Alcohol Industry

Our alcohol regulatory and distribution lawyers represent clients in the full spectrum of US and international matters. We are adept at addressing the legal and regulatory aspects of operating in this complex market, including issues such as licensing, permitting, production, product formulation, taxation, trade practices, transportation, distribution, labeling, advertising and marketing of alcohol beverages. We also possess a deep understanding of the regulation and distribution of alcohol for non-beverage purposes such as flavor, extract and soft drink concentrate production, fuel alcohol (ethanol), as well as hospital, laboratory and industrial uses. The combination of our deep knowledge of the industry along with the strengths of McDermott’s M&A practice makes us a natural choice for advising clients with their transactional strategy and deal needs.

Our extensive work on high-stakes issues and our long history advising major suppliers have given us a deep, comprehensive understanding of industry best practices. Our lawyers and staff are very active before the US Alcohol and Tobacco Tax and Trade Bureau (TTB) and the Federal Trade Commission (FTC), and work closely with control authorities in almost every state. We also have broad experience with the regulation of beverages by US Customs & Border Protection and the US Food and Drug Administration. We understand the objectives of regulatory officials and apply this knowledge to effectively and efficiently advise our clients, including many of the best-known corporations and trade associations.

We are in close communication with key trade associations and government groups, and work with them to provide legislative and policy support to our clients. When commercial, criminal and class action disputes involving antitrust, intellectual property and other issues arise, our litigators take rapid action to maximize the likelihood of success, whether through negotiated settlements, at trial or on appeal.

