Friday, May 24, 2013
Legal Status of Sake in the U.S.
Legally, what is its status? Under U.S. law, is Sake treated as a wine, beer or distilled spirit? Curiously, it is treated as all three! The actual determination for any specific Sake depends upon the surrounding circumstances, such as whether it is produced in the U.S., is imported or contains added distilled alcohol. The Alcohol & Tobacco Tax and Trade Bureau details this strange decision making process.
First, in matters relating to production and tax, Sake is treated as beer under the Internal Revenue Code. The definition for "Beer" states "...and other similar fermented beverages (including sake or similar products).." The sake breweries in the U.S. are considered more as beer breweries for production purposes and must follow the rules for such beer breweries.
However, the law does not address definitions of the various types of Sake, such as Junmai and Ginjo. U.S. Sake breweries can technically use such Japanese terms at will, with no restriction. For example, a U.S. Sake brewery could label any of their products Junmai, even if that product would not qualify as a Junmai under Japanese law. This is similar in some respects to when U.S. wineries labeled their Sparkling Wines as Champagne, though such wines did not fit the French definition of Champagne.
Currently, there are about 10 Sake breweries in the U.S., either already in existence or in the process of being constructed. With such a tiny number of breweries, this labeling issue is not significant and I am unaware of any domestic Sake which does not follow Japanese labeling laws. It is something though which deserves consideration, especially as more sake breweries continue to sprout up all across the country. It would be better to handle the matter now, before it ever becomes a problem.
Second, in matters relating to importation, labeling and advertising, Sake is treated as wine under the Federal Alcohol Administration Act. The definition for "Wine" states "...other alcoholic beverages not so defined, but made in the manner of wine, including ...vermouth, cider, perry and sake;..." So if you want to import Japanese Sake, you must have an importer permit for wine. In addition, Sake labels and advertising must abide by the same laws as does wine.
Third, Sake may sometimes even get treated as a distilled spirit. Some Sake has alcohol added to it and it is generally known as aru-ten, short for arukoru tenka. Honjozo is premium Sake which has some distilled alcohol added to it, as a means of emphasizing certain aromas and flavors which are soluble in alcohol. This distilled alcohol is diluted with water so the alcohol level of the Sake does not rise. It remains around 15%-17% ABV, the same as Junmai which lacks the addition of distilled alcohol.
However, under U.S. law, if any distilled alcohol is used during any stage of the production process, then the Sake will be taxed at the higher distilled spirit tax rate. That means that Honjozo will tend to be more expensive than Junmai because of the increased tax rate.
Alcohol law in the U.S. is a twisted and convoluted system. Poor Sake has an identity crisis, unsure of what it is supposed to be.