Bottled In Bond

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Bottled In Bond

Unread postby Clayton » Mon Apr 05, 2010 8:22 am

Hi folks, I hope you all had a good Easter and enjoyed a special pour.
I have a question that I hope you won't think is too silly and hopefully you won't fall off your chair laughing reading this post!!!

It's in regard to the term "Bottled In Bond", now (please correct me if I'm wrong) my understanding is it refers to a whiskey that must be at least a minimum of 50% alc (100 proof) and be stored in a government bonded warehouse for a minimum of 4 years. Now the hard bit, at least for me, does BIB mean it was bottled prior to going to the bonded warehouse or does it enter the warehouse in barrel and is then bottled after 4 years (or more at the distillers' request).
Any help on the ins and outs of this would be greatly appreciated.

Please excuse my naivety, promise to keep the dumb questions to a minimum!!

Clayton
"I'd rather have a bottle in front of me than a frontal lobotomy" - Dorothy Parker
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Re: Bottled In Bond

Unread postby p_elliott » Mon Apr 05, 2010 8:45 am

Clayton

Let me see if I can get all of this right: It must Come from one distillery, during one distilling season, be aged in a bonded warehouse in new charred oak barrels (like any bourbon) for minimum of 4 years, and be bottled at 100 proof/50% alcohol I think that's every thing but I usually leave something out.
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Re: Bottled In Bond

Unread postby Clayton » Mon Apr 05, 2010 8:52 am

p_elliott wrote:Clayton

Let me see if I can get all of this right: It must Come from one distillery, during one distilling season, be aged in a bonded warehouse in new charred oak barrels (like any bourbon) for minimum of 4 years, and be bottled at 100 proof/50% alcohol I think that's every thing but I usually leave something out.


Sounds good to me mate, the issue I couldn't get my head around is where the aging took place. Adding to my dumbness dare I ask why a government warehouse?
How do distillers ensure nobody tampers with their barrels??
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Re: Bottled In Bond

Unread postby p_elliott » Mon Apr 05, 2010 9:10 am

Years ago the government had a agent that was at the distillery that literally had the keys to the place including the warehouses. The distillery couldn't make a move with out the government agent permission or knowledge. I can't explain it very well but it has to do with the taxation of the whiskey. Chuck explains it in his book to a degree. Any way this is monitored by the government by computers now and there is no agent on site anymore. So in short the government bonded warehouses were their regular warehouses.
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Re: Bottled In Bond

Unread postby Clayton » Mon Apr 05, 2010 9:16 am

p_elliott wrote:Years ago the government had a agent that was at the distillery that literally had the keys to the place including the warehouses. The distillery couldn't make a move with out the government agent permission or knowledge. I can't explain it very well but it has to do with the taxation of the whiskey. Chuck explains it in his book to a degree. Any way this is monitored by the government by computers now and there is no agent on site anymore. So in short the government bonded warehouses were their regular warehouses.


Gee that's really interesting! Taxation makes sense..amazing the government agents had keys to the distilleries. Such an interesting history to this whiskey!
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Re: Bottled In Bond

Unread postby cowdery » Mon Apr 05, 2010 12:52 pm

It's hard for us to imagine today, but until the Pure Food and Drug Act of 1906, there were virtually no consumer protection laws and it was Buyer Beware. Whiskey was one of the most abused products, as producers could make any false claims they wished and there was nothing anyone could do about it. The Bottled in Bond Act was a precursor to Pure Food and Drug, in that the United States government would guarantee the authenticity of the whiskey if all of the Bottled in Bond rules were followed. Although the government never claimed to be guaranteeing the quality of the whiskey, just its authenticity, BIB came to be regarded as a mark of quality. As it was getting started, producers wouldn't necessarily have all of their product 'in bond,' so they might have some warehouses that were not bonded warehouses, as the system was essentially voluntary.

The fact that the so-called 'government man' controlled access to the distillery could lead to some pettiness. Every distillery has stories about the government man showing up late in retaliation for some petty slight. It was an odd phenomenon.
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Re: Bottled In Bond

Unread postby delaware_phoenix » Mon Apr 05, 2010 7:07 pm

For those who like reading the regs, they are found here.

It's actually in section labeled "Prohibited Practices" which tells you (the distiller presumably) that you can't do this unless you follow these rules. Apparently, you could even have BIB gin or vodka or absinthe. It also seems to say you can't add anything to/subtract anything from the spirit (other than pure water to reduce to 100 proof), and I'm wondering if that impacts the 2.5% harmless flavoring materials rules?

