Jump to content


Recommended Posts

My suggestion wasn't really serious because no one is going to pull Scotch or Irish whisky from the US market or even contemplate doing so.

But likewise, even if the authorities on the other side look favorably at the idea, you'll find opposition from their producers.

But just as we (the US) don't have to listen to what the Swiss say can be labeled absinthe, they have the right to call whiskey what they want.

Can't fault you for trying though. If anyone can institute change in this area, it'd be you. Your track record in getting laws and regulations changed is impressive.smile.gif

Link to comment
Share on other sites

  • 3 months later...

Just out of a meeting with the Senior Director of Technical Barriers to Trade Office in DC.

The USTR is in the process of addressing certain trade barriers about to be taken up by Australia, Israel an some Asian countries which relate directly to this issue.

Israel is about to adopt EU labeling standards, Australia has just adopted the EU labeling standard, which means many international brands will be excluded from Australia and Israel. DISCUS has weighed in with the USTR objecting to Israel's adoption of the EU standards since it would mean many American brands controlled by DISCUS members would be excluded since some of those brands are blended with GNS. This may be a case where DISCUS interests align with those of the small distillers for reasons unrelated to introduction of new American whiskey abroad.

Meetings are scheduled to address this issue. I was told the USTR had no idea the size of the micro community and its impact on the job market, agriculture and exported goods. Position papers are being developed to argue the point that American Whiskey is defined by the US Government and quid pro quo with Scotch whiskey as far as regulation and export/import is what is appropriate.

I raised the issue: "Single Malt Scotch Whisky" does not meet US labeling regulations since it is not aged in a NEW barrel and therefore is not a "Type" under US law. But the Scotch Whisky producers are allowed to sell it in the US as a "Type" because it is made under Scottish rules and we recognize that.

The good news is that now the USTR is aware of the issue at the highest level and at the next "rules" meeting in Geneva the topic will be addressed,and especially so now that the same issue is being addressed with regard to Israel with the blessing of DISCUS and the TTB. The precedent is set.

The bad news is the EU rules making is slow and difficult. We'll have to wait, be patient and persistent and see.


Link to comment
Share on other sites

Thursday, 16 September 2010

Today during a press conference staged at the NATIONAL PRESS CLUB in Washington DC, the President of the NATIONAL PUERTO RICAN COALITION Rafael Fantauzzi called for a Federal level investigation of what he characterized as a "sweetheart deal" between the Virgin Islands (a US territory) and DIAGEO, the worlds largest liquor conglomerate.

"Clearly, Governor DeJongh (VI), his advisors Congresswoman Donna Christensen, and the legislature of the Virgin Islands gave away the store and, in essence, more than 6 billion dollars of federal funds to a foreign company in return for just 40 jobs," said Fantauzzi. "The subsidy to Diageo is worth about twice the cost of its rum production."

The deal also included a $250million "state of the art" distillery paid for by the Virgin Islands and to be given free of charge to Diageo and 50% payment of the Excise Tax collected by the US government for rum produced BACK to Diageo.

The overall deal puts roughly $6 BILLION of American tax funding which was intended for "Economic and Infrastructure improvements" directly into the corporate coffers of the world's largest liquor conglomerate; whose CEO by the way just got a 72% raise in his salary. DIAGEO will receive $6.38 in direct payment for every proof gallon of rum they make in the VI, which cost them $3.07 to produce. Added to that is the gift of a $250Million facility and subsidies on molasses, freezing the cost to DIAGEO of molasses at $.15 per gallon (it sells now on open market for $1.50 a gallon) for the next thirty (30) years, renewable at DIAGEO's discretion for another thirty years. No matter where the price of molasses goes for the next 60 years, DIAGEO will still pay just fifteen cents per gallon.

