In Parts 1 and 2, we discussed structure and IP ownership. Now we address where brand owners most often encounter regulatory trouble: The label is not marketing—it is a regulated legal statement.
Why Labeling Becomes Complicated Under the Brand Owner Model
TTB rules require labels to truthfully identify who performed each step of production using statements such as:
- “Produced By”
- “Bottled By”
- “Manufactured For”
- “Distilled & Bottled By” (only if literally accurate)
A brand owner cannot claim activities it did not perform. Brand owners want it to appear that they produced the product and don’t want to reveal the co-packer’s involvement or identity. However, regulations are clear that label statements must be accurate. Another common mistake is trying to use up outdated labels after production changes in a manner that a new label is required. The cost savings in not tossing outdated labels is far outweighed by the cost of a product recall or having to relabel all of the cans or bottles after enforcement scrutiny.
The Contract Must Allocate Regulatory Responsibilities
Because the Brand Owner may not hold manufacturing licenses, regulators will examine the contract manufacturing agreement to determine accountability.
At a minimum, the agreement must specify:
Who:
- Applies for COLAs
- Applies for formula approvals
- Controls label amendments
- Maintains regulatory records
Brand owners should retain this control whenever possible.
Approval Authority Matters
Marketing teams should never control regulated label language without legal review. The agreement should also address:
- Who has final sign-off before printing
- Who pays for recalls
- Who interfaces with regulators
Without these provisions, disputes between brand and manufacturer can escalate quickly.
Practical Steps Before Signing With a Co-Packer
Brand owners should:
- Confirm ownership of formula and process.
- Ensure labels reflect actual licensed activities.
- Retain control of COLAs, trademarks, and artwork.
- Require regulatory cooperation from the manufacturer.
- Build exit rights to move production if needed.
- Treat the manufacturer as a vendor—not a partner in your IP.
The Bottom Line of the Series
New York’s Brand Owner pathway enables beverage entrepreneurs to scale quickly without building facilities—but it shifts the legal burden into:
- Contracts
- Intellectual property protection
- Labeling precision
- Regulatory clarity
Success in this model is not just about making a great RTD. It’s about structuring agreements so that you own the brand, you control the formula, and the label tells the legally correct story.
If you have any questions about contract manufacturing and brand owner licenses, reach out to Tracy at [email protected].
Tracy Jong is a Senior Attorney at Evans Fox LLP with 30 years of experience focusing her practice in business law, intellectual property and licensing for alcohol and cannabis. Tracy Jong is a member of the New York Bar and is a registered attorney at the United States Patent and Trademark Office. She can be reached at [email protected].
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The content has been prepared for informational purposes only; it should not be construed as legal advice, does not create or constitute an attorney-client relationship, and readers should not act upon it without seeking professional counsel.