Robert Lehrman, Attorney

Need Label and Formula Approval? Better Call Robert.

Robert C. Lehrman is a lawyer at Lehrman Beverage Law, PLLC in metro Washington, DC. Since 1988 he has specialized in the federal law surrounding beer, wine and spirits, such as TTB permits, labels, and formulas.

He has helped hundreds of companies formulate beverages to ensure that they are taxed and labeled in an advantageous manner while in compliance with relevant laws and regulations. These companies produce beverages in dozens of countries around the world and range from the largest to the smallest in the beverage industry.

Robert has efficiently reviewed thousands of food and beverage labels over the years. He has also helped to design the labels and get them promptly approved.

When a client calls about a new product they would like to launch, among the first things I tell them is to contact Robert. Neither of us can recall under what circumstances we met, but have some interesting “war stories” about collaborative efforts.

So, I thought it might be fun and informative to interview Robert and for you to learn more about him and his practice.

BB: You are considered among the leading experts in federal regulatory law for alcohol beverages (wine, spirits, and beer). How did you get into this area of specialization?

RL: I stumbled in, like a graduate student into a college bar. I am glad I did. To be honest, it was not a good fit for me in the early years, and I was not wild about the job. It involved a lot of digging through old, tissue-paper pages of dusty old rules, in the CCH Liquor Control Law Reporter. But as I spent more time at it, and got more autonomy, I could change the shape of the job a bit. I think the job changed more than I did. The dusty old pages morphed into up-to-date computer screens. I feel lucky to have been there as law turned from its old, paper ways, toward email and the web.

Anyway, I graduated from law school in Buffalo in the late 1980s. I looked around in DC and the first job offer was from the leading alcohol beverage law firm of the time, Buchman & O’Brien. On that we have something in common because the second of those named partners made his name as general counsel, at a young age, for the leading spirits company of the 20th century — Seagram.

I stayed at Buchman and toiled away in the DC office for a total of about 13 years. At the dawn of the Blackberry age, I decided to embrace the new possibilities and work from anywhere. I started my own little firm in the suburbs, with only a couple of clients. But it really does seem like we have added at least a few clients every week, since that point almost 16 years ago now.

So, getting back to your question, it’s largely happenstance that put me in this position. The internet helped a lot. The rise of small producers helped. Heck, even Arthur Shapiro helped. I am not sure I would enjoy being, for example, a contracts lawyer in a big firm. But, in my current role, what I enjoy most is being at the intersections of law, business, food, branding, and technology. If there is another job that so beautifully blends all these things I like, I can’t think of it.

BB: What are some of the more noteworthy accomplishments you’ve had over the years?

RL: I think the work we did on behalf of absinthe is interesting. It’s a long story so you can find all the details here. The short version is that I worked on absinthe legalization, from 2004-2007, when everyone thought it was impossible. We got the law changed after a 100-year ban. It taught me that there is lots of junk science and junk law out there, and our predecessors didn’t always know better.

Another interesting recollection is about an older man who wanted to put the American flag on his beer cans. Not only that, he wanted Iwo Jima, and In God We Trust on the can to complete the patriotic theming. I patiently explained that TTB would not normally allow American flags on beer cans, turns it down regularly, and has at least a few rules directly banning it.

He was unimpressed and showed me another can and asked why our government will allow Russian flags but not the good old American flag. As we encountered various roadblocks, he would intermittently ask if he should go on the Rush Limbaugh program, or send some cash, to get this thing moving. I assured him there was no need to send extra cash, and assumed he was exaggerating, when he threatened to air it out on talk radio. No. A few months later, I picked up the phone and it was Fox News. “Your client is on the way into the studio and we want to verify a few things about his beer label.” A few hours later, TTB called to say the label is approved, flags and all. I would have liked to believe it was dazzling legal skills but in truth, it was good teamwork with a good client. I was sort of hoping he would go on to make a lot of money with this beer, but in short order Budweiser took the idea and ran with it, and I did not see too much action on my client’s product.

BB: Thinking about the label and formula approval process—both at the TTB and the predecessor ATF— in what ways has the process changed over the years? What’s gotten better and what still could use some improvement?

The main changes are that everything has moved from a paper-based to an internet-based system. When I started, in the late 1980s, I would actually walk over to TTB/ATF’s offices, at least five times a week, and talk directly with the decision-makers/reviewers, at their desk. It was a great way to learn. If they said no, they explained why, on the spot.

