regulating bodies for spirits and alcohol include governmental agencies at the national and local levels, trade consortiums and associations, and nonprofit organizations. They have been involved with the trade since its very beginning: in Germany, local governments were already regulating distilling and the sale of spirits in the 1400s, when the trade was in its infancy. By the eighteenth century, Britain had a complex and comprehensive system of regulations in place that would have an enormous influence on the development of the spirits business, one that is still felt today. See excise, taxes, and distillation; and gin.
The United States
The spirits trade in the United States is regulated by agencies at state and federal levels as well as nonprofits. As a result, and owing in large part to the lingering legacy of Prohibition, individual states may have conflicting or contradictory laws for spirits with respect to those of their neighbors.
At the federal level, the Treasury Department manages the Alcohol and Tobacco Tax and Trade Bureau, or TTB for short. The TTB oversees the regulation and enforcement of multiple spirits laws, including the labeling and advertising of distilled spirits; sales and bottling of spirits; and importation and exportation. There are even regulations spelling out the rules of the manufacturing and use of “volatile fruit-flavor concentrate (essence).” The TTB also collects taxes on alcohol, tobacco, firearms, and ammunition sales. The TTB is a relatively new organization, having been founded in January 2003. Its previous incarnation, the Bureau of Alcohol, Tobacco, and Firearms, or ATF, was reorganized following the passing of the Homeland Security Act of 2002.
After the United States won its independence from the British, the young country found itself saddled with the war’s debt. In 1791, Congress passed the first set of laws to collect taxes from its citizens, among them, the Distilled Spirits Tax.
The tax was unpopular with some farmers, and from the start, collecting the tax proved difficult for US regulators. Some tax collectors were tarred and feathered; others were chased out of their homes. The discontent eventually festered into the Whisky Rebellion of 1794, when rebellious citizens fired upon federal tax collectors. The violence quickly escalated, prompting President George Washington to lead federal troops against the insurgents in September 1794. See Washington, George.
The insurrection lasted until mid-November, when a large number of the rebels, including their leaders, were arrested. Most of the rebels would eventually be pardoned, including the only two men convicted of treason.
Although violent opposition to the distilled spirits tax was quashed, lingering political pressure prompted Congress to repeal the distilled tax, and other income taxes, in 1802. This would remain the case until the War of 1812, when rising war costs forced the United States to reinstate taxes on distilled spirits and other sources of income. In 1862, costs related to the Civil War again forced Congress to impose several new tariffs on so-called sin and luxury items, such as jewelry, tobacco, and alcohol.
The Volstead Act, passed on July 22, 1919, ushered in the Prohibition era, which banned the production and distribution of alcoholic beverages. The catching of criminals, rather than the collecting of taxes, brought about the Prohibition Reorganization Act of May 27, 1930. The precursor to the TBB, now called the Bureau of Prohibition, was transferred from the Treasury to the Justice Department. Special Agent Eliot Ness would later gain fame by heading up the Prohibition Bureau, which successfully arrested and prosecuted mobsters such as Al Capone, who were profiting from illegal liquor sales.
The passing of the Twenty-First Amendment repealed Prohibition, and with it, the United States against found itself in need of a body on regulating spirits. The Federal Alcohol Administration Act, passed by the 74th Congress on August 29, 1935, was enacted to “further protect the revenue derived from distilled spirits, wine and malt beverages, to regulate interstate and foreign commerce and enforce the postal laws with respect thereto, to enforce the twenty-first amendment, and for other purposes.”
The nascent Federal Alcohol Administration, under the purview of the Treasury Department, was deputized as the country’s spirits regulator. The Federal Alcohol Administration, for example, outlined consumer-focused regulations, such as protections against deceptive labeling and detailed limitations on advertising of spirits. A separate entity, the Alcohol Tax Unit, dealt with tariffs; both agencies were merged in 1940.
Within the next few years, the Alcohol Tax Unit took on duties related to explosives, firearms, and tobacco, laying the groundwork for what would become the Bureau of Alcohol, Tobacco, and Firearms. In July 1972, following Treasury Department Order 221, the ATF was officially recognized as an independent agency, reporting to the Treasury. The ATF was later reorganized into the United States’ current regulating body, the TBB, in 2003.
