can decide when we bottle it.   We will print a modified label for use on their bottles to include their name, etc, and hope to be able to only make changes that fit within the "allowable revisions" so that we dont need to get an entire new label approved.  For us it works out that they are basically buying 250+ bottles at a wholesale price.

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In my opinion, HedgeBird describes exactly the way it must be done.  I'm not an attorney, so you should treat what I say next as a question for your attorney, i.e., proceed it with the phrase, "Is it true that ...?" 

My take on this would be that by agreeing to sell the product once it is bottled, you enter into an agreement for future sale.  It can't be an agreement for present sale because the goods that you must deliver under the agreement, spirits bottled and labelled with a private label, do not exist.  Since it is not a present sale, title does not pass.  You have merely identified certain goods to the agreement that will be sold when bottled.  Since you have not sold, or contracted to sell, or delivered bulk spirits, the agreement does not violate Sec. 1.80.  Since the bottle sizes are allowed, you do not have a problem with that either.

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Is this what is meant by "barrel futures?" It seems to me that "selling the contents of a barrel" is a sale in the present.  The customer has to put up some money in advance in order to end up with the product.  However, we're wondering just how the 3 tier system works for "selling" a barrel to a consumer.  Selling to a hotel would be easy--sort of, because, presumably they'd have an on-site sales permit.  But, just what cost does the buyer get charged when the distributor asks for their cut?  If it's a consumer who "bought" the barrel contents, it'll have to go through a licensed retailer, who also will mark up the cost.  Since it is something that is done, I'd like to hear from someone who has actually sold a barrel through the 3 tier system.  (Direct sales in California are limited to 3, [count 'em: 1,2,3] bottles per visitor--who takes a tour or gets an educational tasting.)

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