The old system was a bonanza for Beltway types. It didn’t make sense to mail the labels to Washington. It took a long time, and the government was quite picky in those days. So, you would be just as likely to get a sheaf of rejections, a month after sending your papers to DC, as approvals. And, the rejections might be as trivial and maddening as, there is a comma missing, or one letter is too small. On the other hand, if you sent the labels to a DC law firm, it could be expensive.

The internet gradually changed all that. The processing times were pretty quick, during that old-fashioned setup. You would show up, wait your turn, meet with the reviewer, and walk out with some label approvals, on the same day. Then, as COLAs Online (Certificate of Label Approval) rolled out, things got very slow for many years. Things are good right now. TTB has eased up on the trivialities and is processing most labels quite rapidly.

Another big change is that the system is quite a bit less personal than it used to be. In the olden days, you might sit with a Pamela Jamieson and go over some labels. These days, the rejections are fairly anonymous, you rarely meet with the reviewer, and even if you go in to TTB’s offices, there are many who work from remote locations.

BB: You’ve been front and center in the craft distillers movement. How is this burgeoning business changing? Is it here to stay? Are the entrepreneurs entering the business better equipped to succeed than in the past?

I am a little embarrassed to say, the craft boom was happening all around me, but I did not really notice it. Maybe I was too busy working.

When I started, I suppose there were several dozen busy distilleries in the US and now there are thousands. I remember when Sam Adams was a scrappy little upstart. It may be a lame comparison, but let me try comparing it to the iPhone phenomenon. First you saw it and wondered if it was overhyped, and whether the phenomenon would persist. Cut to ten years later and you can’t really imagine life without it, and it seems firmly entrenched almost to the point where it should have been obvious from day one.

Just like I think the free-for-all among Android, Apple and others is leading to an embarrassment of riches, for consumers, I do think the craft movement is having a similar effect in the libations space. All the fervor and ferment will lead to lots of great new ideas, and even the big stodgy companies to get on their toes, all to the benefit of consumers. It is certainly good for glass companies and liquor lawyers.

Are the barriers to entry too high? Well, they are certainly there, and alcohol beverages remain encrusted in old and new, important and dubious rules. Recent history shows that thousands of scrappy young companies have been able to form and thrive amidst all the barriers and competition.

BB: Finally, it seems to me that your practice has grown over the years in terms of people and expertise. What areas of legal advice/needs do you handle today that you didn’t in the past?

This is true. We are moving up the food chain so to speak. In my early years, I handled mostly labels and formulas, because that’s what I was handling at Buchman. Other lawyers handled things like trademark, for example. We did not really set out to diversify. My first 10 years on my own, confirmed that I could stay busy even within a fairly narrow niche (just federal, just TTB, just alcohol beverages).

But as time passed, I met talented lawyers and their skills drove the diversification. I met Dan (Daniel J. Christopherson), about five years ago and he adds IP law and beer law to our skill set. Lindsey (Lindsey A. Zahn) had a strong interest in appellation law, and wine law nuances, and later developed her skills as an FDA lawyer. Mike (Michael E. Volz) came along and wanted to see what he could do with retail law in the mid-Atlantic states.

At this point, I am pleased to say that we can handle most federal issues that arise for alcohol beverage companies. While we can handle all this in-house, we still reach out to other experts, to supplement our capabilities. In the past, we have reached out to EPA experts (pesticides) and former TTB experts. Just last week I collaborated with one of the top lawyers in the cannabis space, related to CBD-infused spirits. We have federal well covered, for beer, wine and spirits. We also have good coverage in NY, DC, Colorado, Virginia and Maryland. For the other states, we like working with in-state experts.

My goal is to provide excellent service to alcohol beverage companies; I am much less interested in getting bigger, especially if we can keep getting better without adding more people.

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There are a number of outstanding law firms that specialize in alcohol in general and government approvals in particular. Abelman Frayne & Schwab, for example, is a leading full-service firm who I’ve used in a number of areas including intellectual property matters. They do outstanding work. But, Robert Lehrman’s expertise in the approval process leads me to often say, “Better Call Robert.”

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Well Hung Vineyard

Making a Dream Come True

Late last year a man by the name of Peter Marlin contacted me (not his real name for reasons I’ll explain in a moment). He told me he had read and enjoyed my book—already I like him a lot—and wanted my help in marketing a wine brand called Well Hung Vineyard. Now he really had my attention.

Peter has a full-time job as a business advisor, doing quite nicely, but his dream was always to go into the wine business. So, he bought a brand in Virginia, kept it under the radar, and set out to develop it until such time as he was ready to go at it full time.

It didn’t take very long for him to realize that part-time is no time to build a brand in the booze business.

How the Name Came About

As the story goes… There were three women in Virginia, all close friends, and they loved their late afternoon wine sessions. One of them owned a small farm that was just perfect for cultivating grapes and, over time, the vineyard grew and flourished.

