contract bottling

[baronnahmias]

We are staring a new distillery and we have been approached by someone to produce a drink for them. They don't have a distribution license but have a liquor license for their restaurant. Does anyone had any experience with this or with contract bottling in general.

Your comments are appreciated.

Thanks,

Dorit

[Curtis McMillan]

From what we have found out. You can build that drink for them

1. you own it, *logo* names everything is under your TTB license so you own it.

2. I'm still unsure how they would make money out of it (You would pay up till the point you make profit then you could work out a % with them.)

I know its legal look at *bullet whiskey*

[Gwydion Stone]

1. you own it, *logo* names everything is under your TTB license so you own it.

Actually, no, you don't. You only own it if they sell it to you. It's all their intellectual property: idea, formula, label, logo, everything. They would only be contracting you to produce their product, making you a co-packer.

Baronnahmias, you don't specify what sort of drink they're looking for, but I'll assume it's a distilled spirit. There are many scenarios as to how to go about this, and assuming they don't want to market and sell the stuff outside their premises, the simplest is:

They contract you to produce the product, and agree to buy the entire production, whether by special order through the state or through a distributor. What the percentages are will be determined by the best negotiator, but you should at least make sure they're responsible for raw materials and packaging and any other initial costs.

If they do want to enter the stuff on the market, it gets a lot stickier.

Get a good business attorney to carefully vet any agreements. Trust me. I lost the entire proceeds of the first American production runs of Marteau because I trusted the wrong people. I was lucky to get my packaging and raw materials out of the deal.

[baronnahmias]

Actually, no, you don't. You only own it if they sell it to you. It's all their intellectual property: idea, formula, label, logo, everything. They would only be contracting you to produce their product, making you a co-packer.

Baronnahmias, you don't specify what sort of drink they're looking for, but I'll assume it's a distilled spirit. There are many scenarios as to how to go about this, and assuming they don't want to market and sell the stuff outside their premises, the simplest is:

They contract you to produce the product, and agree to buy the entire production, whether by special order through the state or through a distributor. What the percentages are will be determined by the best negotiator, but you should at least make sure they're responsible for raw materials and packaging and any other initial costs.

If they do want to enter the stuff on the market, it gets a lot stickier.

Get a good business attorney to carefully vet any agreements. Trust me. I lost the entire proceeds of the first American production runs of Marteau because I trusted the wrong people. I was lucky to get my packaging and raw materials out of the deal.

Thanks for your input. They do want us to produce distilled spirits and want to take it to market and I agree this is where is gets very complicated.

[Curtis McMillan]

Stone TTB told us that if we make and label anything for an outside vendor it was ours. Do you have a rule number for copacking?

[Curtis McMillan]

I agree it sounded dumb. Im not going to lie that I get one answer one day and a new one the next. I would just like to see the TTB rule. Does anyone have the number in the book or a link.

[Mixo]

I agree it sounded dumb. Im not going to lie that I get one answer one day and a new one the next. I would just like to see the TTB rule. Does anyone have the number in the book or a link.

I would recommend finding legal council that does contract production. Worth the money.