Reaching North American collectors, alongside your importer

The three tiers

American alcohol law separates producers and importers, distributors (also called wholesalers) and retailers, a category that includes restaurants. Wine moves through each tier in turn, and the separation exists partly to stop suppliers from owning or controlling retailers.

For a foreign estate, the first partner is the importer. A federal importer’s permit requires an office in the United States, so most estates work with an established licensed importer. The importer pays the federal duties and excise taxes and holds the label approval, known as a COLA, required for each label at the time of import. Its name, or that of the agent or sole distributor responsible, appears with a US address after the words “imported by” or a similar phrase, and the importer gives the Food and Drug Administration prior notice of each shipment. The estate, for its part, registers with the FDA through a US agent and renews that registration every two years.

State by state

Each state adds its own rules. Many require brands or labels to be registered before sale, and some require distributor appointments to be filed. In New York, an out-of-state supplier names a New York wholesaler as its brand agent; California requires no registration at all.

The rule that matters most is often the franchise law. Just under half the states protect distributors, typically requiring “good cause” to end a relationship. Some go further. In Virginia, a distribution agreement need not be in writing, a single accepted order can be evidence of one, selling the winery is not good cause to end it and a new owner inherits it. In practice, an estate’s first appointments in such states can outlast its plans, so agree the appointments state by state, and how they can end, with your importer before the first shipment.

Several states also require wholesalers to buy from the “primary American source,” usually the authorized importer, which limits gray-market imports of the same wine.

Why you cannot ship directly to collectors

Most states now allow wineries to ship directly to consumers, but the licenses generally require US production permits, and importers and foreign producers are largely ineligible. Retailers can ship across state lines only to a limited number of states, and the law is still being contested in the courts. Some states also restrict ownership across the tiers: New York, for example, bars anyone with an interest in a producer or wholesaler, at home or abroad, from holding a wine-store license. A collector in North America therefore buys an estate’s wine from a licensed retailer, from a restaurant or, in Canada, through the provincial system.

Tastings and collector dinners

Federal “tied-house” rules prohibit suppliers from inducing retailers to favor their wines with money, services or other things of value. There are exceptions: a supplier may conduct tastings at a retailer and may buy the wine for them from that retailer. States add their own rules. New York presumes that anything a supplier gives a retailer is an inducement, but a marketing permit lets out-of-state suppliers pour samples at licensed premises. California allows instructional tastings at retailers, with limits on pours and no gifts. Texas requires the wine at a trade tasting to be bought from the host retailer.

The practical consequence is simple. A collector dinner is hosted by a licensed restaurant or retailer, which buys and sells the wine, and what the estate’s own people may say, pour or take orders for depends on the state. Plan every event with your importer and distributor.

Working with your importer on collectors

Collector relationships work best when the importer is part of the plan from the start:

• Agree which cities, retailers and restaurants will carry the wine to collectors, and how the allocation is shared among them.
• Decide how direct inquiries from collectors are handled. In the United States they generally go to a licensed retailer; in Canada, to the agent or the provincial channel.
• Plan events a season ahead, so licensed partners can order the wine and arrange any permits.
• Agree what each side reports: where the wine has gone, how it has been received and where it has appeared on the secondary market.

Canada

Federal law requires imported wine to be bought by or for the provincial liquor authority and consigned to it, and each province runs its own system.

• Ontario. The LCBO buys and sells. Its Vintages channel carries fine and rare wines, including special offers of older bottles from producers’ own cellars. Agents, licensed by the AGCO, represent wines but cannot sell them, and the LCBO recognizes one agent of record for each product line. Wines can also reach collectors through the consignment program and through private ordering.
• Quebec. The SAQ is the importer. Collectors order agency-represented wines by the case through private import, then collect and pay at an SAQ branch.
• British Columbia. The Liquor Distribution Branch buys foreign wine through the agency the producer authorizes, and retail is shared between government and private stores.
• Alberta. Retail is private. Registered agencies import and market wine on consignment, with the AGLC as importer of record.

Allocations and the secondary market

Allocation is where an estate decides who drinks its wine. Some well-known domaines describe the outline publicly. Domaine Armand Rousseau, for example, exports about three-quarters of its production to some 30 countries and keeps the rest for a small number of private clients, French retailers and restaurants. When an allocation reaches people who will cellar and open the wine, it builds the estate’s reputation. When it reappears quickly at auction, it can unsettle the market for the next release.

Estates have tools. Bottle-level marks, such as Château Margaux’s laser engraving and coded seals, help authenticate wine and trace where it has gone, and in the United States the “imported by” statement names the party responsible for importing each bottle. The deeper protection is discipline: allocations made to trusted retailers, restaurants and private clients, and reviewed release by release.

Library releases and visits

Older wines released from an estate’s own cellar carry the strongest provenance there is, and collectors respond to it. Château Palmer and Château Haut-Brion have both recently offered back vintages from their cellars, and in Ontario the LCBO’s special offers present older bottles direct from producers. Released selectively, library wines reward an estate’s most committed buyers. Released carelessly, they can reach the secondary market as quickly as a new vintage.

Visits work the same way. Many estates receive visitors by appointment only and close their doors at harvest. The value of a visit lies in its quality: collectors who arrive prepared, with time to listen, become an estate’s most lasting advocates.

This note is general information, not legal, tax or insurance advice. Rules change and differ by state, province and country. For a particular wine, collection or estate, write to us.

Sources

1. Alcohol and Tobacco Tax and Trade Bureau, importing bottled alcohol beverages
2. 27 CFR § 4.35, name and address on imported wine labels (eCFR)
3. 21 CFR § 1.230, FDA food facility registration and renewal (eCFR)
4. Sovos ShipCompliant, wine distribution rules by state
5. SevenFifty Daily, doing business in a franchise state
6. 27 CFR § 6.95, consumer tastings at retail establishments (eCFR)
7. New York State Liquor Authority, trade practice issues
8. LCBO, the role of suppliers and agents
9. LCBO, Vintages online programs
10. SAQ, importation of alcoholic beverages (private import)
11. Domaine Armand Rousseau
12. Liv-ex, Château Palmer 2016 (second parcel) release
13. Decanter, Château Haut-Brion’s auction of wines from its own cellars