One day, as the three ladies were touring this 2-acre vineyard, one of them grabbed hold of a cluster of grapes, laughed, and remarked, “girls, these grapes sure are well hung.” They had a good laugh. But, after a second or two, they looked at each other and had a eureka moment. A visit to a trademark attorney followed and a brand was born.

These grapes were made into wine at a local winery and sold each weekend at farmer’s markets, wine festivals, small retail outlets, and other venues around the state.

Over time, things began to change. One left for personal reasons and the others grew weary of running all over the state each weekend. It was time for them to move on. What began as a hobby—you might say a labor of love—was becoming difficult to manage.

So, reluctantly they began to investigate a sale of the small vineyard and, especially, the brand name.

Peter and His Dream

Eventually, through a friend of a friend—you know how that goes—Peter heard of the opportunity and negotiations began, were discontinued and back on again—you certainly know how that also goes. Finally, he bought the brand.

Peter, like most entrepreneurs, saw an opportunity for this brand to be bigger than it was and perhaps with a national footprint. His strategy was to continue to sell the wine locally, but also bought wine from producers and marketed them under the Well Hung Vineyard label.

From the website:

Founded in 2008 by three women who recognized the value of a good joke and a great glass of wine, Well Hung® Vineyard has a proud heritage and a bright future. Today, Well Hung® Vineyard is all about growth. Working with winegrowers across the country, we are able to source the best fruit to go into our up and coming wines.

An unexpected dividend cropped up. It turns out that the women who created the brand were savvy enough to also register the brand for clothing, nuts, and other items. And, these were and still are selling well.

Where do I Come in?

The call with Peter was candid. He saw great opportunities for his brand (and dream) but faced many obstacles—not least of which was the time and effort to build a brand and get the best wine available. In addition, despite the “I got to try this wine” attitude of consumers, finding distributors was more than just a challenge (see the previous article on LibDib), it was a major obstacle.

Peter wanted to enlist my aid in making his dream come true. As we talked a few things occurred to me.

First, in a cluttered wine market, name and packaging can cut through and quickly gain awareness in stores and on menus. In a world of Barefoot, Cupcake, Layer Cake, Little Black Dress, we also have provocative labels like Bitch, Fat Bastard, Old Fart, and more. The idea is to buy the first time because of the name/label and buy again because of the wine itself. Of the one billion wine gallons sold in the US, most are sold to non-maven and non-aficionado consumers who enjoy wine, the experience, and, yes, the label.

Come on… compared to the lame names cited above, you have to admit that “Well Hung” is amusing, a double entendre, a play on words, and a fun way to offer someone a glass of wine. A smile and a conversation are bound to follow.

Second, while I liked the idea of helping, this was more than I could handle in my consulting practice, even if I knew more than I do about the wine business. So, I needed a partner.

Enter Rob Warren

Rob and I knew each other well at Seagram and also worked together when he was with Diageo and I was an advisor to Jose Cuervo International, which they distributed at the time. We think alike and have lots of mutual respect. Besides, he has a great sense of humor and in between moments of marketing and brand building excellence, we laugh a lot.

It didn’t take Rob and I long to figure out that without money, resources, and the need for much time, building a wine business was more than just an uphill battle. Think Mount Everest. And so, the idea of licensing the name, Well Hung Vineyard, came readily to mind.

Peter was already selling wine from winegrowers around the country and it’s not a big leap to enter into a business arrangement with a company who initially can produce a red, white, and others. Eventually, varietals and vintage could be added to the mix. In the right hands and with the right wines, this brand could be a winner.

The clothing and other items under the WHV brand would only add to the allure.

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That’s where things stand at the moment—a search for a business partner interested in licensing the name. Stay tuned and I’ll let you know how things develop.

Oh, by the way, Peter also owns the trademark that should help with an Australian wine producer. It’s called Well Hung Down Under.

Disclaimer: While Rob is calling the shots, and taking the lead, I’m along for the ride. Hey, who says I can’t also have a dream or two?

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Liberating the Alcohol Distribution System

LibDib—The Web-Based Distribution Platform

The actual name of the company setting out to address the booze business wholesaler problems is Liberation Distribution (known as LibDib). The Founder/CEO is Cheryl Durzy and I spoke to her at length recently and, let me tell you, her business model could very well be a game changer in how beer, wine, and spirits come to market.

Cheryl has close to 20 years’ experience in the wine industry, managing wholesalers of all sizes, and learned firsthand what a nightmare it is for a small company to get to the shelves of restaurants, bars, and stores. She set out to fix the problem.