Related Capabilities

• Advertising: Our Alcohol Regulatory & Distribution Group routinely counsels clients on the advertising requirements of the Alcohol and Tobacco Tax and Trade Bureau (TTB), Federal Trade Commission (FTC), state alcohol control authorities and attorneys general, as well as voluntary industry advertising codes. Our lawyers screen advertising across all media for compliance with government statutes, regulations and policies, and, when needed, conduct litigation risk analysis under the Lanham Act and similar laws. Our professionals have vast experience, having represented clients in federal unfair competition litigation, TTB permit actions, FTC investigations and state administrative proceedings arising from the advertising of alcohol beverages. We work across practices with our Intellectual Property, Media & Technology Group to provide comprehensive advice on all aspects of preparing and implementing marketing, promotional and advertising concepts.
• Antitrust and Trade Regulation: We have aided alcohol beverage companies successfully with their antitrust legal needs. From completing complex mergers to responding to government investigations—in the United States and in Europe—as well as providing advice on litigation arising from antitrust claims, we are skilled in all facets of antitrust and competition law. Our lawyers counsel clients on matters related to antitrust litigation, merger and acquisition analysis and defense, antitrust issues and consumer protection. Our team, which has many members with prior experience working in government and for regulatory agencies, represents clients in civil antitrust litigation in the United States in courts at the federal and state levels, and before the FTC and the DOJ. We also represent parties before the European Commission, the Bundeskartellamt in Germany, the Autorità in Italy and the Office of Fair Trading and the Competition Commission in the United Kingdom.
• Corporate, Securities and Financing: McDermott’s corporate lawyers possess extensive experience representing companies active in the alcohol industry. Our M&A lawyers have demonstrated success leading critical acquisition-strategy transactions and the related financing, handled by our skilled finance lawyers. For publicly traded companies, we provide ongoing governance and securities advice to ensure compliance with the US Securities and Exchange Commission. Keen to help clients focus on their business, we provide day-to-day general counsel support, as well reviewing, drafting, and negotiating contracts and agreements with suppliers and distributors along with third parties for advertising and marketing.
• Customs and Border Protection: We assist international and domestic clients with a wide range of customs matters that affect the importation of alcohol beverages into the United States. These matters include country of origin and marking, tariff classification and dutability, valuation and pricing, drawback, bonded warehousing and use of foreign trade zones. McDermott lawyers also have prepared customs compliance programs for many clients in a variety of industries. We have advised and represented clients before the US Customs and Border Protection on issues involving port entry procedures, customs protests, binding ruling proceedings and enforcement cases.
• Distribution: We have extensive experience representing companies in all aspects of alcohol beverage distribution, a critical component to the alcohol industry. We offer a broad array of services, including contracts and agreements, establishing and managing distribution networks, e-commerce activities, and assisting clients in assessing the legal and monetary effects that mergers, acquisitions and other reorganizations may have on their distribution networks. In the event of a dispute, we leverage our litigation team with experience handling alcohol distributor and broker terminations in states with and without alcohol beverage franchise laws, along with issues of cause, rights to new products and brand extensions, obligations of successor brand owners, disapproval of proposed changes of wholesaler ownership and other recurring distribution issues.
• Excise Taxation: Alcohol beverages are subject to a complicated variety of excise and occupational taxes. We draw on our experience with issues involving federal and state excise and occupational taxes to we counsel clients on methods for minimizing excise tax exposure such as the 5010 credit for distilled spirits and the requirements for successfully avoiding tax payment on exported beverages and industrial alcohol products. In addition, we represent companies in excise tax issues arising from audits and investigations by the Alcohol and Tobacco Tax and Trade Bureau (TTB) and routinely handle proposed TTB tax assessments and adjustments arising from audits, and often negotiate offer-in-compromise settlements.
• Food and Drug Administration: One of the most critical regulatory challenges facing the alcohol industry is maintaining compliance with the US Food and Drug Administration (FDA). Our lawyers understand the FDA’s impact on the industry and advise on the relevant legal issues to ensure compliance and avoid disruption to business operations. We advise on the regulations and policies affecting the production, labeling and distribution of alcohol beverages, including the standards for food ingredients and food contact substances, labeling of wines containing less than 7 percent alcohol by volume and the registration and record-keeping requirements of the Bioterrorism Preparedness Act of 2002.
• Government Strategies: We advocate before legislative bodies and regulatory agencies at the federal and state levels, and provide legislative strategy and support services on initiatives before the US Congress and state legislatures across the country. Our alcohol industry clients include large and small companies and industry coalitions and organizations. We represent clients’ interests involving rulemaking proceedings conducted by federal agencies, the Alcohol and Tobacco Tax and Trade Bureau (TTB), and state regulatory agencies. We maintain close ties to the leadership teams and key decision-makers in the US Congress, the White House, and federal agencies and departments.
• Import and Export: We advise US importers and manufacturers from around the world on all aspects of the importation and exportation of alcohol beverages and products. This includes the laws, regulations and policies of the Alcohol and Tobacco Tax and Trade Bureau (TTB) and US Customs and Border Protection (CBP), formerly US Customs. We represent clients on TTB policies that allow the export of alcohol beverages and products without payment of the federal excise tax on such products. We also have represented companies in criminal proceedings, permit actions and audits arising from export activity. Additionally, McDermott’s international trade group supports our alcohol industry clients, thereby offering the full strength of the Firm’s knowledge and experience handling import and export issues and ensuring minimal disruption to supply and business operations.
