Preparing to Sell Your Alcohol Business — Part II: Labeling
This is the second article in a series discussing what your alcohol business should do from a legal and compliance standpoint to best position itself for acquisition. The first article, concentrating on the evaluation of your business’s alcohol licenses, can be found here.
Part II: Labeling
The statements made on your labels are an integral part of each product’s brand and identity. Buyers who want to be able to sell inventory they acquire from you, and continue to make those statements on products produced later, will expect evidence that they are accurate and compliant. This will include diligence into your trademark records, and will likely include detailed diligence questions regarding your business’s internal records and supply chain systems to corroborate and ensure labeling statements are accurate and meet regulatory requirements. Different buyers will have different priorities in their labeling due diligence, and different expectations for underlying compliance. Many buyers place high importance on maintaining label claims in ownership transitions, and view labeling claims as a foundational part of compliance. If obvious labeling compliance gaps are uncovered during due diligence, it can complicate and slow the deal, as the buyer may doubt that you have your house in order. Smart sellers should anticipate a deep dive into labeling compliance and be ready to justify their label claims before due diligence begins.
As a first step, producers should evaluate their Certificates of Label Approval (COLAs), issued by the Alcohol & Tobacco Tax & Trade Bureau (TTB). COLAs are required for most beer, wine, and spirits products, and you’ll need to provide one for each product or explain why an exception applies (e.g., the label is an allowable revision). For businesses with multiple production locations, these COLAs should bear accurate Bottling Statements that reflect the bottling location and match the COLA. Further, many states require Product Registrations, so you’ll need to be prepared to demonstrate compliance. You should be ready to describe the systems in place to track COLAs and state product registrations, and expect to be asked for information on your software as well as your staffing for these functions.
A related evaluation is whether all necessary products have TTB Formula Approval, which is a required precursor for some products to obtain a COLA from the TTB. Many traditional products do not require a TTB Formula Approval, but non-traditional products and products with coloring or flavoring materials often need to complete this step.
For wineries, Appellation and Grape Variety statements are highly important to how your wine connects with consumers, thus the accuracy of those claims may be critical to a potential buyer. These claims are typically substantiated via vineyard ownership, vineyard leases, grape purchase agreements, weigh tags, and good supply chain recordkeeping that ties the grapes to the finished wines. These records usually substantiate Vintage statements and “Estate Bottled” claims as well. You should also evaluate whether the required federal regulatory thresholds are met to use these appellation, variety, and vintage statements. Wineries should also pay attention to state wine labeling laws that may be more rigorous than the federal regulations, such as Conjunctive Labeling laws that require sub-appellation designations to be paired with the overall regional designation. Further, some states have higher requirements for State Sourcing label claims. Your regulatory attorney can assist with this evaluation, positioning you to allay any buyer concerns.
For beer and spirits, you will want to evaluate whether your product labels bear accurate Class/Type Designations under federal regulations. Like wine, assessing these designations will require you to evaluate your supply chain records as well as your production records and lab analyses. Federal class/type designations are complex and can vary depending upon a multitude of factors including alcohol content, ingredients, barrel use, aging, and flavorings. Further, some class/type designations for beer and spirits have geographic production requirements, and thus it is critical that your records support these label statements.
For spirits, Age and Barrel statements may be a key component of how your distillery’s products resonate with consumers. These statements are carefully regulated by the TTB, and the rules depend upon the product’s class/type designation. You should review your production records with your regulatory attorney, as well as your barrel sourcing and use records, to ensure that your distillery can substantiate the age and barrel statements made on the labels. Any “Bottled in Bond” statements on your spirits label should be supported as well.
For any products that contain Coloring or Flavoring Materials, you’ll need to consider a variety of factors. Is the coloring or flavoring material allowed, and is it compatible with the product’s class/type designation? Does the material require the product to go through the TTB formula approval step? Is the coloring or flavoring material approved by the FDA or generally recognized as safe? Further, if you export your products, potential purchasers may inquire whether you’ve confirmed if the coloring or flavoring materials are permitted in the export markets where the product is distributed. Your business should also be able to show the production records for each product, including when anything was added to the product, for what reason, and in what amount.
Finally, you should discuss any Unique Labeling Claims with your regulatory attorney, which a potential buyer will want to know that you have properly vetted. This may not be applicable if your products and labeling are mostly traditional. However, many new products have unique formulations that may require special label consideration. Further, wellness-adjacent claims, such as statements relating to calories, sugar, or carbohydrates, are on the rise and should be discussed with your regulatory attorney. Products in the low and no alcohol space are also on the upswing, and encounter specific labeling issues that should be investigated prior to seeking out potential buyers for your business.
August 14, 2026
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