An introduction to the US market
The US is the world’s largest wine market and is ranked the most attractive wine market in the world by Wine Intelligence. This is based on both wine market characteristics (premiumisation, accessibility and affordability, forecast growth) and economic factors (wealth measures, moderation).
It is also one of the most challenging markets. About 75 per cent of wine consumption in the US is domestic wine, and there are complex regulations that apply to all alcohol products.
The information below has been collected to assist wineries that are interested in exporting to the US. There is helpful guidance on opportunities and challenges, as well as explanations of some essential first steps, such as FDA registrations and applying for COLA waivers.
If you still have questions, you are welcome to reach out to the North America team at usa@wineaustralia.com.
Understanding the Three-Tier System
The three-tier system is a regulatory framework for distributing alcoholic beverages in the US. It was established after the repeal of Prohibition in 1933. The system is designed to ensure the safe production, distribution, and sale of alcohol to consumers, ensuring product safety, tax collection and helping to prevent market domination.
The three tiers are as follows:
- Supplier (ie the exporting winery)
- Distributor (the company that warehouses and delivers the wine)
- Retailer (the outlet that sells the wine to customers)
An important note is that all suppliers need a licensed importer in order to ship wine and sell it to a distributor. In some states it is legal for an importer to also act as a distributor. Importers are explained in more detail in a separate section below.
In most states, no one entity can be involved in more than one tier. Each tier is regulated and licensed separately. The structure prevents any one tier from having a financial interest in another, which led to aggressive sales tactics and unhealthy consumption in the pre-Prohibition era.
Due to each state regulating the commercial laws of beverage alcohol, states may incorporate laws which are unique to their respective market. Wineries should not assume that laws that apply in Connecticut, for example, are the same as those enforced in California.
Exploring different importer models
While all international wine sold in the US requires a US-based importer, the structure of the company as well as the role that they play in selling product can vary.
In general, importers fall into two categories. Traditional importers typically employ salespeople who call on distributors and retailers to make sales. Clearing importers will fill orders and store wine but typically do not have salespeople. Wineries may work with clearing importers if they have their own sales support or if they are filling an order to a retailer. More details on how each model operates, and the various pros and cons, are described below.
Types of importer arrangements
Traditional importer
This is the standard structure where the importer purchases wine and acts as the winery’s official representative in the market. Some services typically provided are:
- Ordering from the winery
- Working to ensure that export labels are compliant and submitting those labels to the Alcohol and Tobacco Tax and Trade Bureau (TTB) for a Certificate of Label Approval (COLA)
- Storing wine in a licensed warehouse
- Presenting to retailers for potential sales
- Processing orders from retailers
- Submitting wine to US media publications
- Participating in trade and consumer events
- Managing distributors
Clearing importer
These businesses can legally import and store wine, make deliveries and submit label approvals. They usually do not employ salespeople or actively sell the wine stored in their facilities.
Clearing importers will charge fees to receive, store and ship wine, and only when a distributor or retailer buys it will the winery get paid.
Selling directly to a retailer
Even with the three-tier system in place, some larger US retailers sell exclusive labels to their customers. This is not illegal. The wine must still be brought in through an importer and delivered to stores by a distributor. Exclusives allow the retailer to make increased margin and offer a product not available from a competitor. Depending on the retailer, order quantities may be hundreds or even thousands of cases.
See our FAQs for some common questions about different types of importer arrangements
Shipping samples to the US
Sending samples from Australia to the US is notoriously strict. Every sample bottle must be registered and accounted for by the Alcohol and Tobacco Tax and Trade Bureau (commonly referred to as the TTB). Despite the difficulty and extra administrative work, having samples in the US to send to potential customers is a very important part of finding an importer or retailer to work with directly.
The most common solution for sending samples to the US is to work with a licensed importer. If you do not have an importer, a number of logistics providers will assist with the process for a fee. Some options are listed below:
- Get Freighted - Based in Sydney, NSW. Whilst they are not a US-importer, they can facilitate wine shipments from Australia to the USA, even to private residences.