• Intellectual Property: The intellectual property (IP) lawyers at McDermott counsel numerous alcohol beverage companies on their IP needs, protecting the integrity of some of the industry’s most celebrated trademarks. We offer comprehensive services, covering portfolio management, trademarks, patents, trade secrets, copyrights and, when needed, litigation to protect and pursue prosecution of violators of protected IP assets. We have experience negotiating licensing transactions along with establishing brand identity policing programs. Our Firm has represented clients in trademark and trade dress infringement suits in federal courts throughout the United States, obtaining temporary restraining orders, preliminary and permanent injunctions and damages against infringers and importers of illegal counterfeit goods.
• Labeling: We routinely work with companies to develop labels that meet their marketing goals and comply with all US federal and state requirements and guide clients through the intricate process to obtain a Certificate of Label Approval (COLA) from the Alcohol and Tobacco Tax and Trade Bureau (TTB). In addition, we advise on and assist clients with meeting the labeling requirements of the US Food and Drug Administration (FDA), the agency with primary labeling jurisdiction over low-alcohol wines and ciders. In the event of an enforcement action, we have experience handling COLA revocation proceedings, permit actions before TTB, investigations by the Federal Trade Commission (FTC) and proceedings before the National Advertising Division of the Better Business Bureau.
• Non-Beverage Alcohol: In addition to our extensive alcohol beverage practice advice, we often counsel clients on the regulatory issues arising from the non-beverage use of alcohol. Whether used as fuel, in manufacturing, for flavorings and foods, or in medical supplies and research, federal law and the laws of some states impose little-known tax, permit, bond and change-of-ownership requirements on companies handling alcohol. Working in tandem with skilled alcohol beverage consultants on retainer with the Firm, our lawyers counsel non-beverage alcohol producers and users in the requirements of all applicable laws. Our team has experience in responding to Alcohol and Tobacco Tax and Trade Bureau (TTB) audits and investigations, administering regulatory compliance audits and implementing corrective action based on the results of such audits.
• Permitting and Licensing: We routinely assist alcohol beverage companies and non-beverage alcohol producers in obtaining government licenses and permits, maintaining those approvals through ownership changes and reorganizations, and defending against threatened license and permit suspension and revocation actions by regulatory authorities. At the federal level, we have extensive experience in the application process for basic permits, brewers’ notices and bonds. We also handle state licensing matters for the supplier and retail tiers of the industry. Our counsel includes advising clients on the impact of ownership changes on existing licenses and permits, and assisting in obtaining government approval of such changes. We possess first-hand knowledge of non-traditional entities and arrangements, including alternating proprietorships, joint marketing entities, in-transit warehousing and electronic retailing.
• Product Formulation: Many alcohol beverage products cannot be sold until the Alcohol and Tobacco Tax and Trade Bureau (TTB) reviews and approves their ingredients and formulation. Our professionals counsel producers on product processes and formulation, helping them to comply with the law and maximize tax, marketing and distribution benefits affected by product formulation. We advise on a range of alcoholic beverages, including flavored malt beverages, formula wines, distilled spirit specialties and other non-traditional products. Our staff routinely submits formula applications, statements of process and pre-import analysis requests to TTB and works diligently to address TTB concerns in order to facilitate timely approvals.
• Regulatory Development: For more than a decade, McDermott’s alcohol regulatory team has been involved in almost every significant federal regulatory initiative concerning alcohol. We have prepared numerous comments on proposed regulations and initiated new rulemaking on behalf of clients. Through our constant interaction with the Alcohol and Tobacco Tax and Trade Bureau (TTB), the US Food and Drug Administration (FDA), the Federal Trade Commission (FTC) and state alcohol control agencies, we stay abreast about the issues that concern the industry’s regulators. Drawing on this high level of knowledge, we identify issues before they arise and continuously expand the institutional acumen that is crucial to responding to regulatory initiatives.
• Tax: McDermott’s tax practice is among the best at advising clients on their tax needs. We provide clients in the alcohol industry with comprehensive tax services ranging from tax structuring for M&A transactions to federal tax planning, addressing state and local tax issues and transfer pricing related to client’s activities that cross borders. Our work also includes tax and corporate restructuring and reorganizations to maximize tax benefits and opportunities. When needed, we represent clients’ interests during audits and controversies, and have a track record of defending programs and strategies challenges by the taxing authorities.
• Trade Practices: We advise alcohol beverage companies on how to meet their promotional goals within federal and state trade practice laws, regulations and policies. Our lawyers have extensive experience dealing with Alcohol and Tobacco Tax and Trade Bureau (TTB) conventions, including the federal laws and regulations concerning tied house, commercial bribery, exclusive outlet and slotting fee policies. We have addressed trade practice issues arising under state law throughout the United States and have represented many clients accused of violating trade practice laws and regulations at the federal and state levels. Whether the issue is negotiating a settlement or offer-in-compromise with the government, participating in proceedings before state alcohol control authorities, litigating a trade practice action or defending against a criminal indictment, McDermott combines civil and criminal litigation with extensive alcohol beverage regulatory experience to protect our clients’ interests.

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