Also the rules only state "wooden containers", they don't specify oak or char or new/used containers. But of course you couldn't call it bourbon BIB if you didn't use new charred oak containers.

Thanks for bringing this up Clayton. I've wondered about the BIB rules and this got me to look them up.
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Re: Bottled In Bond

Unread postby Clayton » Mon Apr 05, 2010 9:30 pm

cowdery wrote:It's hard for us to imagine today, but until the Pure Food and Drug Act of 1906, there were virtually no consumer protection laws and it was Buyer Beware. Whiskey was one of the most abused products, as producers could make any false claims they wished and there was nothing anyone could do about it. The Bottled in Bond Act was a precursor to Pure Food and Drug, in that the United States government would guarantee the authenticity of the whiskey if all of the Bottled in Bond rules were followed. Although the government never claimed to be guaranteeing the quality of the whiskey, just its authenticity, BIB came to be regarded as a mark of quality. As it was getting started, producers wouldn't necessarily have all of their product 'in bond,' so they might have some warehouses that were not bonded warehouses, as the system was essentially voluntary.

The fact that the so-called 'government man' controlled access to the distillery could lead to some pettiness. Every distillery has stories about the government man showing up late in retaliation for some petty slight. It was an odd phenomenon.


That's so interesting Chuck, I so wish to learn more history like this. I notice that some Whiskeys still carry BIB, is that purely marketing or does the practice still exist?
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Re: Bottled In Bond

Unread postby p_elliott » Tue Apr 06, 2010 9:21 am

If it says BIB on the label they still have to follow the BIB rules.
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Re: Bottled In Bond

Unread postby Clayton » Tue Apr 06, 2010 11:29 am

p_elliott wrote:If it says BIB on the label they still have to follow the BIB rules.


Therefore the government bonded warehouses still exist hey?
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Re: Bottled In Bond

Unread postby bourbonv » Tue Apr 06, 2010 11:34 am

All distillery warehouses are bonded so that the distillers do not have to pay the taxes until it is ready for bottling. The taxes on bourbon are paid when it leaves a bonded warehouse.
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Re: Bottled In Bond

Unread postby p_elliott » Tue Apr 06, 2010 11:43 am

Clayton

Are you confused yet? You should be the alcohol laws in the US are very confusing. Some are very old and out of date but are still enforced.

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Re: Bottled In Bond

Unread postby Clayton » Tue Apr 06, 2010 11:57 am

p_elliott wrote:Clayton

Are you confused yet? You should be the alcohol laws in the US are very confusing. Some are very old and out of date but are still enforced.

Paul


Paul I'm getting bloody close!

So the distillers have to let the government know then if they send cases of stock to say a wholesaler for example? Am I at least on the right track?? Meaning you as the distiller could time despatching goods with having enough cash for the taxman?
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Re: Bottled In Bond

Unread postby bourbonv » Tue Apr 06, 2010 12:19 pm

The bonding period is 20 years. This means that after the whiskey is made it is entered into a bonded warehouse for agining. This is a good thing because it allows for the "Angel's Share" to happen without that lost volume being taxed - or a I should say within some limitation, untaxed. There is a formula that tells the tax man how much whiskey there should be in a barrel after a set period of time and if a barrel falls below that limit, then the distiller still pays the tax on what should be there by the government formula. Of course if there is more in a barrel they still pay the taxes on the excess. However since 1984, the guager has played a lesser role and the government allows the tax to be paid on the overall dump so the excess in some barrels makes up for the shortage in others. It works out to be pretty close to the government formula. Still, if you purchase a single barrel of whiskey from a distiller and it falls below the amount called for, you will pay the taxes on the missing whiskey and if there is more than called for you will pay taxes on the extra.

Now after the whiskey is aged and dumped, the distiller gets to bottle the whiskey and pay the taxes when the bottles are shipped. This is one of the big changes from the 1950s that also raised the bonding period from 8 years to 20 years. The advantage here is that the distiller does not ship until the whiskey is sold so if they have whiskey that is over aging they can bottle it and keep those bottles in bonded storage until they sell it.
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Re: Bottled In Bond

Unread postby p_elliott » Tue Apr 06, 2010 12:20 pm

I need to let some one other than me ( Chuck or Mike or some one) explain the taxes on the distilleries it's very confusing . I know that on a bottle of bourbon the price of the bottle is at least 1/2 to 3/4 or more tax

I see Mike posted while I was writing but no offense Mike but wasn't that clear as mud it's the law that's not clear. I can't keep up on the tax law on this no way.
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