- American Spirits Exchange - Based in Williamsport, PA US
- Wine Key Solutions - Based in Sacramento, CA US
Wine sample shipping checklist
- Applying for a COLA (Certificate of Label Approval) Waiver
- FDA Registration and Prior Notice
- Creating a Commercial Invoice
- Preparing Samples to Ship to the US
1. Applying for a COLA (Certificate of Label Approval) Waiver
A winery first needs to work with an importer to obtain a Certificate of Label Approval Waiver (commonly referred to as a COLA Waiver). A COLA Waiver is a temporary single-use waiver issued by the TTB which allows Australian wineries to ship over domestically labelled wine for non-commercial use such as customer sampling, trade show tastings, educational events, etc. The wines cannot be used for commercial selling purposes.
To complete a COLA Waiver, the winery will need to provide the following information to the importer:
Company name
Winery name
- SKU description
- Vintage date
- Alcohol by volume percentage
- Number of bottles (Wine Australia strongly suggests requesting 12 bottles per SKU. You can always send less, but you cannot send more without having to file for a new COLA Waiver)
- Bottle size
- Wine type (white, red or rose)
- Wine style (still, sparkling, fortified or dessert)
- FDA Facility Number
The importer will then be able to submit the COLA Waiver request to the TTB for approval.
2. FDA Registration and Prior Notice
Wineries are required to register for an FDA Registration Number before shipping any samples to the US. The FDA requires that all food and beverage facilities register and then renew their FDA food facility number every two years. This is to help prevent food supply-related attacks, hazards, threats, and emergencies as mandated by the Bioterrorism Act and the Food Safety Modernization Act (FSMA).
Among other regulations, facilities must register with the FDA before shipping to the US to assure compliance, keep their products out of detention, and to avoid demurrage fees. Renewal of an FDA food facility number is required every even-numbered year between October 1 and December 31.
Note that it is the bottling facility, not the winery itself, that requires the FDA registration. Therefore, if you produce wine in a different facility than where its bottled, it’s the bottling facility that needs the FDA registration. If the facility is already bottling wine for US exporters, they likely already have an active FDA registration.
If you need to apply for an FDA Registration Number, please start the registration process. Alternatively, there are third-party companies such as Registrar Corp and First Call Imports that will submit the above-mentioned paperwork on your behalf for a fee.
Submit a Prior Notice to the Food & Drug Administration (FDA)
A prior notice must also be submitted to the FDA before shipping. A prior notice is an electronic notification submitted to the FDA, alerting the agency beforehand that your sample order will be shipped to the US. Without a prior notice, there is a strong likelihood that your shipment will be held up in customs, returned to you, or destroyed. You will not be reimbursed by the US government for your failure to submit a prior notice.
Upon a shipment’s arrival in the US, it is reviewed for entry approval by the FDA and US Customs. You must work with your courier and importer to ensure all necessary documentation is completed. Once all required documents and information are in place, the shipment will be submitted to Customs and the FDA for release.
3. Creating a Commercial Invoice
Your shipment should include a commercial invoice, which is a document that clearly lists the information for your Importer of Record and describes your product in full detail. This includes the brand, type of product, alcohol percentage, bottle size, number of bottles per case, and commercial value. You must declare a commercial value, as US Customs will not accept $0 as a declared value.
Packing up samples to send to the US
Once a winery has completed all of the other steps on the samples shipping checklist, the samples are now ready for shipment. To further expedite the process, wineries should do the following:
Apply a Government Warning and Samples Only sticker on each bottle.
Do NOT place over existing labelling. Attach a copy of each of the following items on the outside of the box to each case(s) of wine:
- The commercial invoice
- A packing list (must match commercial invoice value)
- The approved COLA waiver
- Prior Notice notification
- The bill of lading - Your shipping carrier will actually administer this by a tracking number or airway bill number.
The winery will be responsible for paying import taxes. Wine Australia has found DHL or Fed Ex to be the most reliable shipping carriers. Finally, ensure that the wines are well-packed and insulated. Keep in mind that samples will be traveling a very long distance with cold and warm weather extremes being commonplace in the US. You should allow at least one month for samples to arrive in the US.
