Importing sake into the United States is a multi-step process involving regulatory requirements from multiple government agencies, including the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), U.S. Customs and Border Protection (“CBP”), and the Food and Drug Administration (“FDA”).
The process ensures that the sake complies with U.S. laws on labeling, packaging, taxes, and public health standards. Below is an overview of the key steps involved in importing sake.
Obtain an Importer’s Permit
Before you can import sake into the U.S., you need to obtain a federal importer’s permit from the TTB. The TTB regulates the importation of alcohol beverages, including sake, to ensure compliance with federal laws. To apply for an importer’s permit, you must:
- Submit an application for a federal basic permit.
- Provide documentation about your business, including source of funds and ownership structure.
- Obtain a Letter of Intent from a foreign supplier.
This is not an exhaustive list. Our firm has handled many importer applications before the TTB and can generate a checklist of items required for your company to apply for the federal basic permit application.
Ensure Compliance with FDA Regulations
The FDA oversees the safety of food and beverages, including alcohol beverages like sake. When importing sake, the product must meet FDA requirements, such as ingredient safety and proper labeling. This includes:
- Ensuring the sake is free of harmful contaminants.
- Verifying that the sake supplier must also obtain an FDA food facility registration and maintain a U.S.-based agent.
Customs and Border Protection Clearance
Once the sake arrives at the U.S. border, it must go through U.S. Customs and Border Protection (“CBP”). The key steps include:
- Filing an import entry with CBP, which includes submitting documents such as the commercial invoice, packing list, and the bill of lading.
- Ensuring all required duties and taxes are paid to the CBP. These taxes are typically calculated based on the volume and value of the imported alcohol.
- CBP will inspect the shipment to confirm compliance with federal regulations before clearance.
Sake Label Approval by the TTB
Before distribution, imported sake labels must be approved by the TTB. The label must include several pieces of mandatory information, such as:
- The name of the product.
- Alcohol by volume (“ABV”).
- The name and address of the importer.
- A Government Warning Statement.
- Any other claims (e.g., gluten-free, organic, etc.) must be substantiated.
Sake importers must submit the labels for approval via the TTB’s COLAs online system.
State-Level Compliance
In addition to federal regulations, state laws must also be considered. Every state has its own rules regarding the sale and distribution of alcohol beverages, which could involve:
- State permits for the sale of alcohol.
- Specific importation procedures for each state.
- Varying tax rates depending on the location.
Check with individual state alcohol regulatory bodies for compliance information.
Taxes and Duties
Imported alcohol, including sake, is subject to federal and state excise taxes. The TTB imposes taxes on imported alcohol, which are generally based on volume (measured in gallons or liters). The rates for sake can vary, and it’s important for importers to understand and calculate these duties correctly.
The Customs and Border Protection also requires importers to pay any additional duties at the port of entry.
For federal tax information, visit the TTB’s excise tax page.
Contracts Needed Between the Importer and Producer
When importing sake into the U.S., an importer will typically need to establish several key contracts with the foreign producer to ensure a smooth transaction and compliance with U.S. laws. These contracts protect both parties and clarify their rights and obligations. Some important contracts that may be needed include:
- Importation Agreement: This contract outlines the terms and conditions of the importation arrangement between the producer (often a sake brewery) and the U.S. importer. It should specify details like product pricing, delivery terms, quality control standards, and responsibilities for obtaining permits and licenses. It will also define the payment terms, such as upfront payments, shipment schedules, and freight costs.
- Exclusive Distribution Agreement (if applicable): If the importer is given exclusive rights to distribute the sake in certain U.S. regions, an exclusive distribution agreement will be needed. This contract typically includes terms about the geographic area, minimum purchase commitments, and the duration of exclusivity.
- Shipping and Freight Agreement: The shipping and freight agreement establishes the terms for shipping the sake from the producer in Japan (or other producing countries) to the U.S. This includes responsibilities for handling, shipping costs, insurance, and the transfer of risk from the producer to the importer.
These contracts are critical to ensure the legality of the transaction, maintain clear expectations between parties, and protect the interests of both the importer and the producer.
Selling Alcohol Through the Three-Tier System
In the United States, the alcohol industry operates under a three-tier system that divides the process of alcohol distribution into three distinct phases: production, distribution, and retail. The system was established after the 21st Amendment repealed Prohibition, to regulate the sale and distribution of alcohol beverages and prevent monopolistic practices. Here’s how it affects importers:
- Tier 1 – Producers: This is where sake is manufactured by the producer, which could be a sake brewery in Japan. In some cases, the producer may be responsible for obtaining necessary certifications, labels, and permits in their country before sending the sake.
- Tier 2 – Importers and Distributors: After the sake arrives in the U.S., the importer assumes the role of bringing the product to market. However, under the three-tier system, importers generally cannot directly sell alcohol to consumers. Instead, they must sell their imported sake to a wholesaler or distributor, who then sells the product to retailers (including restaurants, bars, package stores, and other licensed businesses). This tier often involves wholesale agreements that specify pricing, quantities, and delivery schedules between the importer and distributors.
- Tier 3 – Retailers and Consumers: The final tier consists of retailers who sell the sake to consumers. This can include liquor stores, restaurants, and bars that hold the necessary licenses to sell alcohol. Importantly, retailers are responsible for complying with local, state, and federal laws regarding the sale of alcohol, including age verification, hours of sale, and advertising.
The three-tier system is designed to maintain a separation between the production, distribution, and retailing of alcohol. This separation helps prevent any one entity from controlling the entire process, promoting fairness and preventing monopolies. Importers must ensure they work within this system, as bypassing the system or selling directly to consumers can lead to serious legal consequences.
How Can Lindsey Zahn P.C. Help Your Sake Importer Company?
Importing sake into the U.S. involves navigating a complex regulatory landscape, including obtaining permits from the TTB, ensuring FDA compliance, clearing customs, obtaining label approval, and understanding state laws. Because these requirements are subject to frequent updates and can vary significantly depending on the state or even the type of sake being imported, working with an experienced alcohol beverage attorney can help ensure that all requirements are met, and the process is smooth.
Contact Lindsey Zahn P.C. to schedule an introductory meeting to discuss your needs and products and to learn more about how we can help: info@zahnlawpc.com or (929) ZAHNLAW (929-924-6529).