I addressed the speakers when comments were invited and expressed our (small distillers) profound disappointment at this completely inappropriate use of US tax dollars. Pointing out that there are about 200 American craft and artisan distillers with second mortgages, working for no salary, employing locally, buying locally produced raw materials and struggling to meet the cost of doing business, no small part of which is the full board Excise Tax we pay on our goods. On behalf of all the small distillers in the US, I took the liberty of supporting the NPRC call for investigation of the details of this deal, which was lobbied strongly by Charlie Rangel and Congresswoman Donna Christensen. Rangel is accused of keeping the bill from coming to debate which would have limited the amounts the Virgin Islands or Puerto Rico would be permitted to pay out as incentives to 10%. In this case the payment by VI to DIAGEO will be 50% of the rebated taxes paid by the US to VI for "economic development".


Met with two Legislative Assistants for Senator Gillibrand at the Russell Senate building to discuss reduced excise tax for micro producers. They agreed it was appropriate and will work with Congressman Hinchey's office to propose a bill to give micro spirits producers quid pro quo with the brewers and wineries who pay 20% the rate of excise tax the big producers pay.

They are also addressing the issue of the EU prohibition on legal American Whiskeys less than three (3) years in oak. This issue has also been taken up by the Offices of the United States Trade Representative, which is facing the same question with the Israeli proposal to take up the EU standards for labeling, and Australia, and Canada; thereby redefining American Bourbon and Rye Whiskeys. Turns out that DISCUS is supporting this move since many of its members' products would be excluded or need to be reformulated to meet the EU regulations for "whiskey".

Busy day in DC.

Link to comment
Share on other sites

Ralph, thank you for all your tireless work on these three important issues.

If you manage to change the regulation on Fed. Excise Tax, we should call it the Erenzo tax, or something like that. I can tell you that if that passes, you will have made my X-mas card list, and I'll be naming my first born child, Gable. An 80% decrease in taxes? Yow. Sign me up.

Thank you!

I should add, if you need anything in the way of help, drop me a line.

Link to comment
Share on other sites

Ralph, all good news... of particular interest to all licensees of course is the potential for a reduced excise (not to take anything away from your effort re the euro definitions- thanks for that too!). Reduced excise would be a game changer for many. It just so happens that the other day I was rereading the reduced excise threads started by Melkon;



My question is what sort of guidelines did you discuss with the senators assistants? Are we looking at the same "all encompassing" definitions (generous producer volume, wide definition of producer) discussed in the Melkon threads or were narrower definitions discussed?

Please keep us up to date, and certainly let us know when we can be of help!


Link to comment
Share on other sites

  • 2 weeks later...
  • 2 weeks later...

I received a call the other day from the Senior Director of the TECHNICAL BARRIERS TO TRADE office at the Capital. In November he will head for Geneva for bi-lateral talks on various trade issues among the US, EU and other countries. He told me the issue of the definition of "whiskey" or "whisky" will be brought up as a topic of discussion, opening the way for possible revision or clarification of the labeling rules for non-Scotch whisky/whiskey.

In case you are not fully up to date, the issue is the effective banning of all new whiskeys (under three years in oak) from the EU, though they meet the US regulations and are considered whiskey/whisky by the US Federal Government, in particular Bourbon and Rye Whiskeys. New distillers making legal, approved bourbon or rye which is aged under three years in oak are prohibited from using the descriptive "whiskey" or "whisky" on any product sold in the EU, specifically including American Bourbon and Rye. We are attempting to get the ITO to specify that the three year requirement is for SCOTCH whisky, but that American whiskeys are defined by American law. It is the same position taken by the US pertaining to Scotch whisky which is defined in the CFR as "a product of Scotland made under the regulations of that country".

After over a year, we have gotten favorable response from the US TRADE OFFICE and their commitment to take this issue up at the November meeting. It is unlikely to be resolved at that meeting. We anticipate there will be time required to argue this out and perhaps some pressure must be brought to bear upon EU lawmakers to make the change. But it is moving forward.

Anyone considering exporting their whiskey to the EU has a stake in this, contact your Legislators and tell them to weigh in on the issue with the OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE.


