CONSIGNMENT SALES RESULT IN FEDERAL BONDED WINERY PERMIT SUSPENSIONS

The TTB reported that it conducted a joint operation with the California Department of Alcoholic Beverage Control in March 2018, and as a result, four California wine wholesalers and two California wineries each served one-day stipulated permit suspensions for violations of the consignment sales provisions of the Federal Alcohol Administration Act. The four wholesalers who served suspensions are A&M Wines, Monticelli Brothers, Pavi Wines, and MB Vogelzang Vineyards. The two wineries who served suspensions are Six Sigma Winery and Tamber Bey Vineyards. Homage Vineyards surrendered its permit.

Specifically, these wineries engaged in consignment sales of wine to a trade buyer(s) who were not obligated to pay for the wine until after it had been sold to retailers. The TTB stated that “consignment sales arrangements, like other unlawful trade practices, are used to gain an unfair advantage over law-abiding industry members and ultimately limit consumer choice.”

During the period of suspension, the wineries cannot conduct those normal business activities that it otherwise would legally conduct through its basic permit including:

  • Contracting to purchase wine for resale at wholesale;
  • Filling wine orders for customers;
  • Placing orders of wine for customers;
  • Contracting to sell or offering to sell wine products;
  • Shipping wine in interstate or foreign commerce;  
  • Advertising or disseminating, or causing to be advertised or disseminated, in interstate or foreign commerce, any advertisements of wines.

During the period of suspension, the wineries may conduct activities that would allow maintenance of its current stock or inventory such as:

  • Taking inventory of warehoused goods;
  • Performing administrative activities such as bookkeeping;
  • Rearranging warehouse stock;
  • Altering, changing, or creating, but not placing in interstate or foreign commerce, advertisements of your wine products

In New York, these practices would also result in disciplinary action by the New York State Liquor Authority.

 

Alcoholic beverage manufacturers and wholesalers who have questions about legal compliance may attend TTB seminars given around the country at trade organization meetings or download manuals and webinars from the TTB website.

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