Alcoholic Beverage Contract Manufacturing in Florida: Two Model Processes
Sometimes an alcoholic beverage brand developer wants to focus on developing and promoting a product brand and leave the manufacturing to someone else (sometimes called “white labeling”). This can mean good business for the manufacturer too.
Whether the product is classified a beer, wine, or distilled spirits, a variety of contract manufacturing arrangements are available in Florida. This article describes two model contract manufacturing arrangements: (1) contract manufacturing with a licensed brand owner, and (2) contract manufacturing with an unlicensed brand owner.
Contract Manufacturing with Licensed Brand Owner
Brand owners that have a Florida manufacturer (CMB, AMW, or DD) license or a Florida Broker-Sales Agent (BSA) license can contract with a contract manufacturer (sometimes called a contractor or “co-packer”) to make and package the products and deliver them to a licensed distributor selected by the brand owner (sometimes called the “reseller”). This is often the best arrangement when the brand owner wants to take an active role in the supply process and wants to designate its own distribution partners.
In this arrangement–which can be called “Reseller-Based Contract Manufacturing”–the manufacturer sells legal title to the finished products to the licensed brand owner and delivers possession directly to the distributor. The licensed brand owner simultaneously sells legal title to the distributor. For the brand owner, this means that it can collect payment directly from its own distributors. For the contractor, this means that it is not required to add the brand owner to its own manufacturing license.
Contract Manufacturing with Unlicensed Brand Owner
In some cases, the brand owner does not have a Florida manufacturer license or BSA license. This might be the case where the brand owner is content to let its products be sold through the contract manufacturer’s own distribution partners. Without a license to sell alcoholic beverages, an unlicensed brand owner needs a different contract manufacturing arrangement.
In this arrangement–which can be called “Royalty-Based Contract Manufacturing”–the brand owner grants to the contract manufacturer a license to make the products, and the contract manufacturer pays the brand owner a licensing royalty. The manufacturer then sells the products to its own distributors. For the brand owner, this means that it will be paid directly by the manufacturer. For the manufacturer, it means that the brand owner may become an Interested Party that must be included on its manufacturing license (particularly where the licensing royalty is a percentage of revenue from sale of the products to distributors).
Do you have any questions about alcoholic beverage contract manufacturing in Florida? Contact us at email@example.com to schedule a consultation with a beverage attorney.
Because we’re attorneys: Disclaimer. Post updated July 28, 2022.