Wholesale State Status Key + Definitions

Control State:

The state government acts as the wholesaler/distributor and retailer for some or all categories of alcoholic beverages. (PA and UT are control states for wine.) For more information about control systems go to the NABCA website.

Franchise “Monopoly Protection” Law:

Laws which govern the relationship between the producer and the licensed distributor that safeguard the distributor and significantly restrict the ability of a winery to terminate the relationship.

License State:

License states do not participate in the sale of alcohol beverages and regulate through the issuance of licenses to industry members that do business within their states. (CA is a license state.) For more information about license states go to www.ncsla.org.

Glossary

Alternating Proprietorship (AP):

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. 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.

AVA (American Viticultural Area):

American viticultural areas (AVAs) are designated areas for growing wine-grapes in the U.S. An AVA is distinguishable by its unique geographical features. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to its geographic origin. The boundaries of these areas are distinctly defined by the Alcohol and Tobacco Tax and Trade Bureau (TTB). To label a wine with an AVA, not less than 85% of the wine must be derived from grapes grown within the boundaries of the viticultural area.

Capacity Cap:

Excludes wineries whose annual production exceeds a set amount.

Common Carrier:

FedEx and UPS are common carriers. The common carriers only accept wine shipments only from approved licensed entities. Go to www.fedex.com/us/wine and www.ups.com/wine for more information.

Direct-to-Consumer (DTC):

Sales which are shipped to a consumer’s home or office address by a common carrier. Wine must be for a consumer’s own personal use.

Distributor/ Wholesaler:

Entity licensed in a state to purchase product from suppliers and/or importers for resale to retail licensees. In many cases, principles must be residents of the state issuing the license in order to obtain the license.

Estate:

The term Estate is not regulated by the TTB, per se. When used on a label, TTB will expect the term Estate to be used in a way that is truthful, accurate and not misleading.

Estate Bottled:

The term Estate Bottled is used to denote combined growing and bottling conditions. The bottling winery, which must be located within the labeled viticultural (AVA), must grow all of the grapes used to make the wine on land owned or controlled by the winery within the boundaries of the labeled AVA. The bottling winery will crush the grapes, ferment the resulting must, and finish, age, and bottle the wine in a continuous process (the wine at no time leaving the premises of the bottling winery).

Interstate:

Sales and shipments that originate outside the boundaries of the destination state.

Intrastate:

Sales and shipments occurring with within in the boundaries of one state.

Invoice Report:

A spreadsheet provided to the state with detailed sales information for each sale within that state, or a copy of all invoices sent to the state in the preceding month.

Self-Distribution:

Self-Distribution refers to the ability of a winery to act as their own wholesaler by selling directly to retail and restaurant accounts.

Three-Tier System:

The three-tier system for distributing alcoholic beverages was established after the repeal of Prohibition in the United States. The three-tier system allows the state to control alcoholic beverages through licensing. In a three-tier system producers/manufacturers (first tier) can sell only sell their products to wholesalers/ distributors (second tier) who then sell to retailers (third tier), and only retailers may sell to consumers.

Tied House:

A "tied house" is a practice whereby an industry member induces a retailer to purchase its alcohol beverages. Under federal tied-house law, it is unlawful for an alcohol beverage manufacturer or supplier to “induce” directly or indirectly, any alcohol beverage retailer (such as a bottle store, bar or restaurant) to purchase any products from that supplier to the “exclusion,” in whole or in part, of other suppliers’ products. Inducements include, but are not limited to, furnishing, giving, renting, lending, or selling to the retailer anything of value (subject to various exceptions).

Vintage Date:

Vintage wine is wine labeled with the year of harvest of the grapes. Wine labeled with a vintage date must also be labeled with an appellation of origin. If an American or imported wine is labeled with a viticultural area (AVA) appellation of origin (or its foreign equivalent), at least 95% of the wine must have been derived from grapes harvested in the labeled calendar year. If an American or imported wine is labeled with an appellation of origin other than a viticultural area (or its foreign equivalent), such as a county or state, at least 85 percent of the wine must have been derived from grapes harvested in the labeled calendar year.
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