How do the regulatory responsibilities and financial investments differ?
- Independent Winery or Bonded Wine Cellar: When a company qualifies as a stand-alone winery, it is responsible for all production activities that take place on the bonded premises and the recordkeeping that documents those activities and filing reports about the activities to TTB. This may include obtaining label approval for the wine prior to bottling and paying excise tax on the wine. The proprietor incurs expenses for all necessary winemaking equipment and premises.
- Alternating Proprietors: When two or more wineries are approved by TTB to share the use of portions of the same bonded wine premises on an alternating basis, they are known as Alternating Proprietors. The wine company which owns or controls the building is known by TTB as the “Host,” and the other wineries which share the premises are referred to as “Tenants” or “Alternators.”
The Host and the Tenant wineries are each fully qualified as bonded wineries with TTB, and each company is responsible for its own production, recordkeeping, reporting, labeling, and taxes, independent of one another. The tenant proprietor must direct and be fully responsible for those things that are usual and customary for the production, bottling, and storage of wine (as applicable) and the managing of the business. See TTB Industry Circular 2003-7 for more information.
In most situations, the Host agrees to rent space and equipment to the Tenant proprietor. This allows existing wineries to use excess space and capacity and gives new entrants to the wine business an opportunity to begin on a small scale without investing in a winery building and all of the necessary winemaking equipment.
- Custom Crush Operations: Wineries are sometimes approached by a customer who would like to have wine produced. The customer often has access to grapes or other materials and would like to have them made into wine, but does not want to produce the wine. These customers are known as Custom Crush Clients.
The custom wine producer must be fully qualified as a bonded winery. The winery is responsible for all production, records, reports, labeling, and taxes, even though it is producing the wine for a customer. The wine premises that bottles the wine obtains approval from TTB for the wine’s label, and the wine premises that removes the wine from bond pays the Federal excise tax on the wine, regardless of who owns the wine. The producing winery incurs the expenses for winemaking equipment and winery premises.
In most cases, the custom crush client needs to qualify for a Federal Basic Permit as a Wholesale Liquor Dealer (Wholesaler) under the Federal Alcohol Administration Act. Please see TTB’s Wine Frequently Asked Questions for further information and exceptions.
A custom crush client Wholesaler has minimal TTB recordkeeping requirements. The custom crush client Wholesaler has no production, labeling, tax, or reporting responsibilities. All of these matters are the responsibility of the bonded winery or wineries with whom the customer is working to have the wine produced, labeled, and taxpaid.
This table illustrates how the primary responsibilities differ:
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Stand-Alone Bonded Wine Premises
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Alternating Proprietor Host
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Alternating Proprietor Tenant
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