Changing filling standards for spirits in the USA: towards a 700ml Vs 750ml match to conquer the shelves?

How many times have we regretted the lack of harmonization of US and European formats at the time of developing the packaging of a French spirit for the USA? Or when referencing and implementing the dry materials used in the composition of the product for the different markets: bottles, labels, 70cl and 75cl cases, etc... In short, a lot of materials have to be purchased in duplicate and production costs are increasing.

We dreamed about it for decades, Christmas 2020 has done it. And now the news comes down on the side of the Alcohol and Tobacco Tax and Trade Bureau: now 4 new formats are accepted in the USA!

This does not, however, dispense with the COLA or the formula approval. See the official text below:

In fact, the APC has been thinking for some time now about abolishing the filling standards that have been in force since 1 January 1980. but the risk of confusion with a multiplication of formats emerging at the state level is too risky. This could lead to market disruptions and a cascade of costs impacting the value chain at the logistics level: imagine a myriad of formats to be stored and identified!

Hence the result of the votes of US spirits industry professionals (Constellation Brands, Moet Hennessy USA...) which concluded with 110 votes for and 1141 votes against this project in 2019.

Instead, we've decided to keep the current filling standards (including the best-known 1.75L, 1L, 750ml and 355ml) while accepting four others authorized in Europe and Japan 1.8L, 900mm, 720ml and 700ml. And this measure, which comes into force on December 29, 2020, is justified by the APC as follows:

1) In order to facilitate trade between the domestic and international markets

2) Propose new purchase options for consumers

Yet some concerns remain after this decision...

Of course, products bottled only in 70cl will arrive in the States, but consumers are entitled to wonder whether 700ml bottles will be sold at the same price as 750ml ones? Or will spirits go from 750ml to 700ml without changing the price? It will be interesting to see how the big companies position themselves in relation to bottle formats. This will also be done in consultation with US distributors and retailers in the field, and will have a significant impact on the supply chain, including the stocking of many new references...

And what about the traditional 6*70cl case? Shipping such cases to the USA can be expensive. Handling fees (between $0.25 and $0.50) and monthly storage fees (between $0.25 and $0.42) are generally charged per case, regardless of the number of bottles contained. So two 6*70cl cases will cost twice as much as a 12*700ml or 12*750ml case. So think twice before skipping the 12-bottle case in the hope of saving money with your 6-bottle case!

Glass manufacturers are also likely to be in a state of flux. supply difficulties for spirits companies, depending on whether they switch suddenly to 700ml or 750ml for the same bottle or decanter model on the shelf.. For while the biggest brands will definitely opt for a single format in order to keep costs down, other smaller or intermediate brands are likely to take a back seat for a while and make do with what's left, while the market stabilizes.

But there is another format that could have done well if it had been selected by the professionals and the APC...

Among the formats most widely used for spirits in the USA today, there's a clear gap between the 750ml and the 355ml. The 500ml available in Europe has not been tolerated by the TTB since June 30, 1989.much to the regret of importers and distributors (only bottles bottled before this date are still marketable). In fact, while the 750ml is too expensive for some consumers, the 355ml is too small and too close to the 200ml.

However, some markets are interested in the 500ml, including the hotel and restaurant industry, which would like to see limited editions in mini-bars in suites, for example, or to produce limited editions (information gathered personally during a market study carried out in Florida in 2015). Surprisingly, however, the US spirits industry and the TTB have not adopted this format. Perhaps it's not profitable enough after all?

In conclusion, the opening of the USA to the 700ml format is perhaps only a first step before other modifications that could open this market to the 500ml or 350ml. Similarly, it is possible that a 700ml flow with non-compliant or tampered products will land on American territory because, to date, the 750ml is much less prone to being filled with contraband (a fear raised during the debates).

We can therefore expect tighter controls from the FDA and the ATC with, why not, a cancellation of the authorization of the 700ml if the trial is not conclusive?

We will also see what the European Union will decide about this: will it follow the APC approach and make changes?

Now, it seems that South Africa is the last country to impose the only 750ml format...

JÉRÔME SAVOYE

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