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This post is intended to be a quick Public Service Announcement since we’ve observed an increase in this type of transaction.
Both copackers and distillers are routinely running afoul of regulations surrounding Transfer in Bond of bottled/canned product, by sending and receiving canned product via Transfer in Bond.
Unless the copacker and their distillery client are both under the same ownership:
Transfer in Bond of cans is not permitted as a routine operation.
Why is this? You have to dig deep into CBMA FAQs from TTB’s website to understand – keeping in mind that when it states “bottled” it also applies to “canned”:
FAQ TR-D11: “When distilled spirits are transferred in bond from the person who distilled or processed such distilled spirits (“transferor”) to another person (“transferee”) for bottling or storage of such distilled spirits for subsequent return under bond to the transferor for removal, may the transferee conduct any operations other than bottling or storage with respect to such distilled spirits before returning the distilled spirits in bond to the transferor?“
“In the normal process of bottling the spirits, the transferee in this scenario may add water to the distilled spirits as necessary to ensure appropriate label proof during bottling. The amount of water added may not be so much that the addition of such water would change the class or type (as set forth in 27 CFR part 5, Subpart I
) of the distilled spirit. Other than storage and bottling (including the addition of water as previously described), the transferee is not permitted to conduct any other operations on the distilled spirits prior to returning the distilled spirits in bond to the transferor under 26 U.S.C. 5212. Adding water for other purposes – for example, to reconstitute concentrate – is not “storage” or “bottling” activity. Transferees who conduct other operations on the distilled spirits are not permitted to return the distilled spirits in bond to the transferor.” [emphasis mine]
Since a copacker must add CO2 (carbon dioxide) or N2 (nitrogen) to your product in order to get it into cans, they are performing a processing (batching) operation. From a TTB/formulation standpoint, adding a food grade dissolved gas to your spirit is not different from adding flavoring or sugar: you need a formula, and it is a Processing operation!
Even if a copacking client ships pre-carbonated product to the copacker, the copacker will still have to ‘push’ the product through the canning line using a compressed gas, which will come into contact with the product liquid and be dissolved into it.
Add all this up, and you’ll see:
There is no avoiding the fact that putting a spirit-based RTD in cans disqualifies it from being transferred in bond back to the ordering distillery.
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