Midwest Beer And Beverage Distributors: European Imports

MIDWEST BEER AND BEVERAGE DISTRIBUTION
Insert Your Name Here
Assignment 7
Elephant Consultants
University/College
BEER AND BEVERAGE IMPORT FEASIBILITY STUDY
Alcoholic and Beverage Import Requirements
To start importing and purchasing beer and beverage products from a European company, MBBD will have to obtain basic import permits from four federal agencies. These four agencies are Food and Drug Administration (FDA), the Alcohol and Tobacco Tax and Trade Bureau (TTB), the U.S. Department of Agriculture (USDA) and Customs and Border Protection (CBP). TTB requires that importers of alcoholic beverages such as wine and distilled spirits to obtain the Federal Basic Permit. MBBD will need to apply for the FBP online so as to fully comply with Federal Alcohol Administration Act (FAA). Although MBBD qualifies to get the Basic Import Permit, it may not be the cost effective option as compared to contracting an already licensed importer even though it can lead to cost savings in the long term. MBBD will also need a standard wholesaler’s permit, which can be easily obtained by registering on permits online.
The company must also check to ensure that its European trading partners are registered with the Food and Drug Administration (FDA) as per the U.S Alcohol import requirements and the Food Facility Registration Regulations. In addition a commercial invoice, packing list, bill of lading and an arrival notice are just but few of the mandatory import documents. The Federal import guidelines mandate every importer of Alcoholic beverages to obtain a Certificate of Label Approval (COLA) from TTB in order to comply with the FAA import regulations. The COLA certificate is issued for free even though pre-COLA authorization and evaluation is required based on content and tax classification. Pre-approval rules vary based on the type of drink and country of origin. Still, compliance with USDA organic regulations is mandatory.
Taxes, Duty and Import Fees
The import is also required to pay taxes, duties and other federal and state fees related to alcohol import. MBBD will therefore have to pay all taxes and duties as per alcohol import guidelines. Therefore compliance with the Internal Revenue Services (IRS) and CPB excise duty and taxes levied on Alcoholic beverages will require that MBBD be registered with IRS.
Direct importation from a European dealer would be the least cost option of procuring the products; however, considering the enormous regulatory and shipping requirements, it might not be the best option. The company must also check to ensure that it fully complies with the Miscellaneous Trade and Technical Corrections Act of 2004 for grape wines. To comply, MBBD will have to obtain the Natural Wine Certificate from the TTB. However, countries with enological practices are exempt from this requirement, most of which are EU countries.
Cargo originating from a European port will be shipped directly to the port of Milwaukee. The port is ideal due to logistical reasons such as proximity to Chicago, Illinois and the fact that it is served by a robust transport network. One shipping option from the port to Chicago will be by the Federal Interstate Highway system I-94/794. There is already an Interstate Highway linking the port to Chicago since the port provides exit and entrance ramps that adjoins to the port service roads. The second option is to use the inland river barges since Port Milwaukee is served by transits that link Lake Michigan to the Greater Chicago region via Illinois River. This shipping route has an average transit time ranging between 10-30 days. Still, shipping will originate from the EU port and land at Port Milwaukee. The products will then be shipped in FLC so as to be packaged in the United States. Shipping can be optionally done from Milwaukee through the Great Lakes Region.
How to transport from East coast to Chicago?
Port Milwaukee is situated toward the western shores of Lake Michigan. Its location is approximately 75 miles towards the northern part of Chicago. Thus the most cost effective means of transport from the East Coast to Chicago would be through the Great Lakes Transport Hub. Though Illinois lies within a radius of 350 miles from the Port Milwaukee, and is served by an efficient federal interstate high way system, it may not be as cost effective as compared to using the U.S Gulf transit option. However, considering that it will take between 10-30 days for the consignment to arrive in Illinois, truckload option should be considered for quick turnaround even though it has limited capacity which could lead to high lead time.
How do we work with an exporter?
MBBD can optionally work with an EU exporter since this option can be cheaper in the short term given the cost of acquiring import permits and licenses. However, working with an exporter does not present a cost effective alternative as compared to undertaking the shipping directly from Port Milwaukee to Illinois using the intermodal option. However, an EU exporter can be used as this will eliminate logistical challenges that the company is likely to handle if it decides to import directly.
What kind of quantities is required to purchase from an exporter?
Customs bonds are an essential requirement for alcohol importers. According to the CBP regulations, customs bond is a necessity for all importers of products that are required to comply with one or more Federal Laws. Importation of Alcoholic Beverages is subject to several Federal regulations, coupled with the fact that the beer will be packed in containers valued over $2500. Thus MBBD will have the option of choosing between a single entry customs bonds and the continuous entry customs bonds. The single entry bonds require that the importer places a bond that is equivalent to the total value of the imported consignment plus taxes, duty and other fees. Thus the bond should be at least three times the value of the imported shipment. The single entry customs bond also requires the importer to pay for additional coverage when using ocean shipping. Thus MBBD will have to also pay for the Importer security Filing (ISF) fee. The second option is to pay for continuous entry customs bonds which require that the company pays 10% of the annual total fees and taxes or a minimum of 50,000 dollars. The continuous entry customs bonds option is the most preferred due to its cost effectiveness as compared to the single entry customs bond if you are a regular importer since it is inclusive of the ISF requirements.
Find an importer and work with them to get what we want
The company has two options: To find an importer or import the products directly. Both options are feasible except that they vary in terms of costs. Whereas importing directly might seem to be costly at the beginning, it could turn out to ...