Link to comment
Share on other sites

The following has been provided to the US TRADE OFFICE as the beginnings of their talking points on the question of the EU restrictions on new American Bourbon and other American whiskey types. Please review and add some flesh to these bones. I'm hoping to provide the USTO with a dossier of support and justifications for their discussions at the bi lateral trade talks in November.


• PROVENANCE, the US recognizes and respects the provenance of Scotch Whisky, quid pro quo is required in the recognition that Bourbon and Rye Whiskeys, in fact ANY whiskey legally produced in the US under US regulations must be equally recognized.

• DEFINITION, the labeling regulations conflict with the agreement to respect the American provenance of Bourbon and Rye and other American made whiskeys. The conflict arises in the LABELING requirement whisky/whiskey be aged three (3) years in wood. This is recent and is in keeping with the definition of SCOTCH whisky, not AMERICAN whiskeys. The EU may not, logically, agree to respect the rights of US producers exclusively to produce AMERICAN WHISKEY, then redefine American whiskey by restricting the sale by imposing restrictions on the labeling of American whiskey, so that the actual product conforms with the definition of Scotch whisky.

• CONSUMER CONCERNS, the argument of the Scotch Whisky Association and the EU is the protection of the authenticity of “whisky” so that the consumer is certain what they are getting and not confusing a non whisky with whisky as recognized by the Scotch Whisky Association. This is a reasonable protection for Scotch Whisky, but not all whisky/whiskey is Scotch Whisky. What the EU regulations pertaining to labeling must address in seeking to protect the consumer is the IDENTIFICATION of the whisky/whiskey source which then goes to the TYPE of whisky/whiskey is in the package.

• SUGGESTION, may include requirement for AMERICAN whiskey to state on the label that this is an AMERICAN WHISKEY, thereby ensuring no one will mistake it for Scotch Whisky (which is by the way a specious argument since it would say BOURBON or RYE WHISKEY on an American made whiskey); and this is supported in US regulations which specify that Scotch must be made in Scotland, if the spirits come from the US it won’t be mistaken for Scotch.

It seems obvious enough, but there is a problem in EU law. In the correspondence announcing the agreement, it is stipulated that AMERICAN whiskeys are distinct to America and American producers and made under US law. In the same correspondence noting the US agreement to respect EU labeling regulations that recognition is taken away since we are prohibited calling our legal whiskey "whiskey" in the EU unless it is aged three years in oak, which is not required under US law.

It is required and agreed, EU producers honor our labeling requirements when exporting to the US; yet we do not require the Scotch producers to change their methods to comply with American methods. The issue is quite clear. We are not making Scotch whisky. The EU agrees, the US agrees; but the conflict is in the contradiction between the agreements and their specific regulations.


Link to comment
Share on other sites

It's been a busy day, having just found out about BEAM's new brands, so much to do.

The fact of BEAM's COLA applications for so-called "whiskey, a blend" is a wake up call. It has impact upon a number of issues. The Diageo/Virgin Islands deal and the COVER OVER program; the current debate over HR 5034; and now the internationally accepted definition of Bourbon Whiskey.

As you see above, we are struggling with the EU on the issue of Labeling Regulations which effectively redefine American Bourbon, by placing a three year minimum on its time in oak, a requirement not in the American regulations, thereby keeping all new or "white dog" whiskey out of the EU though for instance "Corn Whiskey" is a recognized American "type" of whiskey.

Now along comes BEAM in the middle of this struggle and applies for COLA approvals for three new brands they call "whiskey, a blend" and which are blended not with grain neutral spirits which are commonly used, but with CANE neutral spirits which are cheaply available and as a result of the Virgin Island/Diageo deal. The prospect holds the promise of cheap non-grain based neutral spirits.

Since the CFR does not make the clear distinction between Cane and Grain when it allows "neutral spirits" to be blended with whiskey, there is ambiguity in law. The ambiguity does not exist in the minds of most whiskey makers or consumers. Whiskey is a grain based alcoholic spirit.