I’m very impressed with her web-based platform and think it’s a major positive development for producers (she calls them Makers) and restaurants, bars, and retail shops (RB&R). As Cheryl puts it, “Our goal is to make it easier for small businesses (Makers) to do business with other small businesses (RB&R).

But, as you’re about to learn, it’s much more than that. It’s a boon to the producers, the retailers, the consumer, and, even the current wholesalers.

The Problem

First, the background, as I’m sure nearly all of you know.

The three-tier system of alcohol distribution was set up after Prohibition and consists of producers, distributors, and retailers. Producers can only sell to wholesale distributors who, in turn, can only sell to retailers who sell to consumers.

The system favors wholesalers, especially in view of the consolidation of this tier—which has reduced the number significantly and increased their size. At the same time, it favors the large producers, who have the clout to get attention. Both work closely together for obvious mutual benefit. As I’ve written many times before, “follow the money.” The produce-wholesaler business model is based on volume; the distributor sales rep compensation is based on volume as well. If you were a sales person for a large distributor, which would you focus on—a 3 bottle placement of a craft product or a hand truck of a leading selling brand? Let’s be fair; they are in business to make money,

As a result, small and mid-sized wine, beer, and spirits producers have limited distribution and face many obstacles. Often the large distributors will turn them down or worse, take them on and not pay attention.

Oh, and don’t forget the small RB&R operator who also suffers from the focus on bigness. I follow many bartenders and managers on Facebook and Twitter and there are complaints aplenty about delayed shipments around holidays and long weekends when they can’t get their craft products their customers want. As one prominent Food and Beverage manager told me, “my customers come here for boutique brands that are not mainstream … and getting a timely delivery around the holidays is a nightmare.”

According to Cheryl:

Efforts to change distribution laws have been ineffective, however the market is ripe for disruption. Just as the hotel and transportation industries were disrupted by technology, the alcohol distribution market now has a technology platform that is shaking things up with a new option for small to mid-sized Makers.

The LibDib Solution

If you look at what the platform offers both producers and accounts, I think it’s very impressive. So much so that I have suggested to a number of startup clients of mine that they give this serious consideration.

Currently, LibDib is operating in CA and NY (with more markets on the way) and here’s how it works for producers:

  • A producer enters their information and license online.
  • Product is stored at a producer’s location including their production facility, personal warehouse or third party warehouse, depending on the producer’s choice.
  • It’s delivered by a common carrier, also based on producer’s choice.
  • The charge/fee from LibDib is 15% – 20%, less than what other distributors and wholesalers currently charge.
  • There are no bill backs, no aging inventory, and no buying back product.
  • Producers are free to leave LibDib at will; they will not enforce Franchise Laws. This makes them effective as an “incubator.”
  • They handle the billing, collection, and reporting, which makes them a virtual back office.
  • A producer can invite any account to purchase their product by sending them a link to the LibDib site. (See this video.)
  • And, LibDib is developing a team of platform sales people whose role will be to recruit bars, restaurants and retail stores. These folks can ultimately become brokers and sales people for the brands.

The accounts benefit by being able to buy what they want and when they want it. There are no minimums. There is no middleman, since the accounts can communicate directly with producers through the LibDib platform. Sales materials and POS are current and easily downloadable. Best of all, in my view, an account can provide the experience of unique, local and limited available products, with no hassle.

As a consumer, I’m perfectly happy buying Buffalo Trace or Bulleit Bourbon, but often I want a Koval or Dad’s Hat whiskey and can’t get it. It would be nice to suggest to my retailer or favorite drinking hole, that it’s pretty simple for them to stock less mainstream brands.

Other Potential Winners

When I was at Seagram, new products, no matter the potential, were an annoyance. It meant deflection of assets—people, money, and other resources—that could be applied to mainstream brand growth and, making the annual sales plan. That problem still exists, although companies like Diageo and Pernod Ricard have established venture groups to facilitate traction from a new brand or idea. But, at the same time, wholesalers still have to deflect their resources to address a fledgling brand’s needs. Oh sure, there are dedicated craft and startup resources at the distributor level but not all are equally effective at building brands.

It seems to me that LibDib, with its incubator capability, just might be the answer for the big boys. I know that if I were still at Seagram, I’d definitely give it a shot.

Finally, wholesalers themselves can benefit from LibDib. It’s a way to test market a new product before taking it on. It can augment and amplify the efforts of craft divisions and personnel. And, it can lift the negative feelings and imagery surrounding how and why large wholesalers overlook small, startup brands.

Like I said, LibDib has the potential to be a real game changer.

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