Australian Wine Connect and Austrade assistance
Wineries interested in exporting to the US are encouraged to complete a profile on our business matching platform, Australian Wine Connect. We will promote this resource in regular communications with importers and trade in the US, and direct any importers interested in finding new brands to CONNECT.
You can register for a Connect profile. If you already have a profile, or had one in the past, you can also use this link to update content. Brand presenters, including indicative pricing for the US market, are recommended to include in your brand profile. Images and key selling points that set your brand apart, a varietal offering that makes sense for the US market and a contact email that is monitored regularly are all key considerations. Make sure to select ‘Seeking distribution in the USA’ so that importers can filter their search results.
For further business matching, or general assistance in finding an importer in the US (or other markets), wineries can contact the Austrade Advisory team. They will connect wineries to the right person internally, whether that is a Global Engagement Manager (GEM), Tradestart Advisor, or directly to a Post to assist.
Contact Austrade | Tel: 13 28 78 | General enquiry form - Austrade
Frequently asked questions
Here are some helpful FAQs to assist you entering the US market.
Can Wine Australia provide introductions to potential importer partners for wineries?
Wine Australia is no longer resourced to provide business matching services for wineries in the way we did for participating wineries in our US Market Entry Program. However, we encourage wineries seeking distribution in the US to complete a winery profile on Connect, and we can promote those wineries to US importers and trade through our regular communication channels.
What type of margin does a traditional importer expect to make?
Standard importer margins range between 25% - 40% These margins are not mandatory, and an individual importer may choose a lower or higher percentage.
What are some of the pros and cons of a traditional importer?
A traditional importer will provide sales and marketing services for the brand, will have existing relationships with distributors and key accounts, and typically offers standard payment terms (e.g. 90-120 days from the wine shipping ex AUS).
Finding a traditional importer to take on new brands is extremely competitive and can take a significant amount of time and investment. There may also be a lot of competition from other brands in the portfolio for attention and mindshare, however there can also be benefits to being part of a larger portfolio in terms of relevance to key buyers.
I have secured an importer in the US. What are some of the most effective ways to support my brand?
Visting the market at least once or twice a year is crucial to supporting your brand in this very competitive wine market. Key account meetings, distributor and staff trainings, winemaker dinners and in-store tastings are all effective ways to share your brand story, help move cases and open up new points of distribution. You could also look into hiring a US-based brand representative to cultivate key relationships and keep your brand top of mind with distributors and trade.
What are retailers looking for with direct import purchases?
Retailers typically seek out wines that score 90+ points in a major international wine publication at a highly competitive price. Often this works best with exclusives, where there is no pricing visible for the wine on sites like wine-searcher.com. They may require either regional or national exclusivity with the wine, so a private label brand or product can work quite well, while a winery looks for an importer to represent their brand nationally through the traditional three-tier system.
How long does it take to ship samples to the US?
Wine Australia recommends that a winery begin the process of organising samples one month prior to the required arrival date in the US. Completing the prior notice and FDA facility registration will take some set-up time, and there is typically a 7 – 10 day approval period once COLA waivers are submitted by the importer to the TTB. Finally, customs delays are commonplace, with wines often taking up to a week for customs clearance.
I shipped some samples to the US, and now I need to send newer vintages. Can I still use the original COLA waiver?
You can still use the original COLA Waiver if the alcohol by volume percentage on the label is identical to the initial vintages of wine. If the ABV % is different, then you will need to submit a new COLA Waiver.
What are some of the pros and cons of the clearing importer?
It may be easier to find a clearing importer than a traditional importer, and product could ship into the market more quickly. However, the winery does not get paid until the product is ordered by a distributor, and hiring a broker or sales consultant to help sell and represent the wines may also be required to get traction. Brokers may request a monthly retainer, at least until the brand gets some momentum, and then will typically be paid by commission.
Wine Export Ready has been developed in partnership with Austrade.