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Practical challenges

It is important to ensure your wine "fits" your licence.

Problems that we have seen in the industry over the years include where producers have sold re-labelled cleanskins obtained from others, where blended wine not including the appropriate proportion of the licensee’s own product has been sold, and where port bought in bulk from another producer has been sold at cellar door.  

There can also be difficulties where contract grape processing and winemaking contracts are used by a producer, and are not appropriately structured – for example, it is important that the licensee is, in effect, the owner of the product at pre-fermentation stage, and not simply a buyer of a finished (or near finished) wine.

Where a licensee re-structures its business (for example, to split the business into an asset-holding company, and a separate operating entity), it is important to carefully work through the liquor licensing issues (including any question of whether entities are “related” for the purpose of any “own product” test, how stock will be sold or allocated between any new entities, and whether all entities hold or will hold suitable licences).

Accordingly, as a general observation, licensees utilising these categories of licence will be well served by:

  • creating and retaining appropriate written records of the source of all of the fruit used in your winemaking, including copies of supply contracts and details of supply if you are not producing the fruit yourself;
  • developing and using appropriate written contracts for contract winemakers, and keeping records of your discussions with and instructions given to the winemaker; and
  • making sure your sales and accounting records are appropriately detailed to allow you to track all wine sold in appropriate detail.

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