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Friday, May 24, 2013

Legal Status of Sake in the U.S.

When I describe Sake to people, I tell them that Sake is not a beer, wine or spirit. I consider it to be its own unique liquor, and my position is supported by numerous Sake advocates. It may bear some similarities to beer, wine and spirits, but it also possesses key differences as well. It may be brewed in some ways like a beer, but drinks more like a wine.

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.

7 comments:

  1. Richard,

    The same grey area exists for cider to an extent. Sometimes it is wine, sometimes it is a malt beverage. Although sake is unique as it could be all three commodities.

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  2. Michael:
    Seems the whole alcohol system needs and overhaul and simplification.

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  3. Great article! I recently did a count of the sake kura currently operating or soon to be in the US and here is what I found:

    1)Sake One (Forest Grove, Oregon)

    2) Moto-i (Minneapolis, Minnesota)

    3) Texas Sake (Austin, Texas)

    4) Blue Current (Kittery Point, Maine)

    5) Oktopusake (New Haven, Connecticut)

    6) Kuracali (San Marcos, California)

    7) Takara (Berkeley, California)

    8) Ozeki (Hollister, California)

    9) Blue Kudzu (Asheville, North Carolina)

    10) Yaegaki (Los Angeles, California)

    11) Gekkeikan (Folsom, California)

    12) Ben's Tune Up (Asheville , North Carolina)

    13) Rock Sake (Sake One) (Forest Grove, Oregon)

    Do you agree with this compilation?

    Thanks,

    Ryan

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  4. Hi Ryan:
    That is a great list. I generally wouldn't include Rock Sake as they essentially just have Sake One brew for them.

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  5. Thanks for reviewing the list. Just doing some homework as I'd like to join the list one day.

    -Ryan

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  6. I just found this old post. Great article. Richard - you wrote that US law does not address definitions of the various types of Sake, such as Junmai and Ginjo. Therefore, 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.
    I'm not sure this is accurate. The CFR (Section 27, Subpart C - Standards of Identity for Wine Section 4.21) states that "Sake is wine of this class produced from rice in accordance with the commonly accepted method of manufacture of such product." Therefore, since it is commonly accepted that Junmai has certain requirements, this would apply to US brewers as well.
    Thank you!!

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  7. Hi Polk:
    Thanks, though I must disagree with you. The section you quote only deals with "Sake" as a general term and does not specifically include definitions of Junmai, Ginjo, Daiginjo, etc. As such, "Sake" is the only regulated term that must follow any definition. The regulations would need to be much more specific and include, for example, a specific definition of Junmai, for that to be regulated within the U.S. Such legal regulations always need to be very specific to ensure coverage and omission of a specific term would leave it open for differing definitions.

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