Should BEAM be permitted to use cane neutral spirits in their whiskey, the struggle to convince the EU to honor the US definition of Bourbon Whiskey or any other type of American whiskey spirit will be made more difficult since it will call into question on the international level the American definition of "whiskey" as, in some cases, not necessarily a grain spirit.


Link to comment
Share on other sites

On the question of ABSINTHE and the Swiss attempt to "own" the term, this communication has come to me from the US ITO:

Mr. Erenzo:

The Swiss Federal Office of Agriculture has given the petitioners for the PGI for Absinthe as well as the stakeholder federal agencies the opportunity to respond to the oppositional arguments. They have until November 17. Apparently, 42 oppositions were registered.


Jen Levine

International Trade Specialist

Office of European Country Affairs

International Trade Administration

Tel: 202.482.0431

I urge all concerned small distillers to send off their protests to join those already in hand, against the attempt of the Swiss to disallow the use of the term "absinthe" by any product not produced in Switzerland.

Link to comment
Share on other sites

How many new craft/artisan distillers of whiskey would like the opportunity to export their whiskeys to the EU as "whiskey"?

Remember that any product you wish to identify as "whiskey" or "whisky" must be in oak for minimum three (3) under current EU labeling law. So your "Corn Whiskey" or any other whiskey legally identified as "whiskey" in the US which is less than three years in oak is not "whiskey" or "whisky" in the EU. Even if it is "straight" whiskey in the US, two years or more in oak, if it isn't three years minimum, it ain't whiskey or whisky over there.

Remember, all they know in the EU for the most part are the very largest brands and no variety in American spirits.

Remember, spirits exported out of the US are exempt from Fed and State Excise Tax.

Hence the question, were you to have the chance to bring your legal American whiskey which may be less than three years in oak to the EU, would you do so?

Just trying to get a read on numbers. I know, I know, you can't keep up with domestic demand. Why reach out to EU when there are so many untapped markets in the US? It's impossible to get a distributor in the EU. It's too expensive to develop that market. I know all the arguments, but the fact remains there's a huge untapped market over there and with no help from anyone we managed to get a solid toehold on the European continent, so I've no doubt if you managed to get a license and produce a good product you're smart enough to figure it out and take advantage of the dearth of American products on EU bars.


Link to comment
Share on other sites

  • 1 month later...

Just had a question from the Senior Director for Technical Barriers to Trade Office, who is following up on EU prohibition on selling legitimate American whiskey as "whiskey" or "whisky" in the EU if it has not been aged at least three years. He asked me to estimate the number of cases (9 liter) might be marketed in the EU as a result of a lifting of that prohibition.

So I put it to the American craft whiskey makers who have no stocks three years old:

Would you be making young whiskey or white whiskeys to sell in the EU market as Bourbon or Rye Whiskey (or any other "Type" of American whiskey which is recognized as "whiskey" under US law)?

And over the next three years, what would you guess might be your goal for EU sales?

I realize this is guesswork, not unlike the cash flow projections you made when you dreamed up your business plan. But please take a stab at it. And remember a few things. The EU market knows mainly two things about American whiskey: it's not Scotch, and there are is only one American whiskey, Bourbon. It is a wide open market eager for your goods. Remember too, there is no FET or State Excise tax due on goods exported.

Anyone care to take a crack at estimating an EU market for your young whiskeys?

Link to comment
Share on other sites

This issue is being debated NOW in the EU at the bilateral trade talks. If you are interested in selling your atypical whiskeys in the EU, NOW is the time to comment to the US OFFICE OF TECHNICAL BARRIERS TO TRADE. Send your comments to:

Jeffrey Weiss, Senior Director

Office of the United States Trade Representative

600 17th Street NW

Washington, DC 20508

You can fax a comment direct: 202-395-4549.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...