In contemporary times, taxation on liquor and distilling still remains a flashpoint for the industry. The United States has benefitted greatly from liquor taxes, and revenues show no sign of a downward trend. In 1977, the United States collected $2.3 billion of alcohol tax revenue. By 2013, that number grew to $6.6 billion, according to analysis by the Tax Policy Center.
State and local taxes paid by the liquor industry added up to just under $54 billion in 2014, according to trade group Wine & Spirits Wholesalers of America. The group estimates that 1.83 million Americans have jobs, many of them in family-owned businesses, linked to the manufacture and sales of liquor and wine.
As a result, some of industry’s most recognized lobbying and trade group have taken a stance against higher liquor taxes. The Distilled Spirits Council, or DISCUS, argues that taxes on distilled spirits are much higher than similar taxes on wine and beer. Punitive tariffs, the group argues, punish the hospitality industry and threaten employees nationwide. The sentiment is echoed by the American Beverage Licensees trade group and the Wine & Spirits Wholesalers of America.
International Regulation
Most countries have their own regulating bodies that are not dissimilar to the ones in the United States, although they generally have fewer layers of bureaucracy (few countries impose regulations at the provincial level, although India is a very large exception). In the case of the European Union, its regulations parallel most of those of its member nations, although they often add additional detail, governing things such as regional designations and the like.
Internationally, regulating bodies sometimes operate as consortiums that promote the culture of their products, ensure the quality of their spirits, and provide guidance to producers.
The United Kingdom’s Scotch Whisky Association dates back to 1912, when the group that would later become the SWA formed as a way to safeguard the sector against rising taxes. See Scotland and Ireland.
In France, the Bureau National Interprofessionnel du Cognac, or BNIC, serves as the gatekeeper of the cognac industry. While privately funded, it serves in the interest of cognac producers and aims to protect and promote the spirit locally and internationally (as does the BNIA for Armagnac). See France.
Mexico, with its booming agave spirits industry, is home to the Tequila Regulatory Council (Consejo Regulador del Tequila, or CRT). As with its French and Scottish counterparts, the CRT hosts journalists, provides historical and contemporary education on its products, and protects the designation of tequila as a purely Mexican product by origin. See Mexico.
Across the world, regulating bodies may vary in structure and funding, but they tend to be unified in their focus on their native spirits. Brazil has the Brazilian Institute of Cachaça (IBRAC), which represents the cachaça industry. Japan established the Japan Sake and Shochu Makers Association in 1953. Groups are still being established even in modern times; the Irish Whiskey Association, a subset of the Alcohol Beverage Federation of Ireland, was just established in 2014. See Brazil.
Occasionally, two groups may even join forces. In December 2016, the Scotch Whisky Association announced a joint agreement with the Brazilian Institute of Cachaça, in which both industries would collaborate on “the prevention of misleading commercial practices, promotion of responsible consumption of alcoholic beverages, and mutual promotion and protection of the geographical indications (GIs) Scotch Whisky and Cachaça.”
See also excise, taxes, and distillation; and Prohibition and Temperance in America.
“The BNIC.” Cognac France. https://www.cognac.fr/en/bnic/home/ (accessed April 28, 2021). “The Civil War.” Tax History Project, http://www.taxhistory.org/www/website.nsf/web/THM1861?OpenDocument (accessed March 31, 2021).
“Federal Taxes and Regulation Policy for Distilled Spirits.” Distilled Spirits Council, http://www.discus.org/policy/taxes/ (accessed March 31, 2021).
“International Protection of the Tequila Designation of Origin.” Consejo Regulador del Tequila. https://www.crt.org.mx/index.php/en/pages-2/proteccion-del-tequila-a-nivel-internacional (accessed April 28 2021).Office of the General Counsel. Legislative History of the Federal Alcohol Administration Act. Washington, DC: Federal Alcohol Control Administration, 1935. Available online at https://archive.org/details/legislativehisto00unit (accessed March 31, 2021).
“Treasury Department Order 221.” https://www.atf.gov/our-history/timeline/treasury-department-order-221 (accessed March 31, 2021).
“The TTB Story.” https://www.ttb.gov/about-ttb/history (accessed March 31, 2021).
“Who We Are.” Scotch Whisky Association. https://www.scotch-whisky.org.uk/who-we-are/ (accessed April 28, 2021).
Wine & Spirits Wholesalers of America website. http://www.wswa.org/ (accessed March 31, 2021).
By: Elva Ramirez