The notion of establishing a wine import business has no doubt crossed the minds of many. Even a California connoisseur, who has enjoyed the robust, delicate, and unique varietals from the world famous wine growing regions of Amador, Carneros, Paso Robles, Napa, Santa Barbara, Sonoma, and Temecula, could easily have travelled to France, Spain, Italy, Germany, Argentina, Chile, or other far-reaches of the globe, and dreamt of sharing some rare find within the Golden State.
But becoming a wine-importer requires more than mining for diamonds-in-the-rough—it also requires compliance with state and federal laws and the issuance of the proper wine licenses. And the application process in the state of California, however, can turn that dream into a nightmare. It can easily become overwhelming or result in a misstep for the unaware. Thus, retaining an attorney, an Alcoholic Beverage Control compliance specialist, or winery or wine-importer consultant to help navigate you through the process can be worth every penny. They should be able to help wade you through the paperwork by asking you the right questions and help streamline the process and prevent delays in licensing.
That being said, the best starting point is just understanding all of your options. There are many license issued by the California Department of Alcoholic Beverage Control (ABC), some of which can be combined, and some of which that cannot. Some of the license types when combined will have new conditions imposed thereon. How the license-types interact can dovetail with the importer’s business plan.
Foreign Importer Only
Legally, to import wine only, a person first needs to obtain a license on the federal level. The Federal Alcohol Administration Act (FAA) requires those wishing to import alcoholic beverages into the country to obtain an Importer’s Basic Permit from the Federal Alcohol and Tobacco Tax and Trade Bureau (“TTB”).
To apply for the Importer’s Basic Permit, a person must attach a Letter of Intent with a foreign winery to his or her application. The letter, which must be signed by the foreign supplier and written on its letterhead, should be a statement by the supplier conveying its intent to supply the person with its wine. While this Letter of Intent is not binding on the parties, it is required by the TTB for the Importer’s Basic Permit to even be processed.
The TTB also requires a Certificate of Label Approval (COLA) for each unique product or each brand of wine being imported. Since each product must have its label approved before entering interstate commerce, application for COLAS should be done as soon as the Importer’s Basic Permit is obtained and the labels are ready.
You will also need the Food & Drug Administration (FDA) registration number from each supplier (which the suppliers should already have if they are already shipping to the U.S.) and for yourself as a company if you will be storing the wine at your own facility. This registration process is a free of charge service. More information may be found on the FDA’s Registration of Food Facilities web page.
Finally, in order to import wine from some foreign countries, a certification is required to show that the practices and procedures used to produce the wine in the manufacturer’s country, comply with the requirements of the Miscellaneous Trade and Technical Corrections Act of 2004. This Country of Origin Certification consists of a statement from the manufacturing country’s government regarding the results of lab analyses conducted on the wine and stating proper cellar treatment was employed. Many international trade agreements, however, have exempted most countries from this requirement.
Overview of the License Types
In California, in addition to being licensed at the federal level, one is required to be licensed by the state. Although other states may not require an "importer" license type, California does (type 09). It all it does is mirror the rights of the federal license. Here is a breakdown of that and other common license types.
09. One of two licenses that govern the importation of wine to the United States. The 09 license lets an importer "take possession" of the imported wine as it enters the country and after it clears customs. Note that a 09 license cannot stand alone, but must be held in tandem with either a type 17 or 20 license, both of which are discussed later in this article.
10. Alternatively, an importer can hold a Wine and Beer Importer’s General license, which lets an importer bring wine into the United States with a goal of selling to wholesalers and distributors. Possession of this license can be a key factor in the establishment of a major wine importing business.
14. A public warehouse license is required for a warehouseman who provides warehouse service for alcoholic beverage licensees. The Act defines a public warehouse as "…any place licensed for the storage of, but not for sale of, alcohol, or alcoholic beverages, for the account of other licensees…" A public warehouse is one of the types of premises to which imports may come to rest (Section 23661).
16. Special, stand-alone license, for wine brokers. A wine broker is an independent contractor who acts as the agent in the sale of wine products. Typically, wine broker's services are contracted by smaller wineries and wholesalers who cannot maintain their own in-house marketing representatives. A wine broker means every person, other than a salesman who is regularly employed by a licensee, who engages as an agent in the sale or purchase of wine for or on behalf of another or others for a fee or commission
17. One of the most versatile licenses, the type 17 is most commonly paired with a 09 and/or 20 license. The type 17 authorizes a person or entity to act as a wholesaler and sell wine directly to retailers, thereby eliminating the need to locate another wholesaler.
20. This is a stand-alone license held under the restrictions of the licensing moratorium imposed upon many California counties. When paired with a type 17 license, the ABC lifts the moratorium, and adds significant conditions. Classically, this license is issued for Beer and Wine Off-Sale. With this license, however, a California-based (and properly licensed) wholesaler or importer can legally sell wine directly to California consumers. But, because possession of a wholesaler’s license impedes one’s ability to conduct face-to-face wine transactions with consumers, a wholesaler cannot take possession of the product and must make all sales through the Internet or by telephone. Additionally, the wine must be delivered to the California consumer via common carrier and directly from the licensed warehouse.
Please note that "take possession" does not mean what it appears to mean. All wine held “in possession” of licensed wholesalers may not actually be in their possession. It remains under their control, but wholesalers aren’t allowed to store wine without additional licensing. This more often than not results in the licensee employing the services of a public warehouse.
Importers should realize they can effectively combine licenses to achieve desired results:
17/20. This classic, custom crush combination allows the wholesaling of wine and delivery of the product by common carrier. Moreover, it allows sales to be made to retailers and other properly licensed wholesalers who sell to consumers. With this license, most sales must be made to California retailers. Also, the restriction on selling directly to California consumers kicks in, which means each sale must be followed by or preceded by a sale to a licensed retailer or wholesaler in the state of California within a 45-day period.
09/17/20. This is a common licensing strategy for smaller importers. The 09 portion allows the product to be imported into the state or country. The 17/20 combination works in the same way for importers as it does for custom crushers and wholesalers. The addition of the 09 license allows importers to sell wine obtained from overseas. Again, with this license, most sales must be with licensed California retailers, such as grocery stores, wine bars and restaurants. However, this combination does permit online sales to consumers.
10/17/20. The Importer General’s License (type 10) in combination with the 17/20 can be the ticket to the greatest number of privileges relevant to wine importation. Next to holding a 02-Winegrower’s permit, this licensing strategy offers the most avenues for wine transactions. With an Importer General’s Permit, the importer can sell the majority of its wine imports directly to other wholesalers and distributors. Also, with the type 17 license, selling directly to retailers is a viable option. Finally, the type 20 allows for conditional sales to California consumers (same conditions as with the 17/20 and 09/17/20 combinations) and also to California licensed wholesalers.
UPDATE – Please note that some of the regional offices of ABC are refusing to issue this combination. They are indicating that the privileges this combination boasts are actually duplicative of those inherent with the 10 and that the 10 explicitly does not permit any retail sales to consumers. We will keep track of this development as we hear from more regional offices.