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A frequent question from DSPs is how do I record the production and sale/shipment of ready-to-drink (RTD) cocktails in Keg format (e.g. sixtel, corny keg, beer kegs, etc)?
The short answer: in the United States, you cannot.
The background is usually the same: a cocktail in the Tasting Room becomes popular and turns into a batched/kegged cocktail. Then, bars/restaurants and wholesalers (especially smaller wholesalers) will beg you for keg-format RTDs. Products like beer, wine & seltzers are sold in bulk/keg formats all the time, so it’s understandable why you’d think that an RTD (with similar alcohol content) would also be allowed.
However, Federal Regulations treat spirits differently from fermented beverages. No allowance is made in the regulations for seltzers, low-ABV products or carbonated products. Federal Regulations treat a 5% ABV spirits-based cocktail effectively the same as 40% ABV Vodka.
To understand why the regulations forbid the selling of keg-format RTDs, you have to stitch together a few parts of the Code of Federal Regulations:
27 CFR 1.10 ‘Definitions’: “In bulk. Distilled spirits in containers having a capacity in excess of one wine gallon.”
27 CFR 1.80 ‘Sales of distilled spirits in bulk’: It is unlawful for any person to sell, offer to sell, contract to sell, or otherwise dispose of distilled spirits in bulk, for nonindustrial use, except for export or to the classes of persons enumerated in §§ 1.82, 1.83, and 1.84.
The “classes of persons enumurated” is DSPs, customs bonded warehouses, wineries, and government agencies. Note that wholesalers/retailers are not part of this list.
Not only is it forbidden to sell kegs to wholesalers/bars/restaurants, you cannot even prepare a kegged cocktail in your DSP for sale in your own tasting room without running afoul of this regulation. Your tasting room cannot be part of your DSP (27 CFR 19.52(d)) and therefore cannot receive spirits “in bulk”.
Many distilleries are violating these provisions as a routine course of business, without realizing it.
The regulations cited above apply to all DSPs in the US and (unlike labeling regulations) they apply even if the product never leaves your home state.
The legal workaround (which applies to both Tasting Rooms and 3rd party sales) is to bottle the base spirit(s) into approved fill size(s) with COLA/Formula approval, sell the spirit in approved sizes and give away the cocktail recipe. Your customers and tasting room must create the keg themselves, on their own premises, using spirits poured out from approved fill sizes (which have a maximum capacity of 1.8 L or